Alaska Air Group logged a $76 million GAAP net loss in the second quarter after a sudden spike in fuel prices torpedoed what executives say would have been a solidly profitable spring. The Seattle-based carrier said its economic fuel cost ran about $4.43 per gallon, adding roughly $600 million to expenses for the period. Management pointed to better unit revenue and smoother operations as partial offsets, but not enough to punch through the fuel hit.
In its quarterly update, Alaska Air reported a GAAP pretax margin of (5.3%) and an adjusted net loss of $102 million, while revenue climbed about 10% to roughly $4.1 billion. “Absent the fuel headwind, we would have delivered a solidly profitable quarter,” CEO Ben Minicucci said in a statement. The company also disclosed that it raised $1 billion in financing during the quarter to shore up liquidity as fuel markets tightened, according to a release from Alaska Air Group.
Seattle’s own fuel reality did not help. AAA pegged the average price of unleaded in the city at $5.05, and GasBuddy analyst Patrick De Haan told KIRO 7 that two California refineries being offline, combined with Washington’s cap-and-invest rules, left the West Coast especially exposed. “Washington state’s Cap-and-Invest program is a huge thorn in the side of an airline like Alaska,” De Haan said. For a carrier so tied to Seattle and the broader region, that local squeeze helps explain why the fuel pain cut so deep.
Industry and investor reaction
Markets and aviation watchers largely cast the quarter as a story of fuel costs getting the last word. Coverage highlighted the $76 million GAAP loss and the roughly 85% year-over-year jump in economic fuel costs to about $4.43 per gallon, along with Alaska’s assumption that third-quarter fuel will land closer to $3.75 per gallon. Analysts told investors that Alaska’s revenue trajectory, progress on integration, and cargo growth could set up a rebound if fuel prices calm down, as reported by Investing.com…