Alaska Air Group reports third quarter 2026 results

Premium revenue grew approximately 25%, but full-year guidance includes $1.8 billion in fuel expense above plan.

Rhea-AI Summary

Alaska Air Group (NYSE: ALK) reported a third-quarter net loss of $147 million as fuel costs weighed on revenue growth. Revenue rose 14% year over year to $4.308 billion, while diluted loss per share was $1.32 versus earnings of $0.62. Adjusted earnings per share excluding certain tax impacts were $0.36; including those impacts, adjusted loss per share was $0.31. Fuel expense rose 60% to $1.214 billion.

The company expects a full-year adjusted loss of $5.50 to $5.00 per share, including $1.8 billion in fuel expense above plan. Fourth-quarter guidance calls for an adjusted loss of $2.50 to $2.00 per share and low-double-digit revenue growth per unit of capacity. Available liquidity was $3.3 billion. Alaska also announced plans to join the Atlantic and Pacific Joint International Businesses and new Seattle service to Athens, Paris, Osaka and Papeete beginning in spring 2027.

21 points · 0 major

MixediHow this balance works

How this balance works

Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.

It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.

Rhea-AI Sentiment measures something else, the tone of the wording.

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1 major · 28 points

Hollow bars mark forward-looking points. How the balance works

Positive

• Moderate pointQ3 revenue rose 14% year over year to $4.308 billion.
• Moderate pointQ3 revenue per unit of capacity rose 11.7% year over year.
• Moderate pointPremium revenue grew approximately 25%, representing more than 36% of Q3 total revenue.
• Moderate pointLoyalty cash remuneration grew 21% to $721 million in Q3.
• Moderate pointManaged corporate revenue increased 30% in Q3.
• Moderate pointSeptember yield increased approximately 17% year over year, reflecting higher revenue per passenger mile.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Q4 revenue per unit of capacity is expected to increase low double digits year over year.

14 minor points

• Minor pointQ3 capacity grew 2.4% versus 2025.
• Minor pointQ3 passenger revenue increased 13% year over year to $3.885 billion.
• Minor pointQ3 loyalty program other revenue increased 32% year over year to $263 million.
• Minor pointQ3 cargo and other revenue increased 13% year over year to $160 million.
• Minor pointNine-month revenue increased 10% year over year to $11.673 billion.
• Minor pointOperating cash flow totaled $755 million for the first nine months, including $149 million in Q3.
• Minor pointAvailable liquidity totaled $3.3 billion, including unrestricted cash, marketable securities and undrawn credit facilities.
• Minor pointApproximately $20 billion of unencumbered assets at September 30 included 134 aircraft and loyalty program assets.
• Minor point. Forward-looking: it has not happened yet and may not happen.Q4 capacity growth of 1% to 1.5% is expected versus 2025, concentrated in international flying.
• Minor point. Forward-looking: it has not happened yet and may not happen.Seattle service to Athens, Paris, Osaka and Papeete is planned to begin in spring 2027.
• Minor point. Forward-looking: it has not happened yet and may not happen.Domestic network expansion includes new routes from Portland, San Diego and Paine Field, plus increased Paine Field service.
• Minor pointQ3 special operating charges fell 61% year over year to $25 million.
• Minor pointQ3 variable incentive pay expense fell 4% year over year to $68 million.
• Minor pointQ3 third-party regional carrier expense fell 1% year over year to $71 million.

Negative

• Major point. Forward-looking: it has not happened yet and may not happen.Full-year adjusted loss guidance is $5.50 to $5.00 per share, including $1.8 billion fuel expense above plan.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Q4 adjusted loss guidance is $2.50 to $2.00 per share.
• Moderate pointQ3 GAAP net loss was $147 million, versus net income of $73 million a year earlier.
• Moderate pointQ3 fuel expense rose 60% year over year to $1.214 billion.
• Moderate pointQ3 non-fuel cost per unit of capacity rose 4.4% versus 2025.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Q4 non-fuel cost per unit of capacity is expected to rise mid single digits versus 2025.
• Moderate pointQ3 operating income fell 45% year over year to $82 million.
• Moderate pointLong-term debt and finance leases, excluding current maturities, rose to $5.269 billion from $4.834 billion at year-end.
• Moderate pointShareholders' equity fell to $3.530 billion from $4.118 billion at December 31, 2025.
• Moderate pointInternational joint-business participation remains an intent, rather than a completed entry into the Atlantic and Pacific arrangements.

18 minor points

• Minor pointQ3 diluted loss was $1.32 per share, versus earnings of $0.62 a year earlier.
• Minor pointQ3 adjusted net loss was $35 million, or $0.31 per share, including certain tax impacts.
• Minor pointTax catch-up adjustment reduced Q3 adjusted earnings by $0.67 per share following a revised annual tax estimate.
• Minor pointQ3 economic fuel cost was $3.94 per gallon, above the prior $3.75 expectation.
• Minor point. Forward-looking: it has not happened yet and may not happen.Q4 economic fuel cost is expected at $4.65 to $4.85 per gallon, $650 million above initial plan.
• Minor pointNine-month net loss reached $416 million, versus net income of $79 million a year earlier.
• Minor pointNine-month operating loss was $365 million, versus operating income of $228 million a year earlier.
• Minor pointQ3 interest expense increased 39% year over year to $97 million.
• Minor pointQ3 wages and benefits rose 5% year over year to $1.287 billion.
• Minor pointQ3 aircraft maintenance expense rose 8% year over year to $257 million.
• Minor pointQ3 landing fees and other rentals rose 9% year over year to $333 million.
• Minor pointQ3 contracted services expense rose 8% year over year to $163 million.
• Minor pointQ3 depreciation and amortization rose 6% year over year to $216 million.
• Minor pointQ3 selling expense rose 10% year over year to $118 million.
• Minor pointQ3 food and beverage service expense rose 10% year over year to $110 million.
• Minor pointQ3 aircraft rent increased 3% year over year to $66 million.
• Minor pointQ3 other operating expense rose 16% year over year to $298 million.
• Minor pointCurrent debt and finance lease obligations rose to $890 million from $721 million at year-end.

Key Figures

GAAP net loss: ($147) million GAAP loss per share: ($1.32) Adjusted EPS, excluding certain tax impacts: $0.36 +5 more

GAAP net loss

($147) million

Third quarter 2026

GAAP loss per share

($1.32)

Third quarter 2026

Adjusted EPS, excluding certain tax impacts

$0.36

Third quarter 2026

Tax adjustment to adjusted EPS

($0.67) per share

Third quarter 2026; cumulative catch-up adjustment

Operating revenue

$4.3 billion, up 14%

Third quarter 2026 year over year

Fuel expense above plan

$1.8 billion

Full-year 2026

Adjusted loss per share guidance

($5.50) to ($5.00)

Full-year 2026

Adjusted loss per share guidance

($2.50) to ($2.00)

Fourth quarter 2026

Previous Earnings Reports

2 past events · Latest: Jul 21

Same Type 2 events

1. Jul 21

   Earnings results

   24h Move

   -2.4%

   Reported a $76 million GAAP net loss and a $102 million adjusted net loss.

2. Apr 20

   Earnings results

   24h Move

   -4.8%

   Reported a $193 million GAAP net loss and a 9.6% negative pretax margin.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

gaap, rasm, aetr

3 terms

gaap financial

"Generally Accepted Accounting Principles (GAAP) pretax margin of 0.4%"

GAAP, or Generally Accepted Accounting Principles, are a set of standardized rules and guidelines that companies follow when preparing their financial statements. They ensure consistency, transparency, and comparability across different companies, making it easier for investors to understand and compare financial information accurately. This helps investors make informed decisions based on trustworthy and uniform financial reports.

View in glossary

rasm technical

"RASM % change versus 2025"

RASM (revenue per available seat mile) measures how much money an airline earns for each seat it can fly one mile, combining ticket sales and other onboard revenue divided by total seat-miles offered. It tells investors how effectively an airline turns its flying capacity into income—similar to checking how much a restaurant makes per available table hour—so rising RASM usually signals better pricing or demand, while falling RASM can warn of weaker revenue performance.

aetr financial

"estimated annual effective tax rate (AETR)"

Average effective tax rate (AETR) is the ratio of a company’s total income tax expense to its pre-tax accounting profit, expressed as a percentage. It shows the share of pre-tax earnings that the company actually pays in taxes and can differ from the statutory corporate tax rate because it reflects deductions, credits, tax-loss carryforwards, foreign taxes and other permanent or temporary differences; companies may calculate it using GAAP tax expense, cash taxes paid, or adjusted measures, so check which basis a report uses.

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Reported loss per share of ($1.32), and adjusted earnings per share, excluding certain tax impacts, of $0.36

Announced intent to join the Atlantic and Pacific Joint International Businesses with oneworld and global partners

New service to Osaka and Papeete expands Seattle's nonstop international network to 9 of 15 planned routes by 2030

SEATTLE, Oct. 20, 2026 /PRNewswire/ -- Alaska Air Group (NYSE: ALK) today reported financial results for the third quarter ending September 30, 2026.

"At Investor Day, we laid out a clear strategy for building a stronger, more diversified business, and we're executing it: growing premium, international, cargo and Atmos Rewards, and investing in the guest experience," said Alaska Air Group CEO Ben Minicucci. "Those are the things that earn guest loyalty, diversify our revenue and ultimately drive stronger earnings. While we're not satisfied with this quarter's result or the $1.8 billion fuel headwind this year, we are confident in our ability to execute on the things we can control, including increasing the spread between unit revenue and unit costs excluding fuel."

Quarter in Review:

Air Group reported third quarter Generally Accepted Accounting Principles (GAAP) pretax margin of 0.4% and GAAP net loss of ($147) million, or ($1.32) per share. Air Group's third quarter adjusted pretax margin was 1.1% and adjusted net loss was ($35) million, or ($0.31) per share. Excluding certain tax impacts, Air Group's third quarter adjusted net income was $49 million, or $0.36 per share.

Q3 2026 Results		Prior Expectation		Actual Results
Capacity (ASMs) % change versus 2025		Up 2% to 3%		Up 2.4%
RASM % change versus 2025		Up low double digits		Up 11.7%
CASMex % change versus 2025		Up low to mid single digits		Up 4.4%
Economic fuel cost per gallon		$3.75		$3.94
Adjusted earnings per share, excluding certain tax impacts(a)		$0.00 to $1.00		$0.36

(a) These results reflect a Q3 adjusted effective tax rate of 18.4%, or adjusted tax expense of $9 million, versus our original guidance assumption of approximately 35% due to the AETR revision discussed below.

Third quarter results were driven by strong underlying commercial momentum despite a significant fuel headwind. Revenue increased 14% year-over-year to $4.3 billion on 2.4% capacity growth, resulting in unit revenue growth of nearly 12%, despite  Hawaiʻi headwinds, pressure from strategic growth markets investments, and rapid international expansion. Yield improved through the quarter, with September yield increasing approximately 17% year-over-year.

Air Group's diversified revenue, which represents operating revenue outside the main cabin, has grown to 54% of total revenue, reflecting progress against our strategic initiatives as we shift towards a more structurally resilient business. Premium revenue grew approximately 25% and represented more than 36% of total revenue, loyalty program cash remuneration grew 21% to $721 million, and managed corporate revenue increased 30%. Air Group continued to expand its international network, with the additions of Paris, Athens, Osaka, and Papeete, bringing our Seattle international network to nine routes.

During the third quarter, the Company reduced its estimated annual effective tax rate (AETR) following a change in its full-year outlook from pretax income to a pretax loss, driven primarily by elevated fuel prices. As a result, the Company recorded a cumulative catch-up adjustment related to tax benefits recognized on first-half losses, which reduced third quarter adjusted earnings per share by ($0.67). Excluding this adjustment, third quarter adjusted earnings per share were $0.36.

Fourth Quarter Forecast Information:

Looking ahead, demand remains healthy, with commercial momentum continuing into the fourth quarter. Air Group expects capacity to grow approximately 1% to 1.5% year-over-year, with the increase concentrated in international flying. Unit revenue is expected to increase in the low double digits year-over-year and improve sequentially on a gross basis, supported by continued yield strength. Non-fuel unit costs are expected to increase in the mid-single digits, reflecting lower capacity growth.

Elevated fuel costs are expected to remain a significant headwind to near-term profitability, with our guidance assuming a fourth quarter economic fuel cost of $4.65 to $4.85 per gallon, or $650 million higher than our initial plan. For the full year, we now expect an adjusted loss per share between ($5.50) and ($5.00), inclusive of $1.8 billion in fuel expense above our plan.

		Q4 2026 Expectation
Capacity (ASMs) % change versus 2025		Up 1% to 1.5%
RASM % change versus 2025		Up low double-digits
CASMex % change versus 2025		Up mid single-digits
Economic fuel cost per gallon		$4.65 to $4.85
Adjusted loss per share(a)		($2.50) to ($2.00)

(a) Q4 loss per share guidance assumes non-operating expense of approximately $70 million, a tax rate of approximately 20%, and shares outstanding of approximately 112.5 million.

Commercial Updates:

• Announced intent to join the Atlantic and Pacific Joint International Businesses with oneworld and global partners, broadening international connectivity for guests and increasing access to premium worldwide travel opportunities.
• Unveiled Aurora and Leihōkū by Alaska and Hawaiian, new premium guest experiences designed to elevate travel, featuring spacious lie flat suites, access to exclusive check-in and concierge services, and elevated dining options. Aurora will be featured on Alaska's Boeing 787 fleet and select transcontinental routes operated by new 737-10 MAX aircraft, while Leihōkū will be featured on Hawaiian's A330 fleet.
• Introduced Premium Reserve, a new premium economy product set to debut in 2028 on Alaska's 787-9, 787-10 and select 737-10 MAX aircraft and on Hawaiian's A330 fleet, offering guests enhanced comfort, space, and choice on longer flights.

Loyalty Updates:

• Loyalty program cash remuneration grew 21% to $721 million in the third quarter.
• Beginning in October, Atmos Rewards members can choose how they earn points and status points - by distance traveled, price paid, or segments flown - on flights departing on or after January 1, 2027.
• Announced enhancements to Atmos Rewards, including expanded card offerings with the launch of an Atmos debit card in early 2027, four new Atmos communities, and additional program partnerships.
• Launched new and improved benefits for Huakaʻi by Hawaiian members, including two free checked bags for Neighbor Island travel and additional ways to earn Atmos Rewards points.

Network Updates:

• Announced new nonstop service from Seattle to Athens, Paris, Osaka, and Papeete beginning in spring 2027, further strengthening our position as Seattle's largest international carrier.
• Announced domestic route expansions, including new routes from Portland to Steamboat Springs, San Diego to Loreto, Mexico and Paine Field to San Jose, alongside increased service from Paine Field to Portland, San Diego and Los Angeles.

Liquidity Updates:

• Generated $755 million of operating cash flow during the first nine months of 2026.
• Held $3.3 billion in available liquidity, including unrestricted cash, marketable securities, and undrawn credit facilities.
• Had approximately $20 billion of unencumbered assets at September 30, 2026, including 134 aircraft and the unencumbered portion of our loyalty program assets.

Other Highlights:

• Amaresh Siva named Alaska's Chief Information Technology Officer, joining the company from CVS Health. Siva will serve on the company's Executive Committee.
• Alaska Airlines and Hawaiian Airlines were recognized with the 2026 APEX Five Star Major Airline Award.
• Alaska Airlines recognized by the Skytrax World Airline Awards as the #1 Cleanest Airline in North America and the #2 Best Regional Airline in North America.
• SVP of Merchandising and Innovation Charu Jain was recognized as one of Time's 2026 Tech and Data Executives of the Year.

A conference call regarding the third quarter results will be streamed online at 11:30 a.m. EDT/ 8:30 a.m. PDT on October 21, 2026. It can be accessed at www.alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call.

References in this update to "Air Group," "Company," "we," "us," and "our" refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified.

This news release may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by our forward-looking statements, assumptions or beliefs. For a discussion of risks and uncertainties that may cause our forward-looking statements to differ materially, see Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Some of these risks include competition, labor costs, relations and availability, general economic conditions, increases in operating costs including fuel, uncertainties regarding the ability to successfully integrate operations following the acquisition of Hawaiian Holdings, Inc. and the ability to realize anticipated cost savings, synergies, or growth from the acquisition, inability to meet cost reduction and other strategic goals, seasonal fluctuations in demand and financial results, supply chain risks, events that negatively impact aviation safety and security, cybersecurity risks, and changes in laws and regulations that impact our business. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed in our most recent Form 10-K and in our subsequent SEC filings. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We expressly disclaim any obligation to publicly update or revise any forward-looking statements made today to conform them to actual results. Over time, our actual results, performance or achievements may differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, assumptions or beliefs and such differences might be significant and materially adverse.

Alaska Airlines, Hawaiian Airlines and Horizon Air are subsidiaries of Alaska Air Group, and McGee Air Services is a subsidiary of Alaska Airlines. We are a global airline with hubs in Seattle, Honolulu, Portland, Anchorage, Los Angeles, San Diego and San Francisco. We deliver remarkable care as we fly our guests to more than 140 destinations throughout North America, Latin America, Asia, the Pacific and Europe. Guests can book travel at alaskaair.com and hawaiianairlines.com. Alaska and Hawaiian are members of the oneworld alliance. Members of our Atmos Rewards loyalty program can earn and redeem points with oneworld airlines and our additional global partners that serve over 1,100 worldwide destinations. Learn more about what's happening at Alaska and Hawaiian at news.alaskaair.com. Alaska Air Group is traded on the New York Stock Exchange (NYSE) as "ALK."

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Alaska Air Group, Inc.
	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per share amounts)	2026		2025		Change		2026		2025		Change
Operating Revenue
Passenger revenue	$    3,885		$     3,424		13 %		$   10,449		$     9,587		9 %
Loyalty program other revenue	263		200		32 %		748		617		21 %
Cargo and other revenue	160		142		13 %		476		403		18 %
Total Operating Revenue	4,308		3,766		14 %		11,673		10,607		10 %
Operating Expenses
Wages and benefits	1,287		1,226		5 %		3,768		3,518		7 %
Variable incentive pay	68		71		(4 %)		163		194		(16 %)
Aircraft fuel	1,214		761		60 %		3,315		2,142		55 %
Aircraft maintenance	257		238		8 %		729		698		4 %
Aircraft rent	66		64		3 %		191		190		1 %
Landing fees and other rentals	333		305		9 %		929		825		13 %
Contracted services	163		151		8 %		472		442		7 %
Selling expenses	118		107		10 %		332		312		6 %
Depreciation and amortization	216		203		6 %		627		596		5 %
Food and beverage service	110		100		10 %		312		282		11 %
Third-party regional carrier expense	71		72		(1 %)		195		205		(5 %)
Other	298		256		16 %		903		764		18 %
Special items - operating	25		64		(61 %)		102		211		(52 %)
Total Operating Expenses	4,226		3,618		17 %		12,038		10,379		16 %
Operating Income (Loss)	82		148		(45 %)		(365)		228		NM
Non-operating Income (Expense)
Interest income	22		23		(4 %)		62		71		(13 %)
Interest expense	(97)		(70)		39 %		(259)		(202)		28 %
Interest capitalized	14		8		75 %		37		29		28 %
Other - net	(3)		2		NM		12		(10)		NM
Total Non-operating Expense	(64)		(37)		73 %		(148)		(112)		32 %
Income (Loss) Before Income Tax	18		111				(513)		116
Income tax expense (benefit)	165		38				(97)		37
Net Income (Loss)	$     (147)		$        73				$     (416)		$        79
Basic Earnings (Loss) Per Share	$     (1.32)		$      0.63				$     (3.70)		$      0.66
Diluted Earnings (Loss) Per Share	$     (1.32)		$      0.62				$     (3.70)		$      0.65
Weighted Average Shares Outstanding used for computation:
Basic	111.611		115.287				112.334		119.061
Diluted	111.611		117.500				112.334		121.193

 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) Alaska Air Group, Inc.
(in millions, except share amounts)	September 30, 2026		December 31, 2025
ASSETS
Cash and cash equivalents	$       835		$       627
Restricted cash	34		28
Marketable securities	1,396		1,496
Receivables - net	656		565
Inventories and supplies - net	249		203
Prepaid expenses	234		278
Other current assets	37		69
Total Current Assets	3,441		3,266
Property and equipment - net of accumulated depreciation and amortization of $5,377 and $4,945	12,280		11,857
Operating lease assets	1,325		1,268
Goodwill	2,723		2,723
Intangible assets - net of accumulated amortization of $116 and $74	773		815
Other noncurrent assets	487		432
Total Noncurrent Assets	17,588		17,095
Total Assets	$    21,029		$    20,361
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	$       443		$       324
Accrued wages, vacation and payroll taxes	853		881
Air traffic liability	2,129		1,689
Other accrued liabilities	1,154		1,055
Deferred revenue	1,854		1,722
Current portion of long-term debt and finance leases	890		721
Current portion of operating lease liabilities	222		197
Total Current Liabilities	7,545		6,589
Long-term debt and finance leases, net of current portion	5,269		4,834
Operating lease liabilities, net of current portion	1,138		1,141
Deferred income taxes	909		1,004
Deferred revenue	1,690		1,711
Obligation for pension and post-retirement medical benefits	324		369
Other liabilities	624		595
Total Noncurrent Liabilities	9,954		9,654
Shareholders' Equity
Preferred stock, $0.01 par value, Authorized: 5,000,000 shares, none issued or outstanding	—		—
Common stock, $0.01 par value, Authorized: 400,000,000 shares, Issued: 2026 - 147,152,378 shares; 2025 - 145,115,659 shares, Outstanding: 2026 - 111,631,476 shares; 2025 - 115,530,889 shares	1		1
Capital in excess of par value	1,053		961
Treasury stock (common), at cost: 2026 - 35,520,902 shares; 2025 - 29,584,770 shares	(1,951)		(1,701)
Accumulated other comprehensive loss	(187)		(173)
Retained earnings	4,614		5,030
Total Shareholders' Equity	3,530		4,118
Total Liabilities and Shareholders' Equity	$    21,029		$    20,361

SUMMARY CASH FLOW (unaudited)
Alaska Air Group, Inc.
(in millions)	Nine Months Ended September 30, 2026		Six Months Ended June 30, 2026(a)		Three Months Ended September 30, 2026(b)
Cash Flows from Operating Activities:
Net Loss	$               (416)		$               (269)		$               (147)
Adjustments to reconcile net loss to net cash provided by operating activities	691		453		238
Changes in working capital	480		422		58
Net cash provided by operating activities	755		606		149
Cash Flows from Investing Activities:
Property and equipment additions	(965)		(523)		(442)
Other investing activities	73		(112)		185
Net cash used in investing activities	(892)		(635)		(257)
Cash Flows from Financing Activities:	367		472		(105)
Net increase (decrease) in cash and cash equivalents	230		443		(213)
Cash, cash equivalents, and restricted cash at beginning of period	684		684		1,127
Cash, cash equivalents, and restricted cash at end of the period	$                914		$              1,127		$                914
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents	$                835		$              1,064
Restricted cash	34		33
Restricted cash included in Other noncurrent assets	45		30
Total cash, cash equivalents, and restricted cash at end of the period	$                914		$              1,127

(a) As reported in Form 10-Q for the second quarter of 2026.

(b) Cash flows for the three months ended September 30, 2026 can be calculated by subtracting cash flows from the six months ended June 30, 2026 from the nine months ended September 30, 2026.

 

OPERATING STATISTICS (unaudited)
A manual recalculation of certain figures using rounded amounts may not agree directly to the actual figures presented in the table below.
	Three Months Ended September 30,						Nine Months Ended September 30,
	2026		2025		Change		2026		2025		Change
Consolidated Operating Statistics:(a)
Revenue passengers (000)	15,706		15,879		(1.1) %		44,095		44,272		(0.4) %
RPMs (000,000) "traffic"	20,733		20,739		— %		58,045		58,174		(0.2) %
ASMs (000,000) "capacity"	25,031		24,447		2.4 %		70,907		69,724		1.7 %
Load factor	82.8 %		84.8 %		(2.0) pts		81.9 %		83.4 %		(1.5) pts
Yield	18.73¢		16.51¢		13.4 %		18.00¢		16.48¢		9.2 %
PRASM	15.52¢		14.00¢		10.9 %		14.74¢		13.75¢		7.2 %
RASM	17.21¢		15.41¢		11.7 %		16.46¢		15.21¢		8.2 %
CASMex(b)	11.46¢		10.98¢		4.4 %		11.71¢		11.08¢		5.7 %
Fuel cost per gallon(c)	$3.94		$2.51		57.0 %		$3.81		$2.50		52.4 %
Fuel gallons (000,000)(c)	308		303		1.7 %		870		859		1.3 %
ASMs per gallon	81.3		80.6		0.9 %		81.5		81.1		0.5 %
Departures (000)	146.0		144.0		1.4 %		410.6		407.4		0.8 %
Average full-time equivalent employees (FTEs)	32,171		32,590		(1.3) %		31,787		31,221		1.8 %
Operating fleet(d)	424		406		18 a/c		424		406		18 a/c

(a) Except for FTEs, data includes activity under a capacity purchase agreement with a third-party regional carrier.

(b) See a reconciliation of this non-GAAP measure and Note A for a discussion of the importance of this measure to investors in the accompanying pages.

(c) Excludes operations under the Air Transportation Services Agreement (ATSA) with Amazon.

(d) Includes owned and leased aircraft as well as aircraft operated under a capacity purchase agreement with a third-party regional carrier.

GAAP TO NON-GAAP RECONCILIATIONS (unaudited)
Alaska Air Group, Inc.

We are providing reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. Amounts in the tables below are rounded to the nearest million. As a result, a manual recalculation of certain figures using these rounded amounts may not agree directly to the amounts presented. These reconciliations include adjustments intended to improve comparability and provide a clearer view of the Company's core operating performance.

Losses (gains) on foreign debt and other primarily reflect unrealized and realized gains or losses resulting from changes in foreign currency exchange rates on certain debt. In 2025, these expenses also included mark-to-market fuel hedge adjustments.

Special items - operating primarily relate to costs associated with the integration of Hawaiian Airlines, including employee-related costs, technology costs, and other merger-related expenses. It also includes certain litigation costs. In 2025, these expenses also included costs related to changes in Alaska flight attendants' sick leave benefits pursuant to a collective bargaining agreement ratified in the first quarter of 2025.

During the third quarter of 2026, the Company revised its full-year outlook from a pretax income to a pretax loss primarily due to elevated fuel prices. This reduced the Company's estimated AETR. Because the Company incurred pretax losses in the first half of 2026, the lower tax rate reduced the expected tax benefit associated with those losses by $75 million. As required under the AETR methodology, this adjustment was recorded in the third quarter and is included in adjusted income tax expense of $84 million. Excluding this adjustment, adjusted income tax expense would have been $9 million and adjusted earnings per share would have been $0.36 for the quarter ended September 30, 2026.

The $75 million adjustment remains reflected in year-to-date adjusted earnings and will be included in the Company's full-year 2026 adjusted earnings results. Because the adjustment relates entirely to the remeasurement of tax benefits associated with first-half losses, management believes excluding it from third-quarter adjusted earnings improves comparability of current-quarter operating performance.

Pretax Income (Loss), Net Income (Loss), and Earnings (Loss) per Share, adjusted
	Three Months Ended September 30,
	2026								2025
(in millions, except per share amounts)	Income Before Income Tax		Income Tax		Net Income (Loss)		Per Share		Income Before Income Tax		Income Tax		Net Income		Per Share
GAAP	$   18		$    165		$  (147)		$  (1.32)		$ 111		$     38		$     73		$   0.62
Adjusted for:
Losses (gains) on foreign debt and other	6								(2)
Special items - operating	25								64
Total adjustments	31		(81)		112		1.01		62		12		50		0.43
Adjusted	$   49		$     84		$    (35)		$  (0.31)		$ 173		$     50		$    123		$   1.05
Impact of cumulative catch-up adjustment related to tax benefits recognized on first-half losses	—		75		(75)		(0.67)
Adjusted, excluding certain tax impacts	$   49		$      9		$     40		$   0.36
GAAP pretax margin	0.4 %								2.9 %
Adjusted pretax margin	1.1 %								4.6 %

	Nine Months Ended September 30,
	2026								2025
(in millions, except per share amounts)	Loss Before Income Tax		Income Tax		Net Loss		Per Share		Income Before Income Tax		Income Tax		Net Income		Per Share
GAAP	$         (513)		$    (97)		$  (416)		$  (3.70)		$ 116		$     37		$     79		$   0.65
Adjusted for:
Losses (gains) on foreign debt and other	(1)								1
Special items - operating	102								211
Total adjustments	101		14		87		0.77		212		48		164		1.36
Adjusted	$         (412)		$    (83)		$  (329)		$  (2.93)		$ 328		$     85		$    243		$   2.01
GAAP pretax margin	(4.4) %								1.1 %
Adjusted pretax margin	(3.5) %								3.1 %

CASMex Reconciliation
	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except unit metrics)	2026		2025		2026		2025
Total operating expenses	$        4,226		$        3,618		$       12,038		$       10,379
Less the following components:
Aircraft fuel	1,214		761		3,315		2,142
Freighter costs	53		47		157		136
Performance-based pay	66		62		158		163
Special items - operating	25		64		102		211
Adjusted operating expenses	$        2,868		$        2,684		$        8,306		$        7,727
ASMs	25,031		24,447		70,907		69,724
CASMex	11.46¢		10.98¢		11.71¢		11.08¢

Adjusted Capital Expenditures Reconciliation
	Nine Months Ended September 30,
(in millions)	2026		2025
Aircraft, aircraft purchase deposits, and other flight equipment	$              790		$              744
Other property and equipment	175		219
Capital expenditures	965		963
Adjusted for:
Property and equipment acquired through the issuance of debt	72		69
Proceeds from sales of aircraft and other equipment	(10)		(162)
Adjusted capital expenditures	$            1,027		$              870

Debt-to-capitalization, including leases
(in millions)	September 30, 2026		December 31, 2025
Long-term debt and finance leases, net of current portion	$                 5,269		$                 4,834
Operating lease liabilities, net of current portion	1,138		1,141
Short-term EETC debt maturing in 2027	512		—
Adjusted debt, net of current portion(a)	6,919		5,975
Shareholders' equity	3,530		4,118
Total Invested Capital	$               10,449		$                10,093
Debt-to-capitalization ratio, including leases	66 %		59 %

(a) For September 30, 2026, the Company is presenting its short-term EETC debt, maturing in the third quarter of 2027, within its debt-to-capitalization ratio. At December 31, 2025, this debt was included within Long-term debt and finance leases, net of current portion.

Adjusted net debt to earnings before interest, taxes, depreciation, amortization, fixed portion of operating lease expense, and special items
(in millions)	September 30, 2026		December 31, 2025
Long-term debt and finance leases	$                    6,159		$                    5,555
Operating lease liabilities	1,360		1,338
Adjusted debt	7,519		6,893
Less: Total unrestricted cash and marketable securities	2,231		2,123
Adjusted net debt	$                    5,288		$                    4,770
(in millions)	Twelve Months Ended September 30, 2026		Twelve Months Ended December 31, 2025
Operating Income (Loss)(a)	$                     (290)		$                      303
Adjusted for:
Special items - operating	141		250
Gains on foreign debt and other	(5)		(3)
Depreciation and amortization	826		795
Fixed portion of operating lease expense	283		279
EBITDAR	$                      955		$                    1,624
Adjusted net debt to EBITDAR	5.5x		2.9x

(a) Operating income (loss) can be reconciled using the trailing twelve month operating income as filed quarterly with the SEC.

Note A: Pursuant to Regulation G, we provide reconciliations of reported non-GAAP financial measures to the most directly comparable GAAP financial measures. We believe these non-GAAP measures provide meaningful supplemental information to investors for the following reasons:

• Pretax income (loss), net income (loss), and earnings (loss) per share are presented on an adjusted basis. Adjustments are made for special charges that are unusual or nonrecurring in nature, as well as for gains and losses on foreign debt, as these adjustments enhance comparability of our core operations to prior periods and to the rest of the airline industry.
  
  
• CASMex is a key measure used by management and the Air Group Board of Directors to evaluate cost performance. It is also commonly used by industry analysts to compare airlines. Because U.S. carriers are generally similarly affected by changes in jet fuel prices over the long run, aircraft fuel costs are excluded to focus on more controllable, company-specific cost drivers. Costs related to freighter aircraft operations, including those incurred under the ATSA with Amazon, are excluded to enhance comparability with carriers that do not operate freighter aircraft. Performance‑Based Pay (PBP) expense is excluded as it is dependent on the Company's achievement of annually established financial and operational goals. Certain special charges are excluded as they are unusual or nonrecurring in nature.
  
  
• Adjusted capital expenditures includes certain amounts that are not classified as investing cash outflows within our consolidated statements of cash flows, but are viewed by management and other stakeholders as significant long-term investments in the business. Management believes these adjustments provide a more complete view of capital expenditures during the year.
  
  
• Liquidity and leverage measures, including debt-to-capitalization and adjusted net debt to EBITDAR, are presented to provide insight into the Company's financial position and flexibility. In 2026, we made adjustments to the calculation of these metrics to enhance comparability with our peers. The debt-to-capitalization ratio now excludes the current portion of operating and finance lease liabilities, with prior periods recast for consistency. Additionally, EBITDAR was adjusted to reflect the fixed portion of operating leases rather than total aircraft rent to better reflect performance, with prior periods recast accordingly.

GLOSSARY OF TERMS

Adjusted debt - long-term debt, plus operating and finance lease liabilities

Adjusted net debt - long-term debt, plus operating and finance lease liabilities, less unrestricted cash and marketable securities

Adjusted net debt to EBITDAR - represents adjusted net debt divided by EBITDAR (trailing twelve months earnings before interest, taxes, depreciation, amortization, fixed portion of operating leases, and special items)

ASMs - available seat miles, or "capacity"; represents total seats available across the fleet multiplied by the number of miles flown

CASMex - operating costs excluding fuel, freighter costs, Performance-Based Pay (PBP), and special items per ASM, or "unit cost"

Debt-to-capitalization ratio - represents adjusted debt, net of current portion, divided by total equity plus adjusted debt, net of current portion

Diluted Earnings per Share - represents earnings per share (EPS) using fully diluted shares outstanding

Diluted Shares - represents the total number of shares that would be outstanding if all possible sources of conversion, such as stock options, were exercised

Freighter Costs - operating expenses directly attributable to the operation of B737 freighter aircraft and A330-300 freighter aircraft exclusively performing cargo missions

Load Factor - RPMs as a percentage of ASMs; represents the number of available seats that were filled with revenue passengers

PRASM - passenger revenue per ASM, or "passenger unit revenue"

RASM - operating revenue per ASMs, or "unit revenue"; operating revenue includes all passenger revenue, freight & mail, loyalty program revenue, and other ancillary revenue; represents the average total revenue for flying one seat one mile

RPMs - revenue passenger miles, or "traffic"; represents the number of seats that were filled with revenue passengers; one passenger traveling one mile is one RPM

Yield - passenger revenue per RPM; represents the average passenger revenue for flying one passenger one mile

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SOURCE Alaska Air Group

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were Alaska Air Group's third-quarter 2026 earnings?

Alaska Air Group reported a GAAP net loss of $147 million, or $1.32 per share. Adjusted net loss was $35 million, or $0.31 per share. Excluding certain tax impacts, adjusted net income was $49 million, or $0.36 per share.

What is Alaska Air Group's fourth-quarter and full-year 2026 guidance?

Alaska expects an adjusted loss of $2.50 to $2.00 per share in Q4 and $5.50 to $5.00 per share for the full year. Full-year guidance includes $1.8 billion in fuel expense above plan. Q4 economic fuel cost is expected to be $4.65 to $4.85 per gallon.

Why did Alaska Air Group record a third-quarter 2026 tax adjustment?

Alaska reduced its estimated annual effective tax rate after its full-year outlook shifted from pretax income to a pretax loss, primarily because of elevated fuel prices.

The resulting catch-up adjustment related to tax benefits recognized on first-half losses reduced Q3 adjusted earnings by $0.67 per share.

What assumptions underpin Alaska Air Group's fourth-quarter 2026 loss guidance?

Alaska's Q4 guidance assumes approximately $70 million in non-operating expense, a tax rate of approximately 20%, and approximately 112.5 million shares outstanding.