Alaska Air Group (NYSE: ALK) hit by fuel surge, guides Q3 earnings rebound
Rhea-AI Filing Summary
Alaska Air Group reported second quarter 2026 results with total operating revenue of $4,065 million, up 10% year over year on 1% capacity growth, but a GAAP net loss of $76 million or $(0.68) per diluted share. Adjusted net loss was $102 million, or $(0.92) per share, and GAAP pretax margin was (5.3)% with adjusted pretax margin of (4.3)%.
Economic fuel cost averaged $4.43 per gallon, up 85.4% year over year and adding $600 million of incremental fuel expense, driving operating expenses up 24% to $4,233 million. Non‑fuel unit costs (CASMex) rose 6.5% to 11.40¢, better than prior guidance. Unit revenue (RASM) increased 8.6%, supported by premium revenue up 15%, cargo revenue up 21%, and loyalty cash remuneration up 19%.
Operating cash flow for the first six months of 2026 was $606 million, and available liquidity totaled $3.8 billion, including $1 billion of new financing in the quarter. Debt‑to‑capitalization including leases rose to 65% and adjusted net debt to EBITDAR to 4.8x. For third quarter 2026, guidance calls for capacity up 2%–3%, low double‑digit RASM growth, CASMex up low to mid single digits, economic fuel cost of $3.75 per gallon, and adjusted earnings per share between $0.00 and $1.00.
Positive
- None.
Negative
- $76 million GAAP net loss and a (5.3)% pretax margin in Q2 2026, versus prior-year profitability, driven largely by an 85.4% increase in fuel cost per gallon and $600 million of incremental fuel expense.
- Leverage increased, with the debt‑to‑capitalization ratio including leases rising to 65% and adjusted net debt to EBITDAR climbing to 4.8x, alongside higher long‑term debt and finance leases.
Filing Explained
The four-freighter expansion is an agreement for future deployment, not a current doubling of cargo capacity.
Form 8-K reports specified material events, and this filing furnishes Alaska Air Group's second-quarter earnings release and supplemental materials under Items 2.02 and 7.01. The company reports that transatlantic service from Seattle to Rome, London, and Reykjavik has launched, while an agreement for four 737-800 freighters targets entry into service in the
The filing says the furnished materials are not deemed filed for Section 18 purposes and are not incorporated by reference into other filings unless expressly stated. The release describes the freighter plan as effectively doubling cargo-fleet capacity, but its disclosed timing makes this a planned expansion rather than a completed current-capacity change.
The filing also reports delivery of six 737-8 aircraft, two E175 aircraft, and the addition of one E175 operating under a capacity-purchase agreement.
8-K Event Classification
3 items: 2.02, 7.01, 9.01
3 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 7.01
Regulation FD Disclosure
Disclosure
Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Q2 2026 Total Operating Revenue: $4,065 million
Q2 2026 GAAP Net Income (Loss): $(76) million
Q2 2026 Adjusted Net Income (Loss): $(102) million
+5 more
8 metrics
Q2 2026 Total Operating Revenue
$4,065 million
Three months ended June 30, 2026 total operating revenue grew 10% year-over-year
Q2 2026 GAAP Net Income (Loss)
$(76) million
Net loss for the three months ended June 30, 2026 with diluted EPS of $(0.68)
Q2 2026 Adjusted Net Income (Loss)
$(102) million
Adjusted net loss for the three months ended June 30, 2026 with adjusted EPS of $(0.92)
Q2 2026 Economic Fuel Cost per Gallon
$4.43
Second quarter economic fuel cost per gallon, up 85.4% year-over-year
Q2 2026 CASMex
11.40¢
Non-fuel unit cost per ASM for the three months ended June 30, 2026, up 6.5% year-over-year
Available Liquidity
$3.8 billion
Total available liquidity including unrestricted cash, marketable securities, and undrawn credit facilities at June 30, 2026
Debt-to-Capitalization Ratio Including Leases
65%
Adjusted debt net of current portion divided by total equity plus adjusted debt at June 30, 2026
Adjusted Net Debt to EBITDAR
4.8x
Ratio of adjusted net debt to EBITDAR for the twelve months ended June 30, 2026
Key Terms
CASMex, RASM, EBITDAR, capacity purchase agreement, +1 more
5 terms
CASMex financial
"CASMex is a key measure used by management and the Air Group Board of Directors"
RASM financial
"RASM % change versus 2025 | | Up 8.6%"
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.
EBITDAR financial
"Adjusted net debt to EBITDAR | 4.8x | | 2.9x"
EBITDAR stands for Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent; it measures a company's operating profit before the cost of financing, taxes, accounting write-downs, and lease or rent payments. For investors, it reveals how much cash a business generates from its core activities without the effects of capital structure or rent commitments — similar to checking how much money a store makes from selling goods before paying for the building, loan interest, or taxes.
capacity purchase agreement financial
"Includes activity under a capacity purchase agreement with a third-party regional carrier"
Atmos Rewards financial
"Total liquidity includes term loans secured by assets associated with the Atmos Rewards program"
Earnings Snapshot
Total operating revenue: $4,065 million · Guidance included
Quarter ended June 30, 2026
Total operating revenue
$4,065 million
up 10% year-over-year from $3,704 million in Q2 2025
GAAP net income (loss)
$(76) million
compared with $172 million net income in Q2 2025
GAAP diluted EPS
$(0.68)
compared with $1.42 diluted EPS in Q2 2025
Adjusted net income (loss)
$(102) million
compared with $215 million adjusted net income in Q2 2025
Adjusted diluted EPS
$(0.92)
compared with $1.78 adjusted diluted EPS in Q2 2025
Guidance
For Q3 2026, the company expects capacity up 2%–3% versus 2025, RASM up in the low double digits, CASMex up low to mid single digits, economic fuel cost of $3.75 per gallon, and adjusted earnings (loss) per share between $0.00 and $1.00.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What were Alaska Air Group (ALK) Q2 2026 headline financial results?
Alaska Air Group reported $4,065 million in total operating revenue for Q2 2026, up 10% year over year, and a GAAP net loss of $76 million or $(0.68) per diluted share. Adjusted net loss was $102 million, or $(0.92) per share.
How did fuel costs impact ALK’s Q2 2026 performance?
Economic fuel cost averaged $4.43 per gallon in Q2 2026, an 85.4% year‑over‑year increase. Management stated this resulted in $600 million of incremental fuel cost, a major factor behind the shift from prior‑year profit to a quarterly net loss.
What guidance did Alaska Air Group (ALK) provide for Q3 2026?
For Q3 2026, Alaska Air Group expects capacity up 2%–3% year over year, RASM up in the low double digits, CASMex up low to mid single digits, and economic fuel cost of $3.75 per gallon. Adjusted earnings per share are guided between $0.00 and $1.00.
What is Alaska Air Group (ALK)’s liquidity and debt position as of June 30, 2026?
As of June 30, 2026, Alaska Air Group held $3.8 billion in available liquidity and approximately $20 billion of unencumbered assets. The debt‑to‑capitalization ratio including leases was 65%, and adjusted net debt to EBITDAR stood at 4.8x.
How did ALK’s revenue and unit metrics trend in Q2 2026?
Q2 2026 total operating revenue rose 10% year over year on 1% capacity growth. Unit revenue (RASM) increased 8.6%, yield rose 9.6%, and passenger revenue grew 9%. Non‑fuel unit costs (CASMex) increased 6.5%, reflecting both transitory items and underlying cost trends.
What integration and network milestones did Alaska Air Group (ALK) achieve?
The company completed a single passenger service system for Alaska and Hawaiian, a key integration milestone, and awarded employees 75,000 Atmos Points each. It also launched new transatlantic routes from Seattle and announced four additional 737‑800 freighters for 2027 service.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Date of earliest event reported)
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation)
| (Commission File Number) | (IRS Employer Identification No.) | |||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||||||||
(206 ) 392-5040
(Registrant's Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Ticker Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
This document is also available on our website at http://investor.alaskaair.com
ITEM 2.02. Results of Operations And Financial Condition
On July 21, 2026, Alaska Air Group issued a press release and certain supplemental materials reporting financial results for the second quarter of 2026. The press release is furnished herein as Exhibit 99.1. Supplemental information is furnished herein as Exhibit 99.2.
ITEM 7.01. Regulation FD Disclosure
Pursuant to 17 CFR Part 243 (Regulation FD), Air Group is submitting these press releases and supplemental materials. In accordance with General Instruction B.2 of Form 8-K, the information under this item, including all Exhibits, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. This report will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.
ITEM 9.01. Financial Statements and Other Exhibits
Exhibit 99.1 | Second Quarter 2026 Earnings Press Release dated July 21, 2026 | |||||||
Exhibit 99.2 | Supplemental Earnings Materials | |||||||
| 104 | Cover Page Interactive Data File - embedded within the Inline XBRL Document | |||||||
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ALASKA AIR GROUP, INC.
Registrant
Date: July 21, 2026
/s/ EMILY HALVERSON
Emily Halverson
Vice President Finance, Controller, and Treasurer
Exhibit 99.1
July 21, 2026
| Media contact: | Investor/analyst contact: | |||||||
| Media Relations | Ryan St. John | |||||||
| newsroom@alaskaair.com | VP Finance, Planning and Investor Relations | |||||||
| ALKInvestorRelations@alaskaair.com | ||||||||
Alaska Air Group reports second quarter 2026 results
#1 in the industry in year-to-date on-time performance
Expanded international service to include transatlantic flights from Seattle to Rome, London, Reykjavík
Achieved single passenger service system for Alaska and Hawaiian and recognized employees with 75k Atmos Points for final major integration milestone
Q3 RASM expected to have double digit growth year-over-year
SEATTLE — Alaska Air Group (NYSE: ALK) today reported financial results for the second quarter ending June 30, 2026.
“Our second quarter results were defined by a fuel spike outside our control - but underneath it, this company is executing better than ever,” said CEO Ben Minicucci. “We led the industry in on-time performance for the first half of the year, completed the last major milestone of our Hawaiian integration, launched service to Europe, and returned to profitability in June. Absent the fuel headwind, we would have delivered a solidly profitable quarter. I have never been more confident in our people, our plan, and the long-term earnings power of Alaska Air Group.”
Quarter in Review:
Air Group reported second quarter Generally Accepted Accounting Principles (GAAP) pretax margin of (5.3)% and GAAP net loss of $76 million, or $0.68 per share. Air Group's second quarter adjusted pretax margin was (4.3)% and adjusted net loss was $102 million, or $0.92 per share.
Q2 2026 Results | Prior Expectation | Actual Results | ||||||||||||
| Capacity (ASMs) % change versus 2025 | Up ~1% | Up 1.0% | ||||||||||||
| RASM % change versus 2025 | Up high single digits | Up 8.6% | ||||||||||||
| CASMex % change versus 2025 | Up high single digits | Up 6.5% | ||||||||||||
| Economic fuel cost per gallon | $4.50 | $4.43 | ||||||||||||
| Adjusted loss per share | ~($1.00) | ($0.92) | ||||||||||||
Second quarter total revenue grew 10% year-over-year to $4.1 billion on capacity growth of 1%, with unit revenue up 8.6%. Yields strengthened through the quarter, with June producing double digit unit revenue growth and double digit pretax profit margins.
Our revenue performance was impacted by historic rainstorms in Hawai'i in March which had a meaningful impact on April spring break travel and reduced system unit revenue by approximately 3 points in the quarter, modestly above the 2 points originally expected. Outside of Hawai'i, demand remained resilient across the network and our diversified revenue streams continue to outpace system growth: premium revenue increased 15%, cargo revenue increased 21%, and managed corporate
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revenue accelerated 30% year-over-year respectively. Loyalty performance was also robust, with loyalty cash remuneration up 19%.
Non-fuel unit costs increased 6.5% year-over-year on 1% capacity growth, better than prior guidance. The year-over-year increase reflects 2.5 points of transitory factors, including a one-time employee recognition award tied to achieving a single passenger service system, a year-over-year headwind from prior-year aircraft sale gains, and crew training costs for our international widebody ramp. Outside of these transitory items, core cost management was strong, gaining momentum moving into the second half of the year.
Second quarter economic fuel cost was $4.43 per gallon, an increase of 85% year-over-year, resulting in $600 million of incremental fuel cost for the period. In response to the elevated and unpredictable fuel price environment, we proactively raised $1 billion in financing during the quarter, deliberately bolstering liquidity to the top end of our target range of 15% to 25% of trailing-12-month revenue. As the fuel environment stabilizes and our earnings profile improves, we expect to put excess liquidity towards paying down debt and bring liquidity back to the midpoint of our target range.
Third Quarter Forecast Information:
With a strong demand backdrop and an improving unit cost trajectory, we expect a widening spread between unit revenue and unit costs in Q3. Coupled with continued execution on our strategic initiatives, we expect a meaningful inflection in financial performance beginning in the third quarter.
Third quarter capacity is expected to be up approximately 2% to 3% year-over-year, with nearly all growth coming from long-haul international flying out of Seattle, while capacity within North America will be essentially flat year-over-year.
Unit revenue is expected to improve sequentially from the second to third quarter to low double-digit growth year-over-year, supported by strong yields and demand. While Hawai'i remains a 2-3 point unit revenue headwind in the third quarter, loads are recovering and new bookings are coming in at system level yields, showing demand returning to historical levels in September.
Third quarter non-fuel unit costs are expected to increase in the low to mid single digits year-over-year, a meaningful step-down from the first half of the year, as transitory cost items are behind us and productivity improvements compound. While fuel prices remain volatile, economic fuel cost is expected to come down from second quarter levels as refining margins have recently moderated. Our guidance assumes a fuel price of $3.75 per gallon in the third quarter, reflecting July fuel costs of $3.60 per gallon, and average spot prices of $3.85 for August and September.
| Q3 2026 Expectation | ||||||||
| Capacity (ASMs) % change versus 2025 | Up 2% to 3% | |||||||
| RASM % change versus 2025 | Up low double digits | |||||||
| CASMex % change versus 2025 | Up low to mid single digits | |||||||
| Economic fuel cost per gallon | $3.75 | |||||||
Adjusted earnings (loss) per share(a) | $0.00 to $1.00 | |||||||
(a) Q3 earnings per share guidance assumes non-operating expense of approximately $60 million, a tax rate of approximately 35%, and shares outstanding of approximately 113.5 million.
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Operational Updates:
•Led the industry in year-to-date on-time performance.
•Transitioned to a single passenger service system (PSS), marking a key integration milestone that consolidates reservation and customer service platforms across Alaska and Hawaiian, and delivers a more streamlined guest experience.
•Launched new transatlantic service from Seattle with flights to Rome, London, and Reykjavik, further expanding our international network and reinforcing our position as the fourth-largest global airline in the U.S.
•Took delivery of six 737-8 aircraft, two E175 aircraft, and added one E175 under CPA with SkyWest.
•Announced agreement to add four 737-800 freighter aircraft to Alaska's cargo fleet, effectively doubling the cargo fleet's capacity. The aircraft are expected to enter service in the first half of 2027.
•Completed the 737 cabin retrofits, adding expanded first and premium class seating and refreshed cabin interiors.
•Announced expansions in our domestic route network, including the addition of new routes from Santa Rosa, the return of service between Seattle and Long Beach, new service from Honolulu to Burbank, Spokane, and Boise, and increased service between Honolulu and Las Vegas.
Commercial Updates:
•Hawaiian Airlines joined the oneworld alliance, connecting Hawai'i to over 900 global destinations across more than 170 territories.
•Opened the newest Alaska Lounge at Portland International Airport, which is twice the size of the previous Portland lounge and underscores our continued investment in premium travel.
•Announced plans for a new world-class Alaska Lounge in Seattle. The new lounge is set to open in 2027 and will span across two floors, featuring showers, premium bars, à la carte dining, and chef-curated seasonal menus.
Liquidity Updates:
•Generated $606 million of operating cash flow during the first six months of 2026.
•Held $3.8 billion in available liquidity, including unrestricted cash, marketable securities, and undrawn credit facilities. Total liquidity includes $1 billion in financing completed in the second quarter, comprising $500 million of 6.5% senior unsecured notes and $500 million in term loans secured by assets associated with the Atmos™ Rewards program.
•Had approximately $20 billion of unencumbered assets at June 30, 2026, including 131 aircraft and the unencumbered portion of our loyalty program assets.
Other Highlights:
•Elected Shane Tackett as President and Chief Financial Officer of Alaska Airlines.
•Appointed Mike Sievert, Vice Chairman and former CEO of T-Mobile, to Air Group's board of directors.
•Celebrated our employees' efforts in achieving a single PSS and dedication throughout the Alaska-Hawaiian integration by awarding 75,000 Atmos Rewards points to all Alaska, Hawaiian, and Horizon employees.
•Opened new premium check-in experience in Seattle for business class Suites guests and Atmos Titanium members.
•CEO Ben Minicucci named Executive of the Year - North America at FlightGlobal's 2026 Airline Strategy Awards.
•Hawaiian Airlines named "Most Comfortable Airline" on WalletHub's 2026 Best Airlines list.
•Alaska Airlines and Hawaiian Airlines were recognized with APEX Best Awards for Best Cabin Service and Best Wi‑Fi, respectively.
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•Alaska Airlines recognized by the Port of Seattle's Sustainable Century Awards for Environmental Performance and Innovation and Greatest Use of Ground Power and Pre‑Conditioned Air Systems.
A conference call regarding the second quarter results will be streamed online at 11:30 a.m. EDT/ 8:30 a.m. PDT on July 22, 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. With oneworld and our additional global partners, guests can earn and redeem points for travel to over 1,000 worldwide destinations with Atmos Rewards. 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.”
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Alaska Air Group, Inc.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (in millions, except per share amounts) | 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||
| Operating Revenue | |||||||||||||||||||||||||||||||||||
| Passenger revenue | $ | 3,644 | $ | 3,355 | 9 | % | $ | 6,564 | $ | 6,163 | 7 | % | |||||||||||||||||||||||
| Loyalty program other revenue | 258 | 210 | 23 | % | 485 | 417 | 16 | % | |||||||||||||||||||||||||||
| Cargo and other revenue | 163 | 139 | 17 | % | 316 | 261 | 21 | % | |||||||||||||||||||||||||||
| Total Operating Revenue | 4,065 | 3,704 | 10 | % | 7,365 | 6,841 | 8 | % | |||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||
| Wages and benefits | 1,239 | 1,165 | 6 | % | 2,481 | 2,292 | 8 | % | |||||||||||||||||||||||||||
| Variable incentive pay | 65 | 61 | 7 | % | 95 | 123 | (23) | % | |||||||||||||||||||||||||||
| Aircraft fuel | 1,305 | 700 | 86 | % | 2,101 | 1,381 | 52 | % | |||||||||||||||||||||||||||
| Aircraft maintenance | 256 | 240 | 7 | % | 472 | 460 | 3 | % | |||||||||||||||||||||||||||
| Aircraft rent | 64 | 64 | — | % | 125 | 126 | (1) | % | |||||||||||||||||||||||||||
| Landing fees and other rentals | 305 | 278 | 10 | % | 596 | 520 | 15 | % | |||||||||||||||||||||||||||
| Contracted services | 158 | 146 | 8 | % | 309 | 291 | 6 | % | |||||||||||||||||||||||||||
| Selling expenses | 115 | 105 | 10 | % | 214 | 205 | 4 | % | |||||||||||||||||||||||||||
| Depreciation and amortization | 207 | 199 | 4 | % | 411 | 393 | 5 | % | |||||||||||||||||||||||||||
| Food and beverage service | 107 | 97 | 10 | % | 202 | 182 | 11 | % | |||||||||||||||||||||||||||
| Third-party regional carrier expense | 68 | 69 | (1) | % | 124 | 133 | (7) | % | |||||||||||||||||||||||||||
| Other | 302 | 247 | 22 | % | 605 | 508 | 19 | % | |||||||||||||||||||||||||||
| Special items - operating | 42 | 56 | (25) | % | 77 | 147 | (48) | % | |||||||||||||||||||||||||||
| Total Operating Expenses | 4,233 | 3,427 | 24 | % | 7,812 | 6,761 | 16 | % | |||||||||||||||||||||||||||
| Operating Income (Loss) | (168) | 277 | (161) | % | (447) | 80 | NM | ||||||||||||||||||||||||||||
| Non-operating Income (Expense) | |||||||||||||||||||||||||||||||||||
| Interest income | 21 | 22 | (5) | % | 40 | 48 | (17) | % | |||||||||||||||||||||||||||
| Interest expense | (86) | (66) | 30 | % | (162) | (132) | 23 | % | |||||||||||||||||||||||||||
| Interest capitalized | 13 | 9 | 44 | % | 23 | 21 | 10 | % | |||||||||||||||||||||||||||
| Other - net | 6 | (4) | NM | 15 | (12) | NM | |||||||||||||||||||||||||||||
| Total Non-operating Expense | (46) | (39) | 18 | % | (84) | (75) | 12 | % | |||||||||||||||||||||||||||
| Income (Loss) Before Income Tax | (214) | 238 | (531) | 5 | |||||||||||||||||||||||||||||||
| Income tax expense (benefit) | (138) | 66 | (262) | (1) | |||||||||||||||||||||||||||||||
| Net Income (Loss) | $ | (76) | $ | 172 | $ | (269) | $ | 6 | |||||||||||||||||||||||||||
| Basic Earnings (Loss) Per Share | $ | (0.68) | $ | 1.45 | $ | (2.39) | $ | 0.05 | |||||||||||||||||||||||||||
| Diluted Earnings (Loss) Per Share | $ | (0.68) | $ | 1.42 | $ | (2.39) | $ | 0.05 | |||||||||||||||||||||||||||
| Weighted Average Shares Outstanding used for computation: | |||||||||||||||||||||||||||||||||||
| Basic | 111.127 | 118.847 | 112.702 | 120.979 | |||||||||||||||||||||||||||||||
| Diluted | 111.127 | 120.930 | 112.702 | 123.183 | |||||||||||||||||||||||||||||||
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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
Alaska Air Group, Inc.
| (in millions, except share amounts) | June 30, 2026 | December 31, 2025 | |||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 1,064 | $ | 627 | |||||||
| Restricted cash | 33 | 28 | |||||||||
| Marketable securities | 1,598 | 1,496 | |||||||||
| Receivables - net | 681 | 565 | |||||||||
| Inventories and supplies - net | 253 | 203 | |||||||||
| Prepaid expenses | 261 | 278 | |||||||||
| Other current assets | 46 | 69 | |||||||||
| Total Current Assets | 3,936 | 3,266 | |||||||||
Property and equipment - net of accumulated depreciation and amortization of $5,205 and $4,945 | 12,009 | 11,857 | |||||||||
| Operating lease assets | 1,345 | 1,268 | |||||||||
| Goodwill | 2,723 | 2,723 | |||||||||
Intangible assets - net of accumulated amortization of $102 and $74 | 787 | 815 | |||||||||
| Other noncurrent assets | 446 | 432 | |||||||||
| Total Noncurrent Assets | 17,310 | 17,095 | |||||||||
| Total Assets | $ | 21,246 | $ | 20,361 | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| Accounts payable | $ | 403 | $ | 324 | |||||||
| Accrued wages, vacation and payroll taxes | 727 | 881 | |||||||||
| Air traffic liability | 2,398 | 1,689 | |||||||||
| Other accrued liabilities | 1,217 | 1,055 | |||||||||
| Deferred revenue | 1,778 | 1,722 | |||||||||
| Current portion of long-term debt and finance leases | 452 | 721 | |||||||||
| Current portion of operating lease liabilities | 217 | 197 | |||||||||
| Total Current Liabilities | 7,192 | 6,589 | |||||||||
| Long-term debt and finance leases, net of current portion | 5,783 | 4,834 | |||||||||
| Operating lease liabilities, net of current portion | 1,164 | 1,141 | |||||||||
| Deferred income taxes | 739 | 1,004 | |||||||||
| Deferred revenue | 1,752 | 1,711 | |||||||||
| Obligation for pension and post-retirement medical benefits | 349 | 369 | |||||||||
| Other liabilities | 597 | 595 | |||||||||
| Total Noncurrent Liabilities | 10,384 | 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 - 147,087,872 shares; 2025 - 145,115,659 shares, Outstanding: 2026 - 111,566,970 shares; 2025 - 115,530,889 shares | 1 | 1 | |||||||||
| Capital in excess of par value | 1,034 | 961 | |||||||||
Treasury stock (common), at cost: 2026 - 35,520,902 shares; 2025 - 29,584,770 shares | (1,951) | (1,701) | |||||||||
| Accumulated other comprehensive loss | (175) | (173) | |||||||||
| Retained earnings | 4,761 | 5,030 | |||||||||
| Total Shareholders' Equity | 3,670 | 4,118 | |||||||||
| Total Liabilities and Shareholders' Equity | $ | 21,246 | $ | 20,361 | |||||||
6
| SUMMARY CASH FLOW (unaudited) | |||||||||||||||||
| Alaska Air Group, Inc. | |||||||||||||||||
| (in millions) | Six Months Ended June 30, 2026 | Three Months Ended March 31, 2026(a) | Three Months Ended June 30, 2026(b) | ||||||||||||||
| Cash Flows from Operating Activities: | |||||||||||||||||
| Net Loss | $ | (269) | $ | (193) | $ | (76) | |||||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities | 453 | 229 | 224 | ||||||||||||||
| Changes in working capital | 422 | 385 | 37 | ||||||||||||||
| Net cash provided by operating activities | 606 | 421 | 185 | ||||||||||||||
| Cash Flows from Investing Activities: | |||||||||||||||||
| Property and equipment additions | (523) | (338) | (185) | ||||||||||||||
| Other investing activities | (112) | 169 | (281) | ||||||||||||||
| Net cash used in investing activities | (635) | (169) | (466) | ||||||||||||||
| Cash Flows from Financing Activities: | 472 | (428) | 900 | ||||||||||||||
| Net increase (decrease) in cash and cash equivalents | 443 | (176) | 619 | ||||||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 684 | 684 | 508 | ||||||||||||||
| Cash, cash equivalents, and restricted cash at end of the period | $ | 1,127 | $ | 508 | $ | 1,127 | |||||||||||
| Reconciliation of cash, cash equivalents, and restricted cash: | |||||||||||||||||
| Cash and cash equivalents | $ | 1,064 | $ | 451 | |||||||||||||
| Restricted cash | 33 | 27 | |||||||||||||||
| Restricted cash included in Other noncurrent assets | 30 | 30 | |||||||||||||||
| Total cash, cash equivalents, and restricted cash at end of the period | $ | 1,127 | $ | 508 | |||||||||||||
(a) As reported in Form 10-Q for the first quarter of 2026.
(b) Cash flows for the three months ended June 30, 2026 can be calculated by subtracting cash flows from the three months ended March 31, 2026 from the six months ended June 30, 2026.
7
| 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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
Consolidated Operating Statistics:(a) | |||||||||||||||||||||||||||||||||||
| Revenue passengers (000) | 15,056 | 15,234 | (1.2)% | 28,388 | 28,393 | —% | |||||||||||||||||||||||||||||
| RPMs (000,000) "traffic" | 20,011 | 20,179 | (0.8)% | 37,311 | 37,436 | (0.3)% | |||||||||||||||||||||||||||||
| ASMs (000,000) "capacity" | 24,306 | 24,058 | 1.0% | 45,876 | 45,277 | 1.3% | |||||||||||||||||||||||||||||
| Load factor | 82.3% | 83.9% | (1.6) pts | 81.3% | 82.7% | (1.4) pts | |||||||||||||||||||||||||||||
| Yield | 18.21¢ | 16.62¢ | 9.6% | 17.59¢ | 16.46¢ | 6.9% | |||||||||||||||||||||||||||||
| PRASM | 14.99¢ | 13.94¢ | 7.5% | 14.31¢ | 13.61¢ | 5.1% | |||||||||||||||||||||||||||||
| RASM | 16.72¢ | 15.39¢ | 8.6% | 16.06¢ | 15.11¢ | 6.3% | |||||||||||||||||||||||||||||
CASMex(b) | 11.40¢ | 10.70¢ | 6.5% | 11.85¢ | 11.14¢ | 6.4% | |||||||||||||||||||||||||||||
Fuel cost per gallon(c) | $4.43 | $2.39 | 85.4% | $3.74 | $2.49 | 50.2% | |||||||||||||||||||||||||||||
Fuel gallons (000,000)(c) | 295 | 293 | 0.7% | 562 | 556 | 1.1% | |||||||||||||||||||||||||||||
| ASMs per gallon | 82.4 | 82.0 | 0.5% | 81.6 | 81.5 | 0.1% | |||||||||||||||||||||||||||||
| Departures (000) | 139.0 | 139.6 | (0.4)% | 264.5 | 263.5 | 0.4% | |||||||||||||||||||||||||||||
| Average full-time equivalent employees (FTEs) | 31,726 | 31,299 | 1.4% | 31,596 | 30,536 | 3.5% | |||||||||||||||||||||||||||||
Operating fleet(d) | 422 | 409 | 13 a/c | 422 | 409 | 13 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.
8
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. 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.
| Pretax Income (Loss), Net Income (Loss), and Earnings (Loss) per Share, adjusted | |||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 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 | $ | (214) | $ | (138) | $ | (76) | $ | (0.68) | $ | 238 | $ | 66 | $ | 172 | $ | 1.42 | |||||||||||||||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||||||||||||||||||||||||||
| Losses (gains) on foreign debt and other | (4) | 1 | |||||||||||||||||||||||||||||||||||||||||||||
| Special items - operating | 42 | 56 | |||||||||||||||||||||||||||||||||||||||||||||
| Total adjustments | $ | 38 | $ | 64 | $ | (26) | $ | (0.24) | $ | 57 | $ | 14 | $ | 43 | $ | 0.36 | |||||||||||||||||||||||||||||||
| Adjusted | $ | (176) | $ | (74) | $ | (102) | $ | (0.92) | $ | 295 | $ | 80 | $ | 215 | $ | 1.78 | |||||||||||||||||||||||||||||||
| GAAP pretax margin | (5.3) | % | 6.4 | % | |||||||||||||||||||||||||||||||||||||||||||
| Adjusted pretax margin | (4.3) | % | 8.0 | % | |||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 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 | $ | (531) | $ | (262) | $ | (269) | $ | (2.39) | $ | 5 | $ | (1) | $ | 6 | $ | 0.05 | |||||||||||||||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||||||||||||||||||||||||||
| Losses (gains) on foreign debt and other | (7) | 3 | |||||||||||||||||||||||||||||||||||||||||||||
| Special items - operating | 77 | 147 | |||||||||||||||||||||||||||||||||||||||||||||
| Total adjustments | $ | 70 | $ | 95 | $ | (25) | $ | (0.22) | $ | 150 | $ | 36 | $ | 114 | $ | 0.92 | |||||||||||||||||||||||||||||||
| Adjusted | $ | (461) | $ | (167) | $ | (294) | $ | (2.61) | $ | 155 | $ | 35 | $ | 120 | $ | 0.97 | |||||||||||||||||||||||||||||||
| GAAP pretax margin | (7.2) | % | 0.1 | % | |||||||||||||||||||||||||||||||||||||||||||
| Adjusted pretax margin | (6.3) | % | 2.3 | % | |||||||||||||||||||||||||||||||||||||||||||
9
| CASMex Reconciliation | |||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (in millions, except unit metrics) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Total operating expenses | $ | 4,233 | $ | 3,427 | $ | 7,812 | $ | 6,761 | |||||||||||||||
| Less the following components: | |||||||||||||||||||||||
| Aircraft fuel | 1,305 | 700 | 2,101 | 1,381 | |||||||||||||||||||
| Freighter costs | 52 | 48 | 104 | 89 | |||||||||||||||||||
| Performance-based pay | 64 | 49 | 92 | 101 | |||||||||||||||||||
| Special items - operating | 42 | 56 | 77 | 147 | |||||||||||||||||||
| Adjusted operating expenses | $ | 2,770 | $ | 2,574 | $ | 5,438 | $ | 5,043 | |||||||||||||||
| ASMs | 24,306 | 24,058 | 45,876 | 45,277 | |||||||||||||||||||
| CASMex | 11.40 | ¢ | 10.70 | ¢ | 11.85 | ¢ | 11.14 | ¢ | |||||||||||||||
Adjusted Capital Expenditures Reconciliation | |||||||||||
| Six Months Ended June 30, | |||||||||||
| (in millions) | 2026 | 2025 | |||||||||
| Aircraft, aircraft purchase deposits, and other flight equipment | $ | 415 | $ | 613 | |||||||
| Other property and equipment | 108 | 128 | |||||||||
| Capital expenditures | 523 | 741 | |||||||||
| Adjusted for: | |||||||||||
| Property and equipment acquired through the issuance of debt | 48 | 69 | |||||||||
| Proceeds from sales of aircraft and other equipment | (7) | (62) | |||||||||
| Adjusted capital expenditures | $ | 564 | $ | 748 | |||||||
| Debt-to-capitalization, including leases | |||||||||||
| (in millions) | June 30, 2026 | December 31, 2025 | |||||||||
| Long-term debt and finance leases, net of current portion | $ | 5,783 | $ | 4,834 | |||||||
| Operating lease liabilities, net of current portion | 1,164 | 1,141 | |||||||||
| Adjusted debt, net of current portion | 6,947 | 5,975 | |||||||||
| Shareholders' equity | 3,670 | 4,118 | |||||||||
| Total Invested Capital | $ | 10,617 | $ | 10,093 | |||||||
| Debt-to-capitalization ratio, including leases | 65 | % | 59 | % | |||||||
10
| Adjusted net debt to earnings before interest, taxes, depreciation, amortization, fixed portion of operating lease expense, and special items | |||||||||||
| (in millions) | June 30, 2026 | December 31, 2025 | |||||||||
| Long-term debt and finance leases | $ | 6,235 | $ | 5,555 | |||||||
| Operating lease liabilities | 1,381 | 1,338 | |||||||||
| Adjusted debt | 7,616 | 6,893 | |||||||||
| Less: Total unrestricted cash and marketable securities | 2,662 | 2,123 | |||||||||
| Adjusted net debt | $ | 4,954 | $ | 4,770 | |||||||
| (in millions) | Twelve Months Ended June 30, 2026 | Twelve Months Ended December 31, 2025 | |||||||||
Operating Income (Loss)(a) | $ | (224) | $ | 303 | |||||||
| Adjusted for: | |||||||||||
| Special items - operating | 180 | 250 | |||||||||
| Gains on foreign debt and other | (13) | (3) | |||||||||
| Depreciation and amortization | 813 | 795 | |||||||||
| Fixed portion of operating lease expense | 279 | 279 | |||||||||
| EBITDAR | $ | 1,035 | $ | 1,624 | |||||||
| Adjusted net debt to EBITDAR | 4.8x | 2.9x | |||||||||
(a)Operating income (loss) can be reconciled using the trailing twelve month operating income as filed quarterly with the SEC.
11
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.
12
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
13
ALASKA AIR GROUP Q2 2026 Earnings | July 21, 2026 1
2 Safe Harbor This presentation 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 the 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. 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. Non-GAAP Financial Information The Company has made reference in this presentation to financial metrics which are not in accordance with GAAP. Pursuant to Regulation G, we have provided reconciliations of non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis within the Second Quarter 2026 Earnings Release filed concurrently with this presentation. Prior year non-GAAP financial metrics have been reconciled in previous SEC filings, and can be referenced therein.
3 Alaska Accelerate initiatives progressing well $100M $150M $150M Network Product Loyalty Cargo Revenue up 10% y/y Launched first European service in company history from Seattle to Rome, London, & Reykjavik Managed corp. revenues up 30%, next 90-day bookings up 37%+ PDX, SAN corp. share up 5 and 4 pts y/y, PDX now >50% in total Premium revenue up 15% 100% of 737 premium seat retrofits completed 1/3 of fleet (134 aircraft) now retrofitted with Starlink Wi-Fi, 50% expected by YE Opened new 14k square foot lounge in PDX Cash remuneration up 19% New BofA bank deal tracking to deliver 0.5pt incremental margin in 2026 Active members grew 15% y/y led by non-core member growth up 24% and Hawai’i up 17% Premium card performing well, total accounts nearly 50% above expectation Cargo revenue increased 21% y/y Announced four new dedicated 737-800 freighters to be deployed in Alaska and Hawai’i in early 2027, deepening our investment and service in these markets $400M Synergies on track Synergies on track Synergies on trackInitiatives on track
1Q26 2Q26 3Q26-E 4Q26-E 4 Unit cost trajectory improving in 2H 2026 CASMex % change y/y Chart not to scale Notes ■ Q2 2026 unit costs increased 6.5% year over year, approximately 1.5 points better than planned, reflecting broad-based cost discipline and continued productivity gains ■ Q2 transitory costs include elevated crew training expenses related to 787 fleet ramp, prior year aircraft sale gains, and employee recognition expense tied to completing single PSS ■ Q3 2026 unit costs are expected to increase low- to mid-single digits y/y, with total costs remaining in line with plan despite pressure from an additional point of capacity reduction 6.3% 6.5% ~8% guidance Low to Mid Single Digits
5 Improving revenue-cost spread demonstrates business strength RASM vs CASMex Spread (ex fuel profit per ASM) Chart not to scale – Network carrier outlook based on consensus estimates Notes ■ In 1H26, Hawai’i performance and transitory cost items pressured earnings ■ Q2 showed improvement with momentum building as unit costs and revenue improved sequentially each month, culminating in a return to profitability in June with a double-digit pretax margin ■ Q3 2026 marks an even stronger inflection, with RASM continuing to improve and CASMex stepping down further, widening the spread and positioning Air Group for greater underlying earnings expansion more in line with network carriers (4%) (2%) 0% 2% 4% 6% 8% 10% Q1-26 Q2-26 Q3-26 ALK Network Carriers
2/27/26 3/27/26 4/27/26 5/27/26 6/27/26 MOPS West Coast USGC 6 Fuel costs have moderated but remain elevated Jet Kero Refining Margins(1) Notes ■ Economic fuel cost averaged $4.43 per gallon in Q2 2026 as both crude oil and refining costs increased ■ Singapore refining margins surged in Q2, a sharp reversal from their historical position as one of the cheapest fuel sources ■ After moderating in May and June, refining margins have returned to normalized relative positions, with Singapore once again the lowest-cost index ■ Q3 2026 economic fuel cost is expected to be $3.75 per gallon 1 – Data from FIS Global Kiodex and Platts S&P Global Commodity Insights as of 7/17/26 $1.42 $1.75 $2.92 $1.58 $2.09 $1.97
7 Balance Sheet Debt to Capitalization Ratio Target Adj. Net Debt/EBITDAR < 1.5x 0.9x 2.7x 1.0x 1.3x 2.3x 2.9x 3.3x 4.8x 2019 2021 2022 2023 2024 2025 1Q26 2Q26 TTM Adjusted Net Debt/EBITDAR 38% 48% 46% 45% 57% 59% 61% 65% 2019 2021 2022 2023 2024 2025 1Q26 2Q26 Target Debt to Cap Range 40% to 50% Note: Beginning in 2026, the Company made adjustments to the calculation of these metrics to enhance comparability with our peers. Prior periods have been adjusted to conform to the current calculation.
8 Most challenging integration milestones completed Single Loyalty Single Operating Certificate (SOC) Single Passenger Service System (PSS) Joint Collective Bargaining Agreements (JCBA) 2H 2025 Q4 2025 Q2 2026 2025-2027 Launched new loyalty brand, Atmos Rewards, and new premium credit card on Aug 20th Achieved single loyalty program on Oct 1st when HawaiianMiles members joined Atmos Rewards Atmos for Business portal launched in Sep 2025 Teams achieved SOC in October and became one mainline airline from an FAA/regulatory perspective All flights operated under AS code and Alaska call sign Teams executed operational cutover on 4/22 without any operational disruptions to deliver first ever dual-brand PSS platform in the industry Joint collective bargaining negotiations with union groups remain ongoing Complete Complete Complete