Rising fuel costs on the West Coast of the USA are biting into Alaska Air Group’s financial performance, prompting the Seattle-based airline company to temper third-quarter earnings expectations.
The parent of Alaska Airlines, Hawaiian Airlines and Horizon Air disclosed on 15 September that it now expects to hit the low end of its previously forecast $1-$1.40 earnings per share during the July-September period.
Alaska Air says jet fuel has been pricier than expected “due to ongoing refinery disruptions”, pushing its expected average fuel price to $2.50-$2.55 per gallon during the third quarter, compared with its previous expectation of $2.45 per gallon.
The company has previously noted it faces the highest fuel costs among US airlines due to its geographic location in Seattle and its focus on West Coast hubs.
Other factors are weighing on Alaska’s third quarter results.
“Irregular operations – including weather and air traffic control issues – led to increased costs from overtime, premium pay and passenger compensation,” Alaska says.
An IT outage that halted flights across Alaska’s network for about 3h on 20 July also contributed to the company’s revised guidance.
Despite those headwinds, Alaska says it third-quarter unit revenue is on track with prior guidance of flat-to-low-single-digit growth compared with the third quarter of 2024.
”Yields turned positive year-over-year in August, driven by premium-cabin strength and a double-digit rebound in corporate revenue” since this year’s second quarter.
Alaska is not the only US airline decrying high jet fuel prices on the West Coast.
Andrew Levy, chief executive of start-up discounter Avelo Airlines, told FlightGlobal last week that high fuel prices and a generally unfriendly business environment in California – along with competitive pressure from Alaska and Southwest Airlines – contributed to Avelo’s decision to pull out of its base in Burbank later this year.
