July 21 (Reuters) – Alaska Air on Tuesday forecast third-quarter profit below Wall Street estimates as renewed U.S.-Iran fighting drove fuel prices higher, sending the carrier’s shares down about 2% in extended trading.
The Seattle-based airline expects to break even or post adjusted profit of up to $1 per share in the third quarter, well below analysts’ expectation of a $1.38 profit per share, according to data compiled by LSEG.
U.S. carriers face billions of dollars in additional fuel costs this year after the war in Iran and prolonged shipping disruption through the Strait of Hormuz drove oil and jet-fuel prices sharply higher. United alone expects nearly $6 billion in additional 2026 fuel expenses compared with its plans at the start of the year.
While jet fuel retreated sharply from its spring peak following a fragile truce between Washington and Tehran in June, prices climbed again after hostilities resumed in July.
Alaska Air expects its economic fuel cost to average $3.75 per gallon in the July-to-September quarter, lower than the $4.43 per gallon it paid in the previous quarter. That drop is largely due to a moderation in refining margins.
Fuel typically accounts for about a quarter of an airline’s operating expenses. The volatility has prompted carriers to raise fares, trim flying and pursue additional cost reductions.
The airline reported adjusted loss of 92 cents per share for the second quarter, narrower than analysts’ average estimate of a 99-cent loss per share, according to LSEG-compiled data.
CEO Ben Minicucci said Alaska Air would have reported a profit in the second quarter if not for the fuel price shock.
DEMAND HOLDS STRONG
Alaska Air said its demand and yield, a proxy for air fares, have held strong since June. It expects revenue per passenger, or unit revenue, to grow in the low-double-digit percentage from a year before, outpacing a low- to mid-single-digit rise in unit costs.
Delta Air Lines earlier this month gave a stronger-than-expected third-quarter outlook, while United Airlines’ forecast fell short of Wall Street estimates. Both carriers said strong demand and higher fares were helping offset increased fuel costs, with premium travel remaining particularly robust.
(Reporting by Nandan Mandayam in Bengaluru; Editing by Pooja Desai)
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