Flying got a bit more expensive for Alaska Air Group (ALK) last quarter, and not just for its passengers. The airline reported first-quarter results that missed expectations and came with a sobering warning: fuel costs are looking ugly, to the tune of about $600 million more this year.
Shares were down on Tuesday after the company said it lost $1.68 per share for the quarter, wider than the $1.34 per share loss analysts were expecting. Revenue came in at $3.30 billion, just a hair below the consensus estimate of $3.31 billion. It's the kind of miss that makes investors check their seatbelts.
But the real turbulence came from the outlook—or rather, the lack of one. Alaska Air said it's suspending its full-year 2026 guidance. Why? Because trying to predict earnings when fuel prices are this volatile is, as they put it diplomatically, "constrained." It's like trying to forecast the weather in a hurricane; you know it's going to be bad, but the exact numbers are a guess.
So, what can they tell us? For the current quarter, capacity is expected to be up about 1% compared to last year, though that's slightly below prior plans due to some planned reductions in May and June. Unit revenue—basically how much money they make per seat per mile—is tracking to rise in the high single digits. They think it could hit around 10% growth if demand holds, which is pretty good, though a storm disruption in Hawaiʻi is knocking about 2 percentage points off that.
Costs, however, are going up. Unit costs are projected to be about 1.5 points higher this quarter than last. The company blames a few temporary things: near-term capacity cuts, pilot training for an international widebody expansion (yes, they're thinking bigger), the absence of some asset sale gains they had last year, and some one-time costs related to integration. They say costs should ease to low single-digit growth in the second half of the year, which is the corporate equivalent of "this too shall pass."
Then there's the fuel. This is the big one. Alaska Air says fuel in April is running about $4.75 per gallon. For the second quarter, they're expecting an average of roughly $4.50 based on current forward prices. If that holds, it would add around $600 million to their fuel bill for the year. That works out to an earnings hit of about $3.60 per share. They're planning to burn through an estimated 297 million gallons of jet fuel this quarter alone. When you're talking numbers that big, every penny at the pump counts.
In a bit of brighter news, separate from the earnings, Alaska Air announced it has extended its co-branded credit card partnership with Bank of America (BAC) for multiple years. The deal aims to enhance the Atmos Rewards program—which, incidentally, was just named the best Airline Rewards Program for 2026 by NerdWallet. Under the renewed agreement, Bank of America will become the single issuer for all co-brand cards in the program. Alaska Air says this should help accelerate growth of its loyalty platform beyond the previously outlined $150 million in profit. It's a nice, steady revenue stream that doesn't depend on the price of jet fuel, which is probably why they like it so much.
What are the analysts saying? The stock still carries a Buy rating on average, with a price target of $61.27. But they've been tweaking their numbers: Evercore ISI Group lowered its target to $60 on April 17 but kept an Outperform rating; UBS raised its target to $54 on April 15 with a Buy; and Goldman Sachs lowered its target to $61 on April 1, also with a Buy. It's a mixed bag of adjustments, but the overall sentiment is still that the stock has room to climb from here.
The stock also shows up in a few ETFs, which means its moves can get amplified by fund flows. It has a 5.21% weight in the Themes Airlines ETF (AIRL), a 0.75% weight in the Avantis US Small Cap Value ETF (AVUV), and a 0.69% weight in the SPDR Portfolio S&P 600 Small Cap ETF (SPSM). When those ETFs see money moving in or out, they have to buy or sell Alaska Air shares to match, which can push the stock around a bit more.
As of publication on Tuesday, Alaska Air Group shares were down 2.02% at $42.66. It's a reminder that in the airline business, sometimes the biggest cost isn't the plane or the peanuts—it's what you put in the tank.
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