Alaska Air cuts 2025 profit forecast: Fuel, operational issues hit margins; projects lower returns after IT outage
Alaska Air Group on Thursday lowered its 2025 profit forecast due to rising fuel costs and operational challenges. The airline said adverse weather and other disruptions have further pressured its profit margins.The airline also projected fourth-quarter profit well below analysts’ expectations.Fuel costs have surged due to refinery outages on the US West Coast, tightening supply and adding pressure on airlines already facing rising operational expenses.“Fuel, it’s volatile, and that’s one of the things that we’re having to manage through in terms of making an estimate for earnings in the fourth quarter,” Alaska Air CFO Shane Tackett told Reuters.Operational disruptions, such as storms and strained air traffic control, have increasingly affected US carriers this year, leading to costly delays and cancellations.Alaska Air now expects its annual adjusted profit per share to be at least $2.40, down from its earlier forecast of over $3.25.For the fourth quarter, the company anticipates adjusted profit of at least 40 cents per share, compared with analysts’ estimate of 88 cents, according to LSEG data.The airline also faced a temporary suspension of all flights on Thursday due to a technical outage, three months after a similar incident, news agency AP reported. “Alaska Airlines is experiencing an IT outage affecting operations. A temporary ground stop is in place. We apologize for the inconvenience,” the Seattle-based carrier said on X.In July, a major IT outage disrupted hundreds of flights and stranded thousands of passengers during the busy summer travel season.Despite these challenges, the airline industry’s efforts to limit seat supply and reduce discounting after a weak first half of the year are showing signs of success. “We expect to have positive unit revenues in the fourth quarter,” Tackett said.Alaska Air’s yields, a key measure of pricing power, rose about 1.4% in the quarter through September, while unit costs excluding fuel increased around 8.6%. Tackett added, “Costs will meaningfully improve sequentially on a unit cost basis from Q3.”The carrier reported a third-quarter adjusted profit of $1.05 per share, slightly below analysts’ average estimate of $1.13. Total operating revenue for the quarter rose 23% to $3.77 billion, beating expectations of $3.76 billion.
