Alaska Air Group (NYSE:ALK) reported a second-quarter loss but told analysts that improving revenue trends, completed integration work and easing fuel costs position the company for a stronger second half of 2026.
Ryan St. John, vice president of finance, planning and investor relations, said Air Group reported a second-quarter GAAP net loss of $76 million. Excluding special items, the company posted an adjusted net loss of $102 million.
“Absent the fuel spike, this would have been a solidly profitable quarter,” Ben said, adding that the company saw strengthening unit revenue, improving unit costs and continued demand through the quarter.
Revenue Strengthened Through the Quarter
Andrew said second-quarter revenue rose to $4.1 billion, up 10% year over year, while capacity grew 1%. Unit revenue increased 8.6%, including what the company described as a three-point drag from historic Hawaii rainstorms.
Andrew said unit revenue accelerated each month of the quarter, rising 5.5% in April, 8.8% in May and 11% in June. Total June revenue was up 13.2%, contributing to the company’s return to profitability for that month.
The company pointed to several factors behind the revenue improvement, including the move to a single reservation system, the launch of European service, Asia service, adoption of Atmos Rewards and strong operational performance.
Managed corporate revenue also improved. Andrew said Portland and San Diego managed corporate share increased by five points and four points, respectively. Portland exceeded 50% share of managed corporate revenue, which Andrew called a historic milestone. In Seattle, managed corporate passenger volume exceeded system trends with 9% growth, supported by new service to major international markets including London, Tokyo and Incheon.
Loyalty, Premium and International Growth Highlighted
Alaska executives said loyalty and premium revenue were important contributors to the quarter. Andrew said co-brand remuneration reached $663 million, up 19% year over year. Active Atmos members increased 15%, while attrition fell more than 30%.
In Hawaii, the company said loyalty growth outpaced system performance, with a 73% year-over-year increase in new cardholders and a 34% increase in members in the Huaka’i by Hawaiian community.
Premium revenue rose 15% in the quarter and now represents 35% of total revenue, Andrew said. He added that more than half of every revenue dollar now comes from outside the main cabin.
Ben said the company’s first long-haul international routes from Seattle are “off to a strong start.” He said new Rome, London and Reykjavik routes are each carrying 50% or more Atmos members, which he described as an early sign of loyalty demand for the expansion.
Andrew said the international launch has been encouraging, noting that the company recently turned on its ability to sell in the United Kingdom and sees additional opportunity to grow international premium cabin share.
Integration Milestone Completed
Ben described the quarter as “one of the most consequential and strategically important quarters” in the company’s history. Alaska completed its migration to a single passenger service system and established what he called the industry’s first dual-brand passenger service system platform.
The company said it maintained strong operations during the transition. Ben said Alaska led the industry in on-time performance year to date and improved five points year over year in the second quarter.
Guest satisfaction improved after the reservation cutover, Ben said, rising seven points from the prior quarter. Hawaii improved 10 points. He also said Starlink Wi-Fi is improving the onboard experience, with guest satisfaction on Starlink-equipped flights 20% higher than on non-equipped flights. About one-third of the fleet is now equipped, with the remainder expected by 2027.
Ben said cabin retrofits across the company’s 737 fleet are complete, adding 1.3 million incremental first and premium class seats. Demand is absorbing the additional capacity, he said, as reflected in the increase in premium revenue.
Cargo Expansion and Fleet Changes
Alaska also highlighted cargo as a strategic growth area. Ben said the company restructured its Amazon flying under a more profitable contract and is adding four Boeing 737-800 freighters for deployment across Hawaii and Alaska.
During the question-and-answer session, Shane Tackett, president of Alaska Airlines and CFO, said the aircraft will be owned by Alaska and operated under its own brand, not under a CMI or ACMI arrangement. Two are expected to be used in Alaska and two in Hawaii.
Ben also said the company plans to retire the 717 fleet beginning in 2028 and transition Neighbor Island flying to Boeing 737s, citing improved reliability, economics and cargo capability.
Outlook: Stronger Second Half Expected
Shane said second-quarter unit costs excluding fuel rose 6.5% year over year. He said that result included transitory items such as elevated crew training costs tied to the 787 fleet ramp, employee recognition expense related to the passenger service system milestone and comparisons against aircraft sale gains in 2025. Excluding those items, core cost growth was in the low- to mid-single digits.
The company ended the quarter with $3.8 billion in total liquidity after raising $1 billion through a $500 million senior unsecured note offering and a $500 million term loan. Shane said the financing was intended to keep liquidity near the top of the company’s target range as it navigates fuel volatility.
Alaska guided third-quarter capacity growth of about 2% to 3%, with all growth coming from intercontinental flying. Full-year capacity growth is expected to be around 2%, at the low end of the original 2% to 3% guidance range.
Shane said economic fuel cost averaged $4.43 per gallon in the second quarter, slightly better than the company’s $4.50 guidance. For the third quarter, Alaska expects fuel price per gallon of $3.75 and earnings between breakeven and $1 per share.
The company said demand remains durable, with bookings into the summer peak and early fall pacing well. Andrew said unit revenue is running in the mid-teens year over year and that the company expects third-quarter system unit revenue to increase in the low double digits.
Executives said they plan to provide an update on full-year earnings guidance at an Investor Day scheduled for Sept. 29 in Seattle.
About Alaska Air Group (NYSE:ALK)
Alaska Air Group is a publicly traded holding company headquartered in Seattle, Washington, that operates two main airlines—Alaska Airlines and Horizon Air. Through these carriers, the company offers scheduled passenger and cargo services across a network spanning the United States, Canada and Mexico. Its core business activities include domestic and international air transportation, loyalty program management under the Mileage Plan brand, and ancillary revenue streams such as baggage fees, in-flight sales and code-share partnerships with other global airlines.
The roots of Alaska Air Group trace back to the foundation of its flagship carrier, Alaska Airlines, in 1932.
