10-Q · May 6, 2026
Alaska Air Group reported a first-quarter 2026 revenue of $3.30 billion, up 5% from $3.14 billion in Q1 2025. However, the company posted an EPS loss of $1.68, which was worse than the prior year's loss of $1.35. The…
Earnings analysis · 10-Q
ALK earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Alaska Air Group delivered Q2 revenue growth of 10% to $4.065 billion, supported by an 8.6% RASM increase, premium demand, loyalty monetization, and cargo economics. However, the 85% increase in fuel cost per gallon to…
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Alaska Air Group delivered Q2 revenue growth of 10% to $4.065 billion, supported by an 8.6% RASM increase, premium demand, loyalty monetization, and cargo economics. However, the 85% increase in fuel cost per gallon to $4.43 drove fuel expense up 86%, producing a GAAP loss of $0.68 per share versus $1.42 of GAAP EPS a year earlier. Liquidity improved to $3.762 billion and first-half free cash flow was approximately $83 million, but leverage increased, Latin America contracted, and management expects continued fuel volatility.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
Reported figures
- Earnings per share
- $-0.68
What stood out
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Revenue rose 10%, led by premium and loyalty
Q2 operating revenue increased $361 million, or 10%, to $4.065 billion from $3.704 billion. Revenue growth was led by passenger revenue, up $289 million (9%) to $3.644 billion, alongside loyalty revenue up 23% to $258 million and cargo/other revenue up 17% to $163 million.
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Pricing and unit revenue improved sharply
Unit revenue strengthened despite only 1.0% capacity growth: RASM rose 8.6% to 16.72¢ and yield rose 9.6% to 18.21¢. Management attributed this to premium products, loyalty award redemption, managed corporate travel, cabin retrofits, and new transatlantic routes.
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Loyalty revenue grew 23%
Loyalty program other revenue increased $48 million, or 23%, to $258 million, driven by the Summit Visa Infinite card, Atmos Rewards, active-member growth, consumer spending, and the expanded Bank of America card agreement.
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Liquidity expanded by 27%
Liquidity increased to $3.762 billion at June 30, 2026 from $2.973 billion at December 31, 2025, a 27% increase. The company also reported approximately $20 billion of unencumbered assets, including 131 aircraft.
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Positive first-half free cash flow
First-half operating cash flow remained positive at $606 million. After $523 million of capital expenditures, first-half free cash flow was approximately $83 million; capex represented 86% of operating cash flow.
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Sequential margin improvement, but below prior year
Operating margin improved sequentially from negative 8.5% in Q1 2026 to approximately negative 4.1% in Q2, calculated from the $168 million operating loss on $4.065 billion of revenue. However, it reversed from a 7.5% operating margin in Q2 2025.
What to watch
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Fuel shock overwhelmed revenue growth
Aircraft fuel expense rose $605 million, or 86%, to $1.305 billion as fuel cost per gallon increased 85% to $4.43 from $2.39. Management expects fuel costs to remain elevated and volatile while crude-supply and refinery disruptions persist.
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Profitability reversed to a loss
GAAP net income reversed to a $76 million loss, or $0.68 per diluted share, from $172 million of income, or $1.42 per share, in Q2 2025. Adjusted EPS was also a $0.92 loss versus $1.78 of adjusted EPS a year earlier.
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Leverage increased and equity declined
Long-term debt and finance leases, net of current portion, increased 20% to $5.783 billion from $4.834 billion at year-end, while shareholders' equity declined 11% to $3.670 billion. Debt-to-capitalization rose 6 points to 65%.
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Leisure and Latin America demand weakened
Latin America revenue fell 21% to $145 million, with passenger revenue down 21%, RPMs down 27%, and ASMs down 28%. Management also cited softer leisure demand in Hawai'i, where rainfall affected spring-break and peak-summer bookings.
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Large aircraft order book faces delivery risk
Boeing delivery timing remains uncertain due to supplier availability, production challenges, and regulatory approvals. The company had firm commitments for 168 B737 aircraft and 12 B787 aircraft as of June 30, 2026.
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No formal risk-factor update; cost pressure persists
No risk-factor amendments were provided in this 10-Q; Item 1A refers investors to the 2025 Form 10-K. Nonetheless, operating expenses increased $806 million, or 24%, versus revenue growth of $361 million, or 10%, in Q2.
Management's outlook
The 10-Q provides no explicit revenue or EPS guidance. Management stated planned 2026 capital expenditures of approximately $1.4 billion to $1.5 billion; it expects fuel costs to remain elevated and volatile until supply/refinery disruptions are resolved, and expects current liquidity and available sources to cover needs for the next 12 months.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.