Alaska Air Cuts 2025 Profit Outlook Amid Soaring Fuel Costs and Operational Setbacks

Alaska Air Group has revised its 2025 profit forecast downward, citing rising fuel prices and persistent operational challenges that have eroded margins. The airline now expects annual adjusted earnings of at least $2.40 per share, a sharp drop from its earlier projection of more than $3.25. Its fourth-quarter adjusted profit forecast of at least $0.40 per share also falls significantly below analysts’ average estimate of $0.88, according to LSEG data.

Refinery outages on the U.S. West Coast have caused a spike in jet fuel prices, tightening supplies and increasing expenses across the airline industry. “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,” said CFO Shane Tackett in an interview with Reuters.

In addition to rising fuel costs, severe weather and air traffic control constraints have created costly disruptions across U.S. carriers this year. Alaska Air also faced a major IT outage in July, which led to hundreds of flight cancellations during the peak summer travel season.

Despite the setbacks, the airline remains cautiously optimistic. Efforts to manage seat supply and curb discounting appear to be stabilizing demand after a slow first half of the year. “We expect to have positive unit revenues in the fourth quarter,” Tackett noted.

In the third quarter, Alaska Air reported adjusted earnings of $1.05 per share, missing analysts’ forecast of $1.13. Total operating revenue rose 23% year-over-year to $3.77 billion, slightly above expectations. Yields increased 1.4%, while unit costs excluding fuel jumped 8.6%. The company anticipates sequential improvement in costs as it heads into the final quarter of the year.