Alaska Air's Unit Revenue Growth Accelerates

The Tip Desk · October 27, 2026 · 3 min read

Operating revenue rose 14% to $4.3 billion as RASM growth picked up to 11.7% and GAAP pretax margin reached 0.4%.

Alaska Air Group (ALK) reported third-quarter operating revenue of $4.3 billion, up 14% from a year earlier, as unit revenue growth accelerated and the airline returned to a thin GAAP pretax profit.

Capacity (ASMs) rose 2.4% year-over-year, faster than the 1.0% increase in the second quarter. RASM rose 11.7%, after 8.6% growth in the prior quarter. The company said results were driven by strong underlying commercial momentum despite a significant fuel headwind, Hawaiʻi headwinds, pressure from strategic growth-market investments, and rapid international expansion. Yield improved through the quarter, with September yield up approximately 17% year-over-year.

GAAP pretax margin was 0.4%, versus a (5.3)% pretax margin in the second quarter. GAAP net loss was $147 million, or $1.32 a share, compared with a $76 million, or $0.68 a share, loss in the second quarter. Adjusted pretax margin was 1.1%. Adjusted net loss was $35 million, or $0.31 a share.

A cumulative tax catch-up reduced adjusted earnings by $0.67 a share. The company said it reduced its estimated annual effective tax rate after changing its full-year outlook from pretax income to a pretax loss, driven primarily by elevated fuel prices. The adjustment reduced the expected tax benefit on first-half losses by $75 million. Excluding that item, adjusted earnings were $0.36 a share, inside the $0.00 to $1.00 range the company had given.

Aircraft fuel expense was $1.21 billion, up 60% from a year earlier. Economic fuel cost was $3.94 a gallon, down from $4.43 in the second quarter. CASMex rose 4.4% year-over-year to 11.46 cents, slower than the 6.5% increase in the second quarter. Revenue passengers were 15.7 million, down 1.1%, and load factor was 82.8%.

Diversified revenue outside the main cabin reached 54% of total revenue. Premium revenue grew approximately 25% and represented more than 36% of total revenue. Loyalty program cash remuneration grew 21% to $721 million. Managed corporate revenue increased 30%. Passenger revenue was $3.89 billion. Loyalty program other revenue was $263 million. Cargo and other revenue was $160 million.

The company announced intent to join the Atlantic and Pacific Joint International Businesses with oneworld and unveiled Aurora and Leihōkū premium products. New nonstop service to Osaka and Papeete brought Seattle’s international network to nine of 15 planned routes by 2030.

For the fourth quarter, Air Group expects capacity up 1% to 1.5% year-over-year, with the increase concentrated in international flying. Unit revenue is expected to increase in the low double digits and improve sequentially on a gross basis. Non-fuel unit costs are expected to increase in the mid-single digits. Guidance assumes economic fuel of $4.65 to $4.85 a gallon, or $650 million higher than the initial plan, and an adjusted loss of ($2.50) to ($2.00) a share. For the full year, the company now expects an adjusted loss of ($5.50) to ($5.00) a share, inclusive of $1.8 billion in fuel expense above plan.

The company generated $755 million of operating cash flow in the first nine months of 2026 and held $3.3 billion in available liquidity. It had approximately $20 billion of unencumbered assets at September 30, 2026.