Alaska Air Group reported a $193 million net loss due to high fuel costs and disruptions in Hawaii and Puerto Vallarta, with uncertainty clouding future forecasts.
SEATAC, Wash. — Alaska Air Group announced significant losses during its first-quarter earnings report Monday, citing the high cost of jet fuel and disruptions in popular travel destinations.
The Seattle-based airline reported a net loss of $193 million, or $1.69 per share. The adjusted loss was $192 million, or $1.68 per share.
Fuel costs in the first quarter increased significantly due to blocked shipping routes that are preventing oil from leaving the Strait of Hormuz. Uncertainty about when the strait will be open and for how long has caused volatility in the oil market, making it difficult for businesses to forecast how much they will need to pay for fuel.
Historic rainstorms in Hawaii and civil unrest in Puerto Vallarta ahead of spring break travel season also hurt demand. These markets represent about 30% of the airline’s capacity.
Alaska CEO Ben Minicucci called it a “volatile quarter” but remained optimistic about the direction of the company. When Alaska excluded fuel costs and disruptions in Hawaii and Puerto Vallarta, it said results would have exceeded the midpoint of original first quarter expectations.
The lack of clarity around the future of oil pries will likely continue to impact Alaska Airlines’ bottom line in the second quarter. Until conditions settle down, Alaska said it suspended full-year guidance, as geopolitical factors have made it hard to forecast.
The cost of jet fuel in April is expected to be $4.75 per gallon, according to Alaska, up from an average of $2.98 for the first quarter. Assuming the quarter averages $4.50 per gallon, Alaska said that would add $600 million of expense to the second quarter.
The increased costs have forced Alaska to raise prices on checked baggage and other fees, as well as raise ticket prices on flights.
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