Alaska Air Group could miss a lofty financial target set two years ago at the start of its global expansion effort as it continues to navigate rising jet fuel prices, company executives said Tuesday.
Alaska Air Group — which includes Alaska Airlines, Hawaiian Airlines, regional carrier Horizon Air and ground support company McGee Air Services — set a goal in December 2024 to reach $1 billion in incremental profit and $10 earnings per share over the next three years. It laid out a plan, Alaska Accelerate, to transform from a reliable domestic carrier to a global powerhouse, after its acquisition of Hawaiian Airlines.
Nearly two years into that three-year vision, Alaska said Tuesday it has captured two-thirds of its $1 billion profit goal, as it added new nonstop long-haul international routes, introduced a new loyalty program and completed many of the milestones to integrate Hawaiian into its network.
Alaska is on track to realize the rest of its $1 billion profit goal next year, Chief Financial Officer Shane Tackett said Tuesday, speaking to analysts and media at the company’s investor day.
But Tackett cast doubt on the company’s ability to meet its earnings per share target, citing unexpected macroeconomic factors like falling consumer demand last year amid tariffs and economic uncertainty and skyrocketing jet fuel prices this year. Alaska also faced disruptions from political unrest in Puerto Vallarta, Mexico and difficult weather conditions in Hawaiʻi.
If fuel prices had remained at 2024 levels, about $2.50 per gallon, and assuming Alaska successfully completes the rest of its three-year plan, there would have been a “clear path” to $10 earnings per share, Tackett said.
In fact, Alaska could have seen $5 earnings per share this year if “fuel had behaved itself,” Tackett continued.
But jet fuel prices today are more than $4.40 per gallon, according to an estimate from the Argus U.S. Jet Fuel Index, meaning Alaska and other airlines are still grappling with unexpectedly high costs.
“What we did not anticipate were the headwinds from domestic demand deterioration from 2025 and materially higher fuel prices this year,” Tackett said. “These factors have masked the earnings power we’ve been building.”
In the second quarter this year, the company’s most recent financial earnings, Alaska lost $76 million, or $0.68 per share. In the same quarter last year, Alaska reported net income of $172 million, or $1.42 earnings per share.
Fuel prices were up 85% year-over-year, adding $600 million of incremental fuel cost for the period, Alaska said in its earnings results.
But Tackett and other Alaska executives were still optimistic about the company’s financial footing.
If fuel stabilizes at $3.25 per gallon, the company could record $5-$6 earnings per share in 2027, Tackett said, still missing its original target but a significant jump from its most recent earnings.
“We continue to have absolute confidence in the long-term value of the company,” Tackett said, “and the intrinsic value for our company is not fully reflected in our stock price today.”
Executives on Tuesday spent the day telling analysts and media that Alaska Air Group still had room to grow, with plans to add more nonstop international routes and to tap into growing demand for luxury travel experiences. Ahead of its investor day, Alaska announced a new premium reserve cabin class and new lie-flat suites on its 787s, A330s and some 737 MAX aircraft.
Alaska Air Group has also successfully completed three of the four milestones on its path to integrate Hawaiian Airlines into the company, executives said. The company created a single loyalty program, a single passenger service system for booking and checking in to flights and a single operating certificate from the Federal Aviation Administration, meaning it operates as one carrier in the eyes of the regulator.
It still has to finalize collective bargaining agreements with its unionized workforces.
The Alaska Accelerate plan was ambitious, CEO Ben Minicucci told analysts, but the company still believe it was the right move for its long-term success.
Now, two years in, “the results haven’t been where we want them to be,” Minicucci said. “But the things we control are moving in the right direction.”
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