Yesterday, we issued our earnings release, along with several accompanying slides detailing our results, which are available at investor.alaskaair.com. We will also refer to certain non-GAAP financial measures, such as adjusted earnings and unit cost excluding fuel. As usual, we have provided a reconciliation between the most directly comparable GAAP and non-GAAP measures in today's earnings release. Most recently, following the COVID pandemic, we acquired Hawaiian Airlines, secured more than 50% market share in Hawaii, and launched long-haul international travel out of Seattle.
That represents approximately a $0.70 impact to earnings per share in Q1 and over $3 in Q2. Offsetting some of that pressure is a strong demand backdrop with fare increases holding. Importantly, our position of strength allows us to manage through environments like this while continuing to build long-term earnings power. Premium retrofits on our 737 fleet are now more than 90% complete, increasing our share of premium seats across the network and driving higher premium revenue.
The challenges we're navigating today do not change our longer-term trajectory, our ability to achieve a $10 EPS target, or remain a top margin-producing airline. Today, I'll walk through our first quarter financial performance, our perspective on the near-term demand and revenue environment, and the significant progress we're realizing on the core initiatives that underpin Alaska Accelerate. Total Q1 revenues reached $3.3 billion, up 5% year-over-year on capacity growth of just 1.7%. From a demand and revenue perspective, performance in the first quarter was resilient despite the volatile macro backdrop and material demand headwinds uniquely impacting our spring break revenue, given our network.
| Metric | Period | Current guidance |
|---|---|---|
| Adjusted EPS | Q2 2026 | loss of approximately $1 per share (new guidance, driven by fuel) |
| Unit revenue (RASM) | Q2 2026 | path to up 10% (assuming continued demand strength at observed yields) |
| Unit costs (CASMex) | Q2 2026 | about 1.5 points above Q1 result (given a close-in reduction of one point of capacity) |
| Capacity growth | Q2 2026 | up approximately 1% year-over-year (trimmed nearly a point in May/June; all from long-haul Seattle international) |
| Fuel price | Q2 2026 | approximately $4.50 per gallon (April ~$4.75) (sharply higher; recovering ~one-third of incremental fuel costs) |
| Tax rate | Q2 2026 | assumed 32% (could change meaningfully with performance and full-year outlook) |
| Full-year guidance | FY 2026 | suspended (withdrawn until conditions stabilize) |
| Long-term EPS target | 2027 | $10 (reaffirmed) |
| Metric | YoY | Note |
|---|---|---|
| Adjusted loss per share | -$1.68 | better than guidance midpoint despite fuel and transitory Hawaii/Puerto Vallarta events |
| Total revenue | +5% to $3.3 billion | capacity growth of 1.7% and unit revenue up 3.5% |
| Unit revenue (RASM) | +3.5% | resilient demand and fare increases, reduced nearly a point by Hawaii and Puerto Vallarta |
| Premium demand | +8% | premium retrofits over 90% complete; first-class revenue positive even as capacity rose 5% |
| Managed corporate travel | +19% | international expansion increasing corporate relevance, especially US point of sale |
| Co-brand card cash remuneration | +12% to $615 million | Atmos membership up 13% with double-digit Hawaii loyalty growth |
| Unit costs (CASMex) | +6.3% | lapping the final quarter of the flight attendant CBA plus winter weather and Hawaii storms |
| Fuel price | $2.98 per gallon | initial fuel cost increase beginning in late February |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Fuel costs | $100 million-plus headwind in Q1 (~$0.70 EPS) | $600 million-plus incremental expected in Q2 (over $3 EPS); prices ranged $4.45-$5.15 in past week | Worsening |
| Demand environment | resilient with fare increases holding | strong backdrop, bookings returned to last year's level with strong fare increases | Stable/resilient |
| Integration / PSS | PSS cutover scheduled April | preparations complete, single platform live beginning tomorrow; peak friction now behind | Improving |
| Loyalty / Bank of America | $150 million loyalty profit targeted by 2027 | new BofA deal adds $1 billion cash through 2030, ~0.5 point of margin this year and 1 point next year | Improving |
| International network | Tokyo and Seoul launched | Seattle-Tokyo profitable in March, Rome launching next week, London and Reykjavik this spring | Improving |
| Guidance / outlook | full-year $3.50-$6.50 | full-year guide suspended; reverting to more detailed unit revenue/cost disclosure for Q2 | More uncertain |
| Capacity discipline | low-growth plan | Q2 capacity ~1%, Puerto Vallarta cut ~30%, North America down slightly | Tightening |