Key facts
- Alaska Air may reinstate financial guidance if fuel prices stabilize.
- The airline withdrew its full-year outlook due to jet fuel price volatility.
- Higher fares and resilient demand are expected to offset fuel cost impacts in the second half.
- Operating cash burn could fall to zero or turn slightly positive in the second half.
- Corporate bookings are up 20% to 30% year-over-year for the next 90 days.
Alaska Air Group is hopeful it can reinstate its financial guidance on its second-quarter earnings call if fuel prices show more stability, according to Chief Financial Officer Shane Tackett. Volatility in jet fuel costs had previously forced the carrier to withdraw its full-year outlook. Tackett noted that while fuel markets have become less volatile recently, prices are still moving by about 5% over a couple of days, leading the airline to wait for more confidence before restoring guidance. The carrier anticipates a tougher second quarter than initially expected, but believes higher fares and resilient demand will largely offset the impact in the second half of the year. Tackett stated that operating cash burn could decrease to zero or become slightly positive in the latter half of the year. Alaska Air recently secured $1 billion in debt financing, split between secured and unsecured loans, but has no immediate plans for further liquidity measures or capital spending reductions. Corporate bookings over the next 90 days have increased by 20% to 30% compared to the previous year across most regions and industries. Additionally, Alaska Air is exploring sourcing jet fuel from markets like Singapore to mitigate elevated refining margins on the West Coast and plans to continue operating Airbus aircraft for the foreseeable future.