Alaska Air to Cut 200 Jobs, Warns 2026 Loss Could Reach $700 Million
Key Facts
Alaska Air Group announced on October 30 that it would eliminate about 200 nonunion jobs, as its chief executive warned the company could lose as much as $700 million in 2026 if current conditions persist. Reuters said high fuel prices and geopolitical challenges are weighing on the company's finances. The report described the potential loss as the first adjusted pre-tax loss outside the pandemic period since 2003. The outlook provides financial context for the job cuts as the company contends with a fuel bill above its annual plan. The company's shares closed at $35.71 on October 30, according to EL7 data.
The cuts amount to less than 1% of the company's workforce of about 32,500 employees. They include 125 jobs in Washington state and 48 in Hawaii, while the company said nonmanagerial employees who deal directly with customers would not be affected. Reuters said the last working day for affected employees would be November 13. The company will continue paying them through December 31, along with severance and other support. These details show the cuts are concentrated in nonunion roles, with transition dates set for affected employees.
The company raised its full-year adjusted loss-per-share forecast to a range of $5.00 to $5.50, including $1.8 billion in fuel expense above plan. The annual estimate places the potential loss cited by the chief executive in the broader context of fuel's impact on results. The company said its economic fuel cost was $4.43 per gallon in the second quarter, up 85% year over year, adding $600 million to fuel expense that quarter. In its third-quarter earnings disclosure, Chief Executive Ben Minicucci said management was dissatisfied with the quarter's results and with the $1.8 billion fuel burden this year. He added: "We are confident in our ability to execute on the things we can control."
The annual warning came after the company reported a net loss of $147 million, or $1.32 per share, under generally accepted accounting principles in the third quarter. Adjusted net income, excluding certain tax effects, was $49 million, or $0.36 per share. The comparison between the two figures shows how the reported result under accounting standards differs from the adjusted measure the company uses to present its performance. In the second quarter, Alaska posted an adjusted loss of $102 million and a negative adjusted pre-tax margin of 4.3%, despite revenue growth of 10% to $4.1 billion. Fuel cost pressure is therefore coming as revenue growth has not prevented continued quarterly adjusted losses.
Minicucci said overhead expenses had grown in recent years at a pace disproportionate to revenue, calling for a return to the financial discipline he described as a longstanding competitive advantage for the company. At the same time, the company reported that diversified revenue outside the main cabin accounted for 54% of total third-quarter revenue. Premium-class revenue grew about 25%, taking its share above 36% of the total. The figures put efforts to diversify revenue and premium offerings alongside cost-cutting measures as the company confronts fuel's impact on profitability. The company also said it generated $755 million in operating cash flow in the first nine months of the year and had $3.3 billion in available liquidity.
For the fourth quarter, the company expects capacity growth of 1% to 1.5% year over year, with the increase concentrated in international flights, and low double-digit unit revenue growth. It said demand remained healthy and commercial momentum continued, but it expects nonfuel unit costs to rise in the mid-single digits. Alaska raised $1 billion in financing in the second quarter to bolster liquidity and said it expected to direct excess liquidity toward debt repayment. In October, it began offering Atmos Rewards members options to earn points and status points based on distance, price or number of segments, applicable to flights departing from January 1, 2027. The stock closed at $35.58 on October 28, $36.15 on October 29 and $35.71 on October 30.