RIO DE JANEIRO, June 6 - Alaska Air Group said it is prepared to consider reinstating its financial guidance on its second-quarter earnings call if jet fuel prices settle, Chief Financial Officer Shane Tackett told attendees on the sidelines of an industry meeting in Rio de Janeiro.
Tackett made clear that the carrier withdrew its full-year outlook after sharp swings in jet fuel markets. He said fuel markets have calmed somewhat in recent weeks, but remain prone to moves of roughly 5% over a few days - a level of intra-period volatility that leaves Alaska reluctant to restore a formal forecast until the company has greater confidence in the trajectory of fuel costs.
"We want to see a little bit more stability in the backdrop," Tackett said.
On near-term operational results, Tackett said the airline now expects the second quarter to be more challenging than it had previously planned, citing the impact of the latest fuel spike. Nevertheless, he pointed to offsetting factors that should mitigate much of the damage in the second half of the year: notably, higher ticket fares and continued resilience in demand.
Those dynamics could materially affect the carrier’s cash flow. Tackett indicated operating cash burn might decline to zero or even turn modestly positive in the latter half of the year, a sign that the company expects demand and pricing to help restore financial stability even if fuel costs remain elevated.
Liquidity and capital spending
Alaska recently raised $1 billion in debt financing, split between secured and unsecured instruments. Tackett said that the company is not planning additional liquidity actions at this time, nor is it planning any rollback of capital spending, signaling an intent to maintain existing investment plans despite the fuel-driven disruption.
Demand and booking trends
Tackett provided specifics on forward demand, saying corporate bookings for the coming 90 days are up between 20% and 30% versus the same period a year earlier across most geographies and industries. This advance booking strength is a central element in the carrier’s expectation that the second-half recovery in cash flow is achievable.
Fuel sourcing and fleet posture
To blunt regional supply pressures, Alaska is engaging with energy companies to secure more jet fuel deliveries to the U.S. West Coast from markets such as Singapore, the CFO said. The move responds to elevated refining margins in the carrier’s core geographies, which have contributed to higher jet fuel prices.
On fleet strategy, Tackett said there is no current plan to retire Hawaiian’s Airbus A330s or A321s and that Alaska expects to remain an Airbus operator "for a long time."
Outlook
Overall, the company projects a bumpy short-term performance with a path toward improved results in the second half, contingent on a more stable fuel cost environment. Management is balancing a recent $1 billion borrowing with steady capital spending and hopes that stronger fares and booking momentum will compensate for elevated fuel expenses.