Alaska Air Group said it swung to a third-quarter loss as the value of its fuel hedges declined along with falling oil prices. The Seattle-based operator of...
Alaska Air Group said it swung to a third-quarter loss as the value of its fuel hedges declined along with falling oil prices.
The Seattle-based operator of Alaska Airlines and Horizon Air said it lost $86.5 million, or $2.40 a share, during the quarter that ended Sept. 30, compared with a profit of $81.8 million, or $2.01 a share, during the same period last year. Revenue rose 7.7 percent to almost $1.07 billion, from $988.8 million a year ago.
Alaska Air said that without a noncash accounting charge of $218.2 million for the decline of its fuel hedges, it would have made $39.9 million, or $1.10 a share. Analysts surveyed by Thomson Reuters were expecting a profit of 93 cents a share on revenue of $1.01 billion.
The company’s fuel spending rose by $110 million during the quarter, which ran from July through September. Oil prices peaked in July, leaving airlines with sharply higher fuel bills during much of the summer. But, like Alaska Air, several airlines including Northwest Airlines and United Airlines ended the quarter with fuel hedges that have not settled yet but are worth millions of dollars less than they used to be, forcing them to book losses.
Most Read Business Stories
- Boeing made an entire fake neighborhood to hide its bombers from potential WWII airstrikes
- Seattle artists worry potential sale of historic INS building could spell the end for their studios
- Frontier cancels flight, citing maskless passengers
- Fired after organizing, Starbucks baristas turned down a payout and took their bosses to court
- 6 Dr. Seuss books won't be published for racist images
Alaska Air said it had a gain of $44 million from fuel hedges that settled during the quarter.
Both Alaska Airlines and Horizon collected more money from each passenger they flew, helping to offset some of the higher fuel expense.
“Looking forward, the volatility of oil prices and the weak economy make this an extremely challenging environment,” said Chairman and Chief Executive Bill Ayer in a statement.
Alaska Air’s stock closed off 87 cents, or 3.7 percent, at $22.63.