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Alaska Air withdraws its 2026 profit forecast due to fuel cost uncertainty

Alaska Air Group has withdrawn its full-year forecast due to sky-high jet fuel costs caused by the Iran War and its 'chokehold' on global oil supplies. This is causing margins to be hammered, and the outlook for the future is clouded.

The cost of jet fuel has risen dramatically after U.S. and Israeli strikes on Iran cut off the Strait of Hormuz - a vital artery used for oil shipments around the world. This is the industry's worst shock since the COVID-19 Pandemic.

Since the start of the conflict, prices for jet fuel have nearly doubled, leaving carriers unable to re-price tickets that were already sold.

Fuel prices fluctuation and the uncertainty surrounding war have clouded airline's ability to predict future outcomes.

Alaska had forecasted a profit of $3.50 - $6.50 per share for 2026.

Alaska Air Group CEO Benito Minicucci stated last month that the airline burns around 100 million gallons per month. This means that a $1 increase in jet fuel costs adds approximately $100 million to monthly cost.

Minicucci stated that Alaska is shifting fuel supply away from the U.S. West Coast. This includes tankering fuel?from Singapore to?Seattle because refinery margins have increased jet fuel prices by about 20 cents a gallon.

The West Coast of the U.S. has higher jet fuel prices than other parts of the country. This is because there are fewer refineries and pipelines to major fuel hubs, leaving a market that's relatively isolated. Supplies can become tighter quickly when disruptions occur, and imports may be used to fill in gaps.

(source: Reuters)