Alaska Air Group said its jet fuel costs fell by 13pc in the third quarter from a year earlier, but expects prices to rise as crude prices increase.
The fuel costs for the third quarter averaged $1.58/USG, down 13pc from the same period last year.
Earnings benefited from "less of a tailwind from lower fuel prices" than in the first or second quarter of this year, chief financial officer Brandon Pedersen said. Economic fuel costs declined by $18mn this quarter, but the year-over-year declines in Q1 and Q2 were more than three times that amount, he said. "With oil prices now over $50/bl, it is worth mentioning the improving efficiency of our fleet that will help offset rising fuel costs." Fuel prices have mostly fallen over the last two years and have breached a 12-year low.
Alaska Air Group is still working toward acquiring Virgin America, chief executive Brad Tilden said. Alaska Air Group announced in April its plans to acquire Virgin America, in a merger that will see the airline expand its presence on the west coast and become the country's fifth largest US airline. Alaska Air said it has raised about $1.5bn of funding in anticipation of the planned acquisition.
"The scope of issues that remain with the Justice Department is manageable, but we want to take the time to work through them," Tilden said. "It is hard to predict the exact timing for when this will wrap up, but we are working through the process." The group hopes to have anti-trust clearance "soon" and is confident the deal will get done, Tilden added.
Meanwhile, load factor for the quarter was 85.6pc, flat from the same period last year. System capacity, as measured by the distance traveled by all available seat miles (ASM), rose by 8pc from the same time last year to 11.2bn miles.
Alaska Air Group reported net income for the third quarter of $272mn, down by 2pc from the third quarter of 2015.
