Alaska Airlines Withdraws Profit Forecast as Fuel Crisis Deepens

Alaska Airlines is withdrawing its full-year 2026 profit forecast as it grapples with rising jet fuel prices driven by the escalating conflict in Iran. According to CNBC, Alaska Airlines is bracing for a $600 million increase in fuel costs for the second quarter of 2026 and expects to pay as much as $4.75 per gallon in April. By comparison, U.S. airlines paid an average of $2.35 per gallon for fuel in January and $2.39 in February. Jet fuel typically accounts for approximately one-quarter of most airlines' operating costs, and average prices have doubled since the Iran conflict began. From a supply chain perspective, jet fuel (Jet A-1) pricing is tied to Brent crude oil via crack spread and is priced daily through Platts, Argus, and OPIS indices. Data from the IATA Fuel Price Monitor serves as the primary reference for airlines' fuel hedging decisions.

To manage these costs, Alaska is beginning in March to divert fuel supplies away from the U.S. West Coast to account for West Coast refiner margins that have risen by 20 cents per gallon, instead transporting fuel from Singapore to Seattle. The airline is also increasing baggage fees and has begun cutting scheduled flights for May and June, focusing particularly on late-night departures in high-traffic markets. From a supply chain perspective, the fuel tankering strategy leverages Singapore's Jurong Island refinery complex and integration with Shell, ExxonMobil, SRC (Singapore Refining Company), and PetroChina Singapore operations. The 15-18 day transit time via clean petroleum product tankers across the Pacific can absorb Alaska's arbitrage margin.

From a supply chain perspective, the contraction in West Coast refining capacity is a structural trend. Refineries such as Phillips 66 Los Angeles, Valero Benicia, Chevron El Segundo, and Marathon Martinez are either shutting down or transitioning to renewable diesel conversion under CARB (California Air Resources Board) regulations and LCFS (Low Carbon Fuel Standard) obligations, keeping regional refining margins structurally elevated. SAF (Sustainable Aviation Fuel) blending mandates and CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) compliance continue to create long-term cost pressures for airlines. Alaska's Seattle-Tacoma International Airport (SEA) hub manages fuel logistics collectively through Sea-Tac Fuel Facilities LLC; however, feedstock supply constraints directly reflect operational decisions.

Other airlines are similarly facing challenges in recent weeks. In April, Air Canada suspended all flights from Toronto and Montreal to New York's John F. Kennedy Airport between June and October; Delta has cut summer routes from JFK, Detroit, and Boston; Lufthansa has grounded 27 aircraft serving its short-haul CityLine subsidiary. From a supply chain perspective, airline capacity cutbacks are creating a domino effect in the air cargo market. The reduction in belly cargo capacity has driven air freight rates to elevated levels across the BAI (Baltic Air Freight Index) for e-commerce, pharmaceutical, and electronics segments. Full-freighter operators such as FedEx Express, UPS Airlines, DHL Aviation, and Cargolux are moving into relatively advantageous positions. In conclusion, Alaska Airlines' withdrawal of its profit forecast is further evidence of the concrete financial impact of the Iran conflict on the global airline sector.

Key Points:
1. Alaska Airlines is withdrawing its full-year 2026 profit forecast.
2. A $600 million fuel cost increase is expected for Q2; April prices reach $4.75 per gallon.
3. The company is beginning to transport fuel from Singapore to Seattle.
4. May-June flight cutbacks focus on late-night departures.
5. Air Canada, Delta, and Lufthansa are implementing similar cutbacks.

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