Alaska Air Group (NYSE:ALK) Inc's shares eased in pre-market trading after it tightened revenue guidance and warned of lower margins following a sharp rise in fuel costs in recent weeks.
In a regulatory filing, the airline said it's now expecting third-quarter economic fuel cost per gallon to be about $3.15 to $3.25, up from prior guidance of $2.70 to $2.80.
It expects its adjusted pretax margin to be 10% to 12%, compared with prior guidance of 14% to 16% with revenue forecast to be up 1% to 2%, compared with prior guidance of flat to up 3%, weighed down by the wildfires in Maui, which had resulted in cancellations to the island.
"Our operation continues to perform at an exceptionally high level and throughout peak summer flying our completion rate reached record levels during July and August," said the filing.
"We also executed a market wage rate adjustment for our pilots, effective September 1, 2023 as part of the agreement originally reached in October 2022," it added.
"Inclusive of this impact, we are revising our CASMex guide to the better end of our range, which we now expect to be down 1% to 2% for Q3 2023."
The stock was down 0.8% in pre-market trading.