Executive Summary

Record Q3 revenue of $3.77B with adjusted EPS $1.05; unit revenue (RASM) rose ~1.4% YoY and remained industry-leading, but unit costs ex-fuel (CASMex) increased 8.6% at the high end of guidance due to July IT outage recovery costs and challenging weather .
Versus Wall Street: revenue slightly beat consensus ($3.766B vs $3.757B), while EPS modestly missed ($1.05 vs $1.10) and EBITDA missed ($416M vs $497M). Guidance for Q4 EPS “at least $0.40” sits modestly above consensus $0.38, and full-year adjusted EPS was cut to ≥$2.40 (from >$3.25 in July) — a key stock reaction catalyst highlighting near-term cost headwinds and a lowered annual earnings bar [*Values retrieved from S&P Global].
Strategic execution strong: launch of unified Atmos Rewards and premium card, major integration milestones (single operating certificate), selling cutover to single PSS, and new global routes (SEA–London, SEA–Reykjavik) for spring 2026, with corporate revenue up 8% YoY and continued premium and cargo strength .
Q4 setup: low-single-digit RASM growth expected; CASMex up low-single digits YoY with 2–3% capacity growth; fuel remains a headwind (elevated West Coast refining margins). Focus shifts to cost synergy ramp and normalization after transient Q3 cost impacts .

What Went Well and What Went Wrong

What Went Well

Industry-leading unit revenue continued; overall RASM up ~1.4% YoY with corporate travel up 8% YoY and premium revenue +5% YoY, cargo +27% YoY, and loyalty cash remuneration +8% YoY .
Integration milestones on track: Atmos Rewards live; single operating certificate achieved; selling cutover completed ahead of full PSS transition; management affirmed synergies ahead of plan (“delivering on our Alaska Accelerate vision”) .
Network expansion: announced SEA–London and SEA–Reykjavik for May 2026; expanded codeshare with STARLUX; customer experience investments including fleetwide Starlink high-speed Wi-Fi with complimentary access for Atmos Rewards members .

Management quote: “Alaska’s profitable quarter was powered by another period of industry-leading unit revenue… capturing synergies ahead of plan as we bring together Alaska and Hawaiian Airlines.” — CEO Ben Minicucci .

What Went Wrong

CASMex rose 8.6% YoY, at the high end of guidance, driven by elevated recovery costs from July IT outage and irregular summer operations; economic fuel cost averaged $2.51/gal amid elevated West Coast refining margins .
Profitability compressed: adjusted pretax margin 4.6% vs 9.2% pro forma prior year; GAAP diluted EPS fell to $0.62 from $1.84 YoY; adjusted EPS down to $1.05 from $2.25 YoY .
Full-year adjusted EPS guidance cut to ≥$2.40 from >$3.25 signaled greater cost/macro pressure than mid-year expectations, despite revenue strength and synergy progress .

Financial Results

Quarterly Trend

Metric	Q1 2025	Q2 2025	Q3 2025
Total Operating Revenue ($USD Millions)	3,137	3,704	3,766
GAAP Diluted EPS ($)	-1.35	1.42	0.62
Adjusted EPS ($)	-0.77	1.78	1.05
Adjusted Pretax Margin (%)	-4.5%	8.0%	4.6%
RASM (¢)	14.79	15.39	15.41
CASMex (¢)	11.89	10.90	11.23
Economic Fuel Cost ($/gal)	2.61	2.39	2.51

Q3 2025 vs Prior Year, Prior Quarter, and Consensus

Metric	Q3 2024	Q2 2025	Q3 2025 Actual	Q3 2025 Consensus
Total Operating Revenue ($USD Millions)	3,072	3,704	3,766	3,756.98*
GAAP Diluted EPS ($)	1.84	1.42	0.62	n/a
Adjusted EPS ($)	2.25	1.78	1.05	1.10*
Adjusted Pretax Margin (%)	13.0%	8.0%	4.6%	n/a
RASM (¢)	15.48	15.39	15.41	n/a
CASMex (¢)	10.16	10.90	11.23	n/a
EBITDA ($USD Millions)	n/a	n/a	416	496.58*

Note: Consensus from S&P Global; asterisks denote values without document citations. Values retrieved from S&P Global.

Segment Breakdown – Q3 2025 vs Q3 2024

Segment	Operating Revenue Q3 2024 ($MM)	Operating Revenue Q3 2025 ($MM)	Income (Loss) Before Tax Q3 2024 ($MM)	Income (Loss) Before Tax Q3 2025 ($MM)
Alaska Airlines	2,483	2,406	351	187
Hawaiian Airlines	95	857	-14	-42
Regional	491	500	56	11
Consolidating & Other	3	3	6	17
Air Group Adjusted	3,072	3,766	399	173
Adjustments	—	—	-71	-62
Consolidated	3,072	3,766	328	111

KPIs

KPI	Q1 2025	Q2 2025	Q3 2025
Revenue Passengers (000)	13,159	15,234	15,879
RPMs (MM)	17,257	20,179	20,739
ASMs (MM)	21,219	24,058	24,447
Load Factor (%)	81.3	83.9	84.8
Yield (¢)	16.28	16.62	16.51
RASM (¢)	14.79	15.39	15.41
CASMex (¢)	11.89	10.90	11.23
Economic Fuel ($/gal)	2.61	2.39	2.51
Departures (000)	123.8	139.6	144.0

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Capacity (ASMs) YoY	Q3 2025	Down ~1%	Down ~0.7% (actual)	Maintained (in-line)
RASM YoY	Q3 2025	Flat to up LSD	Up ~1.4% (actual)	Raised (actual > midpoint)
CASMex YoY	Q3 2025	Up mid to high SDs	Up ~8.6% (actual)	Maintained (high end)
Adjusted EPS ($)	Q3 2025	$1.00–$1.40	$1.05 (actual)	In-range (low end)
Capacity (ASMs) YoY	Q4 2025	n/a	Up 2%–3%	New
RASM YoY	Q4 2025	n/a	Up LSD	New
CASMex YoY	Q4 2025	n/a	Up LSD	New
Adjusted EPS ($)	Q4 2025	n/a	≥$0.40	New
Adjusted EPS ($)	FY 2025	>$3.25 (July)	≥$2.40	Lowered

Earnings Call Themes & Trends

Note: A Q3 2025 earnings call transcript was not available in the document catalog. We tracked themes using Q1/Q2 materials and Q3 releases.

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Integration milestones (SOC, PSS, loyalty)	Q2: on track; single SOC and PSS highlighted; loyalty launch in August	SOC achieved (Oct 29); selling cutover completed; Atmos Rewards live	Positive acceleration
Premium strategy and revenue diversification	Q2: Premium revenues +5% YoY; 737 retrofit progress; cargo up 34%	Premium +5% YoY; cargo +27% YoY; loyalty remuneration +8% YoY	Sustained strength
Corporate travel	Q2: Down 1% total; green shoots in July	Corporate revenue +8% YoY rebound	Improving
International gateway (SEA)	Q2: SEA–NRT launched; SEA–ICN Sep; SEA–Rome May ‘26; 787 base	Added SEA–London and SEA–Reykjavik (May ‘26)	Expanding
Technology/AI initiatives	Q2: Focus on safety/ops and guest experience	Starlink Wi-Fi fleetwide by 2027; T-Mobile partnership; free for Atmos Rewards members	Execution milestones
Fuel and cost environment	Q2: Fuel ~$2.45/gal outlook; CASMex up 6.5%	Fuel $2.51/gal; CASMex up 8.6%; elevated West Coast refining margins	Transient headwinds

Management Commentary

“Alaska’s profitable quarter was powered by another period of industry-leading unit revenue… building our future as a global airline… enabled by $1 billion in incremental profit.” — CEO Ben Minicucci .
“We anticipate fourth quarter unit revenue to increase low single digits… unit costs… low single-digits… earnings per share of at least $0.40, with full year adjusted EPS of at least $2.40.” — Company guidance .
“Congratulations… for getting us to a single operating certificate… an important step in our journey as a combined organization.” — CEO Ben Minicucci (SOC press) .

Q&A Highlights

A Q3 2025 call transcript was not available. Relevant Q2 Q&A themes for trajectory context:

Capital allocation: management sees stock undervalued and remained aggressive on buybacks within balance sheet constraints .
2027 EPS power: conviction in $10 EPS target driven by $1B net profit initiatives and share count actions; not dependent on outsized macro tailwinds .
Hawaiian synergies: profitability returned for first time since 2019; more upside as SOC/PSS and fleet optimization progress .
Demand/corporate recovery and fuel: corporate bookings improving, fuel guided ~$2.45/gal in Q3 .

Estimates Context

Q3 2025 comparison: revenue beat ($3.766B actual vs $3.757B*), EPS missed ($1.05 actual vs $1.10*), EBITDA missed ($416M actual vs $497M*). Expect near-term estimate recalibration more on margins/EPS than revenue given cost overhangs [*Values retrieved from S&P Global].
Q4 2025: company guidance ≥$0.40 EPS is modestly above consensus $0.378*, suggesting potential upward EPS revisions if fuel/refining margins stabilize and synergies ramp [*Values retrieved from S&P Global].
FY 2025: guidance cut to ≥$2.40 from >$3.25 (July) implies consensus reductions to align with lower base; revenue resilience may limit top-line estimate changes .

Key Takeaways for Investors

Revenue leadership intact; but Q3 profitability compressed by transient operational recovery costs and elevated refining margins — monitor normalization in Q4 and cost synergy realization rate .
Guidance reset is a near-term negative; however, Q4 EPS bar (≥$0.40) looks achievable vs consensus, offering scope for a small beat if fuel moderates and corporate momentum sustains [*Values retrieved from S&P Global].
Strategic catalysts: SOC achieved, Atmos Rewards live with premium card traction, and Starlink rollout — loyalty monetization (+8% YoY cash remuneration) and premium/cargo diversification are multi-year drivers .
Hawaiian integration on track; expect continued improvement as PSS cutover in spring 2026 and network optimization progress (widebody interior upgrades, new routes) feed margins .
Watch fuel/refining margins and CASMex trajectory: the exit rate setup points to sequential CASMex improvement in Q4; a key tell for 2026 margin expansion .
Balance sheet remains solid (Debt-to-cap ~60%, Adjusted net debt/EBITDAR 2.6x) supporting measured buybacks and investment in growth initiatives .
Trading lens: near-term sentiment hinges on cost normalization and delivery against the lowered FY EPS bar; medium-term thesis centers on synergy capture, revenue diversification, and SEA global gateway scaling .

Document availability note: The Q3 2025 earnings call transcript was not found in the available catalog; analysis relies on the 8-K press release, supplemental materials, and relevant Q1/Q2 documents.

Estimates source note: Values retrieved from S&P Global.

ALASKA AIR GROUP, INC. (ALK)·Q3 2025 Earnings Summary