Alaska Air shares surge on Q4 earnings beat, robust FY26 guidance
Adjusted EPS nearly 4x analyst estimates as Hawaiian Airlines integration advances with single operating certificate
Alaska Air Group shares rallied in extended trading Thursday after the Seattle-based carrier reported fourth-quarter earnings that far exceeded Wall Street expectations, while offering investors a wide-ranging earnings forecast for 2026 that suggests confidence in its Hawaiian Airlines integration.
The parent of Alaska Airlines posted adjusted earnings per share of $0.43 for the final three months of 2025, crushing analyst projections of $0.11—a 291% surprise, according to the company's earnings release. Revenue of $3.63 billion came in roughly in-line with consensus estimates, a notable achievement given what executives described as government shutdown-related headwinds during the quarter.
Perhaps more significant for long-term investors, Alaska Air issued 2026 earnings per share guidance of $3.50 to $6.50, reflecting the expected volatility from integrating Hawaiian Airlines, which the company completed in a $1.9 billion deal that closed in late 2025. Management anticipates a first-quarter loss as the combined carrier navigates seasonal softness and integration costs.
The Q4 performance represents a dramatic turnaround from a year ago, when the airline industry was grappling with elevated fuel costs and uncertain demand. Alaska's adjusted EPS of $0.43 stands in stark contrast to analyst expectations that had been trimmed throughout the quarter amid macroeconomic concerns.
Chief Executive Ben Minicucci highlighted progress on the Hawaiian Airlines merger, noting that the company has achieved a single operating certificate—a critical regulatory milestone that allows the two carriers to function more efficiently as a combined entity. "The combination with Hawaiian Airlines will transform our business and solidify our competitive advantage for years to come," Minicucci stated in prepared remarks.
The integration milestone is particularly important for investors tracking synergies from the deal, which Alaska has projected will generate $500 million in annual cost savings. The single operating certificate allows the airlines to combine flight operations under one set of procedures and manuals, reducing complexity and enabling more efficient crew scheduling and aircraft utilization.
Wall Street analysts remain broadly bullish on the stock's prospects, with 15 of 19 analysts rating Alaska Air a Buy or Strong Buy, according to market data. The consensus price target stands at $70.73, representing roughly 45% upside from Thursday's closing price of $48.86.
The company's valuation metrics suggest analysts see significant room for multiple expansion. Alaska Air currently trades at a forward price-to-earnings ratio of 8.64 times, well below the broader market multiple and modestly below many airline peers. That depressed valuation reflects lingering investor skepticism about integration risks and the cyclical nature of airline earnings.
However, some analysts argue those concerns are overblown. The carrier's 52-week trading range of $37.63 to $78.08 illustrates the volatility that has characterized the stock over the past year, with shares having recovered significantly from their November lows as integration fears have eased and travel demand has remained resilient.
The FY26 guidance range of $3.50 to $6.50 underscores the uncertainty inherent in projecting results for a newly combined carrier, but even the low end of that range would represent substantial growth versus recent performance. Alaska Air's trailing twelve-month earnings per share stand at $1.21, suggesting the company expects earnings to more than double in 2026 even under conservative assumptions.
Investors will be watching closely for signs that the Hawaiian Airlines integration is generating the anticipated synergies without disrupting operational performance. Early indicators have been positive, with both carriers reporting strong load factors and stable unit revenue despite industrywide capacity increases that have pressured yields at competitors.
The airline sector remains sensitive to broader economic conditions, with carriers facing pressure from wage inflation, elevated aircraft maintenance costs, and uncertainty around fuel prices. However, Alaska Air's strong West Coast franchise and expanded Pacific network following the Hawaiian acquisition position it competitively as travel demand remains robust.
As the integration progresses toward full operational combination, analysts will focus on Alaska's ability to maintain its customer service reputation while capturing cost savings. The carrier has historically ranked among the top airlines in customer satisfaction surveys, a competitive advantage executives have pledged to preserve as the combined airline scales to serve more than 140 destinations across North America, Central America, Asia, and the Pacific.