July 21 (Reuters) - Alaska Air on Tuesday forecast third-quarter profit below Wall Street expectations as renewed U.S.-Iran fighting drove fuel prices higher.
The Seattle-based airline expects third-quarter adjusted profit to be in the range of $0 per share to $1 per share. Analysts, on average, had estimated profit of $1.38 per share, according to data compiled by LSEG.
Shares of the carrier dropped 3% in extended trading.
U.S. airlines face billions of dollars in additional fuel costs this year after
the war in Iran and prolonged disruption to shipping through the Strait of Hormuz drove oil and jet-fuel prices sharply higher. United alone expects nearly $6 billion in additional 2026 fuel expense compared with its plan at the start of the year.
Jet fuel retreated sharply from its spring peak following a fragile truce between Washington and Tehran in June, but prices climbed again after hostilities resumed in July.
Alaska expects its economic fuel cost to average $3.75 per gallon in the July-to-September quarter. That is lower than the $4.43 per gallon it paid in the previous quarter, largely due to a moderation in refining margins.
Fuel typically accounts for about a quarter of an airline's operating expenses. The volatility has prompted carriers to raise fares, trim flying and pursue additional cost reductions.
Alaska is particularly exposed to West Coast fuel markets, where limited refining and pipeline capacity can make prices more expensive and volatile. It has been working to diversify its supply by importing more fuel from Singapore, although Singapore refining margins also surged earlier this year.
Alaska currently sources about a fifth of its fuel there and has said it could eventually raise that proportion to 30% to 40%.
Delta Air Lines earlier this month gave a stronger-than-expected third-quarter outlook, while United Airlines' forecast fell short of Wall Street estimates. Both carriers said strong demand and higher fares were helping offset increased fuel costs, with premium travel remaining particularly robust.
Alaska reported adjusted loss of 92 cents per share for the second quarter, narrower than analysts' average estimate of a loss of 99 cents per share, according to data compiled by LSEG.
(Reporting by Nandan Mandayam in Bengaluru; Editing by Pooja Desai)
