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On Dec. 3, 2025, Alaska Air Group, Inc. ALK unveiled disappointing fourth-quarter 2025 guidance, citing issues related to outages, shutdown-related losses, and higher fuel costs, which pressured results.
A downbeat guidance always acts as a negative indicator of the company’s prospects. Given this backdrop, the question that naturally arises is: Should investors buy, hold, or sell ALK stock now? A more in-depth analysis is needed to make that determination. Before diving into ALK’s investment prospects, let’s take a glance at its financial numbers.
ALK cited several headwinds that led to an impact of nearly 55-60 cents per share, hurting its fourth quarter. This includes an internal IT and cloud service provider outage (25 cents), lost revenue owing to the government shutdown (15 cents), higher fuel costs (15 cents) and a higher book tax rate for the fourth quarter.
ALK now anticipates its fourth-quarter 2025 adjusted earnings per share to be around 10 cents per share, down from the prior view of 40 cents per share. The Zacks Consensus Estimate is currently pegged at 28 cents per share.
Fourth-quarter unit revenues or revenue per available seat miles are now expected to be up 1% compared with the prior expectation to be up low single digits on a year-over-year basis. Fourth-quarter capacity (measured in average seat miles) is now expected to be up 2% compared with the prior guided range of up 2%-3% on a year-over-year basis.
Consolidated operating costs per available seat mile (excluding fuel and special items) for the fourth quarter are now anticipated to be up 3% compared with the prior expectation to increase by low single-digits year over year.
ALK has been witnessing high West Coast refining margins due to continued supply disruptions. This has led to an increase in fuel cost expectation to $2.65 per gallon from the prior range of $2.50–$2.60 per gallon.
The government shutdown, which started in October, drove FAA-mandated flight reductions, which led to almost 600 cancelations across ALK, impacting nearly 40,000 guests. Although operations resumed immediately after the government reopening, the disruption and lost revenue are anticipated to hurt Alaska Air’s earnings by almost 15 cents for the fourth quarter.
The negative sentiment surrounding ALK stock is evident from the fact that the Zacks Consensus Estimate for the fourth quarter of 2025, as well as for full-year 2025 and 2026 earnings, has been revised downward in the past 60 days. The consensus mark for first-quarter 2026 earnings has also been projected downward in the past 60 days.
Apart from ALK, other airline companies such as Delta Air Lines DAL and Southwest Airlines Co. (LUV) have also updated their guidance.
Delta Air Lines
At the Morgan Stanley Global Consumer & Retail Conference held on Dec. 3, 2025, Delta unveiled that the government shutdown is anticipated to reduce the company’s December-quarter pre-tax profitability by almost $200 million, or about 25 cents per share. This is due to the softer travel demand witnessed in November due to the government shutdown.
On the greener side, demand remains healthy for the December quarter, with strong trends continuing into early 2026. Travel bookings have recovered to initial expectations.
Southwest Airlines
This Dallas, TX-based passenger airline company revealed its updated expectations for full-year 2025 earnings before interest and taxes, excluding special items (EBIT).
Citing issues related to lower revenues owing to the government shutdown and the impact of higher fuel prices, LUV now anticipates its full-year 2025 EBIT guidance to be around $500 million. This marks a downside from the previous guided range of $600-$800 million.
Shares of ALK have had a good time on the bourses of late, improving in double digits over the past month. The encouraging price performance resulted in ALK stock outperforming the Zacks Airline industry in the said time frame.
From a valuation perspective, ALK is trading at a discount compared to the industry, going by its forward 12-month price-to-sales ratio.
The stock has a forward 12-month P/S-F12M of 0.38X compared with 0.54X for the industry over the past five years. The company’s forward 12-month P/S-F12M ratio is also below the median level of 0.54X over the past five years. These factors indicate that the stock’s valuation is attractive. ALK has a Value Score of A.
Alaska Air’s fourth-quarter 2025 earnings expectations have been weighed down by IT outages, government shutdown-related revenue losses, higher fuel costs and higher book tax rate. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock. We believe that the negatives surrounding Alaska Air stock outweigh its fleet modernization efforts, consistent shareholder-friendly moves, and its attractive valuation. So, the stock appears to be a risky bet for investors. The stock’s current Zacks Rank #4 (Sell) justifies our analysis.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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