알래스카 에어 그룹(ALK) 2026년 3분기 실적 발표회: 연료비 부담에 전망 압박

핵심 요약

• 알래스카 에어 그룹은 2026년 3분기 GAAP 기준 1억 4,700만 달러(주당 1.32달러)의 순손실을 기록했다. 특별 항목 및 개정된 세율의 영향을 제외하면 조정 순이익은 4,000만 달러(주당 0.36달러)였다.
• 매출은 수송 능력이 2.4% 증가함에 따라 전년 동기 대비 14% 늘어난 43억 달러를 기록했다. 단위당 매출은 12% 가깝게 증가했으며 수입률은 13.4% 개선되었다.
• 항공유 비용은 실적에 지속적인 압박으로 작용했다. 3분기 평균 항공유 가격은 갤런당 3.94달러였으며, 경영진은 4분기 가격을 갤런당 4.65~4.85달러로 예상해 당초 계획 대비 약 6억 5,000만 달러의 비용이 추가될 것으로 전망했다.
• 프리미엄 매출은 약 24.5% 증가해 전체 매출의 36%를 초과했다. 기업 고객 관리 매출과 향후 기업 예약 모두 전년 대비 약 30% 증가했다.
• 로열티 프로그램 현금 보상은 21% 증가한 7억 2,100만 달러를 기록했고, 화물 매출은 9% 증가했다. 다각화된 매출 비중은 전체의 54%에 달했다.
• 경영진은 4분기 조정 주당순손실을 2.50~2.00달러, 연간 조정 주당순손실을 5.50~5.00달러로 제시하면서도, 항공유 가격과 관계없이 2027년 핵심 이익이 최소 3~4달러 개선될 것이라는 자신감을 유지했다.

주요 재무 데이터

사업 및 영업 실적

프리미엄 수송량은 여전히 주요 매출 동력으로 작용했다. 프리미엄 매출은 약 24.5% 증가해 전체 매출의 36% 이상을 차지하며 전년 동기 대비 3%포인트 상승했다. 알래스카 에어 그룹은 2030년까지 프리미엄 매출 비중 40%를 목표로 하고 있다. 협동체(narrow-body)의 프리미엄 개조는 완료되었으며, 광동체(wide-body) 업그레이드는 향후 수년에 걸쳐 계획되어 있다.

기업 고객 관리 매출은 30% 증가했으며, 향후 예약 역시 전년 수준을 약 30% 상회했다. 시애틀-런던 히드로 노선의 비즈니스석 탑승률은 경영진의 공정 시장 점유율 벤치마크를 3%포인트 초과했다.

국제 장거리 노선 확장으로 인해 단위당 매출 압력이 약 1%포인트 발생했지만, 3분기 국제선 탑승률은 7.5%포인트 개선되었고 단위당 매출은 24% 상승했다. 회사는 내년 봄부터 시애틀발 오사카 및 타히티 노선의 연중 운항을 발표하여, 시애틀 출발 직항 국제선 노선을 9개로 늘렸다. 경영진은 2030년까지 15개 노선 확보 및 시애틀 선도 장거리 국제 항공사 입지 구축을 목표로 계속 추진하고 있다.

포틀랜드, 샌디에이고, 로스앤젤레스 및 일부 캘리포니아-하와이 노선을 포함한 전략적 성장 시장은 전체 수송 능력의 약 13%를 차지했고 20% 이상 성장했으나, 전체 시스템 단위당 매출을 약 3%포인트 감소시켰다. 경영진은 이러한 압력이 2027년 2분기부터 전년 대비 기저 효과로 본격 완화되기 시작할 것으로 예상하고 있다.

하와이 노선은 전체 시스템 단위당 매출을 약 2%포인트 감소시켰다. 경영진은 기상 악화, 급격한 수송 능력 증가, 통합 과정에서의 마찰을 원인으로 꼽았으나, 2027년 초 예약 현황과 보다 건설적인 업계 수송 능력 전망이 실적 개선을 뒷받침한다고 밝혔다.

로열티 프로그램 현금 보상은 21% 증가한 7억 2,100만 달러에 달했다. 서밋(Summit) 카드 회원의 약 절반이 포트폴리오 신규 가입자이며, 40%는 알래스카 항공의 주요 거점 지역 외부에서 유입되었다. 화물 매출은 9% 증가했으며, 2027년에 도입될 4대의 신규 보잉 737 화물기로 협동체 화물기 수송 능력이 2배로 늘어날 예정이다.

경영진 가이던스

경영진은 4분기 매월 확보된 수입률(held yield)이 전년 동기 대비 두 자릿수 증가했다고 밝혔다. 핵심 여객 쿠폰 매출이 지속적으로 가속화되고 있으나, 전년도 아트모스(Atmos) 로열티 및 신용카드 출시에 따른 기저 효과가 4분기 공시 단위당 매출 성장세에 부담을 줄 것으로 보인다.

회사는 장기 수송 능력 증가율이 경영진의 기저 비용 인플레이션 추정치인 4%~5%에 대체로 부합하는 약 4% 수준을 향해 이동할 것으로 예상하고 있다. 보다 구체적인 2027년 가이던스는 1월에 발표될 예정이다.

리스크 및 주목할 점

항공유 비용은 단기적으로 가장 큰 리스크다. 4분기 항공유 비용은 2026년 당초 가정했던 갤런당 2.50달러보다 2달러 이상 높은 유가를 바탕으로 당초 계획보다 약 6억 5,000만 달러 늘어날 것으로 예상된다.

국제선 노선과 전략적 성장 시장은 여전히 투자 단계에 있어 단위당 매출에 일시적인 압박을 가하고 있다. 경영진은 수송 능력이 안정을 찾고 연계성이 확대되며 추진 중인 대서양 및 태평양 합작 사업이 진전됨에 따라 실적이 개선될 것으로 기대하고 있다.

연료비 제외 비용은 공항 및 부동산 경비, 엔진 정비, 인건비 관련 인플레이션으로 인해 계속 압박을 받고 있다. 출발 직전에 운항 일정이 감축되면 비용 조절이 어렵기 때문에 수송 능력이 계획보다 낮아질 경우 단위당 원가가 상승할 수도 있다.

수익과 잉여현금흐름이 개선되면 재무제표 회복이 경영진의 최우선 재무 과제가 될 것이다. 경영진은 유가 고공행진이 장기화될 경우 자사주 매입 및 자본 집행 시기에 영향이 미칠 수 있음을 인정했다.

애널리스트 Q&A 주요 내용

• 국제선 수익성: 경영진은 알래스카 항공이 국내선 연결, 판매망, 프리미엄 상품 및 파트너십을 강화함에 따라 국제선 실적이 개선되고 있다고 밝혔다. 회사는 4분기 중 대서양 및 태평양 합작 국제 사업 승인을 신청할 예정이다.
• 자본 배분: 베니토 미니쿠치 CEO는 유가가 높은 수준을 유지할 경우 유동성 확보를 위해 자사주 매입에 계획된 현금을 사용할 수도 있다고 밝혔다. 경영진은 보다 정상적인 이익 환경에서 자사주 매입이 주가 가치를 제고할 가능성이 여전히 크다고 판단하고 있다.
• 기재 도입 계획: 알래스카 항공은 1분기 말을 시작으로 2027년에 보잉 737-10 항공기 22대를 인도받을 예정이다. 초기 인도분은 표준 국내선 좌석 배치를 적용하며, 2028년 2차 인도분은 오로라(Aurora) 구성 및 라이플랫 좌석을 탑재할 계획이다.
• 설비투자 유연성: 경영진은 737-10 및 787 항공기가 기재 효율성과 국제선 확장에 핵심적 역할을 하지만, 약 19억 달러 규모의 2027년 설비투자 계획은 유연성을 지니고 있다고 설명했다.
• 수익 관리: 회사는 단순한 탑승률보다는 단위당 매출 극대화를 우선시하고 있다. 경영진은 지역별로 수입률과 여객 수송량 간의 균형을 계속 조정할 용의가 있다고 덧붙였다.
• 고유가 장기화: 경영진은 유가 고공행진이 지속될 경우 결국 업계 차원의 대응과 운임 및 수송 능력 조정을 통한 전면적인 실적 회복이 필요할 것이라고 언급했다. 알래스카 항공의 프리미엄, 로열티, 국제선 및 화물 전략은 이익 하한선을 높이고 외부 충격에 대한 민감도를 줄이는 것을 목표로 한다.

실적 발표 콘퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good morning, ladies and gentlemen, and welcome to the Alaska Air Group 2026 Third Quarter Earnings Call. [Operator Instructions] Today's call is being recorded and will be accessible for future playback at alaskaair.com. [Operator Instructions]

I would now like to turn the call over to Alaska Air Group's Vice President of Finance, Planning and Investor Relations, Ryan St. John.

Ryan St. John

Thank you, operator, and good morning. Thanks for joining us today to discuss our third quarter 2026 earnings results. Yesterday, we issued our earnings release detailing our results, which are available at investor.alaskaair.com. Today, you'll hear updates from Ben, Andrew and Shane. Several others of our management team are also on the line to answer your questions during the Q&A portion of the call.

Air Group reported a third quarter GAAP net loss of $147 million or $1.32 loss per share. Excluding special items and the impact of our revised tax rate, adjusted net income was $40 million and adjusted earnings per share was $0.36. As a reminder, forward-looking statements about future performance may differ materially from our actual results. Information on risk factors that could affect our business can be found within our SEC filings. We will also refer to certain non-GAAP financial measures such as adjusted earnings and unit costs, excluding fuel. And as usual, we have provided a reconciliation between the most directly comparable GAAP and non-GAAP measures in today's earnings release.

Over to you, Ben.

Benito Minicucci

Thanks, Ryan, and good morning, everyone. Just a few weeks ago, we laid out the next chapter for Alaska Air Group and our path becoming a larger, more diversified and more resilient business. Our third quarter results reinforce our confidence in that strategy despite unprecedented fuel prices that are adding $1.8 billion in cost this year and pressuring our profitability.

Demand remains healthy. Revenue performed in line with our expectations, and we continue to execute across our initiatives in premium, loyalty, cargo and international, all helping to drive a 7-point RASM to CASM ex spread for the quarter, up from 2 points in Q2. We continue to see strong momentum across the four strategic growth areas we highlighted at our Investor Day. We said the first chapter of Alaska Accelerate was about building the foundation and the next chapter was about harvesting the value from it. That transition is underway.

The investments we've made over the last several years are driving greater scale, deepening our relevance with guests, and strengthening loyalty across our geographies. Diversified revenues now represent 54% of our total mix, up 4 points from last year and 1 point from last quarter. As this mix continues to grow, our earnings will become less dependent on fuel and more resilient. Premium demand remains robust with revenues reaching more than 36% of our total mix, up 3 points year-over-year. That reflects the strength of our products and our growing relevance across the West Coast and beyond as we build towards our 40% target by 2030.

Our international franchise in Seattle is growing rapidly. We're excited to announce that next spring, we'll launch year-round service from Seattle to Osaka, Japan, and Papa Tahiti, that brings our nonstop international routes out of Seattle to nine as we built towards 15 and our goal of becoming Seattle's #1 long-haul international carrier by 2030. And we see even more opportunity ahead as we prepare to file with the DOT to join the Atlantic and Pacific joint international businesses in the coming weeks.

Loyalty program cash grew 21%, another strong indication that the investments we're making are driving greater relevance and deeper loyalty with our guests. And lastly, cargo revenue grew 9%. We're optimistic about growing this business to a more meaningful level as we deploy our new 737 freighters in Alaska and Hawaii next year and work toward renewing our partnership with Amazon with better economics and expanded service.

Our focus remains on the things we can control. And as we're demonstrating, those things continue to move in the right direction. We know we can do better than the results we're producing today. That's precisely why we're focused on the areas of the business we believe will drive higher and more resilient earnings over time. Premium, international, loyalty and cargo are the path forward. And increasingly, we'll see the investments we've made over the last several years translate into tangible results across the business, and we're doing it with a team that is engaged, energized and excited about the future.

I want to thank our employees for their continued commitment to our guests and to one another. Their dedication makes everything we're accomplishing possible, and it gives me tremendous confidence in the opportunities ahead. And as we look to our next chapter, we're excited to welcome Amaresh Siva, our new Chief Information Technology Officer. He brings deep experience and strong leadership to the role and I know he'll be an important partner as we continue to build the capabilities that will support Air Group's future. We have a lot of work ahead of us, but I'm confident in our strategy and in this team.

Now it's about execution, and delivering the results. Andrew, over to you.

Andrew Harrison

Thanks, Ben, and good morning, everyone. Today, I'll walk through our third quarter financial performance, near-term demand and revenue and the ways we're continuing to diversify and strengthen our revenues as part of Alaska accelerate. In the third quarter, total revenues reached $4.3 billion, up 14% year-over-year, while capacity grew 2.4%, unit revenue increased nearly 12%, in line with our expectations of low double-digit growth. Yield for the quarter grew 13.4% with strong sequential improvement each month from 11% in July and finishing with a particularly strong September up approximately 17% year-over-year.

We achieved this result despite several factors impacting our coupon unit revenues, which we believe are temporary in nature, including approximately 3 points of pressure from strategic growth markets we outlined at Investor Day, which represent about 13% of our capacity and are growing more than 20%. As this capacity matures, like trends we've seen in San Diego, we expect meaningful improvement in year 2 yields and loads along with loyalty and corporate market share.

Another 1 point of pressure from the rapid growth of our international long-haul flying. We expect this dynamic will continue near term as we add new routes, but we're encouraged by the progress we're seeing. And as our international franchise matures, we see a clear opportunity to improve performance. And a continued 2-point headwind from Hawaii, excluding where we undertook double-digit capacity growth, which is included in my first point, as improvements in this market have been outpaced by those across the rest of the system.

As we discussed before, this is one market where our competitive advantage is clear and differentiated. And one of the reasons we remain confident in Hawaii over the long term is that no one is more invested in the market. The big 4 have less than 4% of their network invested, nor understands the travelers and their unique needs better than we do. Just as we've demonstrated in Seattle, our sustained focus and leadership have built a competitive advantage that is difficult to replicate and will only strengthen over time.

So to summarize. Today, over 40% of our system is absorbing 6 points of unit revenue pressure that we don't expect to persist long term. Many of these investments across the network are necessary to increase our West Coast passenger share, capture more premium and corporate demand and drive industry-leading loyalty in our geographies. As our growth annualizes and international markets mature, we see real opportunity for improvements starting in 2027.

Premium traffic remained one of our strongest revenue performers, growing approximately 24.5% year-over-year and reaching more than 36% of total revenue. That's up 3 points versus last year. With our narrow-body premium retrofits complete, we'll capture the full annualized benefit next year. And we still have meaningful runway ahead as we expand premium offerings across our wide-body fleet over the next few years, giving us confidence in our path towards a 40% premium revenue mix and the earnings opportunity that comes with it.

Managed corporate revenues increased 30% in the third quarter and future bookings are also running approximately 30% above prior year levels, reflecting share gains across both business and large lease agencies.

For London, Heathrow, our business class cabin performance exceeded our fair market share by 3 points in the third quarter, demonstrating our ability to convert our strong domestic corporate performance in the international share as we grow our international footprint and expand our premium portfolio, making us a more relevant partner and creating meaningful long-term share opportunities.

Loyalty continues to be 1 of the strongest proof points that our strategy is working. Program cash remuneration of $721 million increased 21% during the quarter, supported by strong card spend and continued engagement across the ecosystem. We are particularly encouraged by the performance of our premium Summit card. Just one year after launch, roughly half of cardholders are new to our portfolio, 40% come from outside our core geographies, and international spend is running several times higher than the rest of the portfolio. Although the strength of that card product launch creates a year-over-year headwind for us in the fourth quarter, we still anticipate strong annual program cash growth through 2030, in line with the targets we shared a few weeks ago.

Looking ahead to the fourth quarter, the demand environment remains healthy, supported by continued strength in pricing and yield trends across much of the network. Held yields for the each month in Q4 are currently up double digits versus last year. We expect capacity growth to moderate to approximately 1% to 1.5% year-over-year, with most of that growth coming from international. With continued momentum across premium and corporate travel, we expect fourth quarter unit revenue performance that is broadly in line with the strength we saw in the third quarter, up low double digits.

To close, the commercial strategy we laid out at Investor Day is working. We've built tremendous scale and unrivaled leadership across the West Coast. And we're translating that scale into greater relevance through a more global network, stronger premium products, and deeper loyalty. And importantly, there is significant opportunity ahead as our international franchise matures. We refine our revenue management capabilities and complete our product offerings to fully serve our guests.

While fuel remains a significant near-term headwind, it does not change our confidence in the strategy for the longer-term opportunity ahead.

And with that, I'll pass it to Shane.

Shane Tackett

Thanks, Andrew, and good morning, everyone. It's been covered and is well understood, our third quarter results were significantly pressured by the current fuel environment, where we saw prices range from approximately $3.10 in early July to nearly $5 as we exited the quarter. The underlying business model transformation we are undertaking, however, is gaining traction, with premium international loyalty and cargo, all contributing meaningful year-over-year revenue growth in the quarter. We are both committed to and confident in our strategic direction, and we will remain focused on delivering a structurally stronger business model in which earnings are more resilient over time.

We ended the quarter with approximately $3.3 billion of liquidity and continue to maintain significant financial flexibility with $20 billion in unencumbered assets. Debt to capitalization remained stable at 66%. And as we improve earnings and generate free cash flow, restoring the balance sheet will be our top financial priority.

Turning to third quarter performance. Nonfuel unit costs increased 4.4% year-over-year on only 2.4% capacity growth, in line with guidance. This was a strong sequential improvement from the 6.5% unit cost increase we saw in the second quarter. We continue to have opportunity to further optimize and lean out the business as we move through operational integration milestones, and we are also focused on flying closer to our original capacity plans going forward, as the operation benefits greatly from predictability in our schedules.

Moving to fuel. Our average price was $3.94 per gallon during the quarter, above our original July guidance of $3.75, driven by higher crude and refining costs. Fuel has continued to move higher into the fourth quarter. We did see West Coast refining margins below Gulf Coast margins during September, while Singapore refining margins and fuel pricing have returned to being our lowest cost source in our network.

Given recent trends, we expect our fourth quarter economic fuel cost to average between $4.65 and $4.85 per gallon. This versus our initial plan of $2.50 per gallon entering 2026. The more than $2 of additional per gallon cost is adding $650 million of expense to the business in the fourth quarter.

As Andrew noted, capacity is sequentially lower in the fourth quarter, increasing 1% to 1.5% year-over-year. This growth level is over 2 points below our original plan for the year and includes reductions we made to the schedule within the past 2 to 3 months.

The past 6 years have seen a trend of planning capacity higher than what we've actually flown, almost entirely due to external events. That pressures unit costs and is a phenomenon we are focused on reversing as we move into 2027 and beyond. We expect nonfuel unit cost to grow mid-single digits in the fourth quarter against our capacity growth of less than 1.5%. This is consistent with what we've shared in the past regarding baseline inflation in the business of 4% to 5%, which requires similar capacity growth to fully offset.

Cost drivers include higher airport and real estate costs as well as additional engine maintenance expenses, consistent with what we see through the rest of the industry. We are encouraged by the improved spread between unit revenue relative to unit costs. We generated approximately 5 points of sequential RASM to CASM X spread improvement in the third quarter and expect a healthy positive spread to persist into the fourth quarter. This is evidence that the commercial investments we're making are helping drive greater RASM as we progress toward our targets and translate those initiatives into higher earnings over time.

Taken together, we expect to produce a fourth quarter adjusted loss per share of between $2.50 and $2, and that includes a more than $4 fuel headwind versus our original assumption. For the full year, we now expect an adjusted loss per share of between $5.50 and $5. As we outlined at our Investor Day, we're focused on building a business with more ways to generate earnings by building on our strong operational performance, safety and care, growing higher-margin revenue streams, maintaining our cost performance and restoring balance sheet strength.

We're already seeing progress in the underlying business with our diversified revenue mix reaching 54%, up 3 points from last year. The foundation is built. Our focus now is on fully turning that progress into stronger earnings and cash flow. And regardless of fuel, we are confident in at least $3 to $4 of core earnings improvement next year.

To close, the earnings we're producing today are not indicative of what we expect the business to earn in a stable macro environment. Higher fuel is creating a significant near-term headwind, and we remain in the midst of a significant business model transformation that will produce higher unit revenues while we also drive more efficiency in our unit cost structure.

With that, let's go to your questions.

Operator

[Operator Instructions] And our first question will come from Mike Linenberg with Deutsche Bank.

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Michael Linenberg

I want to just call out in your release this pressure from strategic growth market investments and presumably, that's the ramp-up of these international markets. I know you're at nine now or you've announced nine air flying a little bit less than nine, and you're on your way to 15. How long does it take to ramp those up to maturity to get to profitability? And as sort of a part of that, Andrew, you called out this, call it, market share outperformance in the Heathrow market. I think you said 3 points. Is that volumes? Or is that actually a revenue number?

Andrew Harrison

Mike. Maybe a couple of things firstly. The -- of the 6 points I just shared in my prepared remarks, the growth that I'm referring to and 3 points of it is actually the markets that we grew 20-plus percent in that it's going to be your Portland and San Diego and Los Angeles and even some California, Hawaii markets. And again, we've seen great loyalty growth, great strength in corporates and all the rest of it. So that is good growth, and that's what we sort of unpacked on Investor Day.

On the international, we shared, that was about 1 point of drag. Even that said, we saw a 7.5 point increase in load factor in the third quarter from our international and our unit revenues were up 24%. So in the near term, it will continue to be a drag. Just to be clear on the international and the London specifically, that's our fair share of the front premium cabins. And we had a premium. And that's very exciting for us to see, which fits our thesis that people from Seattle and connecting into Seattle on our long haul they want to fly with us.

Operator

And our next question will come from Ravi Shanker with Morgan Stanley.

Ravi Shanker

So the new international routes that you guys have ramped up, obviously include a fair bit of fuel pass-through in the current pricing. Are you confident that can be the new baseline going forward -- when fuel normalizes as well? And kind of how are you thinking about the kind of unit economics there over time?

Andrew Harrison

I think -- Ravi, I think international, just like domestic or any other, is basically going to be dictated by, obviously, the fuel cost and then demand. And you can add all the sorts of fuel charges if you want. But at the end of the day, we need to see continued strength in demand. And as I shared earlier, the good thing about where we're coming from is that we're just seeing nothing but ramping an upside as we get better about selling domestically and internationally, the connections, the product that's coming, the joint businesses that are coming. So we feel very good about the platform that we're growing from on the international basis.

Operator

And we'll move next to Jamie Baker with JPMorgan.

Jamie Baker

So for the fourth quarter, it looks like you trimmed about 2 points of flying from a onetime plan. Internally, what sort of financial metric do you use in deciding when to add that back? I mean it's obviously marginal flying, you may characterize it as utilization fun. I assume that internal hurdle is different than me just looking at the output in my earnings model, for example.

Shane Tackett

Jamie, thanks for the question. I think number one, I would just say, and we mentioned it in the prepared remarks, I think increasingly, we are focused on flying what we plan to. It's the best thing for the company long term, best thing for the operation. Once we structurally get ready to fly a certain schedule, it's hard to shift costs out if we're making cuts close in. I think in terms of like once we've made some fringing to the schedule when lines come back, there's actually many layers to that. We have a lot of investments we're making into the fleet with things like StarLink. And obviously, this year, we went through incremental additions in the first class cabin and the PC cabin. And then on the wide-body fleet, we're going to start putting premium reserve and remodeling the front of those cabins as well. So once we decide that we're going to free up an aircraft or a line of aircraft, we tend to not just put them on the ground and let them be lazy spares, we go do something with them on the investment side of the maintenance side. So it's not just a peer sort of like internal economic exercise. Certainly, if we see demand kind of surge back in a way that a market needs more capacity, we have a lot of flexibility to move claims around and match that capacity.

Jamie Baker

Okay. I get it. I asked in kind of a clunky way, but that makes it clear. And then second, look, in hindsight, but the share repurchase program, obviously hasn't worked out particularly well given your elevated leverage. I assume you may have some regrets in that regard. You can comment on that if you want. But more importantly -- what's the lesson here? I mean, does this imply more prudent capital allocation going forward?

Benito Minicucci

Jamie, you always ask great insightful questions. Look, I think if we had a crystal ball in the future and could have predicted where fuel prices are going to go, yes, I think we would have thought about the share buyback differently, just to be honest. And even as we go into next year, we'll see what the price of fuel is and we'll use the share buyback that is planned as perhaps conserving that cash for next year, just to be totally honest and candid. So I think in a normal environment, this would have been very accretive. I think if -- again, given the earnings that we had planned both in '25 and '26, I think this would have been hugely accretive.

The last 2 years have been unconventional, as you know, covering the industry so many years. But going forward, I think at the end of the day, we're optimistic that if we drive the earnings that we're going to have fuel, we'll have to normalize to a certain level. The investments we're making across those four pillars we talked about I think will put us in a good position. And I think we won't regret having bought back any, I don't know, 20 million shares. I think at the end of the day, we're not going to regret buying back 20 million-some-odd shares as we head into '27 and '28.

All right. Thanks, Jamie. And sorry we missed you at Investor Day.

Operator

And we'll now move to our next question that will come from John Godyn with Citi Group. .

John Godyn

In the prior question there from Jamie, Ben, I heard you use the phrase normal environment. And it kind of sounds like normal is lower fuel prices. There are other airlines out there describing normal as a new normal of perpetually higher fuel prices. And I was just hoping to kind of reflect on that for a second. At the Investor Day, you guys had a very wide range on your forward EPS. But maybe you can talk about how if we find ourselves in a new normal with higher for longer fuel, what adjustments could be made to kind of protect earnings and kind of hit the outlook that you guys offered.

Benito Minicucci

I'll start and then I'll hand it over to Shane. And John, it's a great question. what we unveiled at Investor Day was a strategy to allow the company to be more resilient to not only oil shocks, but other economic shocks like tariffs. And so the investments we're doing in premium and international and the loyalty benefits we're going to get and cargo, those are going to really raise the earnings floor and have us become less vulnerable to these external shocks. So I think it's that strategy that's going to -- as it's ramping up here over the next 2 years, that's really going to help us whatever that new normal is. Now nobody knows what that new normal is going to be, and we tried to give you a range at Investor Day. But we feel confident with our plan that once there is a new normal, then Alaska is going to be a winner in this industry. Shane, I don't know if you want to put any more context there.

Shane Tackett

That was perfectly said. The thing I would just add is, for the longest time at the company, I think we planned sort of fleet economics on $3 of fuel -- market economics on $3 of fuel. And for 5 or 6 years, we paid $2.50. So we're not really here to predict what's going to go on in that part of the market. I think, as Ben said, we're going to build a business that can be responsive to whatever type of fuel environment we see over the long term.

John Godyn

Okay, guys. I appreciate that. And if I could just ask a nit here on the 737-10 recently certified. You guys had to kind of juggle a little bit during the Investor Day amid a lot of uncertainty about it. I recall you guys saying however this plays out, it doesn't really change our fleet plan. Given that it was just certified, maybe you could just kind of remind us when do you expect first delivery? What's the latest thinking? And any update on the fleet plan in light of that?

Benito Minicucci

Yes. Thanks, John. I was at the certification ceremony yesterday. It was thing of beauty. Actually, that 10 MAX just looking at it looks fantastic. It looks like it's going to be a great-looking airplane on the Term Act. Next year, we're going to have 22 deliveries. We plan to start taking them some time late in the first quarter. And so that -- and so just to remind you, the first tranche of airplanes are going to be in our standard domestic configuration. And then in' '28, the second tranche is going to be in what we call our Aurora configuration with the lie-flat seats, which we're really excited about. So right now, all systems are go for next year in terms of delivery, 22, 10 MAXs that will fit beautifully into our fleet.

Operator

We'll move next to Savi Syth with Raymond James.

Savanthi Syth

Maybe, Andrew, just following up on the kind of the pressures that you called out. I understand that, that kind of the long-haul rapid growth there, that pressure will continue for some time here. But curious how you're thinking about kind of the forward direction of like the 3 points from strategic growth markets, when does that subside? And on Hawaii, when does that have the subside or you start to anniversary?

Andrew Harrison

Yes. Thanks, Savi. So a couple of things. Obviously, the growth that we saw this year on the call will annualize going into next year and start materially annualizing as we get into the second quarter and beyond. We have core growth next year of a couple of points that's all gauge on the dash turns that Ben just talked about in international, which we believe is solid growth. But Hawaii, just to touch on that, and it's been a challenging year for Hawaii as we all know. But I have real optimism for 2027. And there's really three reasons for that.

The first one is I don't really expect multiple generational storms that impacted Hawaii and we actually had negative unit revenues in the second quarter and the third quarter from the West Coast to Hawaii. But I'm looking at 2027 right now and even in January and February, which is early days, I'm seeing double-digit unit revenues there. So that's headed in the right direction.

Secondly, as you know, we transitioned to a single PSS in April, and that got rid of all sorts of friction, network connectivity challenges and Hawaiian brand joined the One World. And then the third area is industry capacity is appearing constructive, as I sit here today. The industry actually grew mainland capacity to Hawaii by 6% this past year, which is very significant. But as I look into next year, Q1, it's up about 1.9% and second quarter, it's actually down over 4%. So as we stand back and look at Hawaii, and our #1 utility market share departures, nonstops, premium seats, we feel like the setup for Hawaii next year with the annualization of obviously our growth markets, and we feel optimistic.

Savanthi Syth

That's helpful, Andrew. Can I ask just on the fourth quarter guide, low double digits means like a similar RASM as the third quarter, but you are having slower capacity growth. Is that just a tougher comp that's being reflected there? Or is there something worsening somewhere or some seasonality in national that's kind of causing you?

Andrew Harrison

Yes. Right. I actually appreciate you asking that, Savi, because that's an important note is, if you look at our core coupon revenues, actual passenger fares paid, they're actually continuing to accelerate into the fourth quarter. So we had sort of like 3 points from Q2 to Q3 and Q3 to Q4, our coupon is actually accelerating nearly 3 points. What it's being masked with a little bit is as a comp issue and noise, as you suggested, when we launched at most last year, it was a huge launch, both the Summit card and the Ascent card. And so there was -- and there's also some movement in some of the loan bonuses. So bottom line is there -- there's a headwind in the fourth quarter just on the annualization of the Atmos launch, but the core coupon business continues to accelerate into the fourth quarter.

Operator

And our next question will come from Atul Maheswari with UBS Securities.

Atul Maheswari

Shane, you talked about normalized capacity next year. So in that backdrop, what's the realistic CASM ex growth rate to expect for next year? What is your expectation around core inflation? And then what are some of the other puts and takes that are nonfuel costs for next year that we should be mindful of?

Shane Tackett

I will steer clear of like guidance, but we'll talk about sort of some of the components. And I think we've been open about these over the last several calls. I think we want to get -- over time, a growth rate that's in the 4% range, I think that's very consistent with what we've said for a while. And I think we've been sharing for a couple of years, core inflation is between 4% and 5%. There are years that it could be accelerated. There might be years it's slightly less. But that seems to be kind of a new normal in the airline industry across the industry. .

Same drivers as everybody else. Labor has been a part of that airport cost investments, which largely are needed and enhance the guest experience are part of that, and then engine maintenance costs are part of that as well. So those are the basic components of -- as we start to think about capacity relative to cost growth in the company that are going to drive most of the unit cost narrative. What you'll see from us now that we're getting further through the integration milestones and you've seen it this year, we actually have -- over quarter. And we're starting to be able to more aggressively optimize where we can.

And we'll focus on the same things we always have productivity across every component of the business, utilization of the aircraft fleet are going to be important things for us to focus on. We are going to make investments in this strategy going forward, things that we need to do to enhance the guest experience and really earn the premium fares that we're expecting to as we go down the path of further premium further international and further investments in the loyalty program and base. So those are the basic components. We'll get more specific guide out to you guys in January on that call.

Atul Maheswari

Great. That's very helpful. And then just as my second question, which is around CapEx, the plan I think that you laid out at the Investor Day is around $1.9 billion for next year. The question I have is that do you have flexibility to push it lower in case fuel is simply higher for longer, and that is a drag on the free cash in the near term? And then just overall, how are you thinking about balancing near-term balance sheet leverage versus the long-term investment needs for the business?

Shane Tackett

Yes. Thanks, Atul. To answer the first question, we do have flexibility. We've got a phenomenal partner in Boeing. We've never run into a situation where they weren't willing to work with us if we needed to and vice versa we support each other. So we intend to take all of the aircraft, I think, on a just aircraft over aircraft basis, the MAX 10 is much more fuel-efficient, higher gauge, better financial performer than the 737-700s that they'll ultimately replace as those retire. And then obviously, the 787s are really key to the build-out of the international strategy. So those are -- we're still looking to continue to invest in the strategy and both Ben and I mentioned that in the prepared remarks. We have a lot of focus on the balance sheet. The debt to cap is 66%. It's still relatively healthy. We want to get that back down going the other direction.

In terms of leverage, just so you all know the math, $0.75 of fuel price is worth 4 turns of leverage or something like that, 3 to 5 turns of leverage in the business today. So it's very correlated with fuel prices concerned very, very quickly.

In terms of managing liquidity and overall sort of debt on the balance sheet, we haven't made decisions entirely about how we're going to finance the company next year. We have traditional access to traditional debt methods, mortgage debt, capital markets, if we want to go that route. We can do sale leasebacks. There's other terms of alternative financing available to us. So we'll be deliberate about that. We'll be thinking about that over the next couple of months as we finalize our plans.

But I think the thing I'd leave everybody with is we're really focused on maintaining the core discipline around financial or balance sheet discipline in the near and long term. And our first financial priority is earnings turning cash flow is to restore balance sheet strength to our targets.

Operator

And our next question will come from Duane Pfennigwerth with Evercore ISI.

Duane Pfennigwerth

So you touched on Hawaii, some very weird unusual weather this year abnormal weather, elevated industry supply, which sounds like it's correcting a bit. If we think about the entirety of Hawaii headwinds to this year, how would you size the headwind either in system RASM points or total pretax?

Andrew Harrison

Duane, yes, I think it's consistent has been through the year, I think at the highest level, a couple of points on the unit revenues for Hawaii would be where we would baseline it. But again, as I've shared, I think there's some real constructive setup for next year. And also, we're a lot smarter. In challenging times hit and things happen causes the teams to double down and really look hard and we we've sharpened the pencil on all the critical elements of the Hawaii franchise. And so we've got a lot of things in the hopper. And so we feel very ready for next year.

Duane Pfennigwerth

Just to check that, that's 2 points to system?

Andrew Harrison

Yes.

Duane Pfennigwerth

Yes. Great. And then with the greater segmentation of your credit card portfolio and the premium lounges that you highlighted at your Investor Day, I just wonder when you would expect contribution from those maybe more premium co-brand cards really start to drop. Is that maybe late next year or more 2028?

Andrew Harrison

I think if you're referring, Duane, to the Summit card, which we dropped a year ago, and as I shared in my prepared remarks, it's grown remarkably well. Those economics are already coming through. As I shared, like 40% of members are outside of our core. And with all this new growth that we're doing as well as styling and the new member sign-ups, the whole machine around loyalty members and growth and maturity into cardholders is really working really well. And again, with our longer-term double-digit increases in bank cash through the decade, that's still where we're headed and it still looks very solid.

Benito Minicucci

Yes. And Duane, just to add on that, remember, this is an entire ecosystem. We said that we want to get diversified revenues up to 60% at Alaska. We've got 1 point improvement quarter-to-quarter. We're at 54%. So you'll start seeing this wheel of inertia started gaining momentum quarter-over-quarter and we'll let you know where we are on that. But we're very optimistic. These things work all together jointly as a system.

Operator

And our next question will come from Conor Cunningham with Melius Research.

Conor Cunningham

In the quarter, I think you had a 2-point decline in load factor and you're obviously pushing yields. But I'm just trying to understand their willingness to give up load factor into '27 for higher yields. Like I assume some of the third quarter stuff was like related to Hawaii cancellations and whatnot. But just, again, trying to understand volumes versus yields and how you want to manage that going into next year?

Andrew Harrison

Yes. Thanks, Conor. That is the question. And our teams understand clearly, the goal is to maximize unit revenues. And of course, you've got the yield and the loads there. We're watching the loads right now from where we sit the load trade-off from the increasing yields we feel really good about. And again, as we get into next year, that's something that we're continuing to monitor by region. Right now, given what I see, there will be continued load pressure about sort of where we sit. But again, we will make the right adjustments along the way if we believe that it's more revenue accretive to take a little bit more load and a little bit less yield, but that's the fine balance that the team is working.

Conor Cunningham

Okay. And then maybe stick with you, Andrew. Just I've been thinking about the potential of the international JVs and really how that changes your profitability of your international franchise. So I mean, on, can you provide some -- a time line on how you think that will all play out? And just really how you think that will change the structure of that business going forward? And if you wanted to give any color around, I mean I know you've talked about the drag from unit revenue, but on profitability overall, I think that could be helpful in the construct of as we start to think of benefits going forward.

Andrew Harrison

Yes. We expect to file sort of in this fourth quarter. I think how these joint businesses work, but I think especially we are prepared and ready to continue to grow for the foreseeable future. Obviously, the international franchise under our own steam. But once we get into joint businesses and especially leveraging the distribution strength of our global partners and the ability to look at capacity and pricing, there's just a lot of strength in our economics. And although I'm not going to share the numbers with you as upside to today. So again, like 85% of all transatlantic traffic today is in a joint business, we just see this as nothing but a strengthening an upside in our ability to continue to fuel our growth.

Shane Tackett

Andrew, I might just add, Conor, what we're really doing here is adding a lot of competitive capacity out of Seattle. And the more successful that is, the more we can build domestic competitive capacity. So this is a really good thing for the West Coast and for our core customer base and we're excited to go forward and hopefully partner more deeply with our One Road partners.

Operator

Our next question comes from Catherine O'Brien with Goldman Sachs.

Catherine O'Brien

I just wanted to come back to some of the network investments that you're making. And how you expect to see growth in places like San Diego and Portland going forward -- where at Investor Day, you flagged, you're looking to increase share between now and 2030. I guess just trying to think philosophically, how you're weighing the longer-term strategic value of that growth versus some of the shorter-term pressure it's putting on results as you make those investments?

Andrew Harrison

Catie, I think just for clarity, the growth is already in there that's been put in. You're seeing it. That's what my shared remarks, and you're going to see that abate next year. And without going into any other detailed perspectives on where our growth is, but we've got San Diego and especially Portland and some of the moving around in Hawaii to a place where we feel really good as we shared about having the relevant scale and loyalty and being able to capture the local market share in the areas that we operate in. So again, our growth next year will primarily focused on gauge with these Dash 10s coming in and some of the restructuring of our hubs. But again, most of the growth that we've been talking about is already being put into the system.

Catherine O'Brien

Maybe just a quick follow-up on that and then one more on next year's capacity. I guess, Andrew, are you saying that you feel you have the right -- the network is at the size to capture that, 8 points higher share in Portland by 2030, the 5 points higher share in San Diego. And so that's like follow-up. And then quickly, you've spoken about getting to 4% growth. Is that meant to be a '27 comment? Or that's just like a medium-term comment, just where capacity better inflation?

Andrew Harrison

I'll let Shane comment on the capacity for next year, but this is all about phased and phasing. And really the near term and sort of Phase 1 as we get done this year and just roll over into '27 has been to stand up the Portland and San Diego growth. We've got some California, San Francisco, Los Angeles growth in Hawaii. And of course, structuring the hub in Seattle and Portland to work better together. That work has mostly being put into place, and we expect to harvest our results from that next year.

Shane Tackett

Yes. And Catie, we're not giving a guide for '27, but such as it is, I think we've talked for openly about sort of focusing on getting to our long-term target somewhere around 4% over the next several years. And that was consistent with what we laid out in 2024's Investor Day, and I think we reiterated a few weeks ago. So that's kind of our high-level thinking and we'll refine specific numbers over the next couple of months.

Operator

And we'll move next to Tom Fitzgerald with TD Cowen.

Thomas Fitzgerald

I want to ask about cargo. And I guess Part A, at Investor Day, you talked about tripling revenues by the end of the decade in that segment. Is that linear or lumpy? Or are there any kind of contractual or things that could affect the timing of that? And then maybe as part of that, just where things stand with the Amazon contract and improving the economics of that.

Shane Tackett

A hockey stick, Tom. No, it's not. It's -- Jason can talk you through it. Thanks, Tom. We did say we're going to triple cargo. And it's not it's definitely not a hockey stick. It is linear, but we have a few milestones that we expect to get four new freighters next year on the narrowbody side. That's going to double our capacity on the narrow-body freighter fleet, which we're excited to do in Hawaii and Alaska.

We also have the delivery of these wide-body aircraft, the 787s in particular. And as those come on, we're seeing direct benefit to the entire network as we build those out. So it's -- we're building out our base and continuing to grow. It is very linear and steady, and we're confident in the course we're headed.

And on Amazon, we have been really enjoying getting closer in partnership with them. We're optimistic about our ability to partner more deeply. We don't have anything to share today, but hopefully, the course in the next few months, we'll have more clarity on what that looks like going forward. But really excited about the future of the cargo business for all the reasons Jason laid out and what Ian shared at Investor Day.

Thomas Fitzgerald

Okay. That's really helpful. And then just a quick follow-up on the technology side. You made a new hire there this week. I think it was at Katy's conference last December, you were talking about -- I think it was like hygiene areas to improve like more resilience and redundancy. Could you just speak to where things stand on that front? And what some of the focus areas on the technology side are for the team in 2027?

Shane Tackett

Thanks, Tom. Thanks for listening in on Catie's conference last year. Yes, we had a lot of focus and investment in the sort of infrastructure stability side of the business. We've been executing that plan for more than 12 months at this point. It's going really well. I think we've seen much more sort of like reliable stability in the system and our sort of Tier 1 operational critical systems. And we're going to continue to invest in that side, obviously, lots going on in the outside world around technology and AI, and it's definitely a place that we want to continue to focus, invest in, build up our capability and talent in, which is one of the reasons amongst many that we created the CITO position, and Ben can speak more to that briefly here.

Benito Minicucci

Yes. Yes, Tom, technology is moving more from a support function to being really a competitive advantage on how you operate and how you grow. So look, we're a big company now. We're in excess of $15 billion. And so we're excited to big America comes with a phenomenal background of technology and innovation. And like Shane said, with AI and cyber being such a big part of how companies like ours with the technology-dependent to operate. So we're excited to welcome them on board, and I think you'll see a lot of great things on the technology front from Alaska in the next few years.

Unknown Executive

Right. I think we have time for about one more question.

Operator

And that question will come from Brandon Oglenski with Barclays Capital.

Brandon Oglenski

Shane, I guess I'll give you maybe a more critical ones, maybe you didn't want to take this last one for me. But I think you said like core nonfuel earnings improvement of like $3 to $4. And I'm just trying to square that with like closer to a $5 loss this year. And especially if we just take a snapshot of energy futures right now, fuel prices could actually be higher in '27 than they are averaging for you in '26. So I don't know, I mean, is this just a case where if fuel is going to be as energy futures suggest today just another loss-making year because you're making these structural changes in your network that are just hard to reverse at this point? Or is there incremental things you can do looking into next year?

Shane Tackett

Thanks, Brandon. No, I'm happy to take this. I think -- and we -- obviously, this is another dramatic thing from Investor Day, what we were trying to be clear on is the underlying improvement in the business, which is really about all of the investments that we are making that Andrew spoke to, and I spoke to and Ben have spoken to both network-wise in places like Portland and Hawaii and San Diego, certainly international out of Seattle and premium. Those are where the real revenue growth is going to come from -- from those investments. So you have to make those, you can't sort of link in the face of a really difficult backdrop as you know, we make 20-, 30-year decisions with these things, and we're very committed to it. We have the financial wherewithal to withstand the current backdrop and the balance sheet. I think if fuel is structurally higher at anything close to what we see today, I would anticipate much like the industry has always done, it will have to react to that. And at some point, we will have to fully recover all of the fuel price. And I don't have any reason to believe that won't happen. We can all sort of make gloomy predictions about the macro economy and the backdrop of demand. But I think the things that we're focused on what we are seeing in demand today, which is really strong. People are still wanting to travel, they're still allocating dollars to experiences and going and see friends and family. We see really strong business travel.

And I guess I would just end with saying we are hopeful that the forward fuel curves and futures are wrong, like I think for the broader economy and for the country, we want to see lower energy prices, of course. But if they're elevated, industry will structure, we have to respond to that, and we're well positioned to participate in whatever environment we face next year.

And thank you for joining us, everyone, and we'll talk to you next quarter.

Operator

This concludes today's conference call. Thank you for attending.