Alaska borrows $1 billion as fuel costs surge

Alaska Air Group is moving to raise $1 billion as a sharp rise in jet fuel prices puts new pressure on the company’s 2026 outlook. 

The Seattle-based airline group announced a $500 million private debt offering, with senior notes due in 2031. Alaska said it plans to use the money for general corporate purposes. The notes will be issued by Alaska Airlines and guaranteed by Alaska Air Group.  

The company also plans to add another $500 million through a new tranche of an existing loan tied to its Mileage Plan financing structure. That brings the total planned borrowing to about $1 billion.  

The move comes as fuel prices have climbed sharply following the Iran war and disruptions tied to the Strait of Hormuz. Jet fuel prices have nearly doubled since late February, creating a sudden cost problem for airlines that already operate on thin margins.  

Alaska warned investors in April that fuel costs had become difficult to predict and withdrew its full-year 2026 profit forecast. The company said it expected fuel to average about $4.50 per gallon in the second quarter of 2026, adding about $600 million in costs to its bottom line and cutting earnings by about $3.60 per share.  

Rising fuel costs are especially critical to Alaska as it continues to integrate the operations of Hawaiian Airlines, which it acquired in 2024, while also managing its core Alaska Airlines network, regional carrier Horizon Air and support businesses. Alaska Air Group reported a $193 million net loss in the first quarter of 2026 on revenue of $3.3 billion.  

The company has raised baggage fees, trimmed some flying and looked for ways to control costs. The Seattle Times reported that the schedule cuts mostly affect late-night departures in high-frequency markets.  

West Coast carriers can face added pressure when fuel markets tighten because the region has less refining and pipeline capacity than some other parts of the US. Alaska has said it wants to increase the share of fuel it sources from Singapore over time, from about 20% to 30% or 40%, Reuters reported.  

Alaska is not alone in turning to the debt market. Reuters reported that American Airlines and JetBlue have also raised money recently as higher fuel costs weigh on airline finances.  The post Alaska borrows $1 billion as fuel costs surge appeared first on AeroTime.

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