Alaska Air bets on premium travel to boost profit as fuel costs bite

Alaska Air is adding lie-flat seats, premium-economy cabins and airport lounges as it seeks to earn more from travelers willing to pay for comfort. President and CFO Shane Tackett said the investments could eventually add $3 to $4 per share to earnings and lift margins by 2 to 3 percentage points within a couple of years. Alaska expects premium revenue to exceed 40% of total revenue by 2030, up from a projected 36% this year.

Beginning in 2028, Alaska plans to install 12 lie-flat Aurora Suites on each of at least 25 Boeing 737 MAX 10s used on select transcontinental routes. It also plans to add a premium-economy cabin to Boeing 787s, Hawaiian's Airbus A330s and some MAX 10s, and open lounges in Seattle, Honolulu and San Diego. Alaska said it filed with the U.S. Transportation Department for a Pacific joint venture and will seek airline joint ventures across the Atlantic and Pacific.

Tackett did not reaffirm the 2027 timetable for Alaska's $10-per-share earnings target, saying the timing depends heavily on fuel prices and the broader economy. Alaska estimates earnings of $5 to $6 per share in 2027 with fuel at $3.25 a gallon, and more than $10 with fuel at $2.50; a broad U.S. benchmark was $4.40 a gallon on Monday. The company is also targeting up to $4 billion in annual loyalty-program cash payments by 2030 and plans an Atmos debit card in early 2027.