Key Highlights

● Morgan Stanley lowered earnings estimates for Alaska Air.

● The firm made similar cuts for Delta, United and Southwest.

● Delta cut its outlook to $5.10 to $5.60 a share.

● Brent settled at $104.72 a barrel.

Alaska Air Group (NYSE:ALK) was among the airlines in focus on Friday after Morgan Stanley (NYSE:MS) lowered its earnings estimates for the carrier, according to market data. The firm made similar cuts for Delta Air Lines (NYSE:DAL), United Airlines (NASDAQ:UAL) and Southwest Airlines (NYSE:LUV). The reports did not name the analysts or give new figures, and Alaska's own share move for the day was not widely reported.

The timing put Alaska squarely in the conversation. Friday was the unofficial start of airline earnings season, with Delta reporting before the opening bell and delivering a message that every carrier's investors had to take seriously.

Delta sets the tone

Delta posted third-quarter adjusted earnings of $1.72 a share, short of consensus estimates that ranged from $1.82 to $1.92. It cut its 2026 adjusted earnings outlook to $5.10 to $5.60 a share from $6.50 to $7.50, with higher fuel costs a key reason. Its quarterly fuel bill reached $4.1 billion, and it expects about $6 billion in added fuel costs this year.

Estimate cuts at Morgan Stanley and at UBS (NYSE:UBS), which lowered its numbers for Delta, United and American Airlines (NASDAQ:AAL), suggest analysts expect fuel to weigh on results across the industry. Delta's own shares recovered from premarket losses to finish about flat, while United and American slipped.

Alaska's position

Alaska Air Group is the parent of Alaska Airlines and, following its acquisition of Hawaiian Airlines, one of the larger carriers on the US West Coast and across the Pacific. Like every airline, it is highly exposed to jet fuel prices, which are typically one of the largest operating costs after labour.

Fuel has become the defining issue for airline investors in 2026. Brent crude settled at $104.72 a barrel on Friday and US crude at $91.85. Hurricane Isaias has shut in nearly two-thirds of Gulf of Mexico oil output, and the conflict involving Iran keeps supply worries alive. President Donald Trump said on Truth Social that "Diesel Prices for Americans and, indeed, the World, will be COMING DOWN, IN RECORD NUMBERS, AND FAST!" after announcing a Russian diesel supply deal, but energy markets have yet to show a lasting decline.

Demand is the counterweight

Airlines have one important offset: travel demand. Delta chief executive Ed Bastian said: "Demand remains strong, supported by consumers' growing preference for experiences and travel". If that holds, carriers may be able to pass on part of their higher costs through fares.

The broader consumer picture is mixed. The University of Michigan's preliminary October sentiment index fell to 46.3, a five-month low, although weekly jobless claims fell to 197,000, the lowest since July.

Market backdrop

Stocks rose on Friday. The S&P 500 gained 46.18 points to 7,811.54, just under its record close, and the Dow added 423.31 points to 51,654.95. Airlines were weighed down by fuel concerns. High interest rates add another cost for capital-intensive airlines: the 10-year Treasury yield is near a 24-year high, and the Federal Reserve raised rates in September for the first time since 2023.

Alaska's Report Will Show Whether It Must Follow Delta's Outlook Cut

Alaska's own third-quarter report will show how much of the fuel squeeze it has absorbed, and whether it adjusts its outlook as Delta did. Investors will also watch oil prices and the Iran situation. Macro catalysts include September consumer price data on Wednesday, October 14, bank earnings from October 13 to 16 and the Fed meeting on October 27 to 28. Equities trade as usual on Monday, October 12, while Treasury markets are closed for Columbus Day.