Alaska Air Group warned that its adjusted net income for the second quarter and full year will be lower than in 2006 as expenses rise.
The Seattle company, parent of Alaska Airlines and Horizon Air, cited "fuel costs, unit revenue trends and forecasted non-fuel unit costs" in a regulatory filing Wednesday.
Just last month, Alaska Chief Executive William Ayer said second-quarter results would improve.
Most U.S. airlines have said increased capacity and a slowing economy are crimping domestic sales this year.
Alaska Airlines is the nation's ninth-largest carrier, competing primarily in the Western U.S. with Southwest, United Airlines, US Airways and Delta Air Lines.
Alaska Air "has been the most erratic performer among legacy carriers and has consistently missed, or sometimes wildly exceeded, our [earnings per share] estimates," Standard & Poor's analyst Jim Corridore wrote in a research note Wednesday,
Shares of Alaska Air fell $1.66, or 5.7 percent, to $27.54 Wednesday. They have fallen 30.3 percent this year.
Alaska Air had a loss of $52.6 million, or $1.39 a share, for 2006, on adjusted net income of $137.7 million, or $3.45 a share.
The company reported a second-quarter profit of $55.5 million, or $1.38 a share, on adjusted net income of $60.3 million, or $1.50 a share.
Analysts expected Alaska Air to report adjusted net income of $1.50 a share in the second quarter, the average of 10 estimates compiled by Bloomberg.
For the full year of 2007, analysts expected adjusted net income of $3.64 a share, the average of 11 estimates.
Alaska Air is moving to an all-Boeing 737 fleet on its main routes to save money on fuel, parts and training.
The airline said Wednesday it had reached agreement with an unnamed buyer to sell all 20 of its older and less fuel-efficient McDonnell Douglas MD-80s and lease back most, increasing rental expenses.
Alaska Air said revenue per seat mile declined 1.5 percent in April. The percentage of seats filled by paying customers declined by about 1.7 points to 76.9 percent.
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Increased passenger demand and reduced labor expenses help offset soaring fuel costs.
Net income totaled $100 million, or $1.26 per share, compared with a loss of $28 million, or 43 cents per share, a year ago.