Shane Tackett
Executive Vice President Finance and Chief Financial Officer at Alaska Air Group
Thanks, Andrew, and good morning, everyone. In what has been a challenging start to the year, our people and our business model have shown amazing resilience. Safety, of course, is our absolute priority, and it will continue to be our top focus above all else. It has, however, been encouraging to see the level of improvement to our core first quarter performance this year.
While managing through the difficult circumstances of Flight 1282 and its aftermath. The teams did an admirable job operating safely and on time, and our commercial team put together a network plan that coupled with strong demand, positioned us well to meet our long-term target to breakeven in Q1.
We are not shy about setting ambitious goals for ourselves, and we have a good history of delivering on those commitments. Our financial focus remains on continuing to strengthen our business model and delivering strong financial performance over the long-term.
Turning to our results. For the first quarter, our adjusted loss per share was $0.92, which excludes compensation received from Boeing related to our MAX fleet grounding. The profit impact of the fleet grounding in Q1 was $162 million or $0.95 of EPS and seven points of margin.
Fuel price per gallon was $3.08, as West Coast refining margins continue to be a unique margin headwind to our results relative to the rest of the country. Our total liquidity inclusive of on-hand cash and undrawn lines of credit stood at $2.8 billion, as of March 31.
Debt repayments for the quarter were approximately $100 million and are expected to be approximately $50 million in the second quarter. Our leverage levels remain healthy at 47% debt-to-cap and 1.1 times net debt to EBITDAR, while our ROIC stands above 9%.
For the quarter, unit costs were up 11.2% year-over-year, six points of which are directly attributable to the fleet grounding, primarily from the significant loss of planned capacity. So we also incurred approximately $30 million of incremental operational recovery costs due to the grounding as well.
Our core unit costs, absent grounding impacts were up approximately 5% year-over-year in the first quarter. The drivers remain similar to prior quarters and are consistent with pressures faced by most airlines, the primary of which is higher labor rates for our people. We have completed seven labor contracts over the past two years, including a recently signed agreement with our aircraft technicians, and we continue to prioritize finalizing an agreement with our flight attendants.
We remain committed to high productivity in our contracts. And absent the MAX grounding, we would have had a 2% increase in productivity year-over-year, as measured by passengers carried per FTE. We expect continued productivity improvements throughout the year across the company. And in May, we'll operate under our new preferential bidding system for pilots for the first time, which will allow for both enhanced pilot productivity and importantly, schedules that are more aligned with our pilots priorities.
While costs are materially higher structurally for the industry, our margin profile for the first quarter is evidence, we are making the right decisions on capacity deployment. And we will continue to prioritize the overall margin health of the company over growth for the sake of unit cost performance alone.
We are committed to also retain our relative cost advantage, and we continue to do well on that basis. We achieved the industry's best cost performance last year and looking at our rolling four quarter unit costs, we have outperformed both Delta and United by three points on a stage length adjusted unit cost basis.
While we may experience quarterly variances on a unit basis, we are not ceding any of our relative advantage. We have widened the gap over the past 12 months, and we remain focused on managing two aggressive budgets and delivering strong margin performance. Not only did we improve profitability, excluding the grounding by $120 million year-over-year, when compared to the first quarter of 2019 and 2023, we've closed the margin gap to our largest peers by approximately two to three points.
As we look ahead to Q2 and the rest of the year I will provide capacity fuel, EPS and capex guidance, consistent with the metrics we shared last quarter and our focus on the overall margin profile of the business. For the full year, as Ben shared, we do not expect to receive all 23 deliveries from Boeing that we had originally planned for this year.
We are in discussions with Boeing. And as we gain more clarity on those deliveries, we will update our expectations but we expect full year capacity growth at this point to be below 3%. Also, due to lower expected deliveries, we now expect capex of $1.2 billion to $1.3 billion versus our prior expectation of $1.4 billion to $1.5 billion.
We expect economic fuel cost per gallon to be between $3 and $3.20 for the second quarter and expect refining margins on the West Coast to be more in line with Gulf Coast, which we've seen in the past several weeks. Given the significant spread in West Coast fuel costs versus the rest of the country, we are developing strategies to mitigate this disadvantage.
Our first step was to discontinue our hedging program, given refining margins have become the more volatile component of fuel costs, which hedging did not protect us from. The full value of hedging cost reduction will take several quarters to bleed in.
We are also changing our strategy for our annual fuel tender process to obtain better pricing and are likely to begin a program to begin a modest amount of self-supply of fuel later this year and into 2025. While these will take time to fully mature into our results, we expect these actions to close the current fuel headwind we face versus the rest of the industry and will help us to be well positioned to lead the industry in margins.
And as Ben mentioned, we expect full year EPS to now land between $3.25 and $5.25 for the full year and $2.20 and $2.40 for Q2. Despite a likely $0.35 year-over-year headwind from fuel, we have visibility to a path back to healthy double-digit margins in the second quarter on our way to another strong full year performance.
With the immediate impact of the grounding behind us and our operational reliability back on track, we are optimistic about our outlook for the rest of the year. The economy continues to expand with supportive wage growth, recently improving consumer sentiment and trends indicating a continuing preference to prioritize spending on travel and experiences over goods.
By remaining focused on our historical strength, safety, operational excellence and relative cost performance and continuing to reap the benefits of our commercial initiatives. Our business is configured to compete, to maintain our relative advantage and to continue to deliver strong financial results.
And with that, let's go to your questions.
