Alaska Air Group (ALK) saw its stock plummet 5.78% in after-hours trading following the release of its second-quarter earnings report and forward guidance. Despite reporting better-than-expected Q2 results, with adjusted earnings per share of $1.78 surpassing the estimated $1.54 and revenue of $3.7 billion beating the $3.66 billion forecast, investors focused on the company's disappointing outlook for the third quarter.

The airline's Q3 adjusted EPS guidance of $1.00 to $1.40 fell significantly short of analysts' expectations of $1.65. This weaker-than-anticipated forecast appears to be the primary driver behind the stock's sharp decline. Additionally, Alaska Air projected a slight decrease in Q3 capacity, estimating it to be down about 1%, while full-year capacity is expected to increase by approximately 2%.

Further contributing to the negative sentiment, Alaska Air disclosed that an IT outage in July, which resulted in irregular operations, is expected to impact third-quarter adjusted EPS by about 10 cents. This unexpected event, combined with the softer Q3 outlook, has overshadowed the company's solid Q2 performance and recent positive trends in traffic, yield, and revenue intake for both Alaska and Hawaiian Airlines' bookings. The full-year adjusted EPS outlook of more than $3.25, which falls below the consensus estimate of $3.41, has also likely contributed to investor concerns about the company's near-term profitability.