CHICAGO, Illinois: Alaska Air Group could lose as much as $700 million this year as soaring fuel costs squeeze its finances, with the airline moving to eliminate about 200 non-contract positions.

The potential adjusted pretax loss would be Alaska Air's first outside the pandemic since 2003, Chief Executive Ben Minicucci told employees in a memo seen by Reuters.

The cuts come as the fuel-price shock linked to the Iran war puts increasing pressure on U.S. airlines, which have already raised fares and scaled back flight growth.

Alaska Air is also pursuing an expansion into premium and international travel, but strong revenue growth has struggled to offset higher fuel expenses.

"We must return to the financial discipline that has long been a key competitive advantage," Minicucci said, adding that overhead expenses had "grown at a disproportionate rate to revenue" over the past few years.

The job reductions affect less than 1% of Alaska's roughly 32,500 employees, a company spokesperson said. They include 125 positions in Washington state and 48 in Hawaii.

No frontline, non-management jobs are being eliminated.

Affected employees will have their last working day on November 13 but will continue to receive pay through December 31, along with severance and other support, according to the memo.

U.S. airfares increased an average of nearly 23% year-on-year during the seven months through September, according to Labor Department data.

Higher fares, however, have not been enough to offset rising costs across the industry. Delta Air Lines, American Airlines and Southwest Airlines have all cut their 2026 earnings forecasts.

Alaska Air last week forecast a full-year adjusted loss of $5 to $5.50 per share.

The company said it expects to spend $1.8 billion more on fuel this year than it had originally planned.