Alaska Air Group Inc. (NYSE: ALK) reported second-quarter 2016 results before markets opened on Thursday. The low-cost carrier reported adjusted earnings per share (EPS) of $2.12 on revenues of $1.49 billion. In the second quarter of 2015, the airline posted $1.76 EPS on revenues of $1.44 billion. Analysts were expecting Alaska Air to post EPS of $2.09 and $1.5 billion in revenue.

On a consolidated basis, traffic and capacity both rose 11.2% year over year, but unit revenue measured by passenger revenue per available seat mile fell 7.7%. Load factor was flat at 84.9%. Fuel costs fell from $2.12 per gallon in the second quarter of 2015 to $1.53.

Unit costs per available seat mile and excluding fuel and special items dropped 3.7%. Mainline costs dropped 4% and Alaska Air did not report costs for its regional business. Passenger revenue per available seat mile dropped 7.5% on the mainline service and 12.9% on the regional service.

Looking ahead, Alaska Air expects capacity to rise by 8% year over year in the third quarter and by the same amount for the full year. This is slightly lower than the airline’s previous estimates. Fuel costs are forecast at $1.62 per gallon in the third quarter, and unit costs measured by costs per available seat mile less fuel and special items are expected to rise about 3% year over year in the third quarter. For the full year, Alaska Air expects costs to fall by about 0.5%.

The company’s mainline passenger fleet of 141 Boeing 737s is expected to rise to 147 by the end of 2016. The cargo fleet of six 737s will remain the same but the airline is taking three 737-700s out of service to convert the planes to carry cargo. The three planes will return to service in 2017, and by the end of 2018 Alaska Air sees its mainline passenger fleet totaling 156 aircraft.

CEO Brad Tilden said:

This was a great quarter for us. From strong operational and financial performance to a growing customer base, our team delivered. … All of us at Alaska are enthusiastically looking forward to our merger with Virgin America and creating a larger national reach while fortifying our presence along the entire west coast.

Alaska Air was added to the S&P 500 Index in May, and its $2 billion acquisition of Virgin America was announced in April. Alaska will also assume $2 billion in Virgin America debt and the transaction is expected to close in the fourth quarter.

While the airline had a good quarter, characterizing it as “great” might be a stretch. The best news for Alaska is that its passenger counts were up on both mainline and regional service and that unit costs on its mainline service were down. The airline’s forecast is neither particularly good nor particularly bad. Shares might get a boost from these results, but it won’t be a massive one.

Shares closed down about 0.6% on Wednesday, at $63.49 and traded up about 1.2% in Thursday’s premarket session at $64.25. The stock’s 52-week range is $54.51 to $87.17. The consensus price target on the stock is $79.32.

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