Shares of

Alaska Air Group

(ALK) - Get Report

failed to partake of the airline sector rally Thursday, sliding after the company reported disappointing first-quarter results.

The parent of Alaska Airlines and regional carrier Horizon Air reported a net loss of $80.5 million, or $2.39 a share, almost double the year-ago loss of $42.7 million, or $1.59 a share. The loss included the following special items: a $144.7 million charge from an accounting change related to airplane overhauls; a $7.4 million charge for terminating the lease at the company's Oakland, Calif., maintenance base; and $90.0 million of gains from recording the fair market value of fuel hedges.

Excluding those items, Alaska Air Group lost $41.7 million, or $1.54 a share, more than 30 cents wider than the average analyst forecast for $1.22 a share.

Revenue was $642.5 million, up 7.4% from $598.0 million a year before and roughly in line with the $641.2 million consensus from Thomson First Call.

Shares fell 47 cents, or 1.6%, to $28.62, even though most other airline stocks surged, driving the Amex Airline Index up by 3.7%. The sector rose in sympathy with the broader market; it received added boosts from falling crude oil prices and news that two U.S. senators introduced a pension reform bill offering relief to airlines.

"Making excuses for our results would be easy based on the current environment of extremely high fuel prices, very little pricing power and a seasonally soft first quarter," said Bill Ayer, Alaska Air's CEO. "But these realities, along with the cost reductions achieved by others in the industry, mean that we simply must have lower costs."

Alaska Airlines has some of the highest pilot salaries among major airlines.

The company's wages and benefits rose $2.9 million, or 1.1%, in the latest quarter to $244.7 million from a year earlier, and its fuel expense rose $38.9 million, or 36%.

During the quarter, passenger traffic surged 8.9% at Alaska Airlines, more than offsetting a 3.7% capacity increase. That helped it fill 72.6% of its seats on average. Although yield -- a measure of average fares -- fell 3.7%, the fuller planes caused unit revenue to rise 2.6%.