SEATTLE - Alaska Air Group Inc. said it swung to a third-quarter loss as the value of its fuel hedges declined along with falling oil prices.

The operator of Alaska Airlines and Horizon Air said it lost $86.5 million, or $2.40 per share, during the quarter that ended Sept. 30, compared with a profit of $81.8 million, or $2.01 per share, during the same period last year. Revenue rose 7.7 percent to almost $1.07 billion, from $988.8 million a year ago.

Alaska Air said that without a non-cash accounting charge of $218.2 million for the decline of its fuel hedges, it would have made $39.9 million, or $1.10 per share. Analysts surveyed by Thomson Reuters were expecting a profit of 93 cents per share on revenue of $1.01 billion.

The company's fuel spending rose by $110 million during the quarter, which ran from July through September. Oil prices peaked in July, leaving airlines with sharply higher fuel bills during much of the summer. But, like Alaska Air, several airlines including Northwest Airlines Corp. and UAL Corp.'s United Airlines ended the quarter with fuel hedges that have not settled yet but are worth millions of dollars less than they used to be, forcing them to book losses.

Alaska Air said it had a gain of $44 million from fuel hedges that settled during the quarter.

Both Alaska Airlines and Horizon collected more money from each passenger they flew, helping to offset some of the higher fuel expense.

"Looking forward, the volatility of oil prices and the weak economy make this an extremely challenging environment," said Chairman and Chief Executive Bill Ayer in a statement.

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