By Shivansh Tiwary and Rajesh Kumar Singh

July 17 (Reuters) - Alaska Air Group ( ALK ) forecast

third-quarter profit below estimates on Wednesday, citing a

financial hit from its new flight attendant contract deal, while

it topped market expectations for second-quarter earnings.

The Seattle, Washington-based carrier's flight attendants

are set for an average pay hike of 32% after it reached a new

tentative agreement with the union.

It expects a 50 cent-per-share hit to its third-quarter

earnings due to the labor deal, CFO Shane Tackett told Reuters

in an interview.

It forecast an adjusted profit of $1.40 to $1.60 per share

during the period, compared with LSEG estimates of $2.05 per

share.

Alaska, the operator of the Boeing ( BA ) plane that

suffered a mid-air cabin blowout in January, also saw a $60

million impact to its second-quarter revenue due to the incident

as it affected its bookings in April.

During the quarter, Alaska received nine 737 MAX aircraft

from Boeing ( BA ), six of which were the 737 MAX 9 variant.

Airlines are enjoying a summer travel boom while business

travel, which is seen as the cash cow for the industry, has also

continued its upward trajectory as corporate customers ramp up

their work-related travel expenses.

"There is really strong demand by almost any measure,"

Tackett told Reuters. "The most strength is on the premium

segment of travel."

Alaska posted second-quarter adjusted net income of $2.55

per share, compared with estimates of $2.38.

Its second-quarter performance was driven by

lower-than-expected operating costs. Unit costs in the quarter

were down about 2% from a year ago, compared with an April

projection of being flat.

"We actually think that ticket yields would potentially be

positive relative to last year in August. And we certainly do

see that happening in September at the latest," Tackett added.

The airline's adjusted pretax margin of 15.8% for the

quarter ended June 30 came in higher than larger rival Delta

Air's 13%.

Total operating revenue rose 2% to $2.9 billion.