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Alaska Air Group delivers record-breaking second quarter 2022 results

Generated record quarterly revenues of $2.7 billion on improved operational performance; flew record load factor of 88% reflecting strong demand

SEATTLE, July 21, 2022 /PRNewswire/ -- Alaska Air Group (NYSE: ALK) today announced another quarter of improvement in its financial results for the second quarter ending June 30, 2022, and provided outlook for the third quarter ending Sept. 30, 2022.

"It's clear that travel is one of the things people have missed the most these past two years. They are excited to fly again and our team is delivering on the safe, reliable and caring experience they expect from us," said CEO Ben Minicucci. "Revenue in June topped $1 billion, the highest single month in our history. Our 14% adjusted pretax margin in Q2 is near the top of the industry, and our operation is on track in June with the #1 on-time performance and a schedule completion rate over 99%. I'm feeling so much gratitude for the people of Alaska, Horizon and McGee for pulling together. We have a strong platform for growth in 2023 and a lot to be optimistic about."

Financial Results for the Second Quarter:
  • Reported net income for the second quarter of 2022 under Generally Accepted Accounting Principles (GAAP) of $139 million, or $1.09 per share, compared to a net income of $397 million, or $3.13 per share, in the second quarter of 2021.
  • Reported net income for the second quarter of 2022, excluding special items and mark-to-market fuel hedge accounting adjustments, of $280 million, or $2.19 per share, compared to a net loss, excluding special items and mark-to-market fuel hedge accounting adjustments, of $38 million, or $0.30 per share, in the second quarter of 2021.
  • Reported adjusted pretax margin for the second quarter of 14%.
  • Recorded $2.7 billion in operating revenues for the second quarter, the highest revenue-generating quarter in company history.
Balance Sheet and Liquidity:
  • Generated $948 million in operating cash flow for the second quarter, inclusive of $231 million in net federal income tax refunds.
  • Held $3.4 billion in unrestricted cash and marketable securities as of June 30, 2022.
  • Maintained a debt-to-capitalization ratio of 50% as of June 30, 2022, within our target range of 40% to 50%.
Operational Updates and Milestones for the Second Quarter:
  • Flew a record load factor for the quarter of 88%, driven by high demand on reduced capacity.
  • Led the industry in on-time performance for the month of June, meeting our commitment to operational reliability.
  • Received nine Boeing 737-9 aircraft in the second quarter, bringing the total number of 737-9s in our mainline fleet to 28.
  • Ratified new contracts with Alaska Airlines dispatchers and Horizon Air aircraft technicians and fleet service agents; and reached a tentative agreement with Alaska Airlines IAM represented employees.
  • Expanded pilot training throughput by 20% from April, and added 100 active mainline pilots in the second quarter.
  • Began nonstop service to Miami and Cleveland from Seattle, bringing the total nonstop destinations served from Seattle to 100.
  • Launched $8 flat rate satellite Wi-Fi on mainline aircraft in partnership with Intelsat.
Awards and Employee Recognition:
  • Ranked as one of America's Best Employers for Diversity by Forbes, recognizing our commitment to increasing diverse leadership representation and equity initiatives.
  • Named the Best Major Airline in North America by the Airline Passenger Experience Association, highlighting Alaska's inflight experience.
  • Recognized the company's workforce for their relentless commitment to caring for our guests for 90 years by giving each employee 90,000 miles redeemable for travel anywhere in the world.
Second Quarter Environmental, Social and Governance Updates:
  • Released our 2021 Care Report, highlighting the company's progress in various environmental, social and governance areas and outlining ongoing initiatives and future goals.
  • Signed agreement with Aemetis to purchase 13 million gallons of sustainable aviation fuel to be delivered over the seven-year term of the agreement.
  • Subsequent to quarter end, announced a partnership with Microsoft and Twelve, a carbon transformation technology company, to advance the availability of sustainable aviation fuels.
  • Scored 100% in our first year participating in Disability:IN's Disability Equality Index, which benchmarks companies on their disability inclusion and equality.

The following table reconciles the company's reported GAAP net income (loss) per share (EPS) for the three and six months ended June 30, 2022, and 2021 to adjusted amounts.

Three Months Ended June 30,

2022

2021

(in millions, except per-share amounts)

Dollars

Diluted EPS

Dollars

Diluted EPS

GAAP net income per share

$               139

$              1.09

$               397

$              3.13

Payroll Support Program grant wage offset

—

—

(503)

(3.97)

Mark-to-market fuel hedge adjustments

40

0.31

(46)

(0.36)

Special items - fleet transition and related charges(a)

146

1.14

(4)

(0.03)

Special items - restructuring charges(b)

—

—

(23)

(0.18)

Income tax effect of reconciling items above

(45)

(0.35)

141

1.11

Non-GAAP adjusted net income (loss) per share

$               280

$              2.19

$               (38)

$            (0.30)









Six Months Ended June 30,

2022

2021

(in millions, except per-share amounts)

Dollars

Diluted EPS

Dollars

Diluted EPS

GAAP net income (loss) per share

$                  (4)

$            (0.03)

$               266

$              2.10

Payroll support program grant wage offset

—

—

(914)

(7.23)

Mark-to-market fuel hedge adjustments

(67)

(0.53)

(68)

(0.54)

Special items - fleet transition and related charges(a)

221

1.75

14

0.11

Special items - restructuring charges(b)

—

—

(12)

(0.09)

Income tax effect of reconciling items above

(37)

(0.30)

240

1.90

Non-GAAP adjusted net income (loss) per share

$               113

$              0.89

$             (474)

$            (3.75)


(a)   

Special items - fleet transition and related charges in the three and six months ended June 30, 2022 are primarily for impairment charges and accelerated costs associated with the retirement of the A320 and Q400 fleets. The A320 fleet is expected to be retired from operating service by the end of 2022; the Q400 fleet is expected to be retired from operating service in early 2023.


(b)   

Special items - restructuring charges in the three and six months ended June 30, 2021 are related to the estimated costs for pilot incentive leaves.

 

Statistical data, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables. A glossary of financial terms can be found on the last page of this release.

Alaska will hold its quarterly conference call to discuss second quarter results at 8:30 a.m. PDT on July 21, 2022. A webcast of the call is available to the public at www.alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the call.

Third Quarter and Full Year 2022 Outlook



Q3 Expectation(a)

Capacity (ASMs) % change versus 2019(a)

Down 5% to 8%

Revenue passengers % change versus 2019(a)

Down 8% to 10%

Passenger load factor

85% to 88%

Total revenue % change versus 2019(a)

Up 16% to 19%

Cost per ASM excluding fuel and special items (CASMex) % change versus 2019(a)

Up 16% to 19%

Economic fuel cost per gallon

$3.79 to $3.89

Non-operating expense

$2 million to $4 million

Adjusted tax rate

24% to 25%



(a)

Due to the unusual nature of 2021 and 2020, all 2022 comparisons are versus the third quarter of 2019.

 

For full year 2022, we expect our capacity to be down 8% to 9% versus 2019, and expect our CASMex to be up 15% to 17% versus 2019. We continue to expect our full year adjusted pre-tax margin to be between 6% and 9%.

References in this update to "Air Group," "Company," "we," "us," and "our" refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified.

This news release may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by our forward-looking statements, assumptions or beliefs. For a comprehensive discussion of potential risk factors, see Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2021. Some of these risks include competition, labor costs, relations and availability, general economic conditions including those associated with pandemic recovery, increases in operating costs including fuel, inability to meet cost reduction, ESG and other strategic goals, seasonal fluctuations in demand and financial results, supply chain risks, events that negatively impact aviation safety and security, and changes in laws and regulations that impact our business. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed in our most recent Form 10-K and in our subsequent SEC filings. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We expressly disclaim any obligation to publicly update or revise any forward-looking statements made today to conform them to actual results. Over time, our actual results, performance or achievements may differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, assumptions or beliefs and such differences might be significant and materially adverse.

Alaska Airlines and our regional partners serve more than 120 destinations across the United States, Belize, Canada, Costa Rica and Mexico. We emphasize Next-Level Care for our guests, along with providing low fares, award-winning customer service and sustainability efforts. Alaska is a member of the oneworld global alliance. With the alliance and our additional airline partners, guests can travel to more than 1,000 destinations on more than 20 airlines while earning and redeeming miles on flights to locations around the world. Learn more about Alaska at news.alaskair.com. Alaska Airlines and Horizon Air are subsidiaries of Alaska Air Group (NYSE: ALK).

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Alaska Air Group, Inc.











Three Months Ended June 30,

Six Months Ended June 30,

(in millions, except per share amounts)

2022

2021

Change

2022

2021

Change

Operating Revenues










Passenger revenue

$        2,418

$        1,352

79 %

$        3,929

$        2,011

95 %

Mileage Plan other revenue

175

118

48 %

287

212

35 %

Cargo and other

65

57

14 %

123

101

22 %

Total Operating Revenues

2,658

1,527

74 %

4,339

2,324

87 %












Operating Expenses










Wages and benefits

639

510

25 %

1,245

1,003

24 %

Variable incentive pay

56

34

65 %

92

67

37 %

Payroll Support Program grant wage offset

—

(503)

NM

—

(914)

NM

Aircraft fuel, including hedging gains and losses

776

274

183 %

1,123

477

135 %

Aircraft maintenance

104

102

2 %

239

183

31 %

Aircraft rent

73

62

18 %

146

124

18 %

Landing fees and other rentals

136

144

(6) %

274

273

— %

Contracted services

82

54

52 %

160

105

52 %

Selling expenses

78

41

90 %

136

74

84 %

Depreciation and amortization

104

98

6 %

206

195

6 %

Food and beverage service

50

35

43 %

91

58

57 %

Third-party regional carrier expense

50

37

35 %

92

67

37 %

Other

177

117

51 %

329

222

48 %

Special items - fleet transition and related charges

146

(4)

NM

221

14

NM

Special items - restructuring charges

—

(23)

.

NM

—

(12)

NM

Total Operating Expenses

2,471

978

153 %

4,354

1,936

125 %

Operating Income (Loss)

187

549

(66) %

(15)

388

(104) %

Non-operating Income (Expense)










Interest income

11

6

100 %

18

13

38 %

Interest expense

(26)

(39)

(33) %

(53)

(71)

(25) %

Interest capitalized

3

3

7 %

5

6

(17) %

Other - net

10

9

10 %

24

19

25 %

Total Non-operating Income (Expense)

(2)

(21)

(90) %

(6)

(33)

(82) %

Income (Loss) Before Income Tax

185

528


(21)

355

Income tax expense (benefit)

46

131


(17)

89

Net Income (Loss)

$           139

$           397


$              (4)

$           266













Basic Earnings (Loss) Per Share

$          1.10

$          3.18


$        (0.03)

$          2.13

Diluted Earnings (Loss) Per Share

$          1.09

$          3.13


$        (0.03)

$          2.10













Shares used for computation:










Basic

126.543

124.977


126.265

124.640

Diluted

127.795

126.825


126.265

126.388

 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)


Alaska Air Group, Inc.






(in millions)

June 30, 2022

December 31, 2021

ASSETS


Current Assets


Cash and cash equivalents

$                            778

$                            470

Marketable securities

2,647

2,646

   Total cash and marketable securities

3,425

3,116

Receivables - net

401

546

Inventories and supplies - net

93

62

Prepaid expenses and other current assets

313

196

Total Current Assets

4,232

3,920




Property and Equipment


Aircraft and other flight equipment

8,569

8,127

Other property and equipment

1,532

1,489

Deposits for future flight equipment

292

384

10,393

10,000

Less accumulated depreciation and amortization

3,922

3,862

Total Property and Equipment - Net

6,471

6,138




Other Assets


Operating lease assets

1,669

1,453

Goodwill and intangible assets

2,041

2,044

Other noncurrent assets

387

396

Other Assets

4,097

3,893




Total Assets

$                      14,800

$                      13,951

 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)


Alaska Air Group, Inc.






(in millions, except share amounts)

June 30, 2022

December 31, 2021

LIABILITIES AND SHAREHOLDERS' EQUITY


Current Liabilities


Accounts payable

$                            286

$                            200

Accrued wages, vacation and payroll taxes

416

457

Air traffic liability

1,778

1,163

Other accrued liabilities

794

625

Deferred revenue

1,012

912

Current portion of operating lease liabilities

274

268

Current portion of long-term debt

342

366

Total Current Liabilities

4,902

3,991




Long-Term Debt, Net of Current Portion

1,961

2,173




Noncurrent Liabilities


Long-term operating lease liabilities, net of current portion

1,505

1,279

Deferred income taxes

552

578

Deferred revenue

1,429

1,446

Obligation for pension and postretirement medical benefits

299

305

Other liabilities

353

378

Total Noncurrent Liabilities

4,138

3,986




Commitments and Contingencies






Shareholders' Equity


Preferred stock, $0.01 par value, Authorized: 5,000,000 shares, none issued or outstanding

—

—

Common stock, $0.01 par value, Authorized: 400,000,000 shares, Issued: 2022 - 136,109,649 shares; 2021 - 135,255,808 shares, Outstanding: 2022 - 126,759,705 shares; 2021 - 125,905,864 shares

1

1

Capital in excess of par value

542

494

Treasury stock (common), at cost: 2022 - 9,349,944 shares; 2021 - 9,349,944 shares

(674)

(674)

Accumulated other comprehensive loss

(308)

(262)

Retained earnings

4,238

4,242

3,799

3,801

Total Liabilities and Shareholders' Equity

$                      14,800

$                      13,951

 

SUMMARY CASH FLOW (unaudited)




Alaska Air Group, Inc.




(in millions)

Six Months
Ended

June 30, 2022

Three Months Ended
March 31,
2022(a)

Three Months Ended
June 30,
2022(b)

Cash Flows from Operating Activities:




Net income (loss)

$                           (4)

$                      (143)

$                        139

Non-cash reconciling items

447

182

265

Changes in working capital

792

248

544

Net cash provided by (used in) operating activities

1,235

287

948






Cash Flows from Investing Activities:




Property and equipment additions

(632)

(288)

(344)

Other investing activities

(89)

327

(416)

Net cash provided by (used in) investing activities

(721)

39

(760)






Cash Flows from Financing Activities:

(206)

(168)

(38)






Net increase (decrease) in cash and cash equivalents

308

158

150

Cash, cash equivalents, and restricted cash at beginning of period

494

494

652

Cash, cash equivalents, and restricted cash at end of the period

$                        802

$                        652

$                        802


(a) 

As reported in Form 10-Q for the first quarter of 2022.

(b)

Cash flows for the three months ended June 30, 2022, can be calculated by subtracting cash flows for the three months ended March 31,
2022, as reported in Form 10-Q for the first quarter 2022, from the six months ended June 30, 2022.


 

OPERATING STATISTICS SUMMARY (unaudited)





Alaska Air Group, Inc.























Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

Change

2022

2021

Change

Consolidated Operating Statistics:(a)










Revenue passengers (000)

11,005

8,712

26.3 %

19,700

13,379

47.2 %

RPMs (000,000) "traffic"

13,746

10,334

33.0 %

24,332

15,727

54.7 %

ASMs (000,000) "capacity"

15,611

13,413

16.4 %

29,394

23,810

23.5 %

Load factor

88.1 %

77.0 %

11.1 pts

82.8 %

66.1 %

16.7 pts

Yield

17.59¢

13.09¢

34.4 %

16.15¢

12.79¢

26.3 %

RASM

17.03¢

11.38¢

49.6 %

14.76¢

9.76¢

51.2 %

CASMex(b)

9.92¢

9.20¢

7.8 %

10.24¢

9.95¢

2.9 %

Economic fuel cost per gallon(b)

$3.76

$1.90

97.9 %

$3.23

$1.85

74.6 %

Fuel gallons (000,000)

196

168

16.7 %

368

294

25.2 %

ASMs per gallon

79.6

79.8

(0.3) %

79.9

81.0

(1.4) %

Average full-time equivalent employees (FTEs)

22,603

19,001

19.0 %

22,092

18,071

22.3 %

Mainline Operating Statistics:










Revenue passengers (000)

8,321

6,151

35.3 %

14,887

9,302

60.0 %

RPMs (000,000) "traffic"

12,460

8,966

39.0 %

21,972

13,555

62.1 %

ASMs (000,000) "capacity"

14,052

11,611

21.0 %

26,439

20,464

29.2 %

Load factor

88.7 %

77.2 %

11.5 pts

83.1 %

66.2 %

16.9 pts

Yield

16.28¢

11.96¢

36.1 %

14.89¢

11.64¢

27.9 %

RASM

16.02¢

10.59¢

51.3 %

13.81¢

9.09¢

51.9 %

CASMex(b)

8.98¢

8.48¢

5.9 %

9.29¢

9.17¢

1.3 %

Economic fuel cost per gallon(b)

$3.74

$1.88

98.9 %

$3.21

$1.84

74.4 %

Fuel gallons (000,000)

165

135

22.2 %

311

233

33.5 %

ASMs per gallon

85.2

86.0

(0.9) %

85.0

87.8

(3.2) %

Average number of FTEs

17,315

14,021

23.5 %

16,825

13,247

27.0 %

Aircraft utilization

10.1

9.9

2.0 %

9.8

9.2

6.5 %

Average aircraft stage length

1,363

1,320

3.3 %

1,349

1,313

2.7 %

Operating fleet(d)

233

202

31 a/c

233

202

31 a/c

Regional Operating Statistics:(c)










Revenue passengers (000)

2,685

2,562

4.8 %

4,813

4,077

18.1 %

RPMs (000,000) "traffic"

1,285

1,367

(6.0) %

2,360

2,172

8.7 %

ASMs (000,000) "capacity"

1,559

1,802

(13.5) %

2,955

3,346

(11.7) %

Load factor

82.4 %

75.9 %

6.5 pts

79.9 %

64.9 %

15.0 pts

Yield

30.35¢

20.48¢

48.2 %

27.88¢

19.95¢

39.7 %

RASM

26.04¢

16.41¢

58.7 %

23.21¢

13.84¢

67.7 %

Operating fleet(d)

104

94

10 a/c

104

94

10 a/c


(a)     

Except for FTEs, data includes information related to third-party regional capacity purchase flying arrangements.

(b)     

See a reconciliation of this non-GAAP measure and Note A for a discussion of the importance of this measure to investors in the accompanying pages.

(c)     

Data presented includes information for flights operated by Horizon and third-party carriers.

(d)     

Excludes all aircraft removed from operating service. 

 

Given the unusual nature of 2021 and 2020, we believe that some analysis of specific financial and operational results compared to 2019 provides meaningful insight. The table below includes comparative results from 2022 to 2019.

FINANCIAL INFORMATION AND OPERATING STATISTICS - 2022 Compared to 2019 (unaudited)

Alaska Air Group, Inc.























Three Months Ended June 30,

Six Months Ended June 30,

2022

2019

Change

2022

2019

Change

Passenger revenue

$        2,418

$        2,111

15 %

$        3,929

$        3,827

3 %

Mileage plan other revenue

175

118

48 %

287

228

26 %

Cargo and other

65

59

10 %

123

109

13 %

Total Operating Revenues

2,658

2,288

16 %

4,339

4,164

4 %












Operating expenses, excluding fuel and special items

1,549

1,414

10 %

3,010

2,819

7 %

Aircraft fuel, including hedging gains and losses

776

502

55 %

1,123

922

22 %

Special items

146

8

NM

221

34

NM

Total Operating Expenses

2,471

1,924

28 %

4,354

3,775

15 %












Total Non-operating Expense

(2)

(13)

(85) %

(6)

(32)

(81) %

Income (Loss) Before Income Tax

$            185

$            351

(47) %

$            (21)

$            357

(106) %












Consolidated Operating Statistics:










Revenue passengers (000)

11,005

12,026

(8) %

19,700

22,442

(12) %

RPMs (000,000) "traffic"

13,746

14,638

(6) %

24,332

27,087

(10) %

ASMs (000,000) "capacity"

15,611

16,980

(8) %

29,394

32,487

(10) %

Load Factor

88.1 %

86.2 %

         1.9 pts

82.8 %

83.4 %

       (0.6) pts

Yield

17.59¢

14.43¢

22 %

16.15¢

14.13¢

14 %

RASM

17.03¢

13.48¢

26 %

14.76¢

12.82¢

15 %

CASMex

9.92¢

8.33¢

19 %

10.24¢

8.68¢

18 %

FTEs

22,603

21,921

3 %

22,092

21,876

1 %

 

OPERATING SEGMENTS (unaudited)

Alaska Air Group, Inc.



























Three Months Ended June 30, 2022

(in millions)

Mainline

Regional

Horizon

Consolidating
& Other(a)

Air Group
Adjusted(b)

Special
Items(c)

Consolidated

Operating Revenues












Passenger revenues

$     2,028

$        390

$          —

$                  —

$     2,418

$          —

$        2,418

CPA revenues

—

—

101

(101)

—

—

—

Mileage Plan other revenue

159

16

—

—

175

—

175

Cargo and other

64

—

—

1

65

—

65

Total Operating Revenues

2,251

406

101

(100)

2,658

—

2,658

Operating Expenses












Operating expenses, excluding fuel

1,262

289

98

(100)

1,549

146

1,695

Fuel expense

617

119

—

—

736

40

776

Total Operating Expenses

1,879

408

98

(100)

2,285

186

2,471

Non-operating Income (Expense)

3

—

(5)

—

(2)

—

(2)

Income (Loss) Before Income Tax

$        375

$           (2)

$           (2)

$                  —

$        371

$       (186)

$           185

Pretax Margin







14.0 %


7.0 %















Three Months Ended June 30, 2021

(in millions)

Mainline

Regional

Horizon

Consolidating
& Other(a)

Air Group
Adjusted(b)

Special
Items(c)

Consolidated

Operating Revenues












Passenger revenues

$     1,072

$        280

$          —

$                  —

$     1,352

$          —

$        1,352

CPA revenues

—

—

111

(111)

—

—

—

Mileage Plan other revenue

102

16

—

—

118

—

118

Cargo and other

55

—

—

2

57

—

57

Total Operating Revenues

1,229

296

111

(109)

1,527

—

1,527

Operating Expenses












Operating expenses, excluding fuel

984

286

91

(127)

1,234

(530)

704

Fuel expense

253

66

—

1

320

(46)

274

Total Operating Expenses

1,237

352

91

(126)

1,554

(576)

978

Non-operating Income (Expense)

(16)

—

(5)

—

(21)

—

(21)

Income (Loss) Before Income Tax

$         (24)

$         (56)

$          15

$                  17

$         (48)

$        576

$           528

Pretax Margin







(3.1) %


34.6 %

 

Six Months Ended June 30, 2022

(in millions)

Mainline

Regional

Horizon

Consolidating
& Other(a)

Air Group
Adjusted(b)

Special
Items(c)

Consolidated

Operating Revenues












Passenger revenues

$     3,271

$        658

$          —

$                  —

$    3,929

$          —

$        3,929

CPA revenues

—

—

195

(195)

—

—

—

Mileage Plan other revenue

259

28

—

—

287

—

287

Cargo and other

121

—

—

2

123

—

123

Total Operating Revenues

3,651

686

195

(193)

4,339

—

4,339

Operating Expenses












Operating expenses, excluding fuel

2,456

551

197

(194)

3,010

221

3,231

Fuel expense

998

192

—

—

1,190

(67)

1,123

Total Operating Expenses

3,454

743

197

(194)

4,200

154

4,354

Non-operating Income (Expense)

4

—

(10)

—

(6)

—

(6)

Income (Loss) Before Income Tax

$        201

$         (57)

$         (12)

$                    1

$       133

$       (154)

$            (21)

Pretax Margin







3.1 %


(0.5) %















Six Months Ended June 30, 2021

(in millions)

Mainline

Regional

Horizon

Consolidating
& Other(a)

Air Group
Adjusted(b)

Special
Items(c)

Consolidated

Operating Revenues












Passenger revenues

$     1,578

$        433

$          —

$                  —

$    2,011

$          —

$        2,011

CPA revenues

—

—

215

(215)

—

—

—

Mileage Plan other revenue

182

30

—

—

212

—

212

Cargo and other

99

—

—

2

101

—

101

Total Operating Revenues

1,859

463

215

(213)

2,324

—

2,324

Operating Expenses












Operating expenses, excluding fuel

1,877

551

179

(236)

2,371

(912)

1,459

Fuel expense

427

118

—

—

545

(68)

477

Total Operating Expenses

2,304

669

179

(236)

2,916

(980)

1,936

Non-operating Income (Expense)

(23)

—

(10)

—

(33)

—

(33)

Income (Loss) Before Income Tax

$       (468)

$       (206)

$          26

$                  23

$      (625)

$        980

$           355

Pretax Margin







(26.9) %


15.3 %


(a)     

Includes consolidating entries, Air Group parent company, McGee Air Services, and other immaterial business units.

(b)     

The Air Group Adjusted column represents the financial information that is reviewed by management to assess performance of operations
and determine capital allocation and excludes certain charges. See Note A in the accompanying pages for further information.

(c)     

Includes payroll support program grant wage offsets, special items, and mark-to-market fuel hedge accounting adjustments.

 

GAAP TO NON-GAAP RECONCILIATIONS (unaudited)



Alaska Air Group, Inc.






CASM Excluding Fuel and Special Items Reconciliation

Three Months Ended June 30,

Six Months Ended June 30,

(in cents)

2022

2021

2022

2021

Consolidated:






CASM

                15.84 ¢

                  7.29 ¢

                14.81 ¢

                  8.13 ¢

Less the following components:






Payroll Support Program grant wage offset

—

(3.75)

—

(3.84)

Aircraft fuel, including hedging gains and losses

4.98

2.04

3.82

2.00

Special items - fleet transition and related charges(a)

0.94

(0.03)

0.75

0.07

Special items - restructuring charges(b)

—

(0.17)

—

(0.05)

CASM excluding fuel and special items

                  9.92 ¢

                  9.20 ¢

                10.24 ¢

                  9.95 ¢








Mainline:






CASM

                15.06 ¢

                  6.24 ¢

                13.69 ¢

                  6.72 ¢

Less the following components:






Payroll Support Program grant wage offset

—

(3.79)

—

(4.21)

Aircraft fuel, including hedging gains and losses

5.06

1.78

3.84

1.75

Special items - fleet transition and related charges(a)

1.02

(0.03)

0.56

0.07