SEATTLE, April 19, 2012 /PRNewswire via COMTEX/ --First quarter highlights with comparison to 2011:

• Reported first quarter net income, excluding special items, of $28.3 million, or $0.39 per diluted share, compared to net income of $29.5 million, or $0.40 per diluted share. This quarter's results compare to a First Call mean estimate of $0.35 per share and represent the second-best first quarter result in our history.
• Recorded net income under Generally Accepted Accounting Principles (GAAP) of $40.8 million, or $0.56 per diluted share, compared to net income of $74.2 million, or $1.01 per diluted share.
• Effected a 2-for-1 stock split in March, resulting in about 71 million shares outstanding. All EPS figures and share-related information have been adjusted to reflect the split.
• Held the No. 1 spot in U.S. Department of Transportation on-time performance among the 10 largest U.S. airlines for the 12 months ended February 2012.
• Won the "Platinum" award for excellence in baggage handling from the International Air Transport Association, the first carrier in North America and only the second in the world to earn that title.
• Improved employee productivity by 4.7 percent.
• Achieved 12-month return on invested capital of 11.6 percent, compared to 11.3 percent.
• Lowered adjusted debt-to-total capitalization ratio by 2 points, or to 60 percent, since Dec. 31, 2011.
• Held $1.1 billion in unrestricted cash and marketable securities as of March 31, 2012.
• Began new service from San Jose to Palm Springs, Calif., from Seattle to Kansas City, Mo., and from Portland, Ore., to Long Beach, Calif.
• Scheduled new service to start in the second quarter as follows:

New Non-Stop Routes (Launch Date)
Oakland to Honolulu (4/10)	Portland to Bellingham (6/4)
San Jose to Honolulu (4/10)	Portland to Bozeman (6/4)
San Jose to Reno (6/4)	Portland to Santa Barbara (6/4)
San Diego to Santa Rosa (6/4)	Seattle to Philadelphia (6/11)
San Diego to Fresno (6/4)	Seattle to Fort Lauderdale (7/16)
San Diego to Monterey (6/4)

Alaska Air Group Inc. (NYSE: ALK) today reported first quarter 2012 GAAP net income of $40.8 million, or $0.56 per diluted share, compared to GAAP net income of $74.2 million, or $1.01 per diluted share in 2011. Excluding mark-to-market fuel hedge gains of $19.9 million ($12.5 million after tax, or $0.17 per diluted share), the company reported first quarter 2012 net income of $28.3 million, or $0.39 per diluted share, compared to net income excluding special items of $29.5 million, or $0.40 per diluted share, in 2011.

"We are very pleased to report a solid profit--the second-best first quarter result in our history--in what is seasonally our weakest quarter. Changes to our network and new markets led to a significant improvement in revenues, which helped offset rising fuel prices. These results provide a strong footing for the rest of the year," said Brad Tilden, Air Group's chief executive officer-elect. "I want to thank our people who continue to do a great job taking care of our customers and running one of the best operations in the business."

The following table reconciles the company's reported GAAP net income and earnings per diluted share (EPS) during the first quarters of 2012 and 2011 to adjusted amounts:

	Three Months Ended March 31,
	2012								2011
(in millions, except per share amounts)	Dollars				Diluted EPS				Dollars				Diluted EPS
Reported GAAP net income	$	40.8			$	0.56			$	74.2			$	1.01
Fleet transition costs, net of tax	--				--				6.3				0.09
Mark-to-market fuel hedge adjustments, net of tax	(12.5)				(0.17)				(51.0)				(0.70)
Net income and diluted EPS, excluding the items noted below:	$	28.3			$	0.39			$	29.5			$	0.40

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 page 10 of this release.

A conference call regarding the first quarter results will be simulcast via the Internet at 8:30 a.m. Pacific time on April 19. It can be accessed through the company's website at alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call at alaskaair.com/investors.

References in this news release to "Air Group," "company," "we," "us" and "our" refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified. Alaska Airlines, Inc. and Horizon Air Industries, Inc. are referred to as "Alaska" and "Horizon," respectively, and together as our "airlines."

This news release may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, 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 any forward-looking statements. 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 Dec. 31, 2011. Some of these risks include general economic conditions, increases in operating costs including fuel, competition, labor costs and relations, our significant indebtedness, inability to meet cost reduction goals, seasonal fluctuations in our financial results, an aircraft accident, and changes in laws and regulations. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. 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 after the date of this report to conform them to actual results. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse.

Alaska Airlines and Horizon Air, subsidiaries of Alaska Air Group (NYSE: ALK), together serve more than 90 cities through an expansive network in Alaska, the Lower 48, Hawaii, Canada and Mexico. Alaska Airlines ranked "Highest in Customer Satisfaction Among Traditional Network Carriers" in the J.D. Power and Associates 2008, 2009, 2010 and 2011 North America Airline Satisfaction Studies(SM). For reservations, visit alaskaair.com. For more news and information, visit the Alaska Airlines/Horizon Air Newsroom at alaskaair.com/newsroom.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Alaska Air Group, Inc.
	Three Months Ended March 31,
(in millions, except per share amounts)	2012				2011				Change
Operating Revenues:
Passenger
Mainline	$	763.7			$	702.4			8.7	%
Regional	186.7				176.5				5.8	%
Total passenger revenue	950.4				878.9				8.1	%
Freight and mail	24.4				24.9				(2.0)	%
Other - net	64.5				61.4				5.0	%
Total Operating Revenues	1,039.3				965.2				7.7	%
Operating Expenses:
Wages and benefits	256.6				249.3				2.9	%
Variable incentive pay	16.0				16.4				(2.4)	%
Aircraft fuel, including hedging gains and losses	318.8				194.5				63.9	%
Aircraft maintenance	50.1				53.3				(6.0)	%
Aircraft rent	28.0				30.5				(8.2)	%
Landing fees and other rentals	62.5				57.9				7.9	%
Contracted services	47.7				43.5				9.7	%
Selling expenses	41.1				39.8				3.3	%
Depreciation and amortization	63.7				60.3				5.6	%
Food and beverage service	17.8				15.1				17.9	%
Other	64.6				60.7				6.4	%
Fleet transition costs	--				10.1				NM
Total Operating Expenses	966.9				831.4				16.3	%
Operating Income	72.4				133.8				(45.9)	%
Nonoperating Income (Expense):
Interest income	4.9				7.6
Interest expense	(16.6)				(23.4)
Interest capitalized	4.5				1.8
Other - net	1.4				0.9
	(5.8)				(13.1)				(55.7)	%
Income Before Income Tax	66.6				120.7				(44.8)	%
Income tax expense	25.8				46.5
Net Income	$	40.8			$	74.2			(45.0)	%
Basic Earnings Per Share:	$	0.57			$	1.03
Diluted Earnings Per Share:	$	0.56			$	1.01
Shares Used for Computation:
Basic	71.192				71.988
Diluted	72.659				73.682
NM - Not Meaningful

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
Alaska Air Group, Inc.
(in millions)	March 31, 2012				December 31, 2011
Cash and marketable securities	$	1,141.2			$	1,140.9
Total current assets	1,656.9				1,595.5
Property and equipment-net	3,503.7				3,401.5
Other assets	221.4				198.0
Total assets	$	5,382.0			$	5,195.0
Current liabilities	$	1,673.2			$	1,509.6
Long-term debt	1,036.9				1,099.0
Other liabilities and credits	1,453.9				1,413.2
Shareholders' equity	1,218.0				1,173.2
Total liabilities and shareholders' equity	$	5,382.0			$	5,195.0
Debt to Capitalization, adjusted for operating leases	60%:40%				62%:38%
Number of common shares outstanding	71.399				70.950

OPERATING STATISTICS SUMMARY (unaudited)
Alaska Air Group, Inc.
	Three Months Ended March 31,
	2012				2011				Change
Mainline Operating Statistics:
Revenue passengers (000)	4,275				4,107				4.1	%
RPMs (000,000) "traffic"	5,637				5,279				6.8	%
ASMs (000,000) "capacity"	6,575				6,353				3.5	%
Load factor	85.7		%		83.1		%		2.6 pts
Yield	13.55		cents		13.31		cents		1.8	%
PRASM	11.62		cents		11.06		cents		5.1	%
CASM excluding fuel(a)	7.90		cents		7.83		cents		0.9	%
Economic fuel cost per gallon(b)	$	3.40			$	2.87			18.5	%
Fuel gallons (000,000)	86.5				83.1				4.1	%
Average number of full-time equivalent employees	9,010				8,884				1.4	%
Aircraft utilization	10.2				10.4				(1.9)	%
Average aircraft stage length	1,152				1,119				2.9	%
Operating fleet	119				117				2 a/c
Regional Operating Statistics:(c)
Revenue passengers (000)	1,720				1,645				4.6	%
RPMs (000,000) "traffic"	595				574				3.7	%
ASMs (000,000) "capacity"	769				759				1.3	%
Load factor	77.4		%		75.6		%		1.8 pts
Yield	31.38		cents		30.75		cents		2.0	%
PRASM	24.28		cents		23.25		cents		4.4	%
Operating fleet (Horizon only)	48				54				(6) a/c
Consolidated Operating Statistics:(d)
Revenue passengers (000)	5,995				5,752				4.2	%
RPMs (000,000) "traffic"	6,232				5,853				6.5	%
ASMs (000,000) "capacity"	7,344				7,112				3.3	%
Load factor	84.9		%		82.3		%		2.6 pts
Yield	15.25		cents		15.02		cents		1.5	%
PRASM	12.94		cents		12.36		cents		4.7	%
CASM excluding fuel and fleet transition costs(a)	8.82		cents		8.81		cents		0.1	%
Economic fuel cost per gallon(b)	$	3.41			$	2.87			18.8	%
Fuel gallons (000,000)	99.4				96.3				3.2	%
Average number of full-time equivalent employees	11,832				11,884				(0.4)	%

(a)	See page 7 for a reconciliation of operating expenses excluding fuel and certain special items and Note A on page 9 for a discussion of why these measures may be important to investors.
(b)	See page 8 for a reconciliation of economic fuel cost.
(c)	Data presented includes information related to flights operated by Horizon Air and third-party carriers.
(d)	Except for full-time equivalent employees, data includes information related to third-party regional capacity purchase flying arrangements.

OPERATING SEGMENTS (unaudited)
Alaska Air Group, Inc.
	Three Months Ended March 31, 2012
	Alaska
	Mainline				Regional				Horizon				Consolidating				Air Group Adjusted(a)				Special Items				Consolidated
Operating revenues
Passenger
Mainline	$	763.7			$	--			$	--			$	--			$	763.7			$	--			$	763.7
Regional	--				186.7				--				--				186.7				--				186.7
Total passenger revenues	763.7				186.7				--				--				950.4				--				950.4
CPA revenues	--				--				87.0				(87.0)				--				--				--
Freight and mail	23.5				0.9				--				--				24.4				--				24.4
Other-net	62.5				0.1				1.9				--				64.5				--				64.5
Total operating revenues	849.7				187.7				88.9				(87.0)				1,039.3				--				1,039.3
Operating expenses
Operating expenses, excluding fuel	519.6				136.8				78.3				(86.6)				648.1				--				648.1
Economic fuel	294.4				44.3				--				--				338.7				(19.9)				318.8
Total operating expenses	814.0				181.1				78.3				(86.6)				986.8				(19.9)				966.9
Nonoperating income (expense)
Interest income	4.9				--				--				--				4.9				--				4.9
Interest expense	(12.6)				--				(4.0)				--				(16.6)				--				(16.6)
Other	5.3				--				0.4				0.2				5.9				--				5.9
	(2.4)				--				(3.6)				0.2				(5.8)				--				(5.8)
Income (loss) before income tax	$	33.3			$	6.6			$	7.0			$	(0.2)			$	46.7			$	19.9			$	66.6

	Three Months Ended March 31, 2011
	Alaska
	Mainline				Regional				Horizon				Consolidating				Air Group Adjusted(a)				Special Items				Consolidated
Operating revenues
Passenger
Mainline	$	702.4			$	--			$	--			$	--			$	702.4			$	--			$	702.4
Regional	--				176.5				--				--				176.5				--				176.5
Total passenger revenues	702.4				176.5				--				--				878.9				--				878.9
CPA revenues	--				--				94.6				(94.6)				--				--				--
Freight and mail	23.9				1.0				--				--				24.9				--				24.9
Other-net	59.0				--				2.4				--				61.4				--				61.4
Total operating revenues	785.3				177.5				97.0				(94.6)				965.2				--				965.2
Operating expenses
Operating expenses, excluding fuel(b)	497.7				132.9				90.2				(94.0)				626.8				10.1				636.9
Economic fuel	238.4				38.1				--				--				276.5				(82.0)				194.5
Total operating expenses	736.1				171.0				90.2				(94.0)				903.3				(71.9)				831.4
Nonoperating income (expense)
Interest income	8.7				--				--				(1.1)				7.6				--				7.6
Interest expense	(19.7)				--				(4.7)				1.0				(23.4)				--				(23.4)
Other	2.1				--				0.8				(0.2)				2.7				--				2.7
	(8.9)				--				(3.9)				(0.3)				(13.1)				--				(13.1)
Income (loss) before income tax	$	40.3			$	6.5			$	2.9			$	(0.9)			$	48.8			$	71.9			$	120.7

(a)	The adjusted column represents the financial information that is reviewed by management to assess performance of operations and determine capital allocations and does not include certain charges. See Note A on page 9 for further information.
(b)	Special charges related to CRJ-700 fleet transitions costs.

FUEL RECONCILIATIONS (unaudited)
Alaska Air Group, Inc.
	Three Months Ended March 31,
	2012								2011
(in millions, except for per gallon amounts)	Dollars				Cost/Gal				Dollars				Cost/Gal
Raw or "into-plane" fuel cost	$	337.3			$	3.39			$	289.0			$	3.00
Minus gains, or plus the losses, during the period on settled hedges	1.4				0.02				(12.5)				(0.13)
Consolidated economic fuel expense	$	338.7			$	3.41			$	276.5			$	2.87
Adjustments to reflect timing of (gain) or loss recognition resulting from mark-to-market accounting	(19.9)				(0.20)				(82.0)				(0.85)
GAAP fuel expense	$	318.8			$	3.21			$	194.5			$	2.02
Fuel gallons	99.4								96.3
Breakout of Fuel Expense:
									Three Months Ended March 31,
(in millions)									2012				2011
Mainline economic fuel expense									$	294.4			$	238.4
Regional economic fuel expense									44.3				38.1
Consolidated economic fuel expense									$	338.7			$	276.5
Mainline Economic Cost per Gallon Reconciliation:
									Three Months Ended March 31,
(in millions, except per gallon amounts)									2012				2011
Mainline economic fuel expense									$	294.4			$	238.4
Mainline fuel gallons									86.5				83.1
Mainline economic cost per gallon									$	3.40			$	2.87

Note A: Pursuant to Regulation G, we are providing disclosure of the reconciliation of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. We believe that consideration of these non-GAAP financial measures may be important to investors for the following reasons:

• By eliminating fuel expense and certain special items from our cost and unit cost metrics, we believe that we have better visibility into the results of our non-fuel cost-reduction initiatives. Our industry is highly competitive and is characterized by high fixed costs, so even a small reduction in non-fuel operating costs can result in a significant improvement in operating results. In addition, we believe that all domestic carriers are similarly impacted by changes in jet fuel costs over the long run, so it is important for management (and thus investors) to understand the impact of (and trends in) company-specific cost drivers such as labor rates and productivity, airport costs, maintenance costs, etc., which are more controllable by management.
• Cost per ASM (CASM) excluding fuel and certain special items is one of the most important measures used by management and by the Air Group Board of Directors in assessing quarterly and annual cost performance.
• Adjusted Income before Income Taxes and CASM excluding fuel (and other items as specified in our plan documents) are important metrics for the employee incentive plan that covers all Air Group employees.
• CASM excluding fuel and certain special items is a measure commonly used by industry analysts, and we believe it is the basis by which they compare our airlines to others in the industry. The measure is also the subject of frequent questions from investors.
• Disclosure of the individual impact of certain noted items provides investors the ability to measure and monitor performance both with and without these special items. We believe that disclosing the impact of certain items, such as fleet transition costs, is important because it provides information on significant items that are not necessarily indicative of future performance. Industry analysts and investors consistently measure our performance without these items for better comparability between periods and among other airlines.
• Although we disclose our passenger unit revenues, we do not (nor are we able to) evaluate unit revenues excluding the impact that changes in fuel costs have had on ticket prices. Fuel expense represents a large percentage of our total operating expenses. Fluctuations in fuel prices often drive changes in unit revenues in the mid-to-long term. Although we believe it is useful to evaluate non-fuel unit costs for the reasons noted above, we would caution readers of these financial statements not to place undue reliance on unit costs excluding fuel as a measure or predictor of future profitability because of the significant impact of fuel costs on our business.

Note B: Air Group has two operating airlines - Alaska Airlines and Horizon Air. Each is a regulated airline with separate management teams. To manage the two operating airlines, management views the business in three operating segments. Alaska operates a fleet of passenger jets (Alaska Mainline) and contracts with Horizon, SkyWest Airlines, Inc. (SkyWest), and Peninsula Airways, Inc. (PenAir) for regional capacity under which Alaska receives all passenger revenue from those flights (Alaska Regional). Horizon operates a fleet of turboprop aircraft and sells all of its capacity to Alaska pursuant to a capacity purchase arrangement (Horizon). The Company believes the amounts paid by Alaska to Horizon reflect current market rates received by other regional carriers for similar flying and are available to pay for various Horizon operating expenses such as crew expenses, maintenance, and aircraft ownership costs. All inter-company revenues and expenses between Alaska and Horizon are eliminated in consolidation.

Glossary of Terms

Alaska Mainline - the 737 part of Alaska's business with average stage lengths greater than 1,000 miles.

Alaska Regional - Alaska's shorter distance network. In this segment, we record actual on board passenger revenue, less costs such as fuel, distribution costs, and payments made to Horizon, SkyWest and PenAir under capacity purchase agreements (CPAs).

Horizon - Horizon operates regional aircraft. All of Horizon's capacity is sold to Alaska under a CPA. Expenses included those typically borne by regional airlines such as crew costs, ownership costs, and maintenance costs.

RPMs - revenue passenger miles, or "traffic;" represents the number of seats that were filled with paying passengers; one passenger traveling one mile is one RPM.

ASMs - available seat miles, or "capacity;" represents total seats available across the fleet multiplied by the number of miles flown.

Load Factor - RPMs as a percentage of ASMs; represents the number of available seats that were filled with paying passengers.

Yield - passenger revenue per RPM; represents the average revenue for flying one passenger one mile.

PRASM - passenger revenue per ASM; commonly called "passenger unit revenue."

RASM - operating revenue per ASMs, or "unit revenue;" operating revenue includes all passenger revenue, freight and mail, Mileage Plan, and other ancillary revenue; represents the average total revenue for flying one seat one mile.

CASM - operating costs per ASM, or "unit cost;" represents all operating expenses including fuel and special items.

CASMex - operating costs excluding fuel and special items per ASM; this metric is used to help track progress toward reduction of non-fuel operating costs since fuel is largely out of our control.

Economic fuel - best estimate of the cash cost of fuel, net of the impact of our fuel-hedging program.

Aircraft Utilization - block hours per day; this represents the average number of hours our aircraft are flying.

Aircraft Stage Length - represents the average miles flown per aircraft departure.

Diluted Earnings per Share - represents earnings per share using fully diluted shares outstanding.

Diluted Shares - represents the total number of shares that would be outstanding if all possible sources of conversion, such as stock options, were exercised.

Productivity - number of revenue passengers per full-time-equivalent employee.

SOURCE Alaska Air Group Inc.