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Alaska Air Group reports third quarter 2022 results

Delivered adjusted pretax margins of 15.6%;

Recorded record third quarter operating revenue of $2.8 billion;

Finalized new contracts with ALPA, IBT and IAM represented employees

SEATTLE, Oct. 20, 2022 /PRNewswire/ -- Alaska Air Group (NYSE: ALK) today reported financial results for the third quarter ending Sept. 30, 2022, and provided outlook for the fourth quarter ending Dec. 31, 2022.

"I am incredibly proud of our entire team for the strong results they delivered in the third quarter, through the busiest travel season in two years," said Alaska CEO Ben Minicucci. "We ran an industry-leading operation with completion rates over 99% every month. We set a new revenue record and our double-digit pretax margin will likely lead the industry. Alaska and Horizon also ratified three major labor deals. This is a strong foundation that we look forward to building on in 2023."

Financial Results for the Third Quarter:

  • Reported net income for the third quarter of 2022 under Generally Accepted Accounting Principles (GAAP) of $40 million, or $0.31 per share, compared to a net income of $194 million, or $1.53 per share, in the third quarter of 2021.
  • Reported net income for the third quarter of 2022, excluding special items and mark-to-market fuel hedge accounting adjustments, of $325 million, or $2.53 per share, compared to a net income, excluding special items and mark-to-market fuel hedge accounting adjustments, of $187 million, or $1.47 per share, in the third quarter of 2021.
  • Recorded $2.8 billion in operating revenues for the third quarter, the highest revenue-generating quarter in company history.
  • Generated RASM in the third quarter of 2022 26.8% above the third quarter 2019 result, driven by strong pricing, a robust demand environment and the execution of our commercial roadmap.
  • Reported adjusted pretax margin for the third quarter of 15.6%.

Balance Sheet and Liquidity:

  • Held $3.2 billion in unrestricted cash and marketable securities as of Sept. 30, 2022.
  • Maintained a debt-to-capitalization ratio of 49% as of Sept. 30, 2022, within the target range of 40% to 50%.
  • Generated $174 million in operating cash flow for the third quarter.

Operational Updates and Milestones:

  • First major carrier to ratify a new labor agreement with mainline pilots, recognizing Alaska's more than 3,300 ALPA-represented employees for their contributions to the company's success.
  • Ratified a pilot retention agreement in September with 700 Horizon Air pilots represented by the IBT.
  • Ratified a two-year contract extension in August with nearly 5,700 Alaska Airlines employees represented by the IAM.
  • Delivered an excellent operation, with 99% completion rates for both mainline and regional for the quarter.
  • Received five Boeing 737-9 aircraft in the third quarter, bringing the total number of 737-9s in our mainline fleet to 33.
  • Retired six Airbus A320 aircraft and nine Q400 aircraft during the quarter, progressing on our transition to single fleets. By the end of January 2023, the remaining 23 A320 aircraft and 22 Q400 aircraft are expected to be retired.
  • Began retrofit project for the 737-800 fleet to refresh interiors and add three main cabin seats.
  • Announced new nonstop service between Everett's Paine Field and Anchorage starting in November 2022.

Awards and Recognition:

  • Mileage Plan ranked first in the U.S. News & World Report's list of Best Airline Rewards Programs for the eighth consecutive year.
  • Named to Forbes' America's Best Employers for Women list, receiving the highest ranking of all airlines.
  • Named for the second year in a row to Newsweek's list of America's Best Customer Service.
  • Recognized by Fast Company as one of the Best Workplaces for Innovators.

Environmental, Social and Governance Updates:

  • Signed agreement with Gevo Inc. to purchase 185 million gallons of sustainable aviation fuel (SAF) over five years beginning in 2026.
  • Launched a new SAF initiative in partnership with Microsoft, Boeing and Washington State University to expand the use of SAF and increase education on sustainable travel topics.
  • Donated funds and miles to multiple organizations assisting disaster relief and recovery in Alaska, Florida and Puerto Rico.

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

 


Three Months Ended September 30,


2022


2021

(in millions, except per-share amounts)

Dollars


Diluted EPS


Dollars


Diluted EPS

GAAP net income per share

$                 40


$              0.31


$               194


$              1.53

Mark-to-market fuel hedge adjustments

131


1.02



Special items - fleet transition(a)

155


1.21


(9)


(0.07)

Special items - labor ratification bonus(b)

90


0.70



Income tax effect of reconciling items above

(91)


(0.71)


2


0.01

Non-GAAP adjusted net income per share

$               325


$              2.53


$               187


$              1.47










Nine Months Ended September 30,


2022


2021

(in millions, except per-share amounts)

Dollars


Diluted EPS


Dollars


Diluted EPS

GAAP net income per share

$                 36


$              0.28


$               460


$              3.64

Payroll support program grant wage offset



(914)


(7.24)

Mark-to-market fuel hedge adjustments

64


0.50


(68)


(0.54)

Special items - fleet transition(a)

376


2.94


5


0.04

Special items - labor ratification bonus(b)

90


0.70



Special items - restructuring(c)



(12)


(0.09)

Income tax effect of reconciling items above

(128)


(1.00)


242


1.92

Non-GAAP adjusted net income (loss) per share

$               438


$              3.42


$             (287)


$            (2.27)

(a)    Special items - fleet transition in the three and nine months ended September 30, 2022 is primarily for impairment charges and accelerated costs associated with the retirement of the A320 and Q400 fleets by January 2023.

(b)   Special items - labor ratification bonus in the three and nine months ended September 30, 2022 is comprised of a one-time payment to Alaska pilots following ratification of a new collective bargaining agreement.

(c)   Special items - restructuring in the nine months ended September 30, 2021 is 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 third quarter results at 8:30 a.m. PDT on Oct. 20, 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.

Fourth Quarter 2022 Forecast Information

 



Q4 Expectation(a)

Capacity (ASMs) % change versus 2019(a)


Down 7% to 10%

Passenger load factor


83% to 86%

Total revenue % change versus 2019(a)


Up 12% to 15%

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


Up 20% to 23%

Economic fuel cost per gallon


$3.50 to $3.70

Non-operating expense (benefit)

 

 


($3M) to ($5M)

 

Full Year 2022 Forecast Information

 



Full Year Expectation(a)


Prior Full Year Expectation(b)

Capacity (ASMs) % change versus 2019


Down 8% to 9%


Down 8% to 9%

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


Up 19% to 20%


Up 15% to 17%

Adjusted Pre-tax margin


6% to 9%


6% to 9%

Capital Expenditures


~$1.5 billion


$1.6 billion to $1.7 billion

(a)    Due to the unusual nature of 2021 and 2020, all 2022 comparisons are versus the comparable period in 2019.

(b)    As filed on July 21, 2022.

 

For full year 2022, we continue to expect capacity down 8% to 9% as we prioritize our transition to single fleet and operational reliability. For the same period we expect CASMex to be up 19% to 20%, now reflecting the impacts of our three newly ratified labor agreements. Despite the impact of elevated fuel and new labor deals, we still expect to deliver a full year adjusted pre-tax margin of 6% to 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 low fares and award-winning customer service. Alaska is a member of the oneworld global alliance. With the alliance and our additional airline partners, our guests can travel to more than 900 destinations on more than 20 airlines while earning and redeeming miles on flights to locations around the world. Learn more about Alaska at news.alaskaair.com. Alaska Airlines and Horizon Air are subsidiaries of Alaska Air Group.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Alaska Air Group, Inc.













Three Months Ended September 30,


Nine Months Ended September 30,

(in millions, except per share amounts)

2022


2021


Change


2022


2021


Change

Operating Revenues












Passenger revenue

$        2,615


$        1,774


47 %


$        6,544


$        3,785


73 %

Mileage Plan other revenue

146


120


22 %


433


332


30 %

Cargo and other

67


59


14 %


190


160


19 %

Total Operating Revenues

2,828


1,953


45 %


7,167


4,277


68 %













Operating Expenses












Wages and benefits

686


578


19 %


1,931


1,581


22 %

Variable incentive pay

48


42


14 %


140


109


28 %

Payroll Support Program grant wage offset



NM



(914)


NM

Aircraft fuel, including hedging gains and losses

877


376


133 %


2,000


853


134 %

Aircraft maintenance

92


89


3 %


331


272


22 %

Aircraft rent

76


64


19 %


222


188


18 %

Landing fees and other rentals

161


141


14 %


435


414


5 %

Contracted services

83


62


34 %


243


167


46 %

Selling expenses

82


49


67 %


218


123


77 %

Depreciation and amortization

104


99


5 %


310


294


5 %

Food and beverage service

52


39


33 %


143


97


47 %

Third-party regional carrier expense

53


39


36 %


145


106


37 %

Other

207


126


64 %


536


348


54 %

Special items - fleet transition

155


(9)


NM


376


5


NM

Special items - labor ratification bonus

90



NM


90



NM

Special items - restructuring


.

NM



(12)


NM

Total Operating Expenses

2,766


1,695


63 %


7,120


3,631


96 %

Operating Income

62


258


(76) %


47


646


(93) %

Non-operating Income (Expense)












Interest income

17


6


183 %


35


19


84 %

Interest expense

(31)


(30)


3 %


(84)


(101)


(17) %

Interest capitalized

3


3


— %


8


9


(11) %

Other - net

14


8


75 %


38


27


41 %

Total Non-operating Income (Expense)

3


(13)


(123) %


(3)


(46)


(93) %

Income Before Income Tax

65


245




44


600



Income tax expense

25


51




8


140



Net Income

$             40


$           194




$             36


$           460















Basic Earnings Per Share

$          0.32


$          1.55




$          0.28


$          3.69



Diluted Earnings Per Share

$          0.31


$          1.53




$          0.28


$          3.64















Shares used for computation:












Basic

126.783


125.250




126.440


124.846



Diluted

128.370


127.188




128.087


126.325



 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)




Alaska Air Group, Inc.








(in millions)

September 30, 2022


December 31, 2021

ASSETS




Current Assets




Cash and cash equivalents

$                            688


$                            470

Marketable securities

2,462


2,646

   Total cash and marketable securities

3,150


3,116

Receivables - net

345


546

Inventories and supplies - net

94


62

Prepaid expenses and other current assets

221


196

Total Current Assets

3,810


3,920





Property and Equipment




Aircraft and other flight equipment

8,811


8,127

Other property and equipment

1,589


1,489

Deposits for future flight equipment

300


384


10,700


10,000

Less accumulated depreciation and amortization

4,046


3,862

Total Property and Equipment - Net

6,654


6,138





Other Assets




Operating lease assets

1,605


1,453

Goodwill and intangible assets

2,040


2,044

Other noncurrent assets

422


396

Other Assets

4,067


3,893





Total Assets

$                      14,531


$                      13,951

 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)




Alaska Air Group, Inc.








(in millions, except share amounts)

September 30, 2022


December 31, 2021

LIABILITIES AND SHAREHOLDERS' EQUITY




Current Liabilities




Accounts payable

$                      202


$                       200

Accrued wages, vacation and payroll taxes

583


457

Air traffic liability

1,467


1,163

Other accrued liabilities

805


625

Deferred revenue

1,068


912

Current portion of operating lease liabilities

263


268

Current portion of long-term debt

321


366

Total Current Liabilities

4,709


3,991





Long-Term Debt, Net of Current Portion

1,889


2,173





Noncurrent Liabilities




Long-term operating lease liabilities, net of current portion

1,482


1,279

Deferred income taxes

571


578

Deferred revenue

1,413


1,446

Obligation for pension and postretirement medical benefits

296


305

Other liabilities

345


378

Total Noncurrent Liabilities

4,107


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 - 136,184,043 shares; 2021 - 135,255,808 shares, Outstanding: 2022 - 126,834,099 shares; 2021 - 125,905,864 shares

1


1

Capital in excess of par value

549


494

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

(674)


(674)

Accumulated other comprehensive loss

(328)


(262)

Retained earnings

4,278


4,242


3,826


3,801

Total Liabilities and Shareholders' Equity

$                 14,531


$               13,951

 

SUMMARY CASH FLOW (unaudited)






Alaska Air Group, Inc.






(in millions)

 

Nine Months
Ended
September 30,
2022


Six Months
Ended June 30,
2022(a)


Three Months
Ended
September 30,
2022(b)

Cash Flows from Operating Activities:






Net income (loss)

$                          36


$                          (4)


$                          40

Non-cash reconciling items

719


447


272

Changes in working capital

654


792


(138)

Net cash provided by (used in) operating activities

1,409


1,235


174







Cash Flows from Investing Activities:






Property and equipment additions

(947)


(632)


(315)

Other investing activities

59


(89)


148

Net cash provided by (used in) investing activities

(888)


(721)


(167)







Cash Flows from Financing Activities:

(296)


(206)


(90)







Net increase (decrease) in cash and cash equivalents

225


308


(83)

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

494


494


802

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

$                        719


$                        802


$                        719

(a)  As reported in Form 10-Q for the second quarter of 2022.

(b) Cash flows for the three months ended September 30, 2022, can be calculated by subtracting cash flows for the six months ended June 30, 2022, as reported in Form 10-Q for the second quarter 2022, from the nine months ended September 30, 2022.

 

OPERATING STATISTICS SUMMARY (unaudited)







Alaska Air Group, Inc.

























Three Months Ended September 30,


Nine Months Ended September 30,


2022


2021


Change


2022


2021


Change

Consolidated Operating Statistics:(a)












Revenue passengers (000)

11,437


9,832


16.3 %


31,137


23,211


34.1 %

RPMs (000,000) "traffic"

14,143


11,592


22.0 %


38,475


27,319


40.8 %

ASMs (000,000) "capacity"

16,349


14,429


13.3 %


45,743


38,238


19.6 %

Load factor

86.5 %


80.3 %


6.2 pts


84.1 %


71.4 %


12.7 pts

Yield

18.48¢


15.30¢


20.8 %


17.01¢


13.85¢


22.8 %

RASM

17.30¢


13.54¢


27.8 %


15.67¢


11.19¢


40.0 %

CASMex(b)

10.05¢


9.21¢


9.1 %


10.17¢


9.67¢


5.2 %

Economic fuel cost per gallon(b)

$3.66


$2.05


78.5 %


$3.38


$1.93


75.1 %

Fuel gallons (000,000)

204


183


11.5 %


573


477


20.1 %

ASMs per gallon

80.1


78.8


1.6 %


79.8


80.2


(0.5) %

Average full-time equivalent employees (FTEs)

22,878


20,315


12.6 %


22,354


18,819


18.8 %

Mainline Operating Statistics:












Revenue passengers (000)

8,671


7,065


22.7 %


23,557


16,367


43.9 %

RPMs (000,000) "traffic"

12,846


10,122


26.9 %


34,818


23,677


47.1 %

ASMs (000,000) "capacity"

14,782


12,540


17.9 %


41,221


33,004


24.9 %

Load factor

86.9 %


80.7 %


6.2 pts


84.5 %


71.7 %


12.8 pts

Yield

17.26¢


14.08¢


22.6 %


15.76¢


12.68¢


24.3 %

RASM

16.34¢


12.66¢


29.1 %


14.72¢


10.44¢


41.0 %

CASMex(b)

9.15¢


8.45¢


8.3 %


9.24¢


8.90¢


3.8 %

Economic fuel cost per gallon(b)

$3.61


$2.03


77.8 %


$3.35


$1.91


75.4 %

Fuel gallons (000,000)

173


147


17.7 %


484


380


27.4 %

ASMs per gallon

85.4


85.3


0.1 %


85.2


86.9


(2.0) %

Average number of FTEs

17,453


15,116


15.5 %


17,035


13,870


22.8 %

Aircraft utilization

10.5


10.2


2.9 %


10.4


9.6


8.3 %

Average aircraft stage length

1,347


1,313


2.6 %


1,348


1,313


2.7 %

Operating fleet(d)

232


210


22 a/c


232


210


22 a/c

Regional Operating Statistics:(c)












Revenue passengers (000)

2,767


2,767


— %


7,579


6,843


10.8 %

RPMs (000,000) "traffic"

1,297


1,470


(11.8) %


3,657


3,642


0.4 %

ASMs (000,000) "capacity"

1,567


1,889


(17.0) %


4,522


5,235


(13.6) %

Load factor

82.8 %


77.8 %


5.0 pts


80.9 %


69.6 %


11.3 pts

Yield

30.69¢


23.72¢


29.4 %


28.88¢


21.47¢


34.5 %

RASM

26.23¢


19.26¢


36.2 %


24.26¢


15.80¢


53.5 %

Operating fleet(d)

94


94


— a/c


94


94


— 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 September 30,


Nine Months Ended September 30,


2022


2019


Change


2022


2019


Change

Passenger revenue

$        2,615


$        2,211


18 %


$        6,544


$        6,038


8 %

Mileage plan other revenue

146


118


24 %


433


346


25 %

Cargo and other

67


60


12 %


190


169


12 %

Total Operating Revenues

2,828


2,389


18 %


7,167


6,553


9 %













Operating expenses, excluding fuel and special items

1,644


1,476


11 %


4,654


4,295


8 %

Aircraft fuel, including hedging gains and losses

877


486


80 %


2,000


1,408


42 %

Special items

245


5


NM


466


39


NM

Total Operating Expenses

2,766


1,967


41 %


7,120


5,742


24 %













Total Non-operating Expense

3


(6)


(150) %


(3)


(38)


(92) %

Income Before Income Tax

$              65


$            416


(84) %


$              44


$            773


(94) %













Consolidated Operating Statistics:












Revenue passengers (000)

11,437


12,574


(9) %


31,137


35,018


(11) %

RPMs (000,000) "traffic"

14,143


15,026


(6) %


38,475


42,113


(9) %

ASMs (000,000) "capacity"

16,349


17,519


(7) %


45,743


50,006


(9) %

Load Factor

86.5 %


85.8 %


         0.7 pts


84.1 %


84.2 %


       (0.1) pts

Yield

18.48¢


14.71¢


26 %


17.01¢


14.34¢


19 %

RASM

17.30¢


13.64¢


27 %


15.67¢


13.10¢


20 %

CASMex

10.05¢


8.43¢


19 %


10.17¢


8.59¢


18 %

FTEs

22,878


22,247


3 %


22,354


22,000


2 %

 

OPERATING SEGMENTS (unaudited)

Alaska Air Group, Inc.





























Three Months Ended September 30, 2022

(in millions)

Mainline


Regional


Horizon


Consolidating & Other(a)


Air Group Adjusted(b)


Special Items(c)


Consolidated

Operating Revenues














Passenger revenues

$     2,217


$        398


$          —


$                  —


$     2,615


$          —


$        2,615

CPA revenues



93


(93)




Mileage Plan other revenue

133


13




146



146

Cargo and other

65




2


67



67

Total Operating Revenues

2,415


411


93


(91)


2,828



2,828

Operating Expenses














Operating expenses, excluding fuel

1,352


292


94


(94)


1,644


245


1,889

Fuel expense

625


121




746


131


877

Total Operating Expenses

1,977


413


94


(94)


2,390


376


2,766

Non-operating Income (Expense)

8



(5)



3



3

Income (Loss) Before Income Tax

$        446


$          (2)


$          (6)


$                    3


$        441


$      (376)


$             65

Pretax Margin









15.6 %




2.3 %
















Three Months Ended September 30, 2021

(in millions)

Mainline


Regional


Horizon


Consolidating & Other(a)


Air Group Adjusted(b)


Special Items(c)


Consolidated

Operating Revenues














Passenger revenues

$     1,425


$        349


$          —


$                  —


$     1,774


$          —


$        1,774

CPA revenues



107


(107)




Mileage Plan other revenue

105


15




120



120

Cargo and other

58




1


59



59

Total Operating Revenues

1,588


364


107


(106)


1,953



1,953

Operating Expenses














Operating expenses, excluding fuel

1,060


288


93


(113)


1,328


(9)


1,319

Fuel expense

299


77




376



376

Total Operating Expenses

1,359


365


93


(113)


1,704


(9)


1,695

Non-operating Income (Expense)

(8)



(6)


1


(13)



(13)

Income (Loss) Before Income Tax

$        221


$          (1)


$            8


$                    8


$        236


$            9


$           245

Pretax Margin









12.1 %




12.5 %

 


Nine Months Ended September 30, 2022

(in millions)

Mainline


Regional


Horizon


Consolidating & Other(a)


Air Group Adjusted(b)


Special Items(c)


Consolidated

Operating Revenues














Passenger revenues

$     5,488


$     1,056


$          —


$                  —


$    6,544


$          —


$        6,544

CPA revenues



288


(288)




Mileage Plan other revenue

392


41




433



433

Cargo and other

186




4


190



190

Total Operating Revenues

6,066


1,097


288


(284)


7,167



7,167

Operating Expenses














Operating expenses, excluding fuel

3,808


843


291


(288)


4,654


466


5,120

Fuel expense

1,623


313




1,936


64


2,000

Total Operating Expenses

5,431


1,156


291


(288)


6,590


530


7,120

Non-operating Income (Expense)

12



(15)



(3)



(3)

Income (Loss) Before Income Tax

$        647


$         (59)


$         (18)


$                   4


$       574


$       (530)


$             44

Pretax Margin









8.0 %




0.6 %
















Nine Months Ended September 30, 2021

(in millions)

Mainline


Regional


Horizon


Consolidating & Other(a)


Air Group Adjusted(b)


Special Items(c)


Consolidated

Operating Revenues














Passenger revenues

$     3,003


$        782


$          —


$                  —


$    3,785


$          —


$        3,785

CPA revenues



322


(322)




Mileage Plan other revenue

287


45




332



332

Cargo and other

157




3


160



160

Total Operating Revenues

3,447


827


322


(319)


4,277



4,277

Operating Expenses














Operating expenses, excluding fuel

2,937


839


272


(349)


3,699


(921)


2,778

Fuel expense

726


195




921


(68)


853

Total Operating Expenses

3,663


1,034


272


(349)


4,620


(989)


3,631

Non-operating Income (Expense)

(31)



(16)


1


(46)



(46)

Income (Loss) Before Income Tax

$       (247)


$       (207)


$          34


$                  31


$      (389)


$        989


$           600

Pretax Margin









(9.1) %




14.0 %

(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
September 30,


Nine Months Ended
September 30,

(in cents)

2022


2021


2022


2021

Consolidated:








CASM

                16.91 ¢


                11.75  ¢


                15.56 ¢


                  9.50 ¢

Less the following components:








Payroll Support Program grant wage offset




(2.39)

Aircraft fuel, including hedging gains and losses

5.36


2.60


4.37


2.24

Special items - fleet transition(a)

0.95


(0.06)


0.82


0.01

Special items - labor ratification bonus(b)

0.55



0.20


Special items - restructuring(c)




(0.03)

CASM excluding fuel and special items

                10.05 ¢


                  9.21 ¢


                10.17 ¢


                  9.67 ¢









Mainline:








CASM

                16.20 ¢


                10.77 ¢


                14.59 ¢


                  8.26 ¢

Less the following components:








Payroll Support Program grant wage offset




(2.61)

Aircraft fuel, including hedging gains and losses

5.52


2.39


4.44


1.99

Special items - fleet transition(a)

0.92


(0.07)


0.69


0.02

Special items - labor ratification bonus(b)

0.61



0.22