News releases
Alaska Air Group reports third quarter 2021 results
The third quarter marks a significant stride forward in
"We are thrilled to return to profitability this quarter, leading the industry with a 12% pretax profit margin," said CEO
Financial Results:
- Reported net income for the third quarter of 2021 under Generally Accepted Accounting Principles (GAAP) of
$194 million , or$1.53 per share, compared to a net loss of$431 million , or$3.49 per share in the third quarter of 2020. - Reported net income for the third quarter of 2021, excluding special items and mark-to-market fuel hedge accounting adjustments, of
$187 million , or$1.47 per share, compared to an adjusted net loss of$399 million or$3.23 per share, in the third quarter of 2020. This quarter's adjusted results compare to the First Call analyst consensus estimate of$1.30 per share. - Generated adjusted pre-tax margin for the third quarter of 2021 of 12%.
- Reported a debt-to-capitalization ratio of 51%, a reduction of 10 points from
Dec. 31, 2020 . - Made a
$100 million voluntary contribution to the defined benefit plan for Alaska's pilots in the third quarter, boosting estimated combined funded status of all defined benefit plans to 94%. - Held
$3.2 billion in unrestricted cash and marketable securities as ofSept. 30, 2021 . - Prepaid
$425 million in debt from the 364-day term loan facility, bringing total debt payments to$1.2 billion for the year.
Operational Updates:
- Exercised options for 12 Boeing 737-9 aircraft slated for delivery in 2023 and 2024, and added options for an additional 25 deliveries, bringing Alaska's total firm commitments for 737-9 aircraft to 93 and available options to 52.
- Ratified amended wage agreement for
Horizon Air pilots, represented by the InternationalBrotherhood of Teamsters . - Opened new
San Francisco International Airport Lounge with 9,200 square feet ofBay-Area inspired amenities. - Announced new nonstop flights between
San Francisco and Loreto and Ixtapa/Zihuatanejo, with service slated to beginDec. 18 . Since the onset of the pandemic, approximately 70 new markets have been announced or commenced operation. - Resumed and expanded inflight meals, snacks, and drinks in all classes of service.
- Continued to exceed internal metrics for guest satisfaction, highlighting our commitment to providing our guests a smooth and safe experience throughout their journey.
- Near the top of the industry for on-time arrivals and completion rates in the third quarter.
Environmental, Social and Governance Updates:
- Appointed
Adrienne Lofton , vice president of global marketing atGoogle , to the Company's board of directors. - Announced formation of
Alaska Star Ventures , an entity created to identify and further technologies that accelerateAlaska Airlines' path to net zero carbon emissions. - Supported the
Afghan Humanitarian Airlift Mission and theU.S. military by operating Civil Reserve Air Fleet flights in the evacuation of individuals and families fromAfghanistan . - Awarded
$260,000 in LIFT Grants to 25 nonprofits focused on a clear vision to provide the next generation of leaders with the knowledge, skills and providing pathways for success through theAlaska Airlines Foundation .
The following table reconciles the company's reported GAAP net income (loss) per share (EPS) for the three and nine months ended
Three Months Ended |
|||||||||||||||
2021 |
2020 |
||||||||||||||
(in millions, except per-share amounts) |
Dollars |
Diluted EPS |
Dollars |
EPS |
|||||||||||
GAAP net income (loss) per share |
$ |
194 |
$ |
1.53 |
$ |
(431) |
$ |
(3.49) |
|||||||
Payroll support program wage offset |
— |
— |
(398) |
(3.22) |
|||||||||||
Mark-to-market fuel hedge adjustments |
— |
— |
(3) |
(0.02) |
|||||||||||
Special items - impairment charges and other |
(9) |
(0.07) |
121 |
0.98 |
|||||||||||
Special items - restructuring charges |
— |
— |
322 |
2.60 |
|||||||||||
Special items - merger-related costs |
— |
— |
1 |
0.01 |
|||||||||||
Income tax effect of reconciling items above |
2 |
0.01 |
(11) |
(0.09) |
|||||||||||
Non-GAAP adjusted net income (loss) per share |
$ |
187 |
$ |
1.47 |
$ |
(399) |
$ |
(3.23) |
|||||||
Nine Months Ended |
|||||||||||||||
2021 |
2020 |
||||||||||||||
(in millions, except per-share amounts) |
Dollars |
Diluted EPS |
Dollars |
Diluted EPS |
|||||||||||
GAAP net income (loss) per share |
$ |
460 |
$ |
3.64 |
$ |
(877) |
$ |
(7.12) |
|||||||
Payroll support program wage offset |
(914) |
(7.24) |
(760) |
(6.16) |
|||||||||||
Mark-to-market fuel hedge adjustments |
(68) |
(0.54) |
— |
— |
|||||||||||
Special items - impairment charges and other |
5 |
0.04 |
350 |
2.84 |
|||||||||||
Special items - restructuring charges |
(12) |
(0.09) |
322 |
2.61 |
|||||||||||
Special items - merger-related costs |
— |
— |
5 |
0.04 |
|||||||||||
Income tax effect of reconciling items above |
242 |
1.92 |
20 |
0.16 |
|||||||||||
Non-GAAP adjusted net loss per share |
$ |
(287) |
$ |
(2.27) |
$ |
(940) |
$ |
(7.63) |
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.
A conference call regarding the third quarter results will be streamed online at
References in this update to "
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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) |
|||||||||||||||||||||
|
|||||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||||
(in millions, except per-share amounts) |
2021 |
2020 |
Change |
2021 |
2020 |
Change |
|||||||||||||||
Operating Revenues: |
|||||||||||||||||||||
Passenger revenue |
$ |
1,774 |
$ |
572 |
210 |
% |
$ |
3,785 |
$ |
2,362 |
60 |
% |
|||||||||
Mileage Plan other revenue |
120 |
84 |
43 |
% |
332 |
266 |
25 |
% |
|||||||||||||
Cargo and other |
59 |
45 |
31 |
% |
160 |
130 |
23 |
% |
|||||||||||||
Total Operating Revenues |
1,953 |
701 |
179 |
% |
4,277 |
2,758 |
55 |
% |
|||||||||||||
Operating Expenses: |
|||||||||||||||||||||
Wages and benefits |
578 |
495 |
17 |
% |
1,581 |
1,579 |
— |
% |
|||||||||||||
Payroll support program wage offset |
— |
(398) |
(100) |
% |
(914) |
(760) |
20 |
% |
|||||||||||||
Variable incentive pay |
42 |
42 |
— |
% |
109 |
65 |
68 |
% |
|||||||||||||
Aircraft fuel, including hedging gains and losses |
376 |
125 |
201 |
% |
853 |
568 |
50 |
% |
|||||||||||||
Aircraft maintenance |
89 |
84 |
6 |
% |
272 |
244 |
11 |
% |
|||||||||||||
Aircraft rent |
64 |
74 |
(14) |
% |
188 |
229 |
(18) |
% |
|||||||||||||
Landing fees and other rentals |
141 |
109 |
29 |
% |
414 |
323 |
28 |
% |
|||||||||||||
Contracted services |
62 |
36 |
72 |
% |
167 |
138 |
21 |
% |
|||||||||||||
Selling expenses |
49 |
24 |
104 |
% |
123 |
83 |
48 |
% |
|||||||||||||
Depreciation and amortization |
99 |
105 |
(6) |
% |
294 |
320 |
(8) |
% |
|||||||||||||
Food and beverage service |
39 |
14 |
179 |
% |
97 |
70 |
39 |
% |
|||||||||||||
Third-party regional carrier expense |
39 |
29 |
34 |
% |
106 |
92 |
15 |
% |
|||||||||||||
Other |
126 |
89 |
42 |
% |
348 |
310 |
12 |
% |
|||||||||||||
Special items - impairment charges and other |
(9) |
121 |
(107) |
% |
5 |
350 |
(99) |
% |
|||||||||||||
Special items - restructuring charges |
— |
322 |
. |
(100) |
% |
(12) |
322 |
(104) |
% |
||||||||||||
Special items - merger-related costs |
— |
1 |
(100) |
% |
— |
5 |
(100) |
% |
|||||||||||||
Total Operating Expenses |
1,695 |
1,272 |
33 |
% |
3,631 |
3,938 |
(8) |
% |
|||||||||||||
Operating Income (Expense) |
258 |
(571) |
(145) |
% |
646 |
(1,180) |
(155) |
% |
|||||||||||||
Nonoperating Income (Expense): |
|||||||||||||||||||||
Interest income |
6 |
7 |
(14) |
% |
19 |
23 |
(17) |
% |
|||||||||||||
Interest expense |
(30) |
(34) |
(12) |
% |
(101) |
(64) |
58 |
% |
|||||||||||||
Interest capitalized |
3 |
4 |
(25) |
% |
9 |
8 |
13 |
% |
|||||||||||||
Other - net |
8 |
5 |
60 |
% |
27 |
16 |
69 |
% |
|||||||||||||
Total Nonoperating Expense |
(13) |
(18) |
(28) |
% |
(46) |
(17) |
171 |
% |
|||||||||||||
Income (Loss) Before Income Tax |
245 |
(589) |
600 |
(1,197) |
|||||||||||||||||
Income tax expense (benefit) |
51 |
(158) |
140 |
(320) |
|||||||||||||||||
Net Income (Loss) |
$ |
194 |
$ |
(431) |
$ |
460 |
$ |
(877) |
|||||||||||||
Basic Income (Loss) Per Share: |
$ |
1.55 |
$ |
(3.49) |
$ |
3.69 |
$ |
(7.12) |
|||||||||||||
Diluted Income (Loss) Per Share: |
$ |
1.53 |
$ |
(3.49) |
$ |
3.64 |
$ |
(7.12) |
|||||||||||||
Shares Used for Computation: |
|||||||||||||||||||||
Basic |
125.250 |
123.647 |
124.846 |
123.255 |
|||||||||||||||||
Diluted |
127.188 |
123.647 |
126.325 |
123.255 |
|||||||||||||||||
Cash dividend declared per share: |
$ |
— |
$ |
— |
$ |
— |
$ |
0.375 |
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) |
|||||||
|
|||||||
(in millions) |
|
|
|||||
ASSETS |
|||||||
Current Assets |
|||||||
Cash and cash equivalents |
$ |
495 |
$ |
1,370 |
|||
Marketable securities |
2,700 |
1,976 |
|||||
Total cash and marketable securities |
3,195 |
3,346 |
|||||
Receivables - net |
536 |
480 |
|||||
Inventories and supplies - net |
62 |
57 |
|||||
Prepaid expenses, assets held-for-sale, and other current assets |
208 |
123 |
|||||
Total Current Assets |
4,001 |
4,006 |
|||||
Property and Equipment |
|||||||
Aircraft and other flight equipment |
8,076 |
7,761 |
|||||
Other property and equipment |
1,446 |
1,398 |
|||||
Deposits for future flight equipment |
378 |
583 |
|||||
9,900 |
9,742 |
||||||
Less accumulated depreciation and amortization |
3,780 |
3,531 |
|||||
Total Property and Equipment - Net |
6,120 |
6,211 |
|||||
Operating lease assets |
1,370 |
1,400 |
|||||
|
1,943 |
1,943 |
|||||
Intangible assets - net |
102 |
107 |
|||||
Other noncurrent assets |
346 |
379 |
|||||
Other Assets |
3,761 |
3,829 |
|||||
Total Assets |
$ |
13,882 |
$ |
14,046 |
|||
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) |
|||||||
(in millions, except share amounts) |
|
|
|||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
Current Liabilities |
|||||||
Accounts payable |
$ |
181 |
$ |
108 |
|||
Accrued wages, vacation and payroll taxes |
441 |
527 |
|||||
Air traffic liability |
1,225 |
1,073 |
|||||
Other accrued liabilities |
587 |
424 |
|||||
Deferred revenue |
904 |
733 |
|||||
Current portion of operating lease liabilities |
275 |
290 |
|||||
Current portion of long-term debt |
425 |
1,138 |
|||||
Total Current Liabilities |
4,038 |
4,293 |
|||||
Long-Term Debt, Net of Current Portion |
2,225 |
2,357 |
|||||
Noncurrent Liabilities |
|||||||
Long-term operating lease liabilities, net of current portion |
1,191 |
1,268 |
|||||
Deferred income taxes |
501 |
407 |
|||||
Deferred revenue |
1,446 |
1,544 |
|||||
Obligation for pension and postretirement medical benefits |
558 |
665 |
|||||
Other liabilities |
392 |
524 |
|||||
4,088 |
4,408 |
||||||
Commitments and Contingencies |
|||||||
Shareholders' Equity |
|||||||
Preferred stock, |
— |
— |
|||||
Common stock, |
1 |
1 |
|||||
Capital in excess of par value |
462 |
391 |
|||||
|
(674) |
(674) |
|||||
Accumulated other comprehensive loss |
(482) |
(494) |
|||||
Retained earnings |
4,224 |
3,764 |
|||||
3,531 |
2,988 |
||||||
Total Liabilities and Shareholders' Equity |
$ |
13,882 |
$ |
14,046 |
SUMMARY CASH FLOW (unaudited) |
|||||||||||
|
|||||||||||
(in millions) |
Nine Months Ended |
Six Months Ended |
Three Months Ended |
||||||||
Cash Flows from Operating Activities: |
|||||||||||
Net income |
$ |
460 |
$ |
266 |
$ |
194 |
|||||
Non-cash reconciling items |
322 |
221 |
101 |
||||||||
Changes in working capital |
119 |
520 |
(401) |
||||||||
Net cash provided by (used in) operating activities |
901 |
1,007 |
(106) |
||||||||
Cash Flows from Investing Activities: |
|||||||||||
Property and equipment additions |
(190) |
(102) |
(88) |
||||||||
Other investing activities |
(753) |
(968) |
215 |
||||||||
Net cash provided by (used in) investing activities |
(943) |
(1,070) |
127 |
||||||||
Cash Flows from Financing Activities: |
(825) |
(281) |
(544) |
||||||||
Net decrease in cash and cash equivalents |
$ |
(867) |
$ |
(344) |
$ |
(523) |
|||||
Cash, cash equivalents, and restricted cash at beginning of period |
1,386 |
1,386 |
1,042 |
||||||||
Cash, cash equivalents, and restricted cash at end of the period |
$ |
519 |
$ |
1,042 |
$ |
519 |
(a) |
As reported in Form 10-Q for the second quarter of 2021. |
(b) |
Cash flows for the three months ended |
OPERATING STATISTICS SUMMARY (unaudited) |
|||||||||||
|
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
2021 |
2020 |
Change |
2021 |
2020 |
Change |
||||||
Consolidated Operating Statistics:(a) |
|||||||||||
Revenue passengers (000) |
9,832 |
3,595 |
173.5% |
23,211 |
14,012 |
65.7% |
|||||
RPMs (000,000) "traffic" |
11,592 |
3,817 |
203.7% |
27,319 |
16,127 |
69.4% |
|||||
ASMs (000,000) "capacity" |
14,429 |
7,871 |
83.3% |
38,238 |
27,483 |
39.1% |
|||||
Load factor |
80.3% |
48.5% |
31.8 pts |
71.4% |
58.7% |
12.7 pts |
|||||
Yield |
15.30¢ |
14.99¢ |
2.1% |
13.85¢ |
14.65¢ |
(5.5)% |
|||||
RASM |
13.54¢ |
8.90¢ |
52.1% |
11.19¢ |
10.04¢ |
11.5% |
|||||
CASMex(b) |
9.21¢ |
14.00¢ |
(34.2)% |
9.67¢ |
12.57¢ |
(23.1)% |
|||||
Economic fuel cost per gallon(b) |
|
|
55.3% |
|
|
17.0% |
|||||
Fuel gallons (000,000) |
183 |
97 |
88.7% |
477 |
344 |
38.7% |
|||||
ASM's per gallon |
78.8 |
81.3 |
(3.1)% |
80.2 |
79.9 |
0.4% |
|||||
Average number of full-time equivalent employees (FTE) |
20,315 |
16,027 |
26.8% |
18,819 |
18,112 |
3.9% |
|||||
Mainline Operating Statistics: |
|||||||||||
Revenue passengers (000) |
7,065 |
2,156 |
227.7% |
16,367 |
9,736 |
68.1% |
|||||
RPMs (000,000) "traffic" |
10,122 |
2,958 |
242.2% |
23,677 |
13,816 |
71.4% |
|||||
ASMs (000,000) "capacity" |
12,540 |
6,280 |
99.7% |
33,004 |
23,339 |
41.4% |
|||||
Load factor |
80.7% |
47.1% |
33.6 pts |
71.7% |
59.2% |
12.5 pts |
|||||
Yield |
14.08¢ |
13.56¢ |
3.8% |
12.68¢ |
13.46¢ |
(5.8)% |
|||||
RASM |
12.66¢ |
8.14¢ |
55.5% |
10.44¢ |
9.46¢ |
10.4% |
|||||
CASMex(b) |
8.45¢ |
13.88¢ |
(39.1)% |
8.90¢ |
11.90¢ |
(25.2)% |
|||||
Economic fuel cost per gallon(b) |
|
|
55.0% |
|
|
15.1% |
|||||
Fuel gallons (000,000) |
147 |
69 |
113.0% |
380 |
270 |
40.7% |
|||||
ASM's per gallon |
85.3 |
91.0 |
(6.3)% |
86.9 |
86.4 |
0.6% |
|||||
Average number of FTE's |
15,116 |
12,032 |
25.6% |
13,870 |
13,730 |
1.0% |
|||||
Aircraft utilization |
10.2 |
7.3 |
39.7% |
9.6 |
8.3 |
15.7% |
|||||
Average aircraft stage length |
1,313 |
1,244 |
5.5% |
1,313 |
1,263 |
4.0% |
|||||
Operating fleet(d) |
210 |
217 |
(7) a/c |
210 |
217 |
(7) a/c |
|||||
Regional Operating Statistics:(c) |
|||||||||||
Revenue passengers (000) |
2,767 |
1,439 |
92.3% |
6,843 |
4,276 |
60.0% |
|||||
RPMs (000,000) "traffic" |
1,470 |
859 |
71.1% |
3,642 |
2,311 |
57.6% |
|||||
ASMs (000,000) "capacity" |
1,889 |
1,592 |
18.7% |
5,235 |
4,143 |
26.4% |
|||||
Load factor |
77.8% |
54.0% |
23.8 pts |
69.6% |
55.8% |
13.8 pts |
|||||
Yield |
23.72¢ |
19.89¢ |
19.3% |
21.47¢ |
21.72¢ |
(1.2)% |
|||||
RASM |
19.26¢ |
11.91¢ |
61.7% |
15.80¢ |
13.24¢ |
19.3% |
|||||
Operating fleet |
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 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 2021 to 2019.
FINANCIAL INFORMATION AND OPERATING STATISTICS - 2019 RESULTS (unaudited) |
|||||||||||||||||||||
|
|||||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||||
2021 |
2019 |
Change |
2021 |
2019 |
Change |
||||||||||||||||
Passenger revenue |
$ |
1,774 |
$ |
2,211 |
(20) |
% |
$ |
3,785 |
$ |
6,038 |
(37) |
% |
|||||||||
Mileage plan other revenue |
120 |
118 |
2 |
% |
332 |
346 |
(4) |
% |
|||||||||||||
Cargo and other |
59 |
60 |
(2) |
% |
160 |
169 |
(5) |
% |
|||||||||||||
Total operating revenues |
$ |
1,953 |
$ |
2,389 |
(18) |
% |
$ |
4,277 |
$ |
6,553 |
(35) |
% |
|||||||||
Operating expense, excluding fuel and special items |
$ |
1,328 |
$ |
1,476 |
(10) |
% |
$ |
3,699 |
$ |
4,295 |
(14) |
% |
|||||||||
Economic fuel |
376 |
486 |
(23) |
% |
853 |
1,408 |
(39) |
% |
|||||||||||||
Special items |
(9) |
5 |
(280) |
% |
(921) |
39 |
NM |
||||||||||||||
Total operating expenses |
$ |
1,695 |
$ |
1,967 |
(14) |
% |
$ |
3,631 |
$ |
5,742 |
(37) |
% |
|||||||||
Consolidated Operating Statistics(a): |
|||||||||||||||||||||
Revenue passengers (000) |
9,832 |
12,574 |
(22) |
% |
23,211 |
35,018 |
(34) |
% |
|||||||||||||
RPMs (000,000) "traffic" |
11,592 |
15,026 |
(23) |
% |
27,319 |
42,113 |
(35) |
% |
|||||||||||||
ASMs (000,000) "capacity" |
14,429 |
17,519 |
(18) |
% |
38,238 |
50,006 |
(24) |
% |
|||||||||||||
Load Factor |
80.3% |
85.8% |
(5.5) |
pts |
71.4% |
84.2% |
(12.8) |
pts |
|||||||||||||
Yield |
15.30¢ |
14.71¢ |
4 |
% |
13.85¢ |
14.34¢ |
(3) |
% |
|||||||||||||
RASM |
13.54¢ |
13.64¢ |
(1) |
% |
11.19¢ |
13.10¢ |
(15) |
% |
|||||||||||||
CASMex |
9.21¢ |
8.43¢ |
9 |
% |
9.67¢ |
8.59¢ |
13 |
% |
|||||||||||||
FTEs |
20,315 |
22,247 |
(9) |
% |
18,819 |
22,000 |
(14) |
% |
(a) |
2019 comparative operating statistics have been recalculated using the information presented above, and as filed in our third quarter 2019 Form 10-Q |
OPERATING SEGMENTS (unaudited) |
|||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||||||||
(in millions) |
Mainline |
Regional |
Horizon |
Consolidating |
|
Special |
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 |
||||||||||||||||||||
Economic fuel |
299 |
77 |
— |
— |
376 |
— |
376 |
||||||||||||||||||||
Total Operating Expenses |
1,359 |
365 |
93 |
(113) |
1,704 |
(9) |
1,695 |
||||||||||||||||||||
Nonoperating Income (Expense) |
|||||||||||||||||||||||||||
Interest income |
7 |
— |
— |
(1) |
6 |
— |
6 |
||||||||||||||||||||
Interest expense |
(25) |
— |
(6) |
1 |
(30) |
— |
(30) |
||||||||||||||||||||
Interest capitalized |
2 |
— |
— |
1 |
3 |
— |
3 |
||||||||||||||||||||
Other - net |
8 |
— |
— |
— |
8 |
— |
8 |
||||||||||||||||||||
Total Nonoperating Expense |
(8) |
— |
(6) |
1 |
(13) |
— |
(13) |
||||||||||||||||||||
Income (Loss) Before Income Tax |
$ |
221 |
$ |
(1) |
$ |
8 |
$ |
8 |
$ |
236 |
$ |
9 |
$ |
245 |
|||||||||||||
Three Months Ended |
|||||||||||||||||||||||||||
(in millions) |
Mainline |
Regional |
Horizon |
Consolidating |
|
Special |
Consolidated |
||||||||||||||||||||
Operating Revenues |
|||||||||||||||||||||||||||
Passenger revenues |
$ |
401 |
$ |
171 |
$ |
— |
$ |
— |
$ |
572 |
$ |
— |
$ |
572 |
|||||||||||||
CPA revenues |
— |
— |
95 |
(95) |
— |
— |
— |
||||||||||||||||||||
Mileage Plan other revenue |
65 |
19 |
— |
— |
84 |
— |
84 |
||||||||||||||||||||
Cargo and other |
45 |
— |
— |
— |
45 |
— |
45 |
||||||||||||||||||||
Total Operating Revenues |
511 |
190 |
95 |
(95) |
701 |
— |
701 |
||||||||||||||||||||
Operating Expenses |
|||||||||||||||||||||||||||
Operating expenses, excluding fuel |
872 |
248 |
78 |
(97) |
1,101 |
46 |
1,147 |
||||||||||||||||||||
Economic fuel |
90 |
38 |
— |
— |
128 |
(3) |
125 |
||||||||||||||||||||
Total Operating Expenses |
962 |
286 |
78 |
(97) |
1,229 |
43 |
1,272 |
||||||||||||||||||||
Nonoperating Income (Expense) |
|||||||||||||||||||||||||||
Interest income |
8 |
— |
— |
(1) |
7 |
— |
7 |
||||||||||||||||||||
Interest expense |
(28) |
— |
(6) |
— |
(34) |
— |
(34) |
||||||||||||||||||||
Interest capitalized |
4 |
— |
— |
— |
4 |
— |
4 |
||||||||||||||||||||
Other - net |
4 |
— |
— |
1 |
5 |
— |
5 |
||||||||||||||||||||
Total Nonoperating Income (Expense) |
(12) |
— |
(6) |
— |
(18) |
— |
(18) |
||||||||||||||||||||
Income (Loss) Before Income Tax |
$ |
(463) |
$ |
(96) |
$ |
11 |
$ |
2 |
$ |
(546) |
$ |
(43) |
$ |
(589) |
Nine Months Ended |
|||||||||||||||||||||||||||
(in millions) |
Mainline |
Regional |
Horizon |
Consolidating |
|
Special |
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 |
||||||||||||||||||||
Economic fuel |
726 |
195 |
— |
— |
921 |
(68) |
853 |
||||||||||||||||||||
Total Operating Expenses |
3,663 |
1,034 |
272 |
(349) |
4,620 |
(989) |
3,631 |
||||||||||||||||||||
Nonoperating Income (Expense) |
|||||||||||||||||||||||||||
Interest income |
20 |
— |
— |
(1) |
19 |
— |
19 |
||||||||||||||||||||
Interest expense |
(86) |
— |
(16) |
1 |
(101) |
— |
(101) |
||||||||||||||||||||
Interest capitalized |
8 |
— |
— |
1 |
9 |
— |
9 |
||||||||||||||||||||
Other - net |
27 |
— |
— |
— |
27 |
— |
27 |
||||||||||||||||||||
Total Nonoperating Expense |
(31) |
— |
(16) |
1 |
(46) |
— |
(46) |
||||||||||||||||||||
Income (Loss) Before Income Tax |
$ |
(247) |
$ |
(207) |
$ |
34 |
$ |
31 |
$ |
(389) |
$ |
989 |
$ |
600 |
|||||||||||||
Nine Months Ended |
|||||||||||||||||||||||||||
(in millions) |
Mainline |
Regional |
Horizon |
Consolidating |
|
Special |
Consolidated |
||||||||||||||||||||
Operating Revenues |
|||||||||||||||||||||||||||
Passenger revenues |
$ |
1,860 |
$ |
502 |
$ |
— |
$ |
— |
$ |
2,362 |
$ |
— |
$ |
2,362 |
|||||||||||||
CPA revenues |
— |
— |
281 |
(281) |
— |
— |
— |
||||||||||||||||||||
Mileage Plan other revenue |
219 |
47 |
— |
— |
266 |
— |
266 |
||||||||||||||||||||
Cargo and other |
128 |
— |
— |
2 |
130 |
— |
130 |
||||||||||||||||||||
Total Operating Revenues |
2,207 |
549 |
281 |
(279) |
2,758 |
— |
2,758 |
||||||||||||||||||||
Operating Expenses |
|||||||||||||||||||||||||||
Operating expenses, excluding fuel |
2,777 |
727 |
238 |
(289) |
3,453 |
(83) |
3,370 |
||||||||||||||||||||
Economic fuel |
448 |
120 |
— |
— |
568 |
— |
568 |
||||||||||||||||||||
Total Operating Expenses |
3,225 |
847 |
238 |
(289) |
4,021 |
(83) |
3,938 |
||||||||||||||||||||
Nonoperating Income (Expense) |
|||||||||||||||||||||||||||
Interest income |
33 |
— |
— |
(10) |
23 |
— |
23 |
||||||||||||||||||||
Interest expense |
(58) |
— |
(16) |
10 |
(64) |
— |
(64) |
||||||||||||||||||||
Interest capitalized |
8 |
— |
— |
— |
8 |
— |
8 |
||||||||||||||||||||
Other - net |
16 |
— |
— |
— |
16 |
— |
16 |
||||||||||||||||||||
Total Nonoperating Income (Expense) |
(1) |
— |
(16) |
— |
(17) |
— |
(17) |
||||||||||||||||||||
Income (Loss) Before Income Tax |
$ |
(1,019) |
$ |
(298) |
$ |
27 |
$ |
10 |
$ |
(1,280) |
$ |
83 |
$ |
(1,197) |
(a) |
Includes consolidating entries, |
(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 wage offsets, special items and mark-to-market fuel hedge accounting adjustments. |
GAAP TO NON-GAAP RECONCILIATIONS (unaudited) |
|||||||||||
|
|||||||||||
CASM Excluding Fuel and Special Items Reconciliation |
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||
Consolidated: |
|||||||||||
CASM |
11.75 |
¢ |
16.16 |
¢ |
9.50 |
¢ |
14.33 |
¢ |
|||
Less the following components: |
|||||||||||
Payroll support program wage offset (benefit) |
— |
(5.06) |
(2.39) |
(2.77) |
|||||||
Aircraft fuel, including hedging gains and losses |
2.60 |
1.59 |
2.24 |
2.07 |
|||||||
Special items - impairment charges and other(a) |
(0.06) |
1.53 |
0.01 |
1.27 |
|||||||
Special items - restructuring charges(b) |
— |
4.09 |
(0.03) |
1.17 |
|||||||
Special items - merger-related costs |
— |
0.01 |
— |
0.02 |
|||||||
CASM excluding fuel and special items |
9.21 |
¢ |
14.00 |
¢ |
9.67 |
¢ |
12.57 |
¢ |
|||
Mainline: |
|||||||||||
CASM |
10.77 |
¢ |
16.80 |
¢ |
8.26 |
¢ |
13.56 |
¢ |
|||
Less the following components: |
|||||||||||
Payroll support program wage offset (benefit) |
— |
(5.56) |
(2.61) |
(2.89) |
|||||||
Aircraft fuel, including hedging gains and losses |
2.39 |
1.43 |
1.99 |
1.92 |
|||||||
Special items - impairment charges and other(a) |
(0.07) |
1.93 |
0.02 |
1.24 |
|||||||
Special items - restructuring charges(b) |
— |
5.10 |
(0.04) |
1.37 |
|||||||
Special items - merger-related costs |
— |
0.02 |
— |
0.02 |
|||||||
CASM excluding fuel and special items |
8.45 |
¢ |
13.88 |
¢ |
8.90 |
¢ |
11.90 |
¢ |
(a) |
Special items - impairment charges and other in the three and nine months ended |
(b) |
Special items - restructuring charges in the nine months ended |
Fuel Reconciliation |
|||||||||||||||
Three Months Ended |
|||||||||||||||
2021 |
2020 |
||||||||||||||
(in millions, except for per-gallon amounts) |
Dollars |
Cost/Gallon |
Dollars |
Cost/Gallon |
|||||||||||
Raw or "into-plane" fuel cost |
$ |
397 |
$ |
2.16 |
$ |
123 |
$ |
1.27 |
|||||||
Losses (gains) on settled hedges |
(21) |
(0.11) |
5 |
0.05 |
|||||||||||
Consolidated economic fuel expense |
376 |
2.05 |
128 |
1.32 |
|||||||||||
Mark-to-market fuel hedge adjustment |
— |
— |
(3) |
(0.03) |
|||||||||||
GAAP fuel expense |
$ |
376 |
$ |
2.05 |
$ |
125 |
$ |
1.29 |
|||||||
Fuel gallons |
183 |
97 |
|||||||||||||
Nine Months Ended |
|||||||||||||||
2021 |
2020 |
||||||||||||||
(in millions, except for per gallon amounts) |
Dollars |
Cost/Gallon |
Dollars |
Cost/Gallon |
|||||||||||
Raw or "into-plane" fuel cost |
$ |
949 |
$ |
1.99 |
$ |
553 |
$ |
1.61 |
|||||||
Losses (gains) on settled hedges |
(28) |
(0.06) |
15 |
0.04 |
|||||||||||
Consolidated economic fuel expense |
$ |
921 |
$ |
1.93 |
$ |
568 |
$ |
1.65 |
|||||||
Mark-to-market fuel hedge adjustment |
(68) |
(0.14) |
— |
— |
|||||||||||
GAAP fuel expense |
$ |
853 |
$ |
1.79 |
$ |
568 |
$ |
1.65 |
|||||||
Fuel gallons |
477 |
344 |
Debt-to-capitalization, adjusted for operating leases |
|||||||
(in millions) |
|
|
|||||
Long-term debt, net of current portion |
$ |
2,225 |
$ |
2,357 |
|||
Capitalized operating leases |
1,466 |
1,558 |
|||||
COVID-19 related borrowings(a) |
— |
734 |
|||||
Adjusted debt, net of current portion of long-term debt |
3,691 |
4,649 |
|||||
Shareholders' equity |
3,531 |
2,988 |
|||||
|
$ |
7,222 |
$ |
7,637 |
|||
Debt-to-capitalization ratio, including operating leases |
51 |
% |
61 |
% |
(a) |
To best reflect our leverage we included the remaining short-term borrowings stemming from the COVID-19 pandemic which are classified as current liabilities in the consolidated balance sheets. As of |
Adjusted net debt to earnings before interest, taxes, depreciation, amortization and special items |
|||||||
(in millions) |
|
|
|||||
Current portion of long-term debt |
$ |
425 |
$ |
1,138 |
|||
Current portion of operating lease liabilities |
275 |
290 |
|||||
Long-term debt, net of current portion |
2,225 |
2,357 |
|||||
Long-term operating lease liabilities, net of current portion |
1,191 |
1,268 |
|||||
Total adjusted debt |
4,116 |
5,053 |
|||||
Less: Cash and marketable securities |
(3,195) |
(3,346) |
|||||
Adjusted net debt |
$ |
921 |
$ |
1,707 |
|||
(in millions) |
Twelve Months Ended |
Twelve Months Ended |
|||||
GAAP Operating Income (Loss)(a) |
$ |
51 |
$ |
(1,775) |
|||
Adjusted for: |
|||||||
Payroll Support Program grant wage offset and special items |
(767) |
71 |
|||||
Mark-to-market fuel hedge adjustments |
(76) |
(8) |
|||||
Depreciation and amortization |
394 |
420 |
|||||
Aircraft rent |
258 |
299 |
|||||
EBITDAR |
$ |
(140) |
$ |
(993) |
|||
Adjusted net debt to EBITDAR |
(6.6x) |
(1.7x) |
(a) |
Operating income (loss) can be reconciled using the trailing twelve month operating income as filed quarterly with the |
Note A: Pursuant to Regulation G, we are providing reconciliations 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 (including the payroll support program wage offset, impairment and restructuring charges and merger-related costs) from our unit metrics, we believe that we have better visibility into the results of operations as we focus on cost-reduction initiatives emerging from the COVID-19 pandemic. 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, such as the payroll support program wage offset, impairment and restructuring charges and merger-related costs, 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 tax (and other items as specified in our plan documents) is an important metric for the employee incentive plan, which covers the majority of
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 have historically compared our airline 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 these items as noted above. 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.
GLOSSARY OF TERMS
Adjusted net debt - long-term debt, including current portion, plus capitalized operating leases, less cash and marketable securities
Adjusted net debt to EBITDAR - represents net adjusted debt divided by EBITDAR (trailing twelve months earnings before interest, taxes, depreciation, amortization, special items and rent)
Aircraft Utilization - block hours per day; this represents the average number of hours per day our aircraft are in transit
Aircraft Stage Length - represents the average miles flown per aircraft departure
ASMs - available seat miles, or "capacity"; represents total seats available across the fleet multiplied by the number of miles flown
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
Debt-to-capitalization ratio - represents adjusted debt (long-term debt plus capitalized operating lease liabilities) divided by total equity plus adjusted debt
Diluted Earnings per Share - represents earnings per share (EPS) 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
Economic Fuel - best estimate of the cash cost of fuel, net of the impact of our fuel-hedging program
Load Factor - RPMs as a percentage of ASMs; represents the number of available seats that were filled with paying passengers
Mainline - represents flying Boeing 737, Airbus 320 and Airbus 321neo family jets and all associated revenues and costs
Productivity - number of revenue passengers per full-time equivalent employee
RASM - operating revenue per ASMs, or "unit revenue"; operating revenue includes all passenger revenue, freight & mail, Mileage Plan and other ancillary revenue; represents the average total revenue for flying one seat one mile
Regional - represents capacity purchased by
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
Yield - passenger revenue per RPM; represents the average revenue for flying one passenger one mile
View original content:https://www.prnewswire.com/news-releases/alaska-air-group-reports-third-quarter-2021-results-301405450.html
SOURCE
Media Relations, (206) 304-0008; Investor/analyst, Emily Halverson, Managing Director, Investor Relations, (206) 392-5908