SEATTLE, Jan. 24, 2019 /PRNewswire/ --
Dividend Increase:
- Announced today a 9% increase in the quarterly dividend, from
$0.32 per share to $0.35 per share. This is the sixth time the
company has raised the dividend since initiating the quarterly
dividend in July 2013, with a
cumulative increase of 250% since that time. The dividend will be
paid on March 7, 2019, to all
shareholders of record as of Feb. 19,
2019. Dividends are financed from operating cash flow and
cash on hand.
Financial Highlights:
- Reported net income for the fourth quarter and full year 2018
under Generally Accepted Accounting Principles (GAAP) of
$23 million, or $0.19 per diluted share, and $437 million, or $3.52 per diluted share. These results compare to
fourth quarter 2017 net income of $315
million, or $2.55 per diluted
share, and full year 2017 net income of $960
million, or $7.75 per diluted
share. The 2017 financial information has been adjusted to reflect
changes associated with the implementation of new revenue
recognition and retirement benefits accounting standards that
became effective Jan. 1, 2018.
- Reported adjusted net income, excluding merger-related costs,
special charges, and mark-to-market fuel hedging adjustments for
the fourth quarter and full year 2018 of $93
million, or $0.75 per diluted
share, and $554 million, or
$4.46 per diluted share. These
results compare to fourth quarter 2017 adjusted net income of
$88 million, or $0.71 per diluted share, and full year 2017
adjusted net income of $791 million,
or $6.38 per diluted share. This
quarter's adjusted results compare to the First Call analyst
consensus estimate of $0.71 per
share.
- Paid a $0.32 per-share quarterly
cash dividend in the fourth quarter, bringing total dividends paid
in 2018 to $158 million.
- Repurchased a total of 776,186 shares of common stock for
approximately $50 million in
2018.
- Generated approximately $1.2
billion of operating cash flow, and used approximately
$960 million for capital
expenditures, resulting in approximately $240 million of free cash flow in 2018.
- Grew passenger revenues by 6% compared to the fourth quarter of
2017, and by 5% compared to full-year 2017.
- Generated full-year adjusted pretax margin of 8.9% in
2018.
- Held $1.2 billion in unrestricted
cash and marketable securities as of Dec.
31, 2018.
- Reduced debt-to-capitalization ratio to 47% as of Dec. 31, 2018, compared to 53% as of Dec. 31, 2017.
2018 Accomplishments and Highlights:
Recognition and Awards
- Ranked "Highest in Customer Satisfaction Among Traditional
Carriers" in 2018 by J.D. Power for the 11th year in a
row.
- Named "Best U.S. Airline" by Condé Nast Traveler in their 2018
Readers Choice Awards.
- Mileage Plan™ ranked first in U.S. News & World Report's
list of Best Travel Rewards Programs for the fourth time.
- Ranked among the best U.S. airlines by Consumer Reports for
economy flights and overall satisfaction by passengers.
- Ranked No. 1 for performance and quality in the Airline Quality
Rating study for the second year in a row.
- Won the "Best Rewards Program" for Mileage Plan™ for carriers
in the Americas region in the annual FlyerTalk Award for the second
year in a row.
- Top-ranked airline in America for the second year in a row by
The Points Guy.
- Received 17th Diamond Award of Excellence from the
Federal Aviation Administration, recognizing both Alaska and Horizon's aircraft technicians for
their commitment to training.
- Ranked as one of only two U.S. airlines in the Top 20 safest
airlines in the world for 2018 by AirlineRatings.com.
- Rated "Best Airline Staff in North
America" & "Best Regional Airline in North America" by Skytrax.
- Won the 2018 APEX Passenger Choice Award for Best Food and
Beverage in the Americas.
- Ranked as the top U.S. airline in the Dow Jones Sustainability
Index (DJSI) for the second consecutive year, receiving top scores
for "corporate governance" and "efficiency."
Our People
- Ranked among Forbes' 2018 "America's Best Employers" for the
fourth year in a row.
- Awarded $147 million in incentive
pay for 2018.
- Reached joint agreements for all work groups except aircraft
technicians.
- Women Inc. magazine recognized Alaska's female board members as five of the
Most Influential Corporate Directors.
- Launched Flight Path, a workshop for every Alaska and Horizon Air employee that includes
a mix of presentations, open-and-honest dialogue and interactive
activities focused on Alaska's
culture and future.
Our Guests and Product
- Obtained a single operating certificate from the Federal
Aviation Administration for Alaska Airlines and Virgin America,
recognizing us as one airline.
- Transitioned to a single Passenger Service System, enabling us
to provide one reservation system, one website, and one inventory
of flights to our guests.
- Completed Premium Class rollout on our Boeing 737-800, 900 and
900ER fleets.
- Began installation of next-generation Gogo inflight
satellite-based Wi-Fi across the mainline fleet.
- Added partnerships with Japan Airlines, Fiji Airways,
Aer Lingus and Finnair.
- Added 8 Boeing 737-900ER aircraft and 4 Airbus A321neo aircraft
in 2018, bringing the total mainline operating fleet to 233
aircraft.
- Added 25 Embraer 175 (E175) aircraft to the regional operating
fleet in 2018.
Our Communities
- Donated over $17 million and
contributed more than 44,000 volunteer hours to support nonprofits
in our local communities, focusing on youth and education, medical
(research/transportation) and community outreach.
Alaska Air Group Inc. today reported fourth quarter 2018 GAAP
net income of $23 million, or
$0.19 per diluted share, compared to
$315 million, or $2.55 per diluted share in 2017. Excluding the
impact of merger-related costs, other special items, and
mark-to-market fuel hedge adjustments, the company reported fourth
quarter adjusted net income of $93
million, or $0.75 per diluted
share, compared to adjusted net income of $88 million, or $0.71 per diluted share in the fourth quarter of
2017.
The company reported full-year 2018 GAAP net income of
$437 million, compared to
$960 million in the prior year.
Excluding the impact of merger-related costs, other special items,
and mark-to-market fuel hedge adjustments, the company reported
adjusted net income of $554 million,
or $4.46 per diluted share for 2018,
compared to adjusted net income of $791
million, or $6.38 per diluted
share in 2017.
"In 2018, we achieved the vast majority of our integration
milestones and passed through an inflection point in our financial
performance," said Alaska CEO Brad
Tilden. "Our employees have shown great resilience through
the integration, and thanks to their skill and dedication, we have
strong momentum and a lot of optimism heading into 2019."
The following tables reconcile the company's adjusted net income
and earnings per diluted share (EPS) during the full year and
fourth quarters of 2018 and 2017 to amounts as reported in
accordance with GAAP:
|
Three Months Ended
December 31,
|
|
2018
|
|
2017(a)
|
|
(in millions,
except per share amounts)
|
Dollars
|
|
Diluted
EPS
|
|
Dollars
|
|
Diluted
EPS
|
|
Reported GAAP net
income and diluted EPS
|
$
|
23
|
|
|
$
|
0.19
|
|
|
$
|
315
|
|
|
$
|
2.55
|
|
|
Mark-to-market fuel
hedge adjustments
|
52
|
|
|
0.42
|
|
|
(14)
|
|
|
(0.11)
|
|
|
Special items -
merger-related costs
|
20
|
|
|
0.16
|
|
|
30
|
|
|
0.24
|
|
|
Special items - other
(b)
|
20
|
|
|
0.16
|
|
|
—
|
|
|
—
|
|
|
Income tax effect on
special items and fuel hedge adjustments
|
(22)
|
|
|
(0.18)
|
|
|
(6)
|
|
|
(0.05)
|
|
|
Special tax
(benefit)/expense(c)
|
—
|
|
|
—
|
|
|
(237)
|
|
|
(1.92)
|
|
|
Non-GAAP adjusted net
income and diluted EPS
|
$
|
93
|
|
|
$
|
0.75
|
|
|
$
|
88
|
|
|
$
|
0.71
|
|
|
|
|
Twelve Months
Ended December 31,
|
|
2018
|
|
2017(a)
|
|
(in millions,
except per share amounts)
|
Dollars
|
|
Diluted
EPS
|
|
Dollars
|
|
Diluted
EPS
|
|
Reported GAAP net
income and diluted EPS
|
$
|
437
|
|
|
$
|
3.52
|
|
|
$
|
960
|
|
|
$
|
7.75
|
|
|
Mark-to-market fuel
hedge adjustments
|
22
|
|
|
0.18
|
|
|
(7)
|
|
|
(0.06)
|
|
|
Special items -
merger-related costs
|
87
|
|
|
0.70
|
|
|
116
|
|
|
0.94
|
|
|
Special items - other
(b)
|
45
|
|
|
0.36
|
|
|
—
|
|
|
—
|
|
|
Income tax effect on
special items and fuel hedge adjustments
|
(37)
|
|
|
(0.30)
|
|
|
(41)
|
|
|
(0.33)
|
|
|
Special tax
(benefit)/expense(c)
|
—
|
|
|
—
|
|
|
(237)
|
|
|
(1.92)
|
|
|
Non-GAAP adjusted net
income and diluted EPS
|
$
|
554
|
|
|
$
|
4.46
|
|
|
$
|
791
|
|
|
$
|
6.38
|
|
|
|
|
(a)
|
Certain historical
information has been adjusted to reflect the adoption of new
accounting standards.
|
|
(b)
|
Special items - other
includes special charges associated with the employee tax reform
bonus paid in Q1 2018, and a $20 million contract termination fee
incurred in Q4 2018.
|
|
(c)
|
The special tax
benefit in 2017 is due to the remeasurement of deferred tax
liabilities as a result of the Tax Cuts and Jobs Act signed into
law on December 22, 2017, offset by certain state tax law
enactments. The resulting net tax benefit is excluded from our
adjusted non-GAAP earnings.
|
Statistical data, as well as a reconciliation of other 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 fourth quarter and full year
results will be simulcast online at 1:30
p.m. Pacific time on Jan. 24,
2019. 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.
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.,
Horizon Air Industries, Inc., and Virgin America Inc. are referred
to as "Alaska," "Horizon," and
"Virgin America" 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, 2017, as well as in other
documents filed by the Company with the SEC after the date thereof.
Some of these risks include general economic conditions, increases
in operating costs including fuel, competition, labor costs and
relations, our indebtedness, inability to meet cost reduction
goals, seasonal fluctuations in our financial results, an aircraft
accident, changes in laws and regulations and risks inherent in the
achievement of anticipated synergies and the timing thereof in
connection with the acquisition of Virgin America. 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 its regional partners fly 44 million guests
a year to more than 115 destinations with an average of 1,200 daily
flights across the United States
and to Mexico, Canada and Costa
Rica. With Alaska and
Alaska Global Partners, guests can earn and redeem miles on flights
to more than 900 destinations worldwide. Alaska Airlines ranked
"Highest in Customer Satisfaction Among Traditional Carriers in
North America" in the J.D. Power
North America Airline Satisfaction Study for 11 consecutive years
from 2008 to 2018. Learn about Alaska's award-winning service at
newsroom.alaskaair.com and blog.alaskaair.com. Alaska Airlines,
Virgin America and Horizon Air are subsidiaries of Alaska Air Group
(NYSE: ALK).
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
(in millions,
except per share amounts)
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
Operating
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
revenue
|
1,907
|
|
|
1,796
|
|
|
6
|
%
|
|
7,632
|
|
|
7,301
|
|
|
5
|
%
|
|
Mileage Plan other
revenue
|
105
|
|
|
104
|
|
|
1
|
%
|
|
434
|
|
|
418
|
|
|
4
|
%
|
|
Cargo and
other
|
52
|
|
|
42
|
|
|
24
|
%
|
|
198
|
|
|
175
|
|
|
13
|
%
|
|
Total Operating
Revenues
|
2,064
|
|
|
1,942
|
|
|
6
|
%
|
|
8,264
|
|
|
7,894
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages and
benefits
|
561
|
|
|
534
|
|
|
5
|
%
|
|
2,190
|
|
|
1,931
|
|
|
13
|
%
|
|
Variable incentive
pay
|
43
|
|
|
37
|
|
|
16
|
%
|
|
147
|
|
|
135
|
|
|
9
|
%
|
|
Aircraft fuel,
including hedging gains and losses
|
539
|
|
|
396
|
|
|
36
|
%
|
|
1,936
|
|
|
1,447
|
|
|
34
|
%
|
|
Aircraft
maintenance
|
115
|
|
|
120
|
|
|
(4)
|
%
|
|
435
|
|
|
391
|
|
|
11
|
%
|
|
Aircraft
rent
|
82
|
|
|
70
|
|
|
17
|
%
|
|
315
|
|
|
274
|
|
|
15
|
%
|
|
Landing fees and
other rentals
|
128
|
|
|
122
|
|
|
5
|
%
|
|
499
|
|
|
460
|
|
|
8
|
%
|
|
Contracted
services
|
79
|
|
|
80
|
|
|
(1)
|
%
|
|
306
|
|
|
314
|
|
|
(3)
|
%
|
|
Selling
expenses
|
81
|
|
|
91
|
|
|
(11)
|
%
|
|
326
|
|
|
368
|
|
|
(11)
|
%
|
|
Depreciation and
amortization
|
108
|
|
|
97
|
|
|
11
|
%
|
|
398
|
|
|
372
|
|
|
7
|
%
|
|
Food and beverage
service
|
53
|
|
|
50
|
|
|
6
|
%
|
|
211
|
|
|
195
|
|
|
8
|
%
|
|
Third-party regional
carrier expense
|
40
|
|
|
37
|
|
|
8
|
%
|
|
154
|
|
|
121
|
|
|
27
|
%
|
|
Other
|
149
|
|
|
141
|
|
|
6
|
%
|
|
572
|
|
|
562
|
|
|
2
|
%
|
|
Special items -
merger-related costs
|
20
|
|
|
30
|
|
|
(33)
|
%
|
|
87
|
|
|
116
|
|
|
(25)
|
%
|
|
Special items -
other
|
20
|
|
|
—
|
|
|
NM
|
|
|
45
|
|
|
—
|
|
|
NM
|
|
|
Total Operating
Expenses
|
2,018
|
|
|
1,805
|
|
|
12
|
%
|
|
7,621
|
|
|
6,686
|
|
|
14
|
%
|
|
Operating
Income
|
46
|
|
|
137
|
|
|
(66)
|
%
|
|
643
|
|
|
1,208
|
|
|
(47)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
9
|
|
|
9
|
|
|
|
|
38
|
|
|
34
|
|
|
|
|
Interest
expense
|
(20)
|
|
|
(26)
|
|
|
|
|
(91)
|
|
|
(103)
|
|
|
|
|
Interest
capitalized
|
4
|
|
|
4
|
|
|
|
|
18
|
|
|
17
|
|
|
|
|
Other -
net
|
(3)
|
|
|
2
|
|
|
|
|
(23)
|
|
|
3
|
|
|
|
|
Total Nonoperating
Income (Expense)
|
(10)
|
|
|
(11)
|
|
|
|
|
(58)
|
|
|
(49)
|
|
|
|
|
Income Before
Income Tax
|
36
|
|
|
126
|
|
|
|
|
585
|
|
|
1,159
|
|
|
|
|
Income tax
expense
|
13
|
|
|
48
|
|
|
|
|
148
|
|
|
436
|
|
|
|
|
Special income tax
benefit
|
—
|
|
|
(237)
|
|
|
|
|
—
|
|
|
(237)
|
|
|
|
|
Total Income Tax
Expense/(Benefit)
|
$
|
13
|
|
|
$
|
(189)
|
|
|
|
|
$
|
148
|
|
|
$
|
199
|
|
|
|
|
Net
Income
|
$
|
23
|
|
|
$
|
315
|
|
|
|
|
$
|
437
|
|
|
$
|
960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Share:
|
$
|
0.19
|
|
|
$
|
2.56
|
|
|
|
|
$
|
3.55
|
|
|
$
|
7.79
|
|
|
|
|
Diluted Earnings
Per Share:
|
$
|
0.19
|
|
|
$
|
2.55
|
|
|
|
|
$
|
3.52
|
|
|
$
|
7.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Used for
Computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
123.271
|
|
|
123.147
|
|
|
|
|
123.230
|
|
|
123.211
|
|
|
|
|
Diluted
|
124.095
|
|
|
123.670
|
|
|
|
|
123.975
|
|
|
123.854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividend
declared per share
|
$
|
0.32
|
|
|
$
|
0.30
|
|
|
|
|
$
|
1.28
|
|
|
$
|
1.20
|
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited)
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
(in
millions)
|
December 31,
2018
|
|
December 31,
2017
|
|
Cash and marketable
securities
|
$
|
1,236
|
|
|
$
|
1,621
|
|
|
|
|
|
|
Total current
assets
|
1,787
|
|
|
2,152
|
|
|
Property and
equipment-net
|
6,781
|
|
|
6,284
|
|
|
Goodwill
|
1,943
|
|
|
1,943
|
|
|
Intangible
assets-net
|
127
|
|
|
133
|
|
|
Other
assets
|
274
|
|
|
234
|
|
|
Total
assets
|
$
|
10,912
|
|
|
$
|
10,746
|
|
|
|
|
|
|
Air traffic
liability
|
788
|
|
|
806
|
|
|
Current portion of
long-term debt
|
486
|
|
|
307
|
|
|
Other current
liabilities
|
1,668
|
|
|
1,573
|
|
|
Current
liabilities
|
$
|
2,942
|
|
|
$
|
2,686
|
|
|
Long-term
debt
|
1,617
|
|
|
2,262
|
|
|
Other liabilities and
credits
|
2,602
|
|
|
2,338
|
|
|
Shareholders'
equity
|
3,751
|
|
|
3,460
|
|
|
Total liabilities
and shareholders' equity
|
$
|
10,912
|
|
|
$
|
10,746
|
|
|
|
|
|
|
Debt-to-capitalization ratio, adjusted for operating
leases(a)
|
47
|
%
|
|
53
|
%
|
|
|
|
|
|
Number of common
shares outstanding
|
123.194
|
|
|
123.061
|
|
|
|
|
(d)
|
Calculated using the
present value of remaining aircraft lease payments for aircraft
that are in our operating fleet as of the balance sheet
date.
|
|
OPERATING
STATISTICS SUMMARY (unaudited)
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
Consolidated
Operating Statistics:(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passengers
(000)
|
11,117
|
|
10,966
|
|
1.4%
|
|
45,802
|
|
44,005
|
|
4.1%
|
|
RPMs (000,000)
"traffic"
|
13,401
|
|
13,265
|
|
1.0%
|
|
54,673
|
|
52,338
|
|
4.5%
|
|
ASMs (000,000)
"capacity"
|
16,079
|
|
15,901
|
|
1.1%
|
|
65,335
|
|
62,072
|
|
5.3%
|
|
Load
factor
|
83.3%
|
|
83.4%
|
|
(0.1) pts
|
|
83.7%
|
|
84.3%
|
|
(0.6) pts
|
|
Yield
|
14.24¢
|
|
13.54¢
|
|
5.2%
|
|
13.96¢
|
|
13.95¢
|
|
0.1%
|
|
RASM
|
12.84¢
|
|
12.21¢
|
|
5.2%
|
|
12.65¢
|
|
12.72¢
|
|
(0.6)%
|
|
CASMex(b)
|
8.95¢
|
|
8.68¢
|
|
3.1%
|
|
8.50¢
|
|
8.25¢
|
|
3.0%
|
|
Economic fuel cost
per gallon(b)
|
$2.35
|
|
$2.00
|
|
17.5%
|
|
$2.28
|
|
$1.82
|
|
25.3%
|
|
Fuel gallons
(000,000)
|
208
|
|
205
|
|
1.2%
|
|
839
|
|
797
|
|
5.3%
|
|
ASM's per
gallon
|
77.5
|
|
77.6
|
|
(0.1)%
|
|
77.9
|
|
77.9
|
|
—%
|
|
Average full-time
equivalent employees (FTEs)
|
21,838
|
|
21,561
|
|
1.3%
|
|
21,641
|
|
20,183
|
|
7.2%
|
|
Employee productivity
(PAX/FTEs/months)
|
169.7
|
|
169.5
|
|
0.1%
|
|
176.4
|
|
181.7
|
|
(2.9)%
|
|
Mainline Operating
Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passengers
(000)
|
8,496
|
|
8,659
|
|
(1.9)%
|
|
35,603
|
|
34,510
|
|
3.2%
|
|
RPMs (000,000)
"traffic"
|
12,104
|
|
12,191
|
|
(0.7)%
|
|
49,781
|
|
48,236
|
|
3.2%
|
|
ASMs (000,000)
"capacity"
|
14,457
|
|
14,547
|
|
(0.6)%
|
|
59,187
|
|
56,945
|
|
3.9%
|
|
Load
factor
|
83.7%
|
|
83.8%
|
|
(0.1) pts
|
|
84.1%
|
|
84.7%
|
|
(0.6) pts
|
|
Yield
|
13.18¢
|
|
12.71¢
|
|
3.7%
|
|
13.01¢
|
|
13.02¢
|
|
(0.1)%
|
|
RASM
|
12.04¢
|
|
11.58¢
|
|
4.0%
|
|
11.93¢
|
|
12.00¢
|
|
(0.6)%
|
|
CASMex(b)
|
8.20¢
|
|
7.98¢
|
|
2.8%
|
|
7.73¢
|
|
7.50¢
|
|
3.1%
|
|
Economic fuel cost
per gallon(b)
|
$2.34
|
|
$1.99
|
|
17.6%
|
|
$2.27
|
|
$1.82
|
|
24.7%
|
|
Fuel gallons
(000,000)
|
177
|
|
180
|
|
(1.7)%
|
|
727
|
|
706
|
|
3.0%
|
|
ASM's per
gallon
|
81.7
|
|
80.8
|
|
1.1%
|
|
81.4
|
|
80.7
|
|
0.9%
|
|
Average number of
FTEs
|
16,445
|
|
16,295
|
|
0.9%
|
|
16,353
|
|
15,653
|
|
4.5%
|
|
Aircraft
utilization
|
10.7
|
|
11.5
|
|
(7.0)%
|
|
11.2
|
|
11.2
|
|
—%
|
|
Average aircraft
stage length
|
1,313
|
|
1,316
|
|
(0.2)%
|
|
1,298
|
|
1,301
|
|
(0.2)%
|
|
Operating
fleet
|
233
|
|
221
|
|
12 a/c
|
|
233
|
|
221
|
|
12 a/c
|
|
Regional Operating
Statistics:(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passengers
(000)
|
2,621
|
|
2,307
|
|
13.6%
|
|
10,199
|
|
9,495
|
|
7.4%
|
|
RPMs (000,000)
"traffic"
|
1,298
|
|
1,074
|
|
20.9%
|
|
4,892
|
|
4,101
|
|
19.3%
|
|
ASMs (000,000)
"capacity"
|
1,623
|
|
1,354
|
|
19.9%
|
|
6,148
|
|
5,127
|
|
19.9%
|
|
Load
factor
|
80.0%
|
|
79.3%
|
|
0.7 pts
|
|
79.6%
|
|
80.0%
|
|
(0.4) pts
|
|
Yield
|
24.13¢
|
|
23.00¢
|
|
4.9%
|
|
23.66¢
|
|
24.96¢
|
|
(5.2)%
|
|
Operating
Fleet
|
97
|
|
83
|
|
14 a/c
|
|
97
|
|
83
|
|
14 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 potential
importance of this measure to investors in the accompanying
pages.
|
|
(c)
|
Data presented
includes information related to flights operated by Horizon and
third-party carriers.
|
|
OPERATING SEGMENTS
(unaudited)
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2018
|
|
(in
millions)
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Consolidating
& Other
|
|
Air Group
Adjusted(a)
|
|
Special
Items(b)
|
|
Consolidated
|
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
revenues
|
1,595
|
|
|
312
|
|
|
—
|
|
|
—
|
|
|
1,907
|
|
|
—
|
|
|
1,907
|
|
|
CPA
revenues
|
—
|
|
|
—
|
|
|
133
|
|
|
(133)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Mileage Plan other
revenue
|
96
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|
105
|
|
|
Cargo and
other
|
50
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|
Total operating
revenues
|
1,741
|
|
|
323
|
|
|
133
|
|
|
(133)
|
|
|
2,064
|
|
|
—
|
|
|
2,064
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-fuel operating
expenses
|
1,185
|
|
|
269
|
|
|
120
|
|
|
(135)
|
|
|
1,439
|
|
|
40
|
|
|
1,479
|
|
|
Fuel
expense
|
415
|
|
|
72
|
|
|
—
|
|
|
—
|
|
|
487
|
|
|
52
|
|
|
539
|
|
|
Total operating
expenses
|
1,600
|
|
|
341
|
|
|
120
|
|
|
(135)
|
|
|
1,926
|
|
|
92
|
|
|
2,018
|
|
|
Nonoperating
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
14
|
|
|
—
|
|
|
—
|
|
|
(5)
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
Interest
expense
|
(18)
|
|
|
—
|
|
|
(6)
|
|
|
4
|
|
|
(20)
|
|
|
—
|
|
|
(20)
|
|
|
Interest
capitalized
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
Other
|
(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
(3)
|
|
|
Total Nonoperating
income (expense)
|
(3)
|
|
|
—
|
|
|
(6)
|
|
|
(1)
|
|
|
(10)
|
|
|
—
|
|
|
(10)
|
|
|
Income (loss)
before income tax
|
$
|
138
|
|
|
$
|
(18)
|
|
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
128
|
|
|
$
|
(92)
|
|
|
$
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2017
|
|
(in
millions)
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Consolidating
& Other
|
|
Air Group
Adjusted(a)
|
|
Special
Items(b)
|
|
Consolidated
|
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
revenues
|
1,549
|
|
|
247
|
|
|
—
|
|
|
—
|
|
|
1,796
|
|
|
—
|
|
|
1,796
|
|
|
CPA
revenues
|
—
|
|
|
—
|
|
|
109
|
|
|
(109)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Mileage Plan other
revenue
|
96
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
104
|
|
|
—
|
|
|
104
|
|
|
Cargo and
other
|
40
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
|
Total operating
revenues
|
1,685
|
|
|
256
|
|
|
110
|
|
|
(109)
|
|
|
1,942
|
|
|
—
|
|
|
1,942
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-fuel operating
expenses
|
1,160
|
|
|
227
|
|
|
104
|
|
|
(112)
|
|
|
1,379
|
|
|
30
|
|
|
1,409
|
|
|
Fuel
expense
|
359
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
410
|
|
|
(14)
|
|
|
396
|
|
|
Total operating
expenses
|
1,519
|
|
|
278
|
|
|
104
|
|
|
(112)
|
|
|
1,789
|
|
|
16
|
|
|
1,805
|
|
|
Nonoperating
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
11
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
Interest
expense
|
(24)
|
|
|
—
|
|
|
(4)
|
|
|
2
|
|
|
(26)
|
|
|
—
|
|
|
(26)
|
|
|
Interest
capitalized
|
3
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
Other
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
Total Nonoperating
income (expense)
|
(8)
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
(11)
|
|
|
—
|
|
|
(11)
|
|
|
Income (loss)
before income tax
|
$
|
158
|
|
|
$
|
(22)
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
142
|
|
|
$
|
(16)
|
|
|
$
|
126
|
|
|
OPERATING SEGMENTS
(unaudited)
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended December 31, 2018
|
|
(in
millions)
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Consolidating
& Other
|
|
Air Group
Adjusted(a)
|
|
Special
Items(b)
|
|
Consolidated
|
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
revenues
|
6,475
|
|
|
1,157
|
|
|
—
|
|
|
—
|
|
|
7,632
|
|
|
—
|
|
|
7,632
|
|
|
CPA
revenues
|
—
|
|
|
—
|
|
|
508
|
|
|
(508)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Mileage Plan other
revenue
|
397
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|
434
|
|
|
—
|
|
|
434
|
|
|
Cargo and
other
|
191
|
|
|
3
|
|
|
4
|
|
|
—
|
|
|
198
|
|
|
—
|
|
|
198
|
|
|
Total operating
revenues
|
7,063
|
|
|
1,197
|
|
|
512
|
|
|
(508)
|
|
|
8,264
|
|
|
—
|
|
|
8,264
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-fuel operating
expenses
|
4,577
|
|
|
1,024
|
|
|
465
|
|
|
(513)
|
|
|
5,553
|
|
|
132
|
|
|
5,685
|
|
|
Fuel
expense
|
1,652
|
|
|
262
|
|
|
—
|
|
|
—
|
|
|
1,914
|
|
|
22
|
|
|
1,936
|
|
|
Total operating
expenses
|
6,229
|
|
|
1,286
|
|
|
465
|
|
|
(513)
|
|
|
7,467
|
|
|
154
|
|
|
7,621
|
|
|
Nonoperating
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
53
|
|
|
—
|
|
|
—
|
|
|
(15)
|
|
|
38
|
|
|
—
|
|
|
38
|
|
|
Interest
expense
|
(82)
|
|
|
—
|
|
|
(22)
|
|
|
13
|
|
|
(91)
|
|
|
—
|
|
|
(91)
|
|
|
Interest
capitalized
|
16
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
|
Other
|
(12)
|
|
|
(11)
|
|
|
—
|
|
|
—
|
|
|
(23)
|
|
|
—
|
|
|
(23)
|
|
|
Total Nonoperating
income (expense)
|
(25)
|
|
|
(11)
|
|
|
(20)
|
|
|
(2)
|
|
|
(58)
|
|
|
—
|
|
|
(58)
|
|
|
Income (loss)
before income tax
|
$
|
809
|
|
|
$
|
(100)
|
|
|
$
|
27
|
|
|
$
|
3
|
|
|
$
|
739
|
|
|
$
|
(154)
|
|
|
$
|
585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended December 31, 2017
|
|
(in
millions)
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Consolidating
& Other
|
|
Air Group
Adjusted(a)
|
|
Special
Items(b)
|
|
Consolidated
|
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
revenues
|
6,278
|
|
|
1,023
|
|
|
—
|
|
|
—
|
|
|
7,301
|
|
|
—
|
|
|
7,301
|
|
|
CPA
revenues
|
—
|
|
|
—
|
|
|
426
|
|
|
(426)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Mileage Plan other
revenue
|
387
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
418
|
|
|
—
|
|
|
418
|
|
|
Cargo and
other
|
167
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
175
|
|
|
—
|
|
|
175
|
|
|
Total operating
revenues
|
6,832
|
|
|
1,058
|
|
|
430
|
|
|
(426)
|
|
|
7,894
|
|
|
—
|
|
|
7,894
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-fuel operating
expenses
|
4,271
|
|
|
852
|
|
|
427
|
|
|
(427)
|
|
|
5,123
|
|
|
116
|
|
|
5,239
|
|
|
Fuel
expense
|
1,282
|
|
|
172
|
|
|
—
|
|
|
—
|
|
|
1,454
|
|
|
(7)
|
|
|
1,447
|
|
|
Total operating
expenses
|
5,553
|
|
|
1,024
|
|
|
427
|
|
|
(427)
|
|
|
6,577
|
|
|
109
|
|
|
6,686
|
|
|
Nonoperating
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
39
|
|
|
—
|
|
|
—
|
|
|
(5)
|
|
|
34
|
|
|
—
|
|
|
34
|
|
|
Interest
expense
|
(92)
|
|
|
—
|
|
|
(13)
|
|
|
2
|
|
|
(103)
|
|
|
—
|
|
|
(103)
|
|
|
Interest
capitalized
|
15
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
|
Other
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
Total Nonoperating
income (expense)
|
(35)
|
|
|
—
|
|
|
(11)
|
|
|
(3)
|
|
|
(49)
|
|
|
—
|
|
|
(49)
|
|
|
Income (loss)
before income tax
|
$
|
1,244
|
|
|
$
|
34
|
|
|
$
|
(8)
|
|
|
$
|
(2)
|
|
|
$
|
1,268
|
|
|
$
|
(109)
|
|
|
$
|
1,159
|
|
|
|
|
(a)
|
The Air Group
Adjusted column represents the financial information that is
reviewed by management to assess performance of operations and
determine capital allocation and does not include certain charges.
See Note A in the accompanying pages for further
information.
|
|
(b)
|
Includes
merger-related costs, mark-to-market fuel-hedge accounting charges,
special charges associated with the employee tax reform bonus paid
in Q1 2018, and a $20 million contract termination fee incurred in
Q4 2018.
|
|
GAAP TO NON-GAAP
RECONCILIATIONS (unaudited)
|
|
Alaska Air Group,
Inc.
|
|
|
CASM Excluding
Fuel and Special Items Reconciliation (unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
(in
cents)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Consolidated:
|
|
|
|
|
|
|
|
|
Total operating
expenses per ASM (CASM)
|
12.55
|
¢
|
|
11.35
|
¢
|
|
11.66
|
¢
|
|
10.77
|
¢
|
|
Less the following
components:
|
|
|
|
|
|
|
|
|
Aircraft fuel,
including hedging gains and losses
|
3.35
|
|
|
2.49
|
|
|
2.96
|
|
|
2.33
|
|
|
Special items -
merger-related costs
|
0.13
|
|
|
0.18
|
|
|
0.13
|
|
|
0.19
|
|
|
Special items -
other
|
0.12
|
|
|
—
|
|
|
0.07
|
|
|
—
|
|
|
CASM, excluding
fuel and special items
|
8.95
|
¢
|
|
8.68
|
¢
|
|
8.50
|
¢
|
|
8.25
|
¢
|
|
|
|
|
|
|
|
|
|
Mainline:
|
|
|
|
|
|
|
|
|
Total operating
expenses per ASM (CASM)
|
11.70
|
¢
|
|
10.55
|
¢
|
|
10.78
|
¢
|
|
9.94
|
¢
|
|
Less the following
components:
|
|
|
|
|
|
|
|
|
Aircraft fuel,
including hedging gains and losses
|
3.23
|
|
|
2.37
|
|
|
2.83
|
|
|
2.24
|
|
|
Special items -
merger-related costs
|
0.14
|
|
|
0.20
|
|
|
0.14
|
|
|
0.20
|
|
|
Special items -
other
|
0.13
|
|
|
—
|
|
|
0.08
|
|
|
—
|
|
|
CASM, excluding
fuel and special items
|
8.20
|
¢
|
|
7.98
|
¢
|
|
7.73
|
¢
|
|
7.50
|
¢
|
|
|
|
|
|
|
|
|
|
Fuel
Reconciliations (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
2018
|
|
2017
|
|
(in millions,
except for per gallon amounts)
|
Dollars
|
|
Cost/Gal
|
|
Dollars
|
|
Cost/Gal
|
|
Raw or "into-plane"
fuel cost
|
$
|
488
|
|
|
$
|
2.35
|
|
|
$
|
406
|
|
|
$
|
1.98
|
|
|
Losses (gains) on
settled hedges
|
(1)
|
|
|
—
|
|
|
4
|
|
|
0.02
|
|
|
Consolidated
economic fuel expense
|
$
|
487
|
|
|
$
|
2.35
|
|
|
$
|
410
|
|
|
$
|
2.00
|
|
|
Mark-to-market fuel
hedge adjustments
|
52
|
|
|
0.25
|
|
|
(14)
|
|
|
(0.07)
|
|
|
GAAP fuel
expense
|
$
|
539
|
|
|
$
|
2.60
|
|
|
$
|
396
|
|
|
$
|
1.93
|
|
|
Fuel
gallons
|
208
|
|
|
|
|
205
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended December 31,
|
|
2018
|
|
2017
|
|
(in millions,
except for per gallon amounts)
|
Dollars
|
|
Cost/Gal
|
|
Dollars
|
|
Cost/Gal
|
|
Raw or "into-plane"
fuel cost
|
$
|
1,938
|
|
|
$
|
2.31
|
|
|
$
|
1,437
|
|
|
$
|
1.80
|
|
|
Losses (gains) on
settled hedges
|
(24)
|
|
|
(0.03)
|
|
|
17
|
|
|
0.02
|
|
|
Consolidated
economic fuel expense
|
$
|
1,914
|
|
|
$
|
2.28
|
|
|
$
|
1,454
|
|
|
$
|
1.82
|
|
|
Mark-to-market fuel
hedge adjustments
|
22
|
|
|
0.03
|
|
|
(7)
|
|
|
—
|
|
|
GAAP fuel
expense
|
$
|
1,936
|
|
|
$
|
2.31
|
|
|
$
|
1,447
|
|
|
$
|
1.82
|
|
|
Fuel
gallons
|
839
|
|
|
|
|
797
|
|
|
|
|
Debt-to-capitalization, adjusted for aircraft
operating leases
|
|
(in
millions)
|
December 31,
2018
|
|
December 31,
2017(a)
|
|
Long-term
debt
|
$
|
1,617
|
|
|
$
|
2,262
|
|
|
Capitalization of
aircraft operating leases(b)
|
1,768
|
|
|
1,671
|
|
|
Adjusted
debt
|
3,385
|
|
|
3,933
|
|
|
Shareholders'
equity
|
3,751
|
|
|
3,460
|
|
|
Total Invested
Capital
|
$
|
7,136
|
|
|
$
|
7,393
|
|
|
|
|
|
|
Debt-to-capitalization ratio, adjusted for aircraft
operating leases
|
47
|
%
|
|
53
|
%
|
|
|
|
(a)
|
Certain historical
information has been adjusted to reflect the adoption of new
accounting standards.
|
|
(b)
|
Calculated using the
present value of remaining aircraft lease payments. In 2019,
following the adoption of the new leasing standard, this
calculation will be performed utilizing the aircraft component of
the right-of-use asset as capitalized on our balance
sheet.
|
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 merger-related costs, a one-time contract termination
fee, an employee tax reform bonus, changes resulting from the Tax
Cuts and Jobs Act, and certain state tax law enactments) from our
unit metrics, we believe that we have better visibility into the
results of operations and 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,
such as 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 CASM excluding fuel (and
other items as specified in our plan documents) are important
metrics 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 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 merger-related
costs and mark-to-market hedging adjustments, 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.
GLOSSARY OF TERMS
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 the present value of future operating lease
payments) divided by total equity plus adjusted debt
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
Economic Fuel - best estimate of the cash cost of fuel,
net of the impact of our fuel-hedging program
Free Cash Flow - total operating cash flow generated less
cash paid for capital expenditures
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 and Airbus 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 Alaska from Horizon, SkyWest, and
PenAir. In this segment, Regional records actual on-board
passenger revenue, less costs such as fuel, distribution costs, and
payments made to Horizon, SkyWest and PenAir under the respective
capacity purchased arrangement (CPAs). Additionally, Regional
includes an allocation of corporate overhead such as IT, finance,
other administrative costs incurred by Alaska and on behalf of Horizon.
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
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SOURCE Alaska Air Group Inc.
