SEATTLE, Oct. 21, 2021 /PRNewswire/ -- Alaska Air Group
(NYSE: ALK) today reported financial results for its third quarter
ending Sept. 30, 2021, and provided
outlook for the fourth quarter ending Dec.
31, 2021.
The third quarter marks a significant stride forward in Alaska
Air Group's path to recovery. Alaska's goal from the beginning of the
pandemic has been deliberate - scaling the business back up in a
measured way, leveraging the company's strong balance sheet, and
running a resilient operation, all with the aim of producing
consistent industry-leading financial performance.
"We are thrilled to return to profitability this quarter,
leading the industry with a 12% pretax profit margin," said CEO
Ben Minicucci. "Thanks to each one
of our employees for running our operation and showing remarkable
care for our guests, and credit to the leadership team for laying
out a measured plan and executing it with discipline. We're all
feeling the momentum and look forward to building on our strong
foundation for growth in 2022 and beyond."
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 of Sept.
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 International Brotherhood of
Teamsters.
- Opened new San Francisco
International Airport Lounge with 9,200 square feet of Bay-Area
inspired amenities.
- Announced new nonstop flights between San Francisco and Loreto and
Ixtapa/Zihuatanejo, with service slated to begin Dec. 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 at Google, to the Company's board of
directors.
- Announced formation of Alaska Star Ventures, an entity created
to identify and further technologies that accelerate Alaska
Airlines' path to net zero carbon emissions.
- Supported the Afghan Humanitarian Airlift Mission and the U.S.
military by operating Civil Reserve Air Fleet flights in the
evacuation of individuals and families from Afghanistan.
- 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 the Alaska Airlines Foundation.
The following table reconciles the company's reported GAAP net
income (loss) per share (EPS) for the three and nine months ended
Sept. 30, 2021 and 2020 to adjusted
amounts.
|
Three Months Ended
September 30,
|
|
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
September 30,
|
|
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 8:30 a.m. PDT on
October 21, 2021. It can be accessed
at www.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 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, 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
December 31, 2020. Some of these
risks include the risks associated with contagious illnesses and
contagion, such as COVID-19, 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, and changes in laws and regulations. All of the
forward-looking statements are qualified in their entirety by
reference to the risk factors discussed therein. We operate in a
continually changing business environment, and new risk factors
emerge from time to time. Management cannot predict such new risk
factors, nor can it assess the impact, if any, of such new risk
factors on our business or events described in any forward-looking
statements. We expressly disclaim any obligation to publicly update
or revise any forward-looking statements after the date of this
report to conform them to actual results. Over time, our actual
results, performance or achievements will likely differ from the
anticipated results, performance, or achievements that are
expressed or implied by our forward-looking statements, and such
differences might be significant and materially adverse.
Alaska Airlines and its regional partners serve more than 120
destinations across the United
States and to Mexico,
Canada and Costa Rica. The airline emphasizes Next-Level
Care for its guests, along with providing low fares, award-winning
customer service and sustainability efforts. Alaska is a member of oneworld. With
the global alliance and the airline's additional partners, guests
can travel to more than 1,000 destinations on more than 20 airlines
while earning and redeeming miles on flights to locations around
the world. Learn more about Alaska
at newsroom.alaskaair.com and blog.alaskaair.com. Alaska Airlines
and Horizon Air are subsidiaries of Alaska Air Group (NYSE:
ALK).
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
(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)
|
|
|
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
September 30,
2021
|
|
December 31,
2020
|
|
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
|
|
|
Goodwill
|
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)
|
September 30,
2021
|
|
December 31,
2020
|
|
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, $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: 2021 -
134,655,235 shares; 2020 - 133,567,534 shares, Outstanding: 2021 -
125,305,291 shares; 2020 - 124,217,590 shares
|
1
|
|
|
1
|
|
|
Capital in excess of
par value
|
462
|
|
|
391
|
|
|
Treasury stock
(common), at cost: 2021 - 9,349,944 shares; 2020 - 9,349,944
shares
|
(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)
|
|
|
|
|
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Nine Months
Ended
September 30, 2021
|
|
Six Months
Ended
June 30, 2021(a)
|
|
Three Months
Ended
September 30,
2021(b)
|
|
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 September 30, 2021, can be calculated by
subtracting cash flows for the six months ended June 30, 2021, as
reported in Form 10-Q for the second quarter 2021, from the nine
months ended September 30, 2021.
|
|
|
|
|
|
|
|
OPERATING
STATISTICS SUMMARY (unaudited)
|
|
|
|
|
|
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
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)
|
$2.05
|
|
$1.32
|
|
55.3%
|
|
$1.93
|
|
$1.65
|
|
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)
|
$2.03
|
|
$1.31
|
|
55.0%
|
|
$1.91
|
|
$1.66
|
|
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)
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
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)
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
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
September 30, 2020
|
|
(in
millions)
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Consolidating
& Other(a)
|
|
Air Group
Adjusted(b)
|
|
Special
Items(c)
|
|
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
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
|
|
|
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
September 30, 2020
|
|
(in
millions)
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Consolidating
& Other(a)
|
|
Air Group
Adjusted(b)
|
|
Special
Items(c)
|
|
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, 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 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,
|
|
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
September 30, 2021 are primarily comprised of updated
estimates of cost associated with leased aircraft that have been
retired and removed from the operating fleet but not yet returned
to the lessor.
|
|
(b)
|
Special items -
restructuring charges in the nine months ended September 30,
2021 represent adjustments to total cost for pilot incentive leaves
as a result of updated recall timing from what was previously
anticipated due to schedule changes, training limitations and other
factors.
|
|
|
|
|
|
|
|
Fuel
Reconciliation
|
|
|
Three Months Ended
September 30,
|
|
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
September 30,
|
|
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)
|
September 30,
2021
|
|
December 31,
2020
|
|
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
|
|
|
Total Invested
Capital
|
$
|
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 September 30,
2021, no such borrowings were outstanding.
|
|
|
|
|
|
|
|
Adjusted net debt
to earnings before interest, taxes, depreciation, amortization and
special items
|
|
|
(in
millions)
|
September 30,
2021
|
|
December 31,
2020
|
|
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
September 30, 2021
|
|
Twelve Months
Ended
December 31, 2020
|
|
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 SEC.
|
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 Alaska from Horizon and SkyWest. In this
segment, Regional records actual on-board passenger revenue, less
costs such as fuel, distribution costs, and payments made to
Horizon and SkyWest 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
View original
content:https://www.prnewswire.com/news-releases/alaska-air-group-reports-third-quarter-2021-results-301405450.html
SOURCE Alaska Air Group