Reported record full year revenue of
$11.7 billion
Fourth
quarter and full year adjusted earnings per share exceed high end
of previously reported guidance
Repurchased approximately
$250 million in outstanding shares in
the fourth quarter
Announced record performance-based
pay, totaling six weeks pay for most Alaska and Horizon employees
SEATTLE, Jan. 22,
2025 /PRNewswire/ -- Alaska Air Group Inc. (NYSE:
ALK) today reported financial results for the fourth quarter and
full year ended December 31,
2024.
Air Group completed 2024 on a high note, with record revenues of
$11.7 billion and a GAAP pretax
margin of 4.6%. On an adjusted basis, the full year pretax margin
of 7.1% is expected to be amongst the best in the industry
despite the completed acquisition of Hawaiian Airlines and fleet
grounding in the first quarter of the year.
"This was a transformational year as we brought Hawaiian
Airlines into Alaska Air Group and began our journey to unlock
$1 billion in incremental pretax
profit over the next three years," said CEO Ben Minicucci. "We're proud that our incentive
plan will reward Alaska Airlines and Horizon Air employees with
nearly six weeks of pay, which we believe will lead the industry.
Looking forward, our vision is clear and we're focused on executing
our strategic plan – leveraging the strengths of our combined
network, enhancing the end-to-end travel experience for our guests,
and delivering value for everyone who depends on us."
Quarter in Review
Air Group's consolidated results reported in the fourth quarter
and full year 2024 include Hawaiian Airlines as of September 18, 2024 while prior comparable periods
exclude any Hawaiian results. Discussion of fourth quarter results
and forward-looking guidance refer to pro forma historical results
as provided in prior 8-K filings and represented below.
|
Q4 2024 vs Q4 2023
Pro Forma, except EPS
|
|
Prior
Expectation
|
|
Actual
Results
|
|
Capacity
(ASMs)
|
|
Up ~1.5%
|
|
Up 2.5%
|
|
RASM
|
|
Up mid-to-high single
digits
|
|
Up 7.0%
|
|
CASMex
|
|
Up low-double
digits
|
|
Up 8.6%
|
|
Adjusted earnings per
share
|
|
$0.40 to
$0.50
|
|
$0.97
|
Our GAAP pretax margin for the fourth quarter was 2.2% and GAAP
earnings per share was $0.55. On an
adjusted basis, our pretax margin was 3.9% and earnings per
share was $0.97, which exceeded our latest guidance by
approximately $0.50 at the midpoint
driven by revenue and cost improvement across our business as well
as lower non-operating expenses. Due to these same out-performance
factors, full year adjusted EPS of $4.87 also surpassed the better end of our prior
guidance range.
Fourth quarter revenue was stronger than expected across both
Alaska and Hawaiian, building on
the strength seen in the fall, and exiting the year with momentum
driven by sustained leisure demand and an uptick in corporate
travel which improved close in demand. With mild winter weather to
end the year, we delivered reliable operational performance for our
guests throughout the holiday travel period, with
higher-than-expected completion rate and load factor. After
inflecting positive in August, unit revenues improved nearly 6
points sequentially from 1% in the third quarter to 7% in the
fourth quarter. This momentum has continued, with ongoing close-in
strength in early Q1 bookings. Combined with a stable industry
capacity backdrop, we are encouraged by these early indications for
Q1 and a constructive start to 2025.
Unit cost performance in the fourth quarter also exceeded our
guidance, up 8.6% as compared to pro forma 2023, as disciplined
non-fuel cost performance offset higher performance-based pay
accruals and better completion rates drove higher capacity.
Throughout 2024, unit costs remained pressured from constrained
capacity as a result of aircraft delivery delays, but are expected
to improve through 2025 as we normalize resource levels and
capacity compared to 2024.
Alaska Accelerate
Following a great close to 2024, we continue to build on our
strong foundation and execute on Alaska Accelerate - our vision for
the future. This strategy is focused on building scale, relevance
and loyalty to connect our guests to the world with a remarkable
travel experience rooted in safety, care and performance and
deliver $1 billion in incremental
profit over the next 3 years.
"Our success this year and our optimistic look ahead is built
upon a proven strategy that puts the guest at the center of
everything we do and unlocks new opportunities across our
business," said Chief Commercial Officer, Andrew Harrison. "We're poised to capitalize on
the strength of a combined global network, a powerful loyalty
program, two beloved brands, and a remarkable travel experience
that meets guests' needs at every phase of the travel journey."
First Quarter & Full Year 2025 Guidance
For the first quarter and full year 2025, we expect the
following results compared to pro forma historical results as if
the acquisition had occurred on January
1, 2023.
|
Q1 2025
Expectation
|
|
FY 2025
Expectation
|
|
Capacity (ASMs) %
change versus pro
forma 2024
|
Up 2.5% to
3.5%
|
|
Up 2% to 3%
|
|
RASM % change versus
pro forma 2024
|
Up high-single
digits
|
|
|
|
CASMex % change versus
pro forma 2024
|
Up low-single digits to
mid-single digits
|
|
|
|
Adjusted earnings
(loss) per share
|
($0.70) to
($0.50)
|
|
>$5.75
|
Financial Results and Updates:
- Reported net income for the fourth quarter and full year 2024
under Generally Accepted Accounting Principles (GAAP) of
$71 million, or $0.55 per share, and $395
million, or $3.08 per share.
These results compare to net loss for the fourth quarter and net
income for the full year 2023 of $2
million, or $0.02 per share,
and $235 million, or $1.83 per share.
- Reported net income for the fourth quarter and full year 2024,
excluding special items and other adjustments, of $125 million, or $0.97 per share, and $625
million, or $4.87 per share.
These results compare to net income for the fourth quarter and full
year 2023, excluding special items and other adjustments, of
$38 million, or $0.30 per share, and $583
million, or $4.53 per
share.
- Generated an adjusted pretax margin of 7.1% for the full year
2024, among the highest in the industry.
- Generated $1.5 billion in
operating cash flow for the full year 2024.
- Completed $2 billion in
financing, backed by the Company's Mileage Plan program, and
retired $1.6 billion of certain debt
acquired with Hawaiian Airlines.
- Repurchased 3.9 million shares of common stock for
approximately $250 million in the
fourth quarter, bringing total repurchases to 5.5 million shares
for $312 million in 2024.
- Authorized a new $1 billion
dollar share repurchase plan to be executed over the next
four years, with repurchases beginning in January 2025.
- Alaska and Horizon employees
earned $325 million of incentive pay
in 2024 by achieving profitability, safety, sustainability, and
operational targets. The payout represents approximately six weeks
of pay for most employees.
Operational Updates:
- Reached an Agreement in Concept with Alaska flight attendants for an updated
collective bargaining agreement in January
2025.
- Announced the launch of Seattle as an international gateway with
nonstop routes to Tokyo Narita and Seoul Incheon in 2025, with
plans to add 12 international widebody destinations by 2030.
- Approved to fly nonstop service between San Diego International Airport and Ronald
Reagan Washington National Airport, making Alaska the only airline to operate this
route.
- Expanding service from the states of Alaska and Oregon beginning this summer, including
nonstop service from Anchorage to
Detroit and Sacramento; Portland to Houston, Fairbanks, and Eugene; and Medford to San
Diego.
- Hawaiian received two A330-300 freighter aircraft from Amazon
during the fourth quarter, bringing the total within the airline's
fleet to six.
Commercial Updates:
- Announced improvements to Alaska's Mileage Plan for 2025, including more
milestone rewards and new ways to earn elite qualifying miles.
- Introduced Alaska's new
premium credit card, which will be available late summer 2025 and
will provide holders exclusive travel benefits and perks.
- Launched Huaka'i by Hawaiian, a free program for HawaiianMiles
members that offers kama'āina (Hawai'i residents) exclusive travel
benefits when flying with Hawaiian Airlines.
The following table reconciles the company's reported GAAP net
income (loss) per share (EPS) for the three and twelve months ended
December 31, 2024 and 2023 to
adjusted amounts.
|
Three Months Ended
December 31,
|
|
2024
|
|
2023
|
|
(in millions,
except per share amounts)
|
Dollars
|
|
Per
Share
|
|
Dollars
|
|
Per
Share
|
|
Net income
(loss)
|
$
71
|
|
$
0.55
|
|
$
(2)
|
|
$
(0.02)
|
|
Mark-to-market fuel
hedge adjustments
|
(6)
|
|
(0.05)
|
|
12
|
|
0.09
|
|
Unrealized gain on
foreign debt
|
(10)
|
|
(0.08)
|
|
—
|
|
—
|
|
Special items -
operating
|
91
|
|
0.71
|
|
37
|
|
0.29
|
|
Special items - net
non-operating
|
(17)
|
|
(0.13)
|
|
4
|
|
0.03
|
|
Income tax effect of
adjustments above(a)
|
(4)
|
|
(0.03)
|
|
(13)
|
|
(0.09)
|
|
Adjusted net
income
|
$
125
|
|
$
0.97
|
|
$
38
|
|
$
0.30
|
|
|
Twelve Months Ended
December 31,
|
|
2024
|
|
2023
|
|
(in millions,
except per share amounts)
|
Dollars
|
|
Per
Share
|
|
Dollars
|
|
Per
Share
|
|
Net income
|
$
395
|
|
$
3.08
|
|
$
235
|
|
$
1.83
|
|
Mark-to-market fuel
hedge adjustments
|
(28)
|
|
(0.22)
|
|
(2)
|
|
(0.02)
|
|
Unrealized gain on
foreign debt
|
(10)
|
|
(0.08)
|
|
—
|
|
—
|
|
Special items -
operating
|
345
|
|
2.69
|
|
443
|
|
3.44
|
|
Special items - net
non-operating
|
(16)
|
|
(0.12)
|
|
18
|
|
0.14
|
|
Income tax effect of
adjustments above(a)
|
(61)
|
|
(0.48)
|
|
(111)
|
|
(0.86)
|
|
Adjusted net
income
|
$
625
|
|
$
4.87
|
|
$
583
|
|
$
4.53
|
|
|
|
(a)
|
Certain integration
costs are non deductible for tax purposes, resulting in a smaller
income tax effect for current year adjustments.
|
A conference call regarding the fourth quarter and full year
results will be streamed online at 8:30 a.m.
PST on January 23, 2025. 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, Section 21E of the Securities Exchange Act
of 1934, and the Private Securities Litigation Reform Act of 1995.
These statements relate to future events and involve known and
unknown risks and uncertainties that may cause actual outcomes to
be materially different from those indicated by our forward-looking
statements, assumptions or beliefs. For a discussion of risks and
uncertainties that may cause our forward-looking statements to
differ materially, see Item 1A of the Company's Quarterly Report on
Form 10-Q for the period ended September 30,
2024. Some of these risks include competition, labor costs,
relations and availability, general economic conditions, increases
in operating costs including fuel, uncertainties regarding the
ability to successfully integrate the operations of the recently
completed acquisition of Hawaiian Holdings, Inc. and the ability to
realize anticipated cost savings, synergies, or growth from the
acquisition, inability to meet cost reduction, ESG and other
strategic goals, seasonal fluctuations in demand and financial
results, supply chain risks, events that negatively impact aviation
safety and security, and changes in laws and regulations that
impact our business. All of the forward-looking statements are
qualified in their entirety by reference to the risk factors
discussed in our most recent Form 10-Q and in our subsequent SEC
filings. We operate in a continually changing business environment,
and new risk factors emerge from time to time. Management cannot
predict such new risk factors, nor can it assess the impact, if
any, of such new risk factors on our business or events described
in any forward-looking statements. We expressly disclaim any
obligation to publicly update or revise any forward-looking
statements made today to conform them to actual results. Over time,
our actual results, performance or achievements may differ from the
anticipated results, performance or achievements that are expressed
or implied by our forward-looking statements, assumptions or
beliefs and such differences might be significant and materially
adverse.
Alaska Air Group, Inc. is based in Seattle and comprised of subsidiaries Alaska
Airlines, Hawaiian Holdings, Inc., Horizon Air and McGee Air
Services. With our recent acquisition of Hawaiian Airlines, we now
serve more than 140 destinations throughout North America, Central America, Asia and the Pacific. We are committed to
safety, remarkable customer care, operational excellence, financial
performance and sustainability. Alaska Airlines is a member of the
oneworld Alliance. With oneworld and our additional global
partners, our guests have more choices than ever to purchase, earn
or redeem on alaskaair.com across 31 airlines and more than 1,000
worldwide destinations. Book travel throughout the Pacific on
Hawaiian Airlines at hawaiianairlines.com. Learn more about Alaska
Airlines at news.alaskaair.com and Hawaiian Airlines at
newsroom.hawaiianairlines.com/blog. Alaska Air Group is traded on
the New York Stock Exchange (NYSE) as "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)
|
2024
|
|
2023
|
|
Change
|
|
2024
|
|
2023
|
|
Change
|
|
Operating
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
revenue
|
$
3,178
|
|
$
2,326
|
|
37 %
|
|
$
10,654
|
|
$
9,526
|
|
12 %
|
|
Loyalty program other
revenue
|
224
|
|
165
|
|
36 %
|
|
733
|
|
648
|
|
13 %
|
|
Cargo and other
revenue
|
132
|
|
62
|
|
113 %
|
|
348
|
|
252
|
|
38 %
|
|
Total Operating
Revenue
|
3,534
|
|
2,553
|
|
38 %
|
|
11,735
|
|
10,426
|
|
13 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages and
benefits
|
1,119
|
|
782
|
|
43 %
|
|
3,588
|
|
3,041
|
|
18 %
|
|
Variable incentive
pay
|
161
|
|
51
|
|
216 %
|
|
358
|
|
200
|
|
79 %
|
|
Aircraft fuel,
including hedging gains and
losses
|
702
|
|
709
|
|
(1) %
|
|
2,506
|
|
2,641
|
|
(5) %
|
|
Aircraft
maintenance
|
229
|
|
121
|
|
89 %
|
|
620
|
|
488
|
|
27 %
|
|
Aircraft
rent
|
65
|
|
47
|
|
38 %
|
|
207
|
|
208
|
|
— %
|
|
Landing fees and other
rentals
|
249
|
|
178
|
|
40 %
|
|
781
|
|
680
|
|
15 %
|
|
Contracted
services
|
133
|
|
99
|
|
34 %
|
|
444
|
|
389
|
|
14 %
|
|
Selling
expenses
|
106
|
|
72
|
|
47 %
|
|
349
|
|
303
|
|
15 %
|
|
Depreciation and
amortization
|
190
|
|
121
|
|
57 %
|
|
583
|
|
451
|
|
29 %
|
|
Food and beverage
service
|
93
|
|
65
|
|
43 %
|
|
287
|
|
241
|
|
19 %
|
|
Third-party regional
carrier expense
|
62
|
|
54
|
|
15 %
|
|
243
|
|
218
|
|
11 %
|
|
Other
|
261
|
|
185
|
|
41 %
|
|
854
|
|
729
|
|
17 %
|
|
Special items -
operating
|
91
|
|
37
|
|
146 %
|
|
345
|
|
443
|
|
(22) %
|
|
Total Operating
Expenses
|
3,461
|
|
2,521
|
|
37 %
|
|
11,165
|
|
10,032
|
|
11 %
|
|
Operating
Income
|
73
|
|
32
|
|
128 %
|
|
570
|
|
394
|
|
45 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating Income
(Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
32
|
|
18
|
|
78 %
|
|
101
|
|
80
|
|
26 %
|
|
Interest
expense
|
(56)
|
|
(31)
|
|
81 %
|
|
(171)
|
|
(121)
|
|
41 %
|
|
Interest
capitalized
|
10
|
|
6
|
|
67 %
|
|
29
|
|
27
|
|
7 %
|
|
Special items - net
non-operating
|
17
|
|
(4)
|
|
NM
|
|
16
|
|
(18)
|
|
NM
|
|
Other - net
|
3
|
|
(17)
|
|
NM
|
|
—
|
|
(39)
|
|
(100) %
|
|
Total Non-operating
Income (Expense)
|
6
|
|
(28)
|
|
NM
|
|
(25)
|
|
(71)
|
|
(65) %
|
|
Income Before Income
Tax
|
79
|
|
4
|
|
|
|
545
|
|
323
|
|
|
|
Income tax
expense
|
8
|
|
6
|
|
|
|
150
|
|
88
|
|
|
|
Net Income
(Loss)
|
$
71
|
|
$
(2)
|
|
|
|
$
395
|
|
$
235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings
(Loss) Per Share
|
$
0.56
|
|
$
(0.02)
|
|
|
|
$
3.13
|
|
$
1.84
|
|
|
|
Diluted Earnings
(Loss) Per Share
|
$
0.55
|
|
$
(0.02)
|
|
|
|
$
3.08
|
|
$
1.83
|
|
|
|
Weighted Average Shares
Outstanding used for
computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
126.047
|
|
127.376
|
|
|
|
126.136
|
|
127.375
|
|
|
|
Diluted
|
128.931
|
|
127.376
|
|
|
|
128.372
|
|
128.708
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited)
|
|
|
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
As of December 31
(in millions)
|
2024
|
|
2023
|
|
ASSETS
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
1,201
|
|
$
281
|
|
Restricted
cash
|
29
|
|
—
|
|
Marketable
securities
|
1,274
|
|
1,510
|
|
Total cash, restricted
cash, and marketable securities
|
2,504
|
|
1,791
|
|
Receivables -
net
|
558
|
|
383
|
|
Inventories and
supplies - net
|
199
|
|
116
|
|
Prepaid
expenses
|
307
|
|
176
|
|
Other current
assets
|
192
|
|
239
|
|
Total Current
Assets
|
3,760
|
|
2,705
|
|
|
|
|
|
Property and
Equipment
|
|
|
|
|
Aircraft and other
flight equipment
|
12,270
|
|
10,425
|
|
Other property and
equipment
|
2,173
|
|
1,814
|
|
Deposits for future
flight equipment
|
883
|
|
491
|
|
15,326
|
|
12,730
|
|
Less accumulated
depreciation and amortization
|
(4,548)
|
|
(4,342)
|
|
Total Property and
Equipment - Net
|
10,778
|
|
8,388
|
|
|
|
|
|
Other
Assets
|
|
|
|
|
Operating lease
assets
|
1,302
|
|
1,195
|
|
Goodwill
|
2,721
|
|
1,943
|
|
Intangible assets -
net
|
873
|
|
90
|
|
Other noncurrent
assets
|
334
|
|
292
|
|
Total Other
Assets
|
5,230
|
|
3,520
|
|
|
|
|
|
Total
Assets
|
$
19,768
|
|
$
14,613
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited)
|
|
|
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
As of December 31
(in millions except share amounts)
|
2024
|
|
2023
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
$
186
|
|
$
207
|
|
Accrued wages, vacation
and payroll taxes
|
1,001
|
|
584
|
|
Air traffic
liability
|
1,712
|
|
1,136
|
|
Other accrued
liabilities
|
997
|
|
800
|
|
Deferred
revenue
|
1,592
|
|
1,221
|
|
Current portion of
long-term debt
|
442
|
|
289
|
|
Current portion of
operating lease liabilities
|
207
|
|
158
|
|
Current portion of
finance lease liabilities
|
8
|
|
64
|
|
Total Current
Liabilities
|
6,145
|
|
4,459
|
|
|
|
|
|
Noncurrent
Liabilities
|
|
|
|
|
Long-term debt, net of
current portion
|
4,491
|
|
2,182
|
|
Operating lease
liabilities, net of current portion
|
1,198
|
|
1,125
|
|
Finance lease
liabilities, net of current portion
|
47
|
|
—
|
|
Deferred income
taxes
|
934
|
|
695
|
|
Deferred
revenue
|
1,664
|
|
1,382
|
|
Obligation for pension
and post-retirement medical benefits
|
460
|
|
362
|
|
Other
liabilities
|
457
|
|
295
|
|
Total Noncurrent
Liabilities
|
9,251
|
|
6,041
|
|
|
|
|
|
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:
2024 - 141,449,174 shares; 2023 - 138,960,830 shares, Outstanding:
2024 -
123,119,199 shares; 2023 - 126,090,353 shares
|
1
|
|
1
|
|
Capital in excess of
par value
|
811
|
|
695
|
|
Treasury stock
(common), at cost: 2024 - 18,329,975 shares; 2023 -
12,870,477 shares
|
(1,131)
|
|
(819)
|
|
Accumulated other
comprehensive loss
|
(239)
|
|
(299)
|
|
Retained
earnings
|
4,930
|
|
4,535
|
|
Total Shareholders'
Equity
|
4,372
|
|
4,113
|
|
Total Liabilities
and Shareholders' Equity
|
$
19,768
|
|
$
14,613
|
|
SUMMARY CASH FLOW
(unaudited)
|
|
|
|
|
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
(in
millions)
|
Year Ended
December 31, 2024
|
|
Nine Months
Ended
September 30, 2024(a)
|
|
Three Months
Ended
December 31,
2024(b)
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
Net income
|
$
395
|
|
$
324
|
|
$
71
|
|
Adjustments to
reconcile net income to net cash
provided by operating activities
|
577
|
|
451
|
|
126
|
|
Changes in working
capital
|
492
|
|
415
|
|
77
|
|
Net cash provided by
operating activities
|
1,464
|
|
1,190
|
|
274
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
Property and equipment
additions
|
(1,281)
|
|
(851)
|
|
(430)
|
|
Acquisition of Hawaiian
Airlines, net of cash acquired
|
(659)
|
|
(659)
|
|
—
|
|
Supplier
proceeds
|
162
|
|
162
|
|
—
|
|
Other investing
activities
|
1,144
|
|
912
|
|
232
|
|
Net cash used in
investing activities
|
(634)
|
|
(436)
|
|
(198)
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
119
|
|
7
|
|
112
|
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents
|
949
|
|
761
|
|
188
|
|
Cash, cash equivalents,
and restricted cash at
beginning of period
|
308
|
|
308
|
|
1,069
|
|
Cash, cash
equivalents, and restricted cash at end
of period
|
$
1,257
|
|
$
1,069
|
|
$
1,257
|
|
|
|
(a)
|
As reported in Form
10-Q for the third quarter of 2024.
|
|
(b)
|
Cash flows for the
three months ended December 31, 2024 can be calculated by
subtracting cash flows for the nine months ended September 30,
2024, as reported in Form 10-Q for the third quarter 2024, from the
year ended December 31, 2024.
|
|
(c)
|
Cash, cash equivalents,
and restricted cash shown in the Summary Cash Flow consists of
restricted cash presented within Restricted Cash as well as certain
restricted cash balances presented within Other noncurrent assets
in the condensed consolidated balance sheets.
|
SPECIAL ITEMS (unaudited)
Air Group has classified certain operating and non-operating
activity as special items due to their unusual or infrequently
occurring nature. We believe disclosing information about these
items separately improves comparable year-over-year analysis and
allows stakeholders to better understand our results of operations.
A description of the special items is provided below.
Fleet transition: Fleet transition costs (benefits) are
associated with the retirement and disposition of Airbus acquired
from Virgin America and Q400 aircraft.
Labor agreements: Labor agreement costs in 2024 are for
retroactive pay for Alaska flight
attendants pursuant to the agreement in concept reached in
January 2025. Costs in 2023 are for
contractual changes to Alaska
pilots' sick leave benefits.
Integration costs: Integration costs are associated with
the acquisition of Hawaiian Airlines and primarily consist of legal
and professional fees, change in control payments, and other
employee-related expenses.
Litigation: Litigation costs represent expenses
associated with the Virgin trademark license agreement with the
Virgin Group and recorded following a negative ruling in an appeal
case in 2024.
Net non-operating: The income in 2024 is for gains on
Hawaiian debt extinguishment in the fourth quarter. The expense in
2023 is primarily for interest expense associated with certain
Virgin America A321neo lease agreements which were modified as part
of Alaska's fleet transition.
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
(in
millions)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
Fleet
transition
|
$
(40)
|
|
$
30
|
|
$
11
|
|
$
385
|
|
Labor
agreements
|
43
|
|
—
|
|
73
|
|
51
|
|
Integration
costs
|
80
|
|
7
|
|
208
|
|
7
|
|
Litigation
|
8
|
|
—
|
|
53
|
|
—
|
|
Special items -
operating
|
$
91
|
|
$
37
|
|
$
345
|
|
$
443
|
|
|
|
|
|
|
|
|
|
Non-operating Income
(Expense)
|
|
|
|
|
|
|
|
|
Special items - net
non-operating
|
$
17
|
|
$
(4)
|
|
$
16
|
|
$
(18)
|
|
OPERATING STATISTICS
SUMMARY (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full year amounts below
reflect the results of operations for Hawaiian Airlines for the
period September 18, 2024 through
December 31, 2024.
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2024
|
|
2023
|
|
Change
|
|
2024
|
|
2023
|
|
Change
|
|
Consolidated
Operating Statistics:(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passengers
(000)
|
14,339
|
|
10,903
|
|
32 %
|
|
49,238
|
|
44,557
|
|
11 %
|
|
RPMs (000,000)
"traffic"
|
19,068
|
|
14,153
|
|
35 %
|
|
63,871
|
|
57,362
|
|
11 %
|
|
ASMs (000,000)
"capacity"
|
22,744
|
|
17,077
|
|
33 %
|
|
76,167
|
|
68,524
|
|
11 %
|
|
Load factor
|
83.8 %
|
|
82.9 %
|
|
0.9 pts
|
|
83.9 %
|
|
83.7 %
|
|
0.2 pts
|
|
Yield
|
16.67¢
|
|
16.43¢
|
|
1 %
|
|
16.68¢
|
|
16.61¢
|
|
— %
|
|
PRASM
|
13.97¢
|
|
13.62¢
|
|
3 %
|
|
13.99¢
|
|
13.90¢
|
|
1 %
|
|
RASM
|
15.54¢
|
|
14.95¢
|
|
4 %
|
|
15.41¢
|
|
15.21¢
|
|
1 %
|
|
CASMex(b)
|
11.57¢
|
|
10.31¢
|
|
12 %
|
|
10.80¢
|
|
10.06¢
|
|
7 %
|
|
Economic fuel cost per
gallon(b)(c)
|
$2.54
|
|
$3.42
|
|
(26) %
|
|
$2.74
|
|
$3.21
|
|
(15) %
|
|
Fuel gallons
(000,000)(c)
|
279
|
|
204
|
|
37 %
|
|
925
|
|
824
|
|
12 %
|
|
ASMs per
gallon
|
81.6
|
|
83.7
|
|
(3) %
|
|
82.3
|
|
83.2
|
|
(1) %
|
|
Departures
(000)
|
131
|
|
103
|
|
27 %
|
|
461
|
|
414
|
|
11 %
|
|
Average full-time
equivalent employees
(FTEs)
|
30,396
|
|
23,117
|
|
31 %
|
|
25,751
|
|
23,319
|
|
10 %
|
|
Operating
fleet(d)
|
392
|
|
314
|
|
78 a/c
|
|
392
|
|
314
|
|
78 a/c
|
|
Alaska Airlines
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
RPMs (000,000)
"traffic"
|
13,306
|
|
13,008
|
|
2 %
|
|
53,680
|
|
52,975
|
|
1 %
|
|
ASMs (000,000)
"capacity"
|
15,754
|
|
15,708
|
|
— %
|
|
63,873
|
|
63,292
|
|
1 %
|
|
Economic fuel cost per
gallon
|
$2.55
|
|
$3.38
|
|
(25) %
|
|
$2.74
|
|
$3.18
|
|
(14) %
|
|
Hawaiian Airlines
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
RPMs (000,000)
"traffic"
|
4,509
|
|
—
|
|
n/a
|
|
5,143
|
|
—
|
|
n/a
|
|
ASMs (000,000)
"capacity"
|
5,481
|
|
—
|
|
n/a
|
|
6,245
|
|
—
|
|
n/a
|
|
Economic fuel cost per
gallon(c)
|
$2.44
|
|
—
|
|
n/a
|
|
$2.43
|
|
—
|
|
n/a
|
|
Regional Operating
Statistics:(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
RPMs (000,000)
"traffic"
|
1,253
|
|
1,145
|
|
9 %
|
|
5,048
|
|
4,387
|
|
15 %
|
|
ASMs (000,000)
"capacity"
|
1,509
|
|
1,369
|
|
10 %
|
|
6,049
|
|
5,232
|
|
16 %
|
|
Economic fuel cost per
gallon
|
$2.74
|
|
$3.67
|
|
(25) %
|
|
$2.93
|
|
$3.41
|
|
(14) %
|
|
|
|
(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)
|
Excludes operations
under the Air Transportation Services Agreement (ATSA) with
Amazon.
|
|
(d)
|
Includes aircraft owned
and leased by Alaska, Hawaiian, and Horizon as well as aircraft
operated by third-party regional carriers under capacity purchase
agreements. Excludes all aircraft removed from operating
service.
|
|
(e)
|
Data presented includes
information related to flights operated by Horizon and third-party
carriers.
|
GAAP TO NON-GAAP RECONCILIATIONS (unaudited)
Alaska
Air Group, Inc.
We are providing reconciliations of reported non-GAAP financial
measures to their most directly comparable financial measures
reported on a GAAP basis. Amounts in the tables below are rounded
to the nearest million. As a result, a manual recalculation of
certain figures using these rounded amounts may not agree directly
to the actual figures presented in the tables below.
|
Adjusted Income
Before Income Tax Reconciliation
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
(in
millions)
|
2024
|
2023
|
|
2024
|
2023
|
|
Income before income
tax
|
$
79
|
|
$
4
|
|
$
545
|
|
$
323
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
Mark-to-market fuel
hedge adjustment
|
(6)
|
|
12
|
|
(28)
|
|
(2)
|
|
Unrealized gain on
foreign debt
|
(10)
|
|
—
|
|
(10)
|
|
—
|
|
Special items -
operating
|
91
|
|
37
|
|
345
|
|
443
|
|
Special items - net
non-operating
|
(17)
|
|
4
|
|
(16)
|
|
18
|
|
Adjusted income
before income tax
|
$
137
|
|
$
57
|
|
$
836
|
|
$
782
|
|
|
|
|
|
|
|
|
|
Pretax
margin
|
2.2 %
|
|
0.2 %
|
|
4.6 %
|
|
3.1 %
|
|
Adjusted pretax
margin
|
3.9 %
|
|
2.2 %
|
|
7.1 %
|
|
7.5 %
|
|
Adjusted Income
Before Income Tax, excluding Hawaiian Reconciliation
|
|
(in
millions)
|
Twelve Months
Ended
December 31, 2024
|
|
Operating
Revenue
|
$
11,735
|
|
Adjusted
for:
|
|
|
Hawaiian Airlines
Operating Revenue
|
869
|
|
Operating Revenue,
excluding Hawaiian
|
$
10,866
|
|
|
|
Income before income
tax
|
$
545
|
|
Adjusted
for:
|
|
|
Mark-to-market fuel
hedge adjustment
|
(28)
|
|
Unrealized gain on
foreign debt
|
(10)
|
|
Special items -
operating
|
345
|
|
Special items - net
non-operating
|
(16)
|
|
Hawaiian Airlines
pretax loss
|
58
|
|
Adjusted income
before income tax, excluding Hawaiian
|
$
894
|
|
|
|
Adjusted pretax
margin, excluding Hawaiian
|
8.2 %
|
|
CASMex
Reconciliation
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
(in
millions)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Total operating
expenses
|
$
3,461
|
|
$
2,521
|
|
$
11,165
|
|
$
10,032
|
|
Less the following
components:
|
|
|
|
|
|
|
|
|
Aircraft fuel,
including hedging gains and losses
|
702
|
|
709
|
|
2,506
|
|
2,641
|
|
Freighter
costs
|
37
|
|
15
|
|
84
|
|
53
|
|
Special items -
operating
|
91
|
|
37
|
|
345
|
|
443
|
|
Total operating
expenses, excluding fuel, freighter
costs, and special items
|
$
2,631
|
|
$
1,760
|
|
$
8,230
|
|
$
6,895
|
|
|
|
|
|
|
|
|
|
ASMs
|
22,744
|
|
17,077
|
|
76,167
|
|
68,524
|
|
CASMex
|
11.57 ¢
|
|
10.31 ¢
|
|
10.80 ¢
|
|
10.06 ¢
|
|
CASMex, excluding
Hawaiian Reconciliation
|
|
(in
millions)
|
Twelve Months
Ended
December 31, 2024
|
|
Total operating
expenses
|
$
11,165
|
|
Less the following
components:
|
|
|
Aircraft fuel,
including hedging gains and losses
|
2,506
|
|
Freighter
costs
|
84
|
|
Special items -
operating
|
345
|
|
Hawaiian Airlines
non-fuel operating expenses(a)
|
681
|
|
Total operating
expenses, excluding fuel, freighter costs, special items, and
Hawaiian
|
$
7,549
|
|
|
|
Consolidated
ASMs
|
76,167
|
|
Less Hawaiian
ASMs:
|
6,245
|
|
Consolidated ASMs,
excluding Hawaiian
|
69,922
|
|
CASMex, excluding
Hawaiian
|
10.80 ¢
|
|
|
|
(a)
|
Amount excludes $20
million of Hawaiian Airlines freighter costs already included
within Freighter costs.
|
|
Fuel
Reconciliation
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
2024
|
|
2023
|
|
(in millions,
except for per gallon amounts)
|
Dollars
|
|
Cost/Gal
|
|
Dollars
|
|
Cost/Gal
|
|
Raw or "into-plane"
fuel cost
|
$
701
|
|
$
2.51
|
|
$
679
|
|
$
3.33
|
|
Losses on settled
hedges
|
7
|
|
0.03
|
|
18
|
|
0.09
|
|
Economic fuel
expense
|
$
708
|
|
$
2.54
|
|
$
697
|
|
$
3.42
|
|
Mark-to-market fuel
hedge adjustment
|
(6)
|
|
(0.02)
|
|
12
|
|
0.06
|
|
Aircraft fuel,
including hedging gains and losses
|
$
702
|
|
$
2.52
|
|
$
709
|
|
$
3.48
|
|
Fuel
gallons
|
|
|
279
|
|
|
|
204
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31,
|
|
2024
|
|
2023
|
|
(in millions,
except for per gallon amounts)
|
Dollars
|
|
Cost/Gal
|
|
Dollars
|
|
Cost/Gal
|
|
Raw or "into-plane"
fuel cost
|
$
2,496
|
|
$
2.70
|
|
$
2,579
|
|
$
3.13
|
|
Losses on settled
hedges
|
38
|
|
0.04
|
|
64
|
|
0.08
|
|
Economic fuel
expense
|
$
2,534
|
|
$
2.74
|
|
$
2,643
|
|
$
3.21
|
|
Mark-to-market fuel
hedge adjustment
|
(28)
|
|
(0.03)
|
|
(2)
|
|
—
|
|
Aircraft fuel,
including hedging gains and losses
|
$
2,506
|
|
$
2.71
|
|
$
2,641
|
|
$
3.21
|
|
Fuel
gallons
|
|
|
925
|
|
|
|
824
|
|
Debt-to-capitalization, including
leases
|
|
(in
millions)
|
December 31,
2024
|
|
December 31,
2023
|
|
Long-term debt, net of
current portion
|
$
4,491
|
|
$
2,182
|
|
Capitalized operating
leases
|
1,405
|
|
1,283
|
|
Capitalized finance
leases
|
55
|
|
64
|
|
Adjusted debt, net
of current portion of long-term debt
|
$
5,951
|
|
$
3,529
|
|
Shareholders'
equity
|
4,372
|
|
4,113
|
|
Total invested
capital
|
$
10,323
|
|
$
7,642
|
|
|
|
|
|
Debt-to-capitalization
ratio, including leases
|
58 %
|
|
46 %
|
|
Adjusted net debt to
earnings before interest, taxes, depreciation, amortization, rent,
and special items
|
|
(in
millions)
|
December 31,
2024
|
|
December 31,
2023
|
|
Long-term
debt
|
$
4,933
|
|
$
2,471
|
|
Capitalized operating
leases
|
1,405
|
|
1,283
|
|
Capitalized finance
leases
|
55
|
|
64
|
|
Total adjusted
debt
|
6,393
|
|
3,818
|
|
Less: Total cash and
marketable securities
|
2,475
|
|
1,791
|
|
Adjusted net
debt
|
$
3,918
|
|
$
2,027
|
|
|
|
|
|
(in
millions)
|
Twelve Months
Ended
December 31, 2024
|
|
Twelve Months
Ended
December 31, 2023
|
|
Operating
Income
|
$
570
|
|
$
394
|
|
Adjusted
for:
|
|
|
|
|
Special items -
operating
|
345
|
|
443
|
|
Mark-to-market fuel
hedge adjustments
|
(28)
|
|
(2)
|
|
Unrealized gain on
foreign debt
|
(10)
|
|
—
|
|
Depreciation and
amortization
|
583
|
|
451
|
|
Aircraft
rent
|
207
|
|
208
|
|
EBITDAR
|
$
1,667
|
|
$
1,494
|
|
Adjusted net debt to
EBITDAR
|
2.4x
|
|
1.4x
|
|
OPERATING SEGMENTS
(unaudited)
|
|
|
|
|
|
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2024
|
|
(in
millions)
|
Alaska
Airlines
|
|
Hawaiian
Airlines
|
|
Regional
|
|
Consolidating
& Other(a)
|
|
Air Group
Adjusted(b)
|
|
Adjustments(c)
|
|
Consolidated
|
|
Operating
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
revenue
|
$
2,073
|
|
$
673
|
|
$
432
|
|
$
—
|
|
$
3,178
|
|
$
—
|
|
$
3,178
|
|
Loyalty program other
revenue
|
161
|
|
48
|
|
15
|
|
—
|
|
224
|
|
—
|
|
224
|
|
Cargo and other
revenue
|
77
|
|
53
|
|
—
|
|
2
|
|
132
|
|
—
|
|
132
|
|
Total Operating
Revenue
|
2,311
|
|
774
|
|
447
|
|
2
|
|
3,534
|
|
—
|
|
3,534
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding
fuel
|
1,736
|
|
619
|
|
330
|
|
(17)
|
|
2,668
|
|
91
|
|
2,759
|
|
Fuel expense
|
447
|
|
172
|
|
89
|
|
—
|
|
708
|
|
(6)
|
|
702
|
|
Total Operating
Expenses
|
2,183
|
|
791
|
|
419
|
|
(17)
|
|
3,376
|
|
85
|
|
3,461
|
|
Non-operating
Income
(Expense)
|
14
|
|
(27)
|
|
—
|
|
(8)
|
|
(21)
|
|
27
|
|
6
|
|
Income (Loss) Before
Income
Tax
|
$
142
|
|
$
(44)
|
|
$
28
|
|
$
11
|
|
$
137
|
|
$
(58)
|
|
$
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2023
|
|
(in
millions)
|
Alaska
Airlines
|
|
Hawaiian
Airlines
|
|
Regional
|
|
Consolidating
& Other(a)
|
|
Air Group
Adjusted(b)
|
|
Adjustments(c)
|
|
Consolidated
|
|
Operating
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
revenue
|
$
1,928
|
|
$
—
|
|
$
398
|
|
$
—
|
|
$
2,326
|
|
$
—
|
|
$
2,326
|
|
Loyalty program other
revenue
|
152
|
|
—
|
|
13
|
|
—
|
|
165
|
|
—
|
|
165
|
|
Cargo and other
revenue
|
60
|
|
—
|
|
—
|
|
2
|
|
62
|
|
—
|
|
62
|
|
Total Operating
Revenue
|
2,140
|
|
—
|
|
411
|
|
2
|
|
2,553
|
|
—
|
|
2,553
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding
fuel
|
1,499
|
|
—
|
|
289
|
|
(13)
|
|
1,775
|
|
37
|
|
1,812
|
|
Fuel expense
|
592
|
|
—
|
|
105
|
|
—
|
|
697
|
|
12
|
|
709
|
|
Total Operating
Expenses
|
2,091
|
|
—
|
|
394
|
|
(13)
|
|
2,472
|
|
49
|
|
2,521
|
|
Non-operating
Income
(Expense)
|
(12)
|
|
—
|
|
—
|
|
(12)
|
|
(24)
|
|
(4)
|
|
(28)
|
|
Income (Loss) Before
Income
Tax
|
$
37
|
|
$
—
|
|
$
17
|
|
$
3
|
|
$
57
|
|
$
(53)
|
|
$
4
|
|
OPERATING SEGMENTS
(unaudited)
|
|
|
|
|
|
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31, 2024
|
|
(in
millions)
|
Alaska
Airlines
|
|
Hawaiian
Airlines
|
|
Regional
|
|
Consolidating
& Other(a)
|
|
Air Group
Adjusted(b)
|
|
Adjustments(c)
|
|
Consolidated
|
|
Operating
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
revenue
|
$
8,151
|
|
$
757
|
|
$ 1,746
|
|
$
—
|
|
$ 10,654
|
|
$
—
|
|
$ 10,654
|
|
Loyalty program other
revenue
|
621
|
|
53
|
|
59
|
|
—
|
|
733
|
|
—
|
|
733
|
|
Cargo and other
revenue
|
279
|
|
59
|
|
—
|
|
10
|
|
348
|
|
—
|
|
348
|
|
Total Operating
Revenue
|
9,051
|
|
869
|
|
1,805
|
|
10
|
|
11,735
|
|
—
|
|
11,735
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding
fuel
|
6,406
|
|
701
|
|
1,276
|
|
(69)
|
|
8,314
|
|
345
|
|
8,659
|
|
Fuel expense
|
1,962
|
|
195
|
|
377
|
|
—
|
|
2,534
|
|
(28)
|
|
2,506
|
|
Total Operating
Expenses
|
8,368
|
|
896
|
|
1,653
|
|
(69)
|
|
10,848
|
|
317
|
|
11,165
|
|
Non-operating
Income
(Expense)
|
20
|
|
(31)
|
|
—
|
|
(40)
|
|
(51)
|
|
26
|
|
(25)
|
|
Income (Loss) Before
Income
Tax
|
$
703
|
|
$
(58)
|
|
$
152
|
|
$
39
|
|
$
836
|
|
$
(291)
|
|
$
545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31, 2023
|
|
(in
millions)
|
Alaska
Airlines
|
|
Hawaiian
Airlines
|
|
Regional
|
|
Consolidating
& Other(a)
|
|
Air Group
Adjusted(b)
|
|
Adjustments(c)
|
|
Consolidated
|
|
Operating
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
revenue
|
$
8,010
|
|
$
—
|
|
$ 1,516
|
|
$
—
|
|
$
9,526
|
|
$
—
|
|
$
9,526
|
|
Loyalty program other
revenue
|
599
|
|
—
|
|
49
|
|
—
|
|
648
|
|
—
|
|
648
|
|
Cargo and other
revenue
|
244
|
|
—
|
|
—
|
|
8
|
|
252
|
|
—
|
|
252
|
|
Total Operating
Revenue
|
8,853
|
|
—
|
|
1,565
|
|
8
|
|
10,426
|
|
—
|
|
10,426
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding
fuel
|
5,841
|
|
—
|
|
1,121
|
|
(14)
|
|
6,948
|
|
443
|
|
7,391
|
|
Fuel expense
|
2,264
|
|
—
|
|
379
|
|
—
|
|
2,643
|
|
(2)
|
|
2,641
|
|
Total Operating
Expenses
|
8,105
|
|
—
|
|
1,500
|
|
(14)
|
|
9,591
|
|
441
|
|
10,032
|
|
Non-operating
Income
(Expense)
|
(15)
|
|
—
|
|
—
|
|
(38)
|
|
(53)
|
|
(18)
|
|
(71)
|
|
Income (Loss) Before
Income
Tax
|
$
733
|
|
$
—
|
|
$
65
|
|
$
(16)
|
|
$
782
|
|
$
(459)
|
|
$
323
|
|
|
|
(a)
|
Includes consolidating
entries, Air Group parent company, Horizon, 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.
|
|
(c)
|
Includes special items,
mark-to-market fuel hedge accounting adjustments, and unrealized
gain on foreign debt.
|
|
SUPPLEMENTARY PRO
FORMA COMPARATIVE FINANCIAL AND OPERATING INFORMATION
(unaudited)
|
|
|
|
|
|
|
|
We believe that
analysis of specific financial and operational results on a pro
forma basis provides more meaningful year-over-
year comparisons. The table below provides results comparing the
three months ended December 31, 2024 as reported to the
pro forma three months ended December 31, 2023. Hawaiian's
financial information has been conformed to reflect Air
Group's historical financial statement presentation. This
information does not purport to reflect what our financial and
operational results would have been had the acquisition been
consummated at the beginning of the periods presented.
|
|
Three Months Ended
December 31,
|
|
2024 As
Reported
|
|
2023 Pro
Forma(a)
|
|
Change
|
|
|
|
|
|
|
|
Passenger
revenue
|
$
3,178
|
|
$
2,928
|
|
9 %
|
|
Loyalty program other
revenue
|
224
|
|
196
|
|
14 %
|
|
Cargo and other
revenue
|
132
|
|
97
|
|
36 %
|
|
Total Operating
Revenue
|
3,534
|
|
3,221
|
|
10 %
|
|
Operating expenses,
excluding fuel
|
2,759
|
|
2,393
|
|
15 %
|
|
Fuel expense
|
702
|
|
919
|
|
(24) %
|
|
Total Operating
Expenses
|
3,461
|
|
3,312
|
|
4 %
|
|
Operating Income
(Loss)
|
73
|
|
(91)
|
|
NM
|
|
Non-operating income
(expense)
|
6
|
|
(38)
|
|
NM
|
|
Income (Loss) Before
Tax
|
79
|
|
(129)
|
|
NM
|
|
Special items -
operating
|
91
|
|
15
|
|
NM
|
|
Special items - net
non-operating
|
(17)
|
|
(5)
|
|
NM
|
|
Mark-to-market fuel
hedge adjustments
|
(6)
|
|
16
|
|
NM
|
|
Unrealized (gain)/loss
on foreign debt
|
(10)
|
|
7
|
|
NM
|
|
Adjusted Income
(Loss) Before Tax
|
$
137
|
|
$
(96)
|
|
NM
|
|
|
|
|
|
|
|
Pretax
Margin
|
2.2 %
|
|
(4.0) %
|
|
|
|
Adjusted Pretax
Margin
|
3.9 %
|
|
(3.0) %
|
|
|
|
|
|
|
|
|
|
Pro Forma
Comparative Operating Statistics
|
|
|
|
|
|
|
Revenue passengers
(000)
|
14,339
|
|
13,559
|
|
5.8 %
|
|
RPMs (000,000)
"traffic"
|
19,068
|
|
18,374
|
|
3.8 %
|
|
ASMs (000,000)
"capacity"
|
22,744
|
|
22,181
|
|
2.5 %
|
|
Load factor
|
83.8 %
|
|
82.8 %
|
|
1.0 pt
|
|
Yield
|
16.67¢
|
|
15.92¢
|
|
4.7 %
|
|
RASM
|
15.54¢
|
|
14.52¢
|
|
7.0 %
|
|
CASMex
|
11.57¢
|
|
10.65¢
|
|
8.6 %
|
|
|
|
(a)
|
As provided on Form 8-K
filed with the SEC on October 31, 2024, with certain immaterial
adjustments made to reflect permissible measurement period
adjustments.
|
|
Pro Forma
Comparative CASMex Reconciliation
|
|
|
|
|
Three Months Ended
December 31,
|
|
(in
millions)
|
2024 As
Reported
|
|
2023 Pro
Forma(a)
|
|
Total operating
expenses
|
$
3,461
|
|
$
3,312
|
|
Less the following
components:
|
|
|
|
|
Aircraft fuel,
including hedging gains and losses
|
702
|
|
919
|
|
Freighter
costs
|
37
|
|
15
|
|
Special items -
operating
|
91
|
|
15
|
|
Total operating
expenses, excluding fuel, freighter costs, and special
items
|
$
2,631
|
|
$
2,363
|
|
|
|
|
|
ASMs
|
22,744
|
|
22,181
|
|
CASMex
|
11.57 ¢
|
|
10.65 ¢
|
|
|
|
(a)
|
As provided on Form 8-K
filed with the SEC on October 31, 2024, with certain immaterial
adjustments made to reflect permissible measurement period
adjustments.
|
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 excluding certain costs from our unit metrics, we believe
that we have better visibility into the results of operations. 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. We
believe that all U.S. carriers are similarly impacted by changes in
jet fuel costs over the long run, so it is important for management
and investors to understand the impact of company-specific cost
drivers which are more controllable by management. We adjust for
expenses related directly to our freighter aircraft operations,
including those costs incurred under the ATSA with Amazon, to allow
for better comparability to other carriers that do not operate
freighter aircraft. We also exclude certain special charges as they
are unusual or nonrecurring in nature and adjusting for these
expenses allows management and investors to better understand our
cost performance.
- CASMex 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. CASMex is also 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.
- Adjusted pretax income is an important metric for the employee
incentive plan, which covers the majority of Air Group
employees.
- 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 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 unit revenue, we do not, nor are we
able to, evaluate unit revenue 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 revenue 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 and finance leases, less cash,
restricted 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; represents all
operating expenses including fuel, freighter costs, and special
items
CASMex - operating costs excluding fuel, freighter
costs, and special items per ASM, or "unit cost"
Debt-to-capitalization ratio - represents adjusted
debt (long-term debt plus capitalized operating and finance 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 and excluding
operations under the Air Transportation Service Agreement (ATSA)
with Amazon
Freighter Costs - operating expenses directly
attributable to the operation of Alaska's B737 freighter aircraft and
Hawaiian's A330-300 freighter aircraft exclusively performing cargo
missions
Load Factor - RPMs as a percentage of ASMs;
represents the number of available seats that were filled with
paying passengers
PRASM - passenger revenue per ASM, or "passenger
unit revenue"
RASM - operating revenue per ASMs, or "unit
revenue"; operating revenue includes all passenger revenue, freight
& mail, loyalty program revenue, and other ancillary revenue;
represents the average total revenue for flying one seat one
mile
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 passenger revenue for flying one passenger one mile
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SOURCE Alaska Air Group, Inc.
