Category Archives: Alaska Airlines

Alaska adds new routes from Los Angeles and San Diego

Alaska Airlines is expanding service at two of its major hubs in Southern California with new routes and additional capacity to popular West Coast destinations as part of the carrier’s ongoing commitment to growth in the state. 
 
Starting this fall, we’re adding our 39th nonstop destination from San Diego with service to Las Vegas. We’re also starting new service between Los Angeles and Pasco, as well as bringing back guest favorite Los Angeles to Reno. Guests can now book these new, nonstop routes on alaskaair.com with service beginning Oct. 1, 2024.
 
Alaska also announced it is adding more flights to destinations already serve out of Los Angeles International Airport, increasing capacity by more than 25%, including to Boise, Medford, Portland, San Jose, Santa Rosa and Seattle/Tacoma.

In Los Angeles, we’ll start to fly our expanded schedule on Oct. 1, 2024 when we’ll offer the most daily flights to West Coast destinations of any airline from LAX. 

Alaska Airlines aircraft photo gallery:

Screenshot

Horizon Air’s pilots ratify the new agreement

Horizon Air’s more than 700 pilots, who are represented by the International Brotherhood of Teamsters (IBT), voted to ratify a new agreement aimed at supporting the company’s pilots and retaining talent as mainline airlines continue hiring pilots away from regional airlines at record levels. The agreement includes important pay increases and enhancements to retirement benefits. Additional improvements involve commuter policies and instructor benefits.

More than 91% of Horizon pilots voted, and the agreement passed by 99%.

Horizon Air pilot

A tentative agreement was reached with the IBT on Sept. 2 and is effective immediately upon today’s ratification.

The pilot shortage and the transition to a single fleet of Embraer 175 aircraft has resulted in a temporary reduction of Horizon’s scheduled flying. Nonetheless, Horizon continues to fly to every community we serve. Regional air service provides essential support for economic development and strong local communities. We’re committed to ensuring this service remains strong into the future.

The new agreement with Horizon pilots complements other company efforts that are expanding and diversifying the pilot pipeline through investments in the Ascend Pilot Academy and the Pilot Development Program. This is a priority, as Alaska and Horizon estimate the need to hire 500 pilots each year through 2025.

With bases in Washington, Oregon, Idaho and Alaska, Horizon serves more than 45 cities throughout the Pacific Northwest, California, the Midwest, and British Columbia and Alberta in Canada. Horizon maintains pilot crew bases in Anchorage, Boise, Everett, Medford, Portland, Seattle and Spokane.

Horizon Air was formed in response to the Airline Deregulation Act of 1978. One of the results of this act was that many larger airlines abandoned routes within the Northwest. To fill this gap in the market, entrepreneur Milt Kuolt and a group of venture capitalists founded Horizon in Seattle in September 1981. Horizon brought together 36 enthusiastic employees and a fleet consisting of two leased Fairchild F-27 turboprop aircraft to begin service between Yakima, Pasco, and Seattle.

In the early 1980s, Horizon grew rapidly and in 1982, Horizon acquired Air Oregon, which had served the state of Oregon for a number of years. In 1983, Horizon acquired Utah-based Transwestern Airlines, which served the intermountain West, including Boise. Both these acquisitions expanded Horizon’s system map considerably.

In early 1984, Horizon became a public company with an initial stock offering of 750,000 shares. The stock sale was an immediate success and was used to retire debt and provide funding for future aircraft acquisition.

By 1986 the company’s proven track record attracted the attention of larger airlines. In the end Horizon was acquired by Seattle-based Alaska Air Group, Inc., a holding company that includes us, Alaska Airlines. While remaining independently managed, Horizon gained the competitive advantage of connections with us, her sister carrier, and partnership in our Mileage Plan frequent flier program. Along with Alaska, Horizon also code-shares with a wide range of other airline partners.

On Jan. 1, 2011, Horizon shifted to a capacity purchase agreement (CPA) business model, which is the regional airline industry standard. Under this arrangement, Horizon operates and maintains its aircraft while Alaska is responsible for scheduling, marketing and pricing all flights. The change also included the rebranding of all Horizon aircraft to feature the Alaska brand.

Today, Horizon Air maintains an operational fleet of 52 Bombardier Q400 aircraft with an average age of 10 years. In 2016, the airline announced the purchase of 33 Embraer E175 aircraft, the first of which was delivered in spring 2017.

Horizon is about 4,000 employees strong and serves more than 45 cities in Alaska, California, Colorado, Idaho, Montana, Oregon, Utah, Washington, and Alberta and British Columbia, Canada.

The airline has a general office in Seattle and a primary maintenance base in Portland, Oregon, with additional maintenance facilities in Boise, Idaho; Seattle, Washington; Medford, Oregon; Redmond/Bend, Oregon, and Spokane, Washington.

Alaska Horizon aircraft photo gallery:

Horizon Air aircraft photo gallery (historic):

Alaska to fly between Everett and Anchorage

Alaska Airlines made this announcement (to be operated by Horizon Air):

We’re connecting the newest commercial airport in the Seattle area with another one of our main hubs: New daily, nonstop service between Everett, Wash. and Anchorage begins Nov. 30, 2022.

We listened to our guests who live and work from north of Seattle to the Canadian border. They told us one of their top requests is a nonstop flight between Everett and Anchorage,” said Brett Catlin, vice president of network and alliances for Alaska Airlines. “There’s a significant need and demand to connect workers and businesses in the two regions —from the fishing industry to aviation—in addition to the desire for leisure travel. We’re ready to welcome our guests on this new route this fall.”

Our guests flying to and from Everett—about 20 miles north of Seattle and 70 miles south of Bellingham—have enjoyed a convenient, stress-free, upscale alternative airport experience with a lounge atmosphere.

Since our regularly scheduled service launched there in March 2019, we’ve flown roughly 1.3 million guests to and from Paine Field-Snohomish County Airport.

Flight schedule:

Start date Cities Departs Arrives Frequency Aircraft
Nov. 30 PAE-ANC 11:05 a.m. 2:05 p.m. Daily E175
Nov. 30 ANC-PAE 1:40 p.m. 6:10 p.m. Daily E175
All times Pacific Standard Time and all flights are year-round.

With the new nonstop from Everett, operated by our sister airline Horizon Air, Anchorage becomes the farthest destination and longest flight we’ll serve from that airport, and it’s also our first route to fly north from it.

On the operations side, Horizon began operating a new 74,000 square foot hangar and maintenance facility on the Paine Field property this year that can accommodate up to four E175 aircraft at a time.

9 destinations from Paine Field in Everett

From Everett this fall and winter, we’ll fly to nine destinations: Anchorage, Boise, Las Vegas, Orange County, Palm Springs, Phoenix, San Diego, San Francisco and Spokane. For the latest flight schedules and to purchase tickets, visit alaskaair.com.

Our sister carrier Horizon Air provides most of our service at Paine Field with the Embraer 175 jet. The E175 features First Class and Premium Class, and only window and aisle seating – there are no middle seats. Guests can enjoy hundreds of free movies and TV shows available for viewing on personal devices, free texting on most flights and Wi-Fi connectivity for purchase.

For Economic Alliance Snohomish County, the City of Everett and Paine Field, we are thankful for the rich history of business and community engagement provided by Alaska Airlines. This announcement is another example of Alaska Airlines’ willingness to be forward thinking, valuing its customers to create desired opportunities for travel and connection. This is extra sweet due to Alaska Airlines’ history: Anchorage served as the first flight location for Alaska Airlines and its founder Linious McGee back in 1932. Snohomish County is grateful for Alaska and its continued efforts at Paine Field.”

— Garry Clark, president and CEO at Economic Alliance Snohomish County.

Alaska Horizon aircraft photo gallery:

 

Alaska Airlines corporate sustainable aviation fuels program adds Deloitte as participant with business travel emissions-reduction agreement

Alaska Airlines and Deloitte on August 11 announced an agreement to advance purchase and use of sustainable aviation fuels (SAF) through Alaska’s new corporate SAF program, part of the company’s Ever Green program to advance environmental sustainability. As a participant in the program, Deloitte will reduce the emissions of their business travel with Alaska by approximately 1,050 metric tons of carbon dioxide.

Alaska and Deloitte will collaborate on the purchase of SAF certificates which provide an accounting framework to expand the market for SAF and capture the emissions reduction value for corporate purchasers.

By Chad Slattery.

SAF is currently available in volumes amounting to less than one percent of total fuel use but is a safe, certified fuel that meets all jet fuel standards and can reduce carbon emissions by as much as 80% on a lifecycle basis. Through their corporate SAF program, Alaska intends to address some of the key barriers to scaling SAF production such as feedstock accessibility, facilities, transportation and storage, pricing, engine infrastructure and demand from operations and customers.

Alaska Airlines aircraft photo gallery (Airbus):

Alaska Airlines launches new program to advance sustainable aviation fuels through corporate partnerships, shared learning

Alaska Airlines is taking the next step in advancing sustainable aviation fuels (SAF) as part of Alaska’s Ever Green program for improvements in environmental sustainability. On August 11 Alaska launched a program to engage its corporate customers in the decarbonization journey through purchase of SAF credits and continued efforts to expand education and awareness about opportunities to improve the sustainability of business travel including through use of SAF. The program builds on a first-in-the-US program launched with Microsoft in 2020 to reduce corporate business travel emissions through corporate partnerships.

The program launches with participation from Microsoft, Boeing and Washington State University (WSU). Microsoft has also committed to reducing the scope 3 emissions of their business travel with Alaska. Program participants will further deepen the experience with pilot book and claim systems and build upon those efforts to advance awareness and education on sustainable travel topics among all corporate customers.

Alaska’s program includes Boeing and WSU as aviation and academic value chain partners to share knowledge and advancements in sustainable business travel with corporate participants. Together, participants will collaborate to advance sustainability in business travel, increase education and awareness, and identify and act on opportunities for collective action.

“WSU has long been a national leader in climate and sustainability research, including in the development and adoption of SAF,” said Kirk Schulz, president of WSU. “We look forward to supporting this coalition of forward-looking companies committed to decarbonizing air travel.”

SAF is currently available in volumes amounting to less than one percent of total fuel use but is a safe, certified fuel that meets all jet fuel standards and can reduce carbon emissions by as much as 80% on a lifecycle basis. Through the program, Alaska intends to expand understanding of and action to address some of the key barriers to scaling SAF production such as feedstock accessibility, facilities, transportation and storage, pricing, engine infrastructure and demand from operations and customers. Additionally, participants may tackle other topics related to sustainability in travel.

Last year, Alaska announced its commitment and five-part roadmap to reduce the company’s carbon emissions to net-zero by 2040, including SAF as the most significant opportunity to reduce carbon emissions over the next few decades. Additionally, Alaska set 2025 goals to improve its impact relative to carbon, waste, and water.

Alaska Airlines aircraft photo gallery:

Alaska Airlines makes significant investment in sustainable aviation fuel

Alaska Airlines announced today it has finalized an agreement with biofuel company Gevo Inc., to purchase its most significant sustainable aviation fuel (SAF) offtake commitment to date – 185 million gallons of SAF over five years starting in 2026. This agreement was developed alongside others in the oneworld alliance.

In April 2021, Alaska announced the company’s commitment and roadmap to achieve carbon net zero by 2040, and established a five-part path to achieve that goal. The path includes operational efficiency, fleet renewal, sustainable aviation fuel, electric or hybrid-electric aircraft over the long term and credible carbon offsets only as needed to achieve our targets if technology does not advance fast enough to close the gap without. Of this path, sustainable aviation fuel provides the greatest opportunity to decarbonize in the near and medium term, and Alaska has been working for over a decade to first test and then use SAF.

In 2016, Alaska and Gevo made history by flying the world’s first commercial flight using forest residuals from Seattle-Tacoma International Airport to Reagan National Airport in Washington, D.C., powered by a 20 percent blend of SAF. Today, Alaska is using SAF in its operations in California and works with multiple producers and other partners to use and facilitate the development of additional SAF supply in the future.

In September 2020, oneworld became the first global airline alliance to announce a target of carbon neutrality by 2050, establishing its commitment to long-term sustainability for the industry. The alliance followed up that commitment with an intermediate goal to achieve 10% SAF use across the member airlines by 2030.

Alaska Airlines aircraft photo gallery:

Alaska Airlines cooks up new vegan and plant-based options

Alaska Airlines made this announcement:

This summer, Alaska Airlines guests can veg out on board with more gluten friendly, plant-based and vegan meal options available in all cabins.

We’re listening to our guests who told us that they are looking for more plant-based menu options when traveling. Our new vegan option, called the “Soy Meets World,” is a vegan salad developed in partnership with Evergreens, a West Coast-based company that makes gourmet, freshly chopped salads.

We serve freshly prepared meals and snacks for breakfast, lunch and dinner & always include a vegetarian option. This summer, we’re excited to offer guests our ”Soy Meets World” salad, a new vegan friendly option.

Most comprehensive menu in the sky

 

We’re proud to offer our guests a variety of fresh and seasonal meal selections and thirst-quenching beverages on our flights.

Today, we have the most comprehensive domestic food and beverage program in the industry. We offer three meal options in First Class, including our Signature Fruit & Cheese on flights as short as 550 miles.

We also offer ample food options in Premium Class and Main Cabin, which include up to four fresh options on flights over 1,100 miles and up to five snack items on flights over 223 miles, such as the Mediterranean Tapas Pack (vegan and gluten-free).

Now through October, guests can enjoy fresh summer flavors that include berries, summer squash, corn, citrus and tomatoes.

Our Soy Meets World vegan salad includes roasted broccoli, fresh cucumber slices, scallions, pickled carrots, fried tofu and brown rice served over a bed of crisp romaine and baby lettuce greens, topped with roasted cashews, fried onions and paired with a Tamari Chili-Lime dressing.

Pre-order meals before takeoff

 

Alaska makes it easy to get the meal(s) you want. Enjoy fresh ingredients inspired by the West Coast, from snacks to freshly prepared meals, by pre-ordering your favorites ahead of your flight using your reservation on our app or alaskaair.com.

Meal orders can be made starting 14 days before your flight, and up to 20 hours prior to departure.

 

Snacks and Picnic packs do not require pre-order and are available on board most flights over 2 hours.

Alaska Airlines aircraft photo gallery (Airbus):

Alaska Air Group reports second quarter GAAP net income of $139 million

Alaska Airlines Boeing 737-900 ER SSWL N298AK (msn 60583) IAH (Jarrod Wilkening). Image: 958261.

Alaska Air Group today announced another quarter of improvement in its financial results for the second quarter ending June 30, 2022, and provided outlook for the third quarter ending Sept. 30, 2022.

“It’s clear that travel is one of the things people have missed the most these past two years. They are excited to fly again and our team is delivering on the safe, reliable and caring experience they expect from us,” said CEO Ben Minicucci. “Revenue in June topped $1 billion, the highest single month in our history. Our 14% adjusted pretax margin in Q2 is near the top of the industry, and our operation is on track in June with the #1 on-time performance and a schedule completion rate over 99%. I’m feeling so much gratitude for the people of Alaska, Horizon and McGee for pulling together. We have a strong platform for growth in 2023 and a lot to be optimistic about.”

Financial Results for the Second Quarter:
  • Reported net income for the second quarter of 2022 under Generally Accepted Accounting Principles (GAAP) of $139 million, or $1.09 per share, compared to a net income of $397 million, or $3.13 per share, in the second quarter of 2021.
  • Reported net income for the second quarter of 2022, excluding special items and mark-to-market fuel hedge accounting adjustments, of $280 million, or $2.19 per share, compared to a net loss, excluding special items and mark-to-market fuel hedge accounting adjustments, of $38 million, or $0.30 per share, in the second quarter of 2021.
  • Reported adjusted pretax margin for the second quarter of 14%.
  • Recorded $2.7 billion in operating revenues for the second quarter, the highest revenue-generating quarter in company history.
Balance Sheet and Liquidity:
  • Generated $948 million in operating cash flow for the second quarter, inclusive of $231 million in net federal income tax refunds.
  • Held $3.4 billion in unrestricted cash and marketable securities as of June 30, 2022.
  • Maintained a debt-to-capitalization ratio of 50% as of June 30, 2022, within our target range of 40% to 50%.
Operational Updates and Milestones for the Second Quarter:
  • Flew a record load factor for the quarter of 88%, driven by high demand on reduced capacity.
  • Led the industry in on-time performance for the month of June, meeting our commitment to operational reliability.
  • Received nine Boeing 737-9 aircraft in the second quarter, bringing the total number of 737-9s in our mainline fleet to 28.
  • Ratified new contracts with Alaska Airlines dispatchers and Horizon Air aircraft technicians and fleet service agents; and reached a tentative agreement with Alaska Airlines IAM represented employees.
  • Expanded pilot training throughput by 20% from April, and added 100 active mainline pilots in the second quarter.
  • Began nonstop service to Miami and Cleveland from Seattle, bringing the total nonstop destinations served from Seattle to 100.
  • Launched $8 flat rate satellite Wi-Fi on mainline aircraft in partnership with Intelsat.
Awards and Employee Recognition:
  • Ranked as one of America’s Best Employers for Diversity by Forbes, recognizing our commitment to increasing diverse leadership representation and equity initiatives.
  • Named the Best Major Airline in North America by the Airline Passenger Experience Association, highlighting Alaska’s inflight experience.
  • Recognized the company’s workforce for their relentless commitment to caring for our guests for 90 years by giving each employee 90,000 miles redeemable for travel anywhere in the world.
Second Quarter Environmental, Social and Governance Updates:
  • Released our 2021 Care Report, highlighting the company’s progress in various environmental, social and governance areas and outlining ongoing initiatives and future goals.
  • Signed agreement with Aemetis to purchase 13 million gallons of sustainable aviation fuel to be delivered over the seven-year term of the agreement.
  • Subsequent to quarter end, announced a partnership with Microsoft and Twelve, a carbon transformation technology company, to advance the availability of sustainable aviation fuels.
  • Scored 100% in our first year participating in Disability:IN’s Disability Equality Index, which benchmarks companies on their disability inclusion and equality.

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

Three Months Ended June 30,
2022 2021
(in millions, except per-share amounts) Dollars Diluted EPS Dollars Diluted EPS
GAAP net income per share $               139 $              1.09 $               397 $              3.13
Payroll Support Program grant wage offset (503) (3.97)
Mark-to-market fuel hedge adjustments 40 0.31 (46) (0.36)
Special items – fleet transition and related charges(a) 146 1.14 (4) (0.03)
Special items – restructuring charges(b) (23) (0.18)
Income tax effect of reconciling items above (45) (0.35) 141 1.11
Non-GAAP adjusted net income (loss) per share $               280 $              2.19 $               (38) $            (0.30)
Six Months Ended June 30,
2022 2021
(in millions, except per-share amounts) Dollars Diluted EPS Dollars Diluted EPS
GAAP net income (loss) per share $                  (4) $            (0.03) $               266 $              2.10
Payroll support program grant wage offset (914) (7.23)
Mark-to-market fuel hedge adjustments (67) (0.53) (68) (0.54)
Special items – fleet transition and related charges(a) 221 1.75 14 0.11
Special items – restructuring charges(b) (12) (0.09)
Income tax effect of reconciling items above (37) (0.30) 240 1.90
Non-GAAP adjusted net income (loss) per share $               113 $              0.89 $             (474) $            (3.75)
(a) Special items – fleet transition and related charges in the three and six months ended June 30, 2022 are primarily for impairment charges and accelerated costs associated with the retirement of the A320 and Q400 fleets. The A320 fleet is expected to be retired from operating service by the end of 2022; the Q400 fleet is expected to be retired from operating service in early 2023.
(b) Special items – restructuring charges in the three and six months ended June 30, 2021 are related to the estimated costs for pilot incentive leaves.

Statistical data, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables. A glossary of financial terms can be found on the last page of this release.

Alaska will hold its quarterly conference call to discuss second quarter results at 8:30 a.m. PDT on July 21, 2022. A webcast of the call is available to the public at www.alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the call.

Third Quarter and Full Year 2022 Outlook

Q3 Expectation(a)
Capacity (ASMs) % change versus 2019(a) Down 5% to 8%
Revenue passengers % change versus 2019(a) Down 8% to 10%
Passenger load factor 85% to 88%
Total revenue % change versus 2019(a) Up 16% to 19%
Cost per ASM excluding fuel and special items (CASMex) % change versus 2019(a) Up 16% to 19%
Economic fuel cost per gallon $3.79 to $3.89
Non-operating expense $2 million to $4 million
Adjusted tax rate 24% to 25%
(a) Due to the unusual nature of 2021 and 2020, all 2022 comparisons are versus the third quarter of 2019.

For full year 2022, we expect our capacity to be down 8% to 9% versus 2019, and expect our CASMex to be up 15% to 17% versus 2019. We continue to expect our full year adjusted pre-tax margin to be between 6% and 9%.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Alaska Air Group, Inc.
Three Months Ended June 30, Six Months Ended June 30,
(in millions, except per share amounts) 2022 2021 Change 2022 2021 Change
Operating Revenues
Passenger revenue $        2,418 $        1,352 79 % $        3,929 $        2,011 95 %
Mileage Plan other revenue 175 118 48 % 287 212 35 %
Cargo and other 65 57 14 % 123 101 22 %
Total Operating Revenues 2,658 1,527 74 % 4,339 2,324 87 %
Operating Expenses
Wages and benefits 639 510 25 % 1,245 1,003 24 %
Variable incentive pay 56 34 65 % 92 67 37 %
Payroll Support Program grant wage offset (503) NM (914) NM
Aircraft fuel, including hedging gains and losses 776 274 183 % 1,123 477 135 %
Aircraft maintenance 104 102 2 % 239 183 31 %
Aircraft rent 73 62 18 % 146 124 18 %
Landing fees and other rentals 136 144 (6) % 274 273 — %
Contracted services 82 54 52 % 160 105 52 %
Selling expenses 78 41 90 % 136 74 84 %
Depreciation and amortization 104 98 6 % 206 195 6 %
Food and beverage service 50 35 43 % 91 58 57 %
Third-party regional carrier expense 50 37 35 % 92 67 37 %
Other 177 117 51 % 329 222 48 %
Special items – fleet transition and related charges 146 (4) NM 221 14 NM
Special items – restructuring charges (23) . NM (12) NM
Total Operating Expenses 2,471 978 153 % 4,354 1,936 125 %
Operating Income (Loss) 187 549 (66) % (15) 388 (104) %
Non-operating Income (Expense)
Interest income 11 6 100 % 18 13 38 %
Interest expense (26) (39) (33) % (53) (71) (25) %
Interest capitalized 3 3 7 % 5 6 (17) %
Other – net 10 9 10 % 24 19 25 %
Total Non-operating Income (Expense) (2) (21) (90) % (6) (33) (82) %
Income (Loss) Before Income Tax 185 528 (21) 355
Income tax expense (benefit) 46 131 (17) 89
Net Income (Loss) $           139 $           397 $              (4) $           266
Basic Earnings (Loss) Per Share $          1.10 $          3.18 $        (0.03) $          2.13
Diluted Earnings (Loss) Per Share $          1.09 $          3.13 $        (0.03) $          2.10
Shares used for computation:
Basic 126.543 124.977 126.265 124.640
Diluted 127.795 126.825 126.265 126.388

 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
Alaska Air Group, Inc.
(in millions) June 30, 2022 December 31, 2021
ASSETS
Current Assets
Cash and cash equivalents $                            778 $                            470
Marketable securities 2,647 2,646
   Total cash and marketable securities 3,425 3,116
Receivables – net 401 546
Inventories and supplies – net 93 62
Prepaid expenses and other current assets 313 196
Total Current Assets 4,232 3,920
Property and Equipment
Aircraft and other flight equipment 8,569 8,127
Other property and equipment 1,532 1,489
Deposits for future flight equipment 292 384
10,393 10,000
Less accumulated depreciation and amortization 3,922 3,862
Total Property and Equipment – Net 6,471 6,138
Other Assets
Operating lease assets 1,669 1,453
Goodwill and intangible assets 2,041 2,044
Other noncurrent assets 387 396
Other Assets 4,097 3,893
Total Assets $                      14,800 $                      13,951

 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
Alaska Air Group, Inc.
(in millions, except share amounts) June 30, 2022 December 31, 2021
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable $                            286 $                            200
Accrued wages, vacation and payroll taxes 416 457
Air traffic liability 1,778 1,163
Other accrued liabilities 794 625
Deferred revenue 1,012 912
Current portion of operating lease liabilities 274 268
Current portion of long-term debt 342 366
Total Current Liabilities 4,902 3,991
Long-Term Debt, Net of Current Portion 1,961 2,173
Noncurrent Liabilities
Long-term operating lease liabilities, net of current portion 1,505 1,279
Deferred income taxes 552 578
Deferred revenue 1,429 1,446
Obligation for pension and postretirement medical benefits 299 305
Other liabilities 353 378
Total Noncurrent Liabilities 4,138 3,986
Commitments and Contingencies
Shareholders’ Equity
Preferred stock, $0.01 par value, Authorized: 5,000,000 shares, none issued or outstanding
Common stock, $0.01 par value, Authorized: 400,000,000 shares, Issued: 2022 – 136,109,649 shares; 2021 – 135,255,808 shares, Outstanding: 2022 – 126,759,705 shares; 2021 – 125,905,864 shares 1 1
Capital in excess of par value 542 494
Treasury stock (common), at cost: 2022 – 9,349,944 shares; 2021 – 9,349,944 shares (674) (674)
Accumulated other comprehensive loss (308) (262)
Retained earnings 4,238 4,242
3,799 3,801
Total Liabilities and Shareholders’ Equity $                      14,800 $                      13,951

 

SUMMARY CASH FLOW (unaudited)
Alaska Air Group, Inc.
(in millions) Six Months
Ended

June 30, 2022

Three Months Ended
March 31,
2022(a)
Three Months Ended
June 30,
2022(b)
Cash Flows from Operating Activities:
Net income (loss) $                           (4) $                      (143) $                        139
Non-cash reconciling items 447 182 265
Changes in working capital 792 248 544
Net cash provided by (used in) operating activities 1,235 287 948
Cash Flows from Investing Activities:
Property and equipment additions (632) (288) (344)
Other investing activities (89) 327 (416)
Net cash provided by (used in) investing activities (721) 39 (760)
Cash Flows from Financing Activities: (206) (168) (38)
Net increase (decrease) in cash and cash equivalents 308 158 150
Cash, cash equivalents, and restricted cash at beginning of period 494 494 652
Cash, cash equivalents, and restricted cash at end of the period $                        802 $                        652 $                        802
(a) As reported in Form 10-Q for the first quarter of 2022.
(b) Cash flows for the three months ended June 30, 2022, can be calculated by subtracting cash flows for the three months ended March 31,
2022, as reported in Form 10-Q for the first quarter 2022, from the six months ended June 30, 2022.

 

OPERATING STATISTICS SUMMARY (unaudited)
Alaska Air Group, Inc.
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 Change 2022 2021 Change
Consolidated Operating Statistics:(a)
Revenue passengers (000) 11,005 8,712 26.3 % 19,700 13,379 47.2 %
RPMs (000,000) “traffic” 13,746 10,334 33.0 % 24,332 15,727 54.7 %
ASMs (000,000) “capacity” 15,611 13,413 16.4 % 29,394 23,810 23.5 %
Load factor 88.1 % 77.0 % 11.1 pts 82.8 % 66.1 % 16.7 pts
Yield 17.59¢ 13.09¢ 34.4 % 16.15¢ 12.79¢ 26.3 %
RASM 17.03¢ 11.38¢ 49.6 % 14.76¢ 9.76¢ 51.2 %
CASMex(b) 9.92¢ 9.20¢ 7.8 % 10.24¢ 9.95¢ 2.9 %
Economic fuel cost per gallon(b) $3.76 $1.90 97.9 % $3.23 $1.85 74.6 %
Fuel gallons (000,000) 196 168 16.7 % 368 294 25.2 %
ASMs per gallon 79.6 79.8 (0.3) % 79.9 81.0 (1.4) %
Average full-time equivalent employees (FTEs) 22,603 19,001 19.0 % 22,092 18,071 22.3 %
Mainline Operating Statistics:
Revenue passengers (000) 8,321 6,151 35.3 % 14,887 9,302 60.0 %
RPMs (000,000) “traffic” 12,460 8,966 39.0 % 21,972 13,555 62.1 %
ASMs (000,000) “capacity” 14,052 11,611 21.0 % 26,439 20,464 29.2 %
Load factor 88.7 % 77.2 % 11.5 pts 83.1 % 66.2 % 16.9 pts
Yield 16.28¢ 11.96¢ 36.1 % 14.89¢ 11.64¢ 27.9 %
RASM 16.02¢ 10.59¢ 51.3 % 13.81¢ 9.09¢ 51.9 %
CASMex(b) 8.98¢ 8.48¢ 5.9 % 9.29¢ 9.17¢ 1.3 %
Economic fuel cost per gallon(b) $3.74 $1.88 98.9 % $3.21 $1.84 74.4 %
Fuel gallons (000,000) 165 135 22.2 % 311 233 33.5 %
ASMs per gallon 85.2 86.0 (0.9) % 85.0 87.8 (3.2) %
Average number of FTEs 17,315 14,021 23.5 % 16,825 13,247 27.0 %
Aircraft utilization 10.1 9.9 2.0 % 9.8 9.2 6.5 %
Average aircraft stage length 1,363 1,320 3.3 % 1,349 1,313 2.7 %
Operating fleet(d) 233 202 31 a/c 233 202 31 a/c
Regional Operating Statistics:(c)
Revenue passengers (000) 2,685 2,562 4.8 % 4,813 4,077 18.1 %
RPMs (000,000) “traffic” 1,285 1,367 (6.0) % 2,360 2,172 8.7 %
ASMs (000,000) “capacity” 1,559 1,802 (13.5) % 2,955 3,346 (11.7) %
Load factor 82.4 % 75.9 % 6.5 pts 79.9 % 64.9 % 15.0 pts
Yield 30.35¢ 20.48¢ 48.2 % 27.88¢ 19.95¢ 39.7 %
RASM 26.04¢ 16.41¢ 58.7 % 23.21¢ 13.84¢ 67.7 %
Operating fleet(d) 104 94 10 a/c 104 94 10 a/c
(a) Except for FTEs, data includes information related to third-party regional capacity purchase flying arrangements.
(b) See a reconciliation of this non-GAAP measure and Note A for a discussion of the importance of this measure to investors in the accompanying pages.
(c) Data presented includes information for flights operated by Horizon and third-party carriers.
(d) Excludes all aircraft removed from operating service.

 

Given the unusual nature of 2021 and 2020, we believe that some analysis of specific financial and operational results compared to 2019 provides meaningful insight. The table below includes comparative results from 2022 to 2019.

FINANCIAL INFORMATION AND OPERATING STATISTICS – 2022 Compared to 2019 (unaudited)
Alaska Air Group, Inc.
Three Months Ended June 30, Six Months Ended June 30,
2022 2019 Change 2022 2019 Change
Passenger revenue $        2,418 $        2,111 15 % $        3,929 $        3,827 3 %
Mileage plan other revenue 175 118 48 % 287 228 26 %
Cargo and other 65 59 10 % 123 109 13 %
Total Operating Revenues 2,658 2,288 16 % 4,339 4,164 4 %
Operating expenses, excluding fuel and special items 1,549 1,414 10 % 3,010 2,819 7 %
Aircraft fuel, including hedging gains and losses 776 502 55 % 1,123 922 22 %
Special items 146 8 NM 221 34 NM
Total Operating Expenses 2,471 1,924 28 % 4,354 3,775 15 %
Total Non-operating Expense (2) (13) (85) % (6) (32) (81) %
Income (Loss) Before Income Tax $            185 $            351 (47) % $            (21) $            357 (106) %
Consolidated Operating Statistics:
Revenue passengers (000) 11,005 12,026 (8) % 19,700 22,442 (12) %
RPMs (000,000) “traffic” 13,746 14,638 (6) % 24,332 27,087 (10) %
ASMs (000,000) “capacity” 15,611 16,980 (8) % 29,394 32,487 (10) %
Load Factor 88.1 % 86.2 %          1.9 pts 82.8 % 83.4 %        (0.6) pts
Yield 17.59¢ 14.43¢ 22 % 16.15¢ 14.13¢ 14 %
RASM 17.03¢ 13.48¢ 26 % 14.76¢ 12.82¢ 15 %
CASMex 9.92¢ 8.33¢ 19 % 10.24¢ 8.68¢ 18 %
FTEs 22,603 21,921 3 % 22,092 21,876 1 %

 

OPERATING SEGMENTS (unaudited)
Alaska Air Group, Inc.
Three Months Ended June 30, 2022
(in millions) Mainline Regional Horizon Consolidating
& Other(a)
Air Group
Adjusted(b)
Special
Items(c)
Consolidated
Operating Revenues
Passenger revenues $     2,028 $        390 $          — $                  — $     2,418 $          — $        2,418
CPA revenues 101 (101)
Mileage Plan other revenue 159 16 175 175
Cargo and other 64 1 65 65
Total Operating Revenues 2,251 406 101 (100) 2,658 2,658
Operating Expenses
Operating expenses, excluding fuel 1,262 289 98 (100) 1,549 146 1,695
Fuel expense 617 119 736 40 776
Total Operating Expenses 1,879 408 98 (100) 2,285 186 2,471
Non-operating Income (Expense) 3 (5) (2) (2)
Income (Loss) Before Income Tax $        375 $           (2) $           (2) $                  — $        371 $       (186) $           185
Pretax Margin 14.0 % 7.0 %
Three Months Ended June 30, 2021
(in millions) Mainline Regional Horizon Consolidating
& Other(a)
Air Group
Adjusted(b)
Special
Items(c)
Consolidated
Operating Revenues
Passenger revenues $     1,072 $        280 $          — $                  — $     1,352 $          — $        1,352
CPA revenues 111 (111)
Mileage Plan other revenue 102 16 118 118
Cargo and other 55 2 57 57
Total Operating Revenues 1,229 296 111 (109) 1,527 1,527
Operating Expenses
Operating expenses, excluding fuel 984 286 91 (127) 1,234 (530) 704
Fuel expense 253 66 1 320 (46) 274
Total Operating Expenses 1,237 352 91 (126) 1,554 (576) 978
Non-operating Income (Expense) (16) (5) (21) (21)
Income (Loss) Before Income Tax $         (24) $         (56) $          15 $                  17 $         (48) $        576 $           528
Pretax Margin (3.1) % 34.6 %

 

Six Months Ended June 30, 2022
(in millions) Mainline Regional Horizon Consolidating
& Other(a)
Air Group
Adjusted(b)
Special
Items(c)
Consolidated
Operating Revenues
Passenger revenues $     3,271 $        658 $          — $                  — $    3,929 $          — $        3,929
CPA revenues 195 (195)
Mileage Plan other revenue 259 28 287 287
Cargo and other 121 2 123 123
Total Operating Revenues 3,651 686 195 (193) 4,339 4,339
Operating Expenses
Operating expenses, excluding fuel 2,456 551 197 (194) 3,010 221 3,231
Fuel expense 998 192 1,190 (67) 1,123
Total Operating Expenses 3,454 743 197 (194) 4,200 154 4,354
Non-operating Income (Expense) 4 (10) (6) (6)
Income (Loss) Before Income Tax $        201 $         (57) $         (12) $                    1 $       133 $       (154) $            (21)
Pretax Margin 3.1 % (0.5) %
Six Months Ended June 30, 2021
(in millions) Mainline Regional Horizon Consolidating
& Other(a)
Air Group
Adjusted(b)
Special
Items(c)
Consolidated
Operating Revenues
Passenger revenues $     1,578 $        433 $          — $                  — $    2,011 $          — $        2,011
CPA revenues 215 (215)
Mileage Plan other revenue 182 30 212 212
Cargo and other 99 2 101 101
Total Operating Revenues 1,859 463 215 (213) 2,324 2,324
Operating Expenses
Operating expenses, excluding fuel 1,877 551 179 (236) 2,371 (912) 1,459
Fuel expense 427 118 545 (68) 477
Total Operating Expenses 2,304 669 179 (236) 2,916 (980) 1,936
Non-operating Income (Expense) (23) (10) (33) (33)
Income (Loss) Before Income Tax $       (468) $       (206) $          26 $                  23 $      (625) $        980 $           355
Pretax Margin (26.9) % 15.3 %
(a) Includes consolidating entries, Air Group parent company, McGee Air Services, and other immaterial business units.
(b) The Air Group Adjusted column represents the financial information that is reviewed by management to assess performance of operations
and determine capital allocation and excludes certain charges. See Note A in the accompanying pages for further information.
(c) Includes payroll support program grant wage offsets, special items, and mark-to-market fuel hedge accounting adjustments.

 

GAAP TO NON-GAAP RECONCILIATIONS (unaudited)
Alaska Air Group, Inc.
CASM Excluding Fuel and Special Items Reconciliation
Three Months Ended June 30, Six Months Ended June 30,
(in cents) 2022 2021 2022 2021
Consolidated:
CASM                 15.84 ¢                   7.29 ¢                 14.81 ¢                   8.13 ¢
Less the following components:
Payroll Support Program grant wage offset (3.75) (3.84)
Aircraft fuel, including hedging gains and losses 4.98 2.04 3.82 2.00
Special items – fleet transition and related charges(a) 0.94 (0.03) 0.75 0.07
Special items – restructuring charges(b) (0.17) (0.05)
CASM excluding fuel and special items                   9.92 ¢                   9.20 ¢                 10.24 ¢                   9.95 ¢
Mainline:
CASM                 15.06 ¢                   6.24 ¢                 13.69 ¢                   6.72 ¢
Less the following components:
Payroll Support Program grant wage offset (3.79) (4.21)
Aircraft fuel, including hedging gains and losses 5.06 1.78 3.84 1.75
Special items – fleet transition and related charges(a) 1.02 (0.03) 0.56 0.07
Special items – restructuring charges(b) (0.20) (0.06)
CASM excluding fuel and special items                   8.98 ¢                   8.48 ¢                   9.29 ¢                   9.17 ¢
(a) Special items – fleet transition and related charges in the three and six months ended June 30, 2022 are primarily for impairment charges and accelerated costs associated with the retirement of the A320 and Q400 fleets. The A320 fleet is expected to be retired from operating service by the end of 2022; the Q400 fleet is expected to be retired from operating service in early 2023.
(b) Special items – restructuring charges in the three and six months ended June 30, 2021 are related to the estimated costs for pilot incentive leaves.

 

Fuel Reconciliation
Three Months Ended June 30,
2022 2021
(in millions, except for per-gallon amounts) Dollars Cost/Gallon Dollars Cost/Gallon
Raw or “into-plane” fuel cost $                   824 $                  4.20 $                   330 $                  1.96
Losses (gains) on settled hedges (88) (0.44) (10) (0.06)
Consolidated economic fuel expense 736 3.76 320 1.90
Mark-to-market fuel hedge adjustment 40 0.20 (46) (0.27)
GAAP fuel expense $                   776 $                  3.96 $                   274 $                  1.63
Fuel gallons 196 168
Six Months Ended June 30,
2022 2021
(in millions, except for per gallon amounts) Dollars Cost/Gallon Dollars Cost/Gallon
Raw or “into-plane” fuel cost $                1,328 $                  3.61 $                   552 $                  1.87
Losses (gains) on settled hedges (138) (0.38) (7) (0.02)
Consolidated economic fuel expense 1,190 3.23 545 1.85
Mark-to-market fuel hedge adjustment (67) (0.18) (68) (0.23)
GAAP fuel expense $                1,123 $                  3.05 $                   477 $                  1.62
Fuel gallons 368 294

 

Debt-to-capitalization, including operating leases
(in millions) June 30, 2022 December 31, 2021
Long-term debt, net of current portion $                           1,961 $                            2,173
Long-term and current capitalized operating leases 1,779 1,547
Adjusted debt, net of current portion of long-term debt 3,740 3,720
Shareholders’ equity 3,799 3,801
Total Invested Capital $                           7,539 $                            7,521
Debt-to-capitalization ratio, including operating leases 50 % 49 %

 

Adjusted net debt to earnings before interest, taxes, depreciation, amortization, rent and special items
(in millions) June 30, 2022 December 31, 2021
Current portion of long-term debt $                                   342 $                                   366
Current portion of operating lease liabilities 274 268
Long-term debt 1,961 2,173
Long-term operating lease liabilities, net of current portion 1,505 1,279
Total adjusted debt 4,082 4,086
Less: Total cash and marketable securities (3,425) (3,116)
Adjusted net debt $                                   657 $                                   970
(in millions) Twelve Months Ended
June 30, 2022
Twelve Months Ended
December 31, 2021
GAAP Operating Income(a) $                                   282 $                                   685
Adjusted for:
Payroll Support Program grant wage offset and special items 208 (925)
Mark-to-market fuel hedge adjustments (46) (47)
Depreciation and amortization 405 394
Aircraft rent 276 254
EBITDAR $                               1,125 $                                   361
Adjusted net debt to EBITDAR 0.6x 2.7x
(a) Operating income 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 Payroll Support Program wage offset, fleet transition and related charges, and restructuring charges) 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. 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 Payroll Support Program wage offset, fleet transition and related charges, and restructuring charges, 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.

Top Copyright Photo: Alaska Airlines Boeing 737-900 ER SSWL N298AK (msn 60583) IAH (Jarrod Wilkening). Image: 958261.

Alaska Airlines aircraft slide show:

Alaska Airlines aircraft photo gallery:

 

Alaska Airlines becomes first U.S. airline to launch electronic bag tag program

Alaska Airlines made this announcement:

Today, we’re announcing that we will become the first U.S. airline to launch an electronic bag tag program later this year.

Electronic bag tags will allow guests to skip the step of printing traditional bag tags at the airport. Travelers will be able to activate the devices from anywhere—their home, office or even car—up to 24-hours before their flight through our mobile app.

“This technology allows our guests to tag their own bags in just seconds and makes the entire check-in process almost all off-airport,” said Charu Jain, senior vice president of merchandising and innovation at Alaska.”

Not only will our electronic bag tags allow our guests to quickly drop-off their luggage after they arrive at the airport, the devices will also give our employees the opportunity to spend more one-on-one time with guests who ask for assistance and reduce lines at our lobbies,” says Jain.

The activation is done by simply  touching the phone used for check-in to the electronic bag tag, which has an antenna that powers and reads the information transmitted from the phone. The e-paper bag tag’s screen will then display the guest’s flight information.

Alaska’s electronic bag tags will display the guest’s flight information. 

Our electronic bag tag program is expected to reduce the time spent dropping-off checked luggage by nearly 40%. 

In March, we launched a new self-bag drop system at San Jose International Airport, where guests can save up to a little more than four minutes. Our goal is to modernize travel at every major city we fly, from reimagining the lobby to testing innovative technology that streamlines the airport experience.

Alaska Airlines is the first U.S. airline to pioneer this innovative electronic bag tag program here at SJC,” said San José Mayor Sam Liccardo. “This program will modernize the check-in process and provide a more sustainable option for travelers.”

Rollout of the electronic bag tag program will happen in several phases. The first phase will initially include 2,500 Alaska Airlines’ frequent fliers who will begin using the electronic bag tags in late 2022. Mileage Plan members will have the option to purchase the devices early next year.

We are very proud to announce the first American carrier adopting our EBT solutions,” said BAGTAG Managing Director Jasper Quak. “Alaska Airlines’ relentless efforts to make their passenger journey a true 21st century experience makes us very confident in a successful rollout among their guests.”

Alaska Airlines to explore fossil-free jet fuel made from CO2

Alaska Airlines made this announcement:

Carbon transformation company Twelve, Alaska Air Group Inc., and Microsoft Corp. (Nasdaq: MSFT) have signed a Memorandum of Understanding (MOU) to collaborate on advancing the market for sustainable aviation fuels (SAF) to include fuels derived from recaptured CO2 and renewable energy, and working toward the first commercial demonstration flight in the United States powered by Twelve’s E-Jet®.

Through the first-of-its-kind agreement, Twelve, Alaska, and Microsoft will work to advance production and use of Twelve’s E-Jet®, a low carbon jet fuel produced by a power-to-liquids process leveraging the company’s carbon transformation technology, which uses only renewable energy, water, and CO2 as inputs to transform CO2 into a variety of critical chemicals and materials conventionally made from fossil fuels. As part of the work outlined to advance the scalability and use of the technology, the companies will work toward a demonstration flight using E-Jet®, and to supply the fuel to address some of Microsoft’s business travel on Alaska.

“By producing our drop-in E-Jet® fuel from captured CO2, we can rapidly and efficiently close the carbon cycle and allow businesses to sustainably use emissions to power their own business travel,”. said Nicholas Flanders, Co-Founder and CEO of Twelve. “Partnering with progress-minded brands like Alaska Airlines and Microsoft adds thrust as we work towards delivering industrial-scale volumes of E-Jet®.”

“Alaska is on a path to net zero by 2040, which will require sustainable aviation fuels like Twelve’s E-Jet®,” said Diana Birkett Rakow, senior vice president of public affairs and sustainability at Alaska Airlines. “We are committed to making SAF more widely available, at an affordable price, helping bring new alternatives to market, and using these fuels in our operation – a path that requires public policy action and private partnerships like this one. We’re excited to work with Twelve and Microsoft to advance Twelve’s E-Jet® fuel, turning captured CO2 and renewable energy into fuel for our airplanes.”

“Addressing emissions from the economy’s hardest-to-abate sectors, such as aviation, will take commitment from all stakeholders,” said Elizabeth Willmott, Carbon Program Director at Microsoft. “Building on our Climate Innovation Fund investment in Twelve and relationship with Alaska Airlines, this collaboration provides an opportunity to accelerate decarbonization in the aviation industry by exploring how to use low carbon fuels produced by renewable electricity, like Twelve’s E-Jet®.”

Produced using Twelve’s carbon transformation technology and in partnership with Emerging Fuels Technology, E-Jet® is a fuel with over 80 percent lower lifecycle emissions. Transitioning to E-Jet will not only reduce reliance on fossil fuels but will release fewer particulates and reduce impacts on neighboring communities. In March, Shopify, one of the largest corporate purchasers of long-term carbon removal, announced the first purchase of E-Jet® through the company’s Sustainability Fund.

SAF is a core part of Alaska’s five-part pathway to net zero by 2040. Since 2010, Alaska has worked with various public and private partners to advance public policies needed to jumpstart the nascent SAF market, create new offtake agreements and cultivate partnerships to accelerate market development. Alaska was also a founding member of the Aviators Group of the Sustainable Aviation Fuel Buyers Alliance, announced at COP26, bringing an operator’s perspective to collaborations driving demand and supply.

Alaska Airlijnes aircraft photo gallery: