Tag Archives: Horizon Air

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 Air Group orders 8 additional Embraer E175s, to be operated by Horizon Air

Alaska Air Group has announced plans to grow its regional fleet with an order of eight new additional Embraer E175 jets and options for 13 more.

The E175 aircraft will fly exclusively for Alaska Airlines under a Capacity Purchase Agreement (CPA) with Horizon Air.

The value of the contract, including options, is USD $1.12 billion based on list price.

Horizon’s new 76-seat aircraft from this order will be delivered in Alaska’s livery and three-class configuration over the next four years starting in Q2 2023.

The Horizon Air 76-seat E175 jet features 12 seats in First Class, 12 in Premium Class and 52 in the Main Cabin. Onboard amenities include free entertainment featuring more than 1,000 movies and TV shows. Additionally, customers seated in First Class enjoy 110-volt power in every seat.

Transitioning to a single jet fleet

Earlier this year, Horizon Air announced it would move to a single fleet of all E175 jets. The carrier currently flies a mix of 31Bombardier Q400 turboprop aircraft and 30 E175s. It will take delivery of 9 E175s over the next year as part of a previous order that also includes 3 deliveries in 2025.With this order by 2026, if not sooner, Horizon will have a fleet of 50 E175s.

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.

The Alaska Airlines’ E175 experience:

  • Seat pitch is 31 inches in the Main Cabin, 34 inches in Premium Class and between 36 and 38 inches in First Class.
  • All guests flying on the E175 will enjoy a window or aisle seat.
  • The regional jet is equipped with large overhead bins.
  • Maximum cruising altitude: 41,000 feet
  • Typical cruising speed: 494 mph

Alaska Horixon aircraft photo gallery:

Alaska Airlines: Here’s how to become a pilot with Alaska Airlines and Horizon Air

Facing a possible strike by its pilots, Alaska Airlines is stepping up its efforts to hire more pilots:

Austen Pyle was 13 when he knew he wanted to fly — it was his first brush with the sky in a glider. Today, less than 10 years after that first flight, he’s starting his pilot training with Horizon Air, Alaska’s regional airline in the Pacific Northwest. Within a few months, he’ll be a first officer – following in his mentor’s flight path.

Lawrence and Austen at Aviation Day, 2015
Lawrence and Austen at Aviation Day, 2022

Like many pilots, it took just one flight to inspire a career. Lawrence Pavlinovic, then a Horizon Air captain and now an Alaska captain, was the glider flight instructor that auspicious day. He saw Pyle’s passion for flight immediately and took him under his wing – inviting him to Aviation Day, an annual event hosted by Alaska and Horizon to inspire careers in aviation.

“Lawrence really pushed me to explore aviation as an option,” says Pyle. “He opened my eyes, and I’m so glad he did.” 

Pyle, once the mentee attending Aviation Day, became the mentor over the weekend, discussing the journey to becoming a pilot.

Now’s the best time to become a pilot

The need for the next generation of pilots is greater than ever. Alaska and Horizon expect to hire more than 900 pilots by the end of 2022 to replace thousands of pilots who retired during the pandemic or are approaching the mandatory retirement age of 65. Across the industry, mainline airlines are hiring about 10,000 pilots this year alone.

Alaska Airlines First Officer Mallory C

But in between the moment a love of flying is sparked and a career, aspiring pilots like Pyle face a journey that requires a daunting investment of time and money. On average, it can cost around $90,000 for education, flight training and certifications, and pilots must log hundreds of flying hours before they can fly for commercial airlines. However, the opportunities for financial and other support while navigating this journey are growing.

Alaska has launched several pilot-development programs – including most recently True North, a partnership with two historically black colleges and universities (HBCUs), and Ascend Pilot Academy, a partnership with Hillsboro Aero Academy in Oregon – to encourage aspiring pilots from diverse backgrounds to follow their dream.

“If you’re going to do this, do it 100 percent,” – Austen Pyle at Alaska Airlines Aviation Day May 2022

Want to fly? Here are some tips and resources to get you off the ground:

Find your passion: Take a discovery flight

Flight schools and many flying clubs offer an hour with a flight instructor who includes an introduction to ground school as well as time at the controls in the air. Pilots say this is the best way to determine if a curiosity about flying will transform into a passion and commitment to do the work.

“Do one flight. That’s all it will take for you to decide if you want to become a pilot or not,” says Pyle.

Alaska’s annual Aviation Day events in Seattle and Portland also provide an opportunity for young people to explore careers across the industry. Seattle’s event was May 7, but there’s still time to attend the event in Portland, coming up Saturday, May 21. Learn more about registering.

Plan your pathway: Explore Alaska’s pilot-development programs

Pyle started out at the Evergreen Soaring Club and worked toward his pilot’s license while still in high school. “I actually got my private pilot’s license before my driver’s license,” he said.

When he started Central Washington University’s aviation program, Pyle interviewed right away for the Horizon Air Pilot Development Program, which partners with universities while providing a stipend, mentorship and a pathway to a future job at Horizon.

“That was really special for me as a freshman in college to know that I had an airline job waiting for me when I was ready,” said Pyle.

And Alaska’s newest pilot-development programs are designed to recruit students with diverse backgrounds, part of our commitment to increase the diversity of our workforce at all levels by 2025.

The True North pilot-development program was launched in fall 2021 in partnership with Delaware State University and University of Maryland-Eastern Shore, two historically black colleges and universities (HBCUs). True North’s goal is to recruit and support BIPOC pilots on their journeys, and students receive guaranteed first officer positions at Horizon upon graduation, along with a confirmed path to Alaska.

Ascend Pilot Academy launched in March in partnership with Hillsboro Aero Academy in Oregon to provide resources and a career path for aspiring pilots, including those who don’t yet have flight experience. Once accepted, cadets receive a stipend and financial assistance for training, as well as a confirmed job with Horizon once qualified. “Aviation is for everyone,” says Carlos Zendejas, vice president of flight operations for Horizon Air. “Our programs help navigate the how-to of becoming a pilot, and we know that finances are a barrier, so our programs have stipends to help with that as well.”

We need to find the young pilots and we’ve got to grow them. That’s where True North came from.” – Captain Ron Limes, one of the founders of True North and Alaska’s director base chief pilot in Seattle.

Captain Limes loved planes as a child, but knew as a teen he was destined to fly them when he took a discovery flight over the New York City skyline.

Seek out support through pilot associations and flying clubs

Aerospace associations and flying clubs offer a wealth of resources – from scholarships to assistance in sorting through education options, to job opportunities. For example, Alaska Airlines Captain JP Wilson found a job at Horizon Air through a career fair sponsored by the Organization of Black Aerospace Professionals.

Captain Wilson knew he wanted to fly planes from the time he was a kid angling for the window seat while tagging along on his dad’s business trips. 

Limes says associations provide vital guidance from mentors who have already navigated the journey to becoming a pilot, which is especially valuable for diverse students who are entering a field long dominated by white male pilots.

“You can find a group where somebody has already broken the barrier for you. I’m so thankful for the generations ahead of me who made the way smoother for me,” says Limes.

A few of the associations and clubs with Alaska and Horizon members: 

Find a mentor to help you stay the course

As a young man, Pavlinovic chased his aviation dreams for years, but kept running into roadblocks – from his parents, who initially pushed him to be a doctor or lawyer instead of a pilot, to the Air Force recruiter who told him he couldn’t fly because he wore glasses (not true). He credits a naval aviator who was a flight instructor in the Civil Air Patrol for encouraging him to not give up. It took many years, along with money from the veterans’ benefits he earned through 21 years of service in the Marines and Army, to achieve his dream of becoming a commercial pilot.

Now when he meets young people like Pyle who have a passion for flying, he’s eager to help them on their way. “Because of my experience in the military and the civilian world, which is where I did all my flying, I can tailor my mentorship to a young man or woman and talk through the different ways they can pursue this,” says Pavlinovic.

Across Alaska and Horizon, pilots take mentorship to heart, and veteran pilots are matched with students in all our associated pilot-development programs.

We look for pilots who want to be mentors, who want to give back. We ask about it in interviews. A lot of our pilots love to give back.” – Captain JP Wilson

Pyle has already found ways to mentor up-and-coming pilots. While still in high school, he put together a presentation on aviation careers for a class of fifth graders – complete with metal wings donated from Alaska and Horizon. And as a flight instructor, he would tell his students: “If you’re going to do this, do it 100 percent until you are done and nothing less.”

Now that he’s achieved one goal, Pyle has his sights set on another: “I’ve told Lawrence, ‘On your retirement flight, I want to be your first officer.’”

Photos by Joe Nicholson

Alaska Air Group reports a loss of $143 million in the first quarter

Alaska Air Group (Alaska Airlines and Horizon Air) today reported financial results for its first quarter ending March 31, 2022 and provided outlook for the second quarter ending June 30, 2022.

“Alaska has a proven track record and a resilient business model that delivers in good times and through challenging ones. We are on course to deliver 6% to 9% adjusted pre-tax margins in 2022, as we recently announced at our investor day,” said Alaska Airlines CEO Ben Minicucci. “March results were particularly strong, marked by our highest cash sales month in history and revenues that exceeded 2019 levels for the first time since the pandemic began. Our people are working hard to get our airline back to its pre-COVID size and to return to growth from there, all while delivering the operational excellence that we’re known for. It’s an honor to have our company’s hard work recognized by Air Transport World as the 2022 Global Airline of the Year.”

Financial Results:

  • Reported net loss for the first quarter of 2022 under Generally Accepted Accounting Principles (GAAP) of $143 million, or $1.14 per share, compared to a net loss of $131 million, or $1.05 per share in the first quarter of 2021.
  • Reported net loss for the first quarter of 2022, excluding special items and mark-to-market fuel hedge accounting adjustments, of $167 million, or $1.33 per share, compared to a net loss, excluding special items and mark-to-market fuel hedge accounting adjustments, of $436 million or $3.51 per share, in the first quarter of 2021.
  • Generated $287 million in operating cash flow for the first quarter, driven by increased advance bookings as both leisure and business demand for air travel continue to recover.
  • Held $2.9 billion in unrestricted cash and marketable securities as of March 31, 2022.
  • Ended the quarter with a debt-to-capitalization ratio of 50%, within our target range of 40% to 50%.

Operational Updates:

  • Announced plans to accelerate the transition of Alaska’s mainline fleet to all-Boeing and introduced new plans to transition Horizon’s regional fleet to all-Embraer jets by the end of 2023. This transition is expected to drive significant economic benefits through cost savings, operational simplicity and better fuel efficiency.
  • Extended the co-branded Mileage Plan credit card agreement with Bank of America through 2030, providing expanded guest benefits and accelerating Alaska’s strategic growth plans in the West Coast.
  • Modified the Boeing aircraft order to include six firm and 41 option 737-10 aircraft and 10 firm 737-8 aircraft. The new mix of aircraft types provides an optimal fleet for our network and anticipated growth.
  • Announced plans to renovate and expand Alaska lounges in Seattle and Portland to provide additional capacity and enhanced amenities, with both expected to open by 2026.
  • Received nine Boeing 737-9 aircraft, bringing the total number of 737-9s in our fleet to 20.
  • Added Air Tahiti Nui as a new global Mileage Plan partner, allowing our guests to earn miles flying nonstop between Seattle or Los Angeles and French Polynesia.
  • Expanded codeshare agreement with Finnair, bringing total codeshare growth to more than 250 routes since Alaska’s entrance into the oneworld alliance in 2021.

Recognition and Awards:

  • Awarded the 2022 Airline of the Year by Air Transport World, given to an airline each year in recognition of outstanding performance, innovation and superior service.
  • Named to the TIME100 Most Influential Companies list, highlighting Alaska’s commitment to make meaningful changes in the climate impact of aviation.

Environmental, Social and Governance Updates:

  • Announced Patricia Bedient as the next chair of Alaska Air Group’s Board of Directors, replacing Brad Tilden effective May 5, 2022.
  • Launched the Ascend Pilot Academy in partnership with Hillsboro Aero Academy, providing aspiring pilots a simpler and more financially accessible path to become a commercial pilot at Horizon and Alaska.
  • Alongside other oneworld partners, signed two offtake agreements to procure sustainable aviation fuel for California operations, beginning in 2024.

The following table reconciles the company’s reported GAAP net loss per share (EPS) for the three months ended March 31, 2022 and 2021 to adjusted amounts.

Three Months Ended March 31,
2022 2021
(in millions, except per-share amounts) Dollars EPS Dollars EPS
GAAP net loss per share $             (143) $            (1.14) $             (131) $            (1.05)
Payroll Support Program grant wage offset (411) (3.31)
Mark-to-market fuel hedge adjustments (107) (0.85) (22) (0.18)
Special items – fleet transition and related charges(a) 75 0.60 18 0.14
Special items – restructuring charges(b) 11 0.09
Income tax effect of reconciling items above 8 0.06 99 0.80
Non-GAAP adjusted net loss per share $             (167) $            (1.33) $             (436) $            (3.51)
(a) Special items – fleet transition and related charges in the three months ended March 31, 2022 are primarily comprised of impairment charges associated on the Q400 fleet that will be retired from the operating service by the end of 2023.
(b) Special items – restructuring charges in the three months ended March 31, 2021 represent adjustments to total estimated cost for pilot incentive leaves as a result of updated recall timing from what was previously anticipated due to schedule changes, training limitations and other factors.

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

A conference call regarding the first quarter results will be streamed online at 8:30 a.m. PDT on April 21, 2022. 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.

Second Quarter and Full Year 2022 Outlook

Q2 Expectation(a)
Capacity (ASMs) % change versus 2019(a) Down 6% to 9%
Revenue passengers % change versus 2019(a) Down 10% to 12%
Passenger load factor 85% to 88%
Total revenue % change versus 2019(a) Up 5% to 8%
Cost per ASM excluding fuel and special items (CASMex) % change versus 2019(a) Up 16% to 19%
Economic fuel cost per gallon $3.25 to $3.30
Non-operating expense $7 million to $9 million
Adjusted tax rate ~24% to 25%
(a) Due to the unusual nature of 2021 and 2020, all 2022 comparisons are versus the second quarter of 2019.

We recently reduced Q2 scheduled capacity in response to shortfalls in throughput from our pilot training department versus what was originally planned. For this reason, coupled with our commitment to exit the Airbus A320 fleet on an accelerated timeline, as well as persistent high oil prices, we have reduced our planned capacity growth modestly as compared to previous expectations.

For these reasons, we’ve also reduced our full year 2022 capacity expectations from up 1% to 3% versus 2019, to flat to down 3% versus 2019. As a direct result of the reduction in full year capacity expectations, we expect full year 2022 CASMex to be up 6% to 8% compared to our prior expectation of up 3% to 5%. We continue to expect full year 2022 adjusted pre-tax margins between 6% and 9%.

 

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 comprehensive discussion of potential risk factors, see Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Some of these risks include competition, labor costs, relations and availability, general economic conditions including those associated with pandemic recovery, increases in operating costs including fuel, 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-K 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 resumes its full schedule at Paine Field in June

Alaska Airlines has made this announcement:

After an exceptionally long two years, our guests are flying again – ready to go places and see people. At the newest commercial airport in the Seattle area, Alaska Airlines is making it easier to get going by adding more convenient flights as we ramp up to resuming our full schedule at Paine Field in Everett this summer.

Starting June 17, we’ll increase to 18 peak daily departures – our full allotment of departures at the airport – which will include four daily nonstops to San Francisco, one of Alaska’s key hubs that’s the center of Bay Area business travel. Service between Paine Field and San Francisco resumes on May 19.

From Everett, we fly to Boise, Las Vegas, Orange County, Palm Springs, Phoenix, San Diego, Spokane and Tucson.

Our sister carrier Horizon Air provides most of our service at Paine Field with the Embraer 175 jet. We recently added 737 service on Alaska for the afternoon flights to Las Vegas and Phoenix.

Alaska Airlines and Horizon Air launch Ascend Pilot Academy

Pictured here is Captain Emma Bryson of Redmond, OR, who went on from instructing at Hillsboro Aero Academy to flying for Horizon Air as an E175 captain.

Alaska Airlines and its regional partner Horizon Air are teaming up with Hillsboro Aero Academy, a premier flight school in the Pacific Northwest, to launch the Ascend Pilot Academy (APA). This new development program, designed for aspiring pilots, provides a simpler, more financially accessible path to becoming a commercial pilot at Horizon and eventually Alaska. The program is part of a larger effort to address a growing pilot shortage coupled with increased travel demand.

In partnership with Hillsboro Aero, the two airlines will register and train up to 250 students a year. Once enrolled, cadet pilots will be eligible for low-interest financial aid, a $25,000 stipend to cover the cost of a commercial pilot license, mentorship and guidance from Alaska Airlines and Horizon Air pilots and a conditional job offer at Horizon Air, with an opportunity to fly with Alaska Airlines after meeting certain criteria.

“Launching the Ascend Pilot Academy addresses a critical need to build a larger and more diverse talent pipeline and remove historical barriers to entry for aspiring pilots,” said Joe Sprague, Horizon Air president. “Our goal is to create a program that enables students to complete an intensive training and time-building program, with a clear and established path toward flying for Horizon as a first officer.”

An industry-wide shortage of pilots has emerged during the pandemic. Over the past two years, thousands of pilots at major airlines took early retirements, accelerating a pilot shortage that was already on the horizon. In 2022 alone, mainline airlines are expected to hire more than 10,000 pilots – twice the amount hired in 2019. With 80% of these hires anticipated to be sourced from regional airlines like Horizon Air, a more robust talent pipeline is critical to maintaining operational efficiency and business growth.

Combined, Alaska and Horizon estimate they will need to hire 500 pilots a year, or 2,000 by 2025. The Ascend Pilot Academy is one part of building that diverse talent pipeline.

“We’re taking a number of steps to actively recruit pilots at both Alaska and Horizon, including enhancing our existing Pilot Development Program and launching a robust marketing recruiting campaign,” added Sprague.

Barriers to entry

The barriers to entry for aspiring pilots can seem nearly impossible to overcome, particularly for young people who are unable to afford the estimated $70,000 to $90,000 to pay for training, schooling, and the licenses to become a commercially rated pilot. Furthermore, it can be difficult for flight school students to secure government-backed financing, which means financing terms are often prohibitive.

In response to these challenges, Alaska Airlines and Horizon Air have been advocating for expanded federal student loan aid to also cover costs associated with flight education.

“It should be as easy to get a federally backed, low-interest student loan to become a pilot as it is to attend medical school,” Sprague said. “The Ascend Pilot Academy aims to do just that.”

A Pacific Northwest partnership

With campuses located in Hillsboro and Redmond, Oregon, near the metropolitan areas of Portland and Bend, Hillsboro Aero Academy is a premier flight school and long-time Horizon Air partner. Hillsboro’s fleet of 95 aircraft are equipped with modern avionics, and their training staff are working directly with Horizon’s to develop instructional practices to best prepare students to fly in an airline environment.

“Through this program, an aspiring commercial pilot will be able to realize their dream of learning to fly, and work toward becoming a captain at Alaska Airlines,” said Nik Kresse, Hillsboro Aero Academy’s vice president of airplane flight operations. “Enrolling in Ascend Pilot Academy is the first step of what we hope will be a long relationship with Horizon Air and Alaska Airlines. We’re eager to work with students through their entire journey and provide world-class training and dedicated pilot mentorship along the way.”

Many pilots at Alaska and Horizon either started their careers at Hillsboro or instructed at Hillsboro. Horizon E175 captain Emma Bryson and her husband, E175 captain Ian Bryson, both previously worked as Hillsboro flight instructors.

“Hillsboro Aero Academy and Horizon Air were the clear choice as the place to build my career,” said Emma Bryson, “They made a point of explaining that this is a place you could stay if you wanted. My husband and I chose Hillsboro Aero because it was close to home and we thought flying in the Pacific Northwest was the best way to learn to fly in all types of weather and terrain.”

Alaska Airlines and Horizon Air offer pilots a highly competitive compensation and benefits package, in addition to a supportive work environment with opportunities for growth. Employees receive travel privileges across Alaska Airlines’ impressive flight network that includes 120 destinations across the United States, Canada, Mexico, Costa Rica and Belize, as well as the ability to fly space-available on any of the 13 member airlines of the oneworld global alliance.

Interested students can learn more about Ascend Pilot Academy and enroll at: https://careers.alaskaair.com/career-opportunities/pilots/pilot-training/.

Alaska Air Group is collaborating with ZeroAvia to develop hydrogen powertrain for 76-seat zero-emission aircraft

ZeroAvia has made this announcement:

  • ZeroAvia will incorporate a 3MW+ hydrogen-electric powertrain system into a De Havilland DHC-8-400 (Q400) aircraft.
  • Joint development collaboration also adds Alaska Airlines to ZeroAvia’s list of investors.
  • The aircraft will contain a ZA2000, the largest ZeroAvia’s powertrain platform, capable of producing between 2,000 kW and 5,000 kW.

ZeroAvia is gaining altitude as the leader in zero-emission passenger aircraft as it announces a development collaboration with Alaska Air Group, the parent company of Alaska Airlines, for a hydrogen-electric powertrain capable of flying 76-seat regional aircraft in excess of 500 NM. Alaska is also joining the list of top investors for the company, alongside a fellow Seattle-based Amazon Climate Pledge Fund and Bill Gates’s Breakthrough Energy Ventures.

Alaska and ZeroAvia engineers will work together to scale the company’s existing powertrain platform to produce the ZA2000, an engine family capable of producing between 2,000 and 5,000 kilowatts of power with a 500-mile range. The partnership will initially deploy ZeroAvia’s hydrogen-electric propulsion technology into a full-size De Havilland Q400 aircraft, previously operated by Alaska Air Group subsidiary Horizon Air Industries, Inc., capable of transporting 76 passengers.

ZeroAvia will also work closely with aircraft regulators during this project to ensure the aircraft meets both safety and operational requirements. ZeroAvia will set up a location in the Seattle area to support this initiative.

Alaska has also secured options for up to 50 kits to begin converting its regional aircraft to hydrogen-electric power through ZeroAvia’s zero-emission powertrain, starting with the Q400 aircraft. This pioneering zero-emission aviation rollout will be supported by the ground fuel production and dispensing infrastructure from ZeroAvia and its infrastructure partners, such as Shell. Working to advance novel propulsion is one of the five parts of Alaska’s strategy to achieve net zero.

Recently, ZeroAvia also successfully ground-tested its 600kW powertrain capable of flying airframes 10-20 seats in size 500 miles, is well advanced in preparing a 19-seat aircraft for flight testing at Cotswold Airport in the UK and is moving to full-size prototype manufacturing of its 2,000 kW engine for demonstrations in 2022.

Video:

Horizon Air celebrates 40 years of flying in the Pacific Northwest

From the Alaska Airlines blog:

On September 1, 40 years ago, Horizon Air, our sister airline in the Pacific Northwest, flew its first flight between Seattle and Yakima, Washington.

If you’re from the PNW there’s a strong chance you’ve flown with Horizon. They’re the regional airline for Alaska Airlines and help connect our guests in the West with the world.

“Horizon connects us all to the Pacific Northwest’s incredible outdoor communities and amazing small cities and enables our connection to the country and world. Horizon Air employees make travel feel personal and bring incredible heart and care to every guest,” said Ben Minicucci, Alaska CEO.

Meet Travion Smith, a ground service agent in Seattle who stays “grounded” through kindness and awareness. Read more

Did you know?

  • Horizon flies to more than 50 destinations in our route network.
  • First airline to serve Starbucks coffee in the sky.
  • Are always looking for great new team members. Check out current job openings!
  • Known for delivering performance with excellence and developing industry leading innovations to create safe, incomparable flying experiences.
  • Flies 32 Bombardier Q400 aircraft—perfectly suited for serving smaller communities in the PNW—and 30 Embraer E175 aircraft.
  • Well known for offering FREE beer + wine to guests 21 years young on Q400 flights!

To commemorate Horizon’s momentous day, a special flight will fly the same route that started it all on Sept 1, 1981. This time, it will be flown on Horizon’s “Meatball” plane, a custom-painted retro-themed aircraft, which will fly some of its beloved employees and guests from Seattle to Yakima.

“We’re flying our meatball livery on the same route Horizon flew 40 years ago,” said Capt. Perry Solmonson, 40th Anniversary Committee Chair. “This is a huge milestone for us and this anniversary flight recognizes not only the hard and successful work accomplished to date, but also celebrate our up-and-coming team members of the future.”

40 years of history

Founded in 1981 by entrepreneur Milt Kuolt and a group of venture capitalists in Seattle, Horizon had fewer than 100 employees at that time and operated a fleet of two Fairchild F-27 propjets.

Kuolt believed that every guest deserved more than just a ride from point A to B, which turned into the superior service that Horizon is still known for today.

“Service began with complimentary wine then blossomed into other little but much-appreciated amenities such as free newspapers handed out at the gate, complimentary coffee, and baskets on board filled with munching snacks that included all kinds of goodies,” wrote Robert J. Serling in the chapter on Horizon Air in the book, Character & Characters: The Spirit of Alaska Airlines.

The service created a culture, a way of life and a state of mind that was “firmly embedded in the work ethic and attitude of every Horizon employee,” wrote Serling.

Today, Horizon has more than 3,500 employees and operates a fleet of 62 aircraft.

Reaching 40 years is a huge milestone. Despite the ups and downs of the industry, it’s been the people of Horizon who have carried the company forward. Our 40th anniversary is all about our people.

First Officer Perry Solmonson waves from the cockpit.

“What I love most about Horizon is our family unit. I have never seen a group of people come together more for the good of a company or each other as I have witnesses during my time with QX. The commitment to our values, the love and respect we show each other and the service to our guests across all work groups is unmatched. I look forward to seeing my colleagues who I consider extended family.” – Natalie Razor, Flight Attendant. SEA

“I love the opportunities to travel around the world on behalf of Horizon Air. I love the opportunities I’ve had to mentor the next generations of Maintenance Technicians. I love the opportunities to travel through the system and assist in new station openings. I love the dynamics of the business, always learning the new aircraft, working through the highs and lows, (9-11, the pandemic). Raising my family.” – Willard Clark, lead technician, GEG

“Being a part of the Horizon family is exactly that. Like any family, we have our ups and downs, highs and lows. We support our Horizon family members and help each other overcome our problems. Some say you can’t pick your family; Horizon is the exception.” – Bill Bowling, Q400 Captain, PDX

“Growing up in the tiny town of Connell, WA; Horizon Air was the airline I trusted to get me to the nearest major airport. It is always the airline I flew on my voyage outside of home and back to my home. Now I am living in Seattle and Horizon still connects me to my parents in my hometown that I love flying to! I am proud to be part of the airline that keeps us connected through the years. #PSC” – Jaime Chavez, passenger service agent, SEA

“I love the loyalty and dedication the employees have and flying with a regional airline I see that same loyalty with our customers. In the short 10 months I have already seen several of our elites on a regular basis and it feels good to be able to build that relationship with them.” – Catherine Alder, Flight Attendant, PDX 

Updated 2021 University of Washington college livery

Above Copyright Photo: Alaska Horizon (Horizon Air) Bombardier DHC-8-402 (Q400) N435QX (msn 4232) (Huskies – Go Dawgs) SEA (Michael B. Ing). Image: 954699.

Horizon Air aircraft slide show:

Alaska Horizon aircraft slide show:

Alaska Airlines to reward its vaccinated employees with a $200 payment

Alaska Airlines made this announcement:

Throughout the pandemic, the safety of our employees and guests has always come first, and we are committed to protecting our fellow employees, guests and loved ones from the impacts of the COVID-19 virus.

We believe having as many people as possible vaccinated is the is best path for protection against COVID-19 and we will continue to strongly encourage our employees to be vaccinated. As of today, 75% of Alaska and Horizon employees who have shared their vaccination status are vaccinated. This is good progress, but we have more work to do. That’s why we are implementing new measures designed to increase vaccination rates and enhance our multi-layered approach to safety.

Moving forward, we will implement a testing protocol for unvaccinated employees as another layer of safety, while continuing to enforce safety protocols such as masking and distancing. We will also require all unvaccinated employees to participate in a vaccine education program and have stopped special COVID pay for unvaccinated employee absences due to exposure or infection. All new hires, effective immediately, will be required to be vaccinated before being hired at Alaska Airlines or Horizon Air. Finally, we will recognize those employees who provide proof of vaccination with a $200 payment.

And as we have throughout the pandemic, we’ll continue to adjust our safety protocols as we learn.

Alaska Air Group reports second quarter 2021 results

Alaska Air Group issued this financial statement for the second quarter:

Financial Results:

  • Reported net income for the second quarter of 2021 under Generally Accepted Accounting Principles (GAAP) of $397 million, or $3.15 per share, compared to a net loss of $214 million, or $1.74 per share in the second quarter of 2020.
  • Reported a net loss for the second quarter of 2021, excluding CARES Act Payroll Support Program (PSP) wage offsets, special items and mark-to-market fuel hedge accounting adjustments, of $38 million, or $0.30 per share, compared to an adjusted net loss of $439 million or $3.57 per share, in the second quarter of 2020.
  • Reported a debt-to-capitalization ratio, including short-term borrowings related to COVID-19, of 56%.
  • Held $4.0 billion in unrestricted cash and marketable securities as of June 30, 2021.
  • Generated $840 million in operating cash flow in the second quarter, inclusive of $489 million of PSP funding, bolstered by improved advance bookings on a surge in demand for air travel. Excluding PSP funding, quarterly operating cash flows improved over $580 million from the first quarter of 2021.

Operational Updates:

  • Announced plans to grow our mainline and regional fleets, exercising options for 13 Boeing 737-9 MAX with deliveries in 2023 and 2024, and nine E175 to be operated by Horizon Air with deliveries in 2022 and 2023. In addition, expanded our long-term capacity agreement with SkyWest Airlines by eight aircraft to be delivered in 2022.
  • Announced new service to Central America with new routes to Belize from Seattle and Los Angeles, with service slated to begin in November 2021.
  • Issued recall notices to all pilots on incentive lines for return to work by October 2021.
  • Continued our history of providing meaningful incentive programs to our employees with $67 million in cash bonuses earned to date.
  • Announced seven new domestic routes aimed at providing our West Coast guests more options to sun-filled destinations, including three new routes serving Boise, Idaho.

Liquidity Updates:

  • Received $664 million through a combination of grants and loans from the U.S. Treasury under an extension of the PSP.
  • Repaid approximately $570 million in debt, including the full $135 million loan from the U.S. Treasury made available under the CARES Act and the $363 million outstanding balance on two credit facilities.

Sustainability Updates:

  • Announced five-part pathway to achieve a net zero carbon footprint by 2040, putting the airline on track to meet the annual carbon intensity target that is part of its performance-based pay program for all employees.
  • First airline to implement network optimization software, Flyways, using artificial intelligence and machine learning to optimize air traffic and enable more fuel-efficient flight paths for aggregate savings of fuel, carbon emissions and time.
  • Partnered with Boeing to launch a 737-9 ecoDemonstrator to test advanced technologies that can enhance the safety and sustainability of air travel.  The aircraft will conduct five months of flight tests across the U.S.
  • Revealed “Our Commitment” aircraft in partnership with long-time partner UNCF, a symbol of the airline’s commitments to increase diverse representation in our leadership, advance education as a critical component of equity, and to make Alaska Airlines a place where everyone feels they belong.

Alaska Air Group Inc. today reported second quarter 2021 GAAP net income of $397 million, or $3.15 per share, compared to a net loss of $214 million, or $1.74 per share in the second quarter of 2020. Excluding the impact of payroll support program wage offsets, special items and mark-to-market fuel hedge adjustments, the company reported an adjusted net loss of $38 million, or $0.30 per diluted share, compared to an adjusted net loss of $439 million, or $3.57 per diluted share in 2020.

“As we put the worst of last year’s downturn behind us, Alaska is back on the path to profitability,” said CEO Ben Minicucci. “We are executing our plan, rebuilding our network, leveraging our capacity to meet growing demand, and delivering exceptional service and value to our guests. I’m incredibly proud and grateful for how hard our employees are working and how they show up for each other and our guests every day with focus on safety, operational excellence and care.”

The following table reconciles the company’s reported GAAP net income (loss) per share (EPS) for the three and six months ended June 30, 2021 and 2020 to adjusted amounts.

Three Months Ended June 30,
2021 2020
(in millions, except per-share amounts) Dollars Diluted EPS Dollars Diluted EPS
GAAP net income (loss) per share $ 397 $ 3.15 $ (214) $ (1.74)
Payroll support program wage offset (503) (3.99) (362) (2.94)
Mark-to-market fuel hedge adjustments (46) (0.37) (6) (0.05)
Special items – impairment charges and other (4) (0.03) 69 0.56
Special items – restructuring charges (23) (0.18)
Special items – merger-related costs 1 0.01
Income tax effect of reconciling items above 141 1.12 73 0.59
Non-GAAP adjusted net loss per share $ (38) $ (0.30) $ (439) $ (3.57)
Six Months Ended June 30,
2021 2020
(in millions, except per-share amounts) Dollars Diluted EPS Dollars Diluted EPS
GAAP net income (loss) per share $ 266 $ 2.12 $ (446) $ (3.62)
Payroll support program wage offset (914) (7.27) (362) (2.94)
Mark-to-market fuel hedge adjustments (68) (0.54) 3 0.02
Special items – impairment charges and other 14 0.11 229 1.86
Special items – restructuring charges (12) (0.10)
Special items – merger-related costs 4 0.03
Income tax effect of reconciling items above 240 1.91 31 0.25
Non-GAAP adjusted net loss per share $ (474) $ (3.77) $ (541) $ (4.40)

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

A conference call regarding the second quarter results will be streamed online at 8:30 a.m. PDT on July 22, 2021. It can be accessed at www.alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call.

References in this update to “Air Group,” “Company,” “we,” “us,” and “our” refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified.

This news release may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by any forward-looking statements.  For a comprehensive discussion of potential risk factors, see Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Some of these risks include the risks associated with contagious illnesses and contagion, such as COVID-19, general economic conditions, increases in operating costs including fuel, competition, labor costs and relations, our indebtedness, inability to meet cost reduction goals, seasonal fluctuations in our financial results, an aircraft accident, and changes in laws and regulations. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We expressly disclaim any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance, or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse.

Alaska Airlines and its regional partners serve more than 120 destinations across the United States and to Mexico, Canada and Costa Rica. The airline emphasizes Next-Level Care for its guests, along with providing low fares, award-winning customer service and sustainability efforts. Alaska is a member of oneworld. With the global alliance and the airline’s additional partners, guests can travel to more than 1,000 destinations on more than 20 airlines while earning and redeeming miles on flights to locations around the world. Learn more about Alaska at newsroom.alaskaair.com and blog.alaskaair.com. Alaska Airlines and Horizon Air are subsidiaries of Alaska Air Group (NYSE: ALK).

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Alaska Air Group, Inc.
Three Months Ended June 30, Six Months Ended June 30,
(in millions, except per-share amounts) 2021 2020 Change 2021 2020 Change
Operating Revenues:
Passenger revenue $ 1,352 $ 309 338 % $ 2,011 $ 1,790 12 %
Mileage Plan other revenue 118 73 <td style=”font-family: arial, verdana; BORDER-BOTTOM: 1pt; BORDER-LEFT