第99.1展示文本
2024年10月31日
| 媒体联系人： | 投资者/分析师联系人： | |||||||
| 媒体关系 | Ryan St. John | |||||||
| (206) 304-0008 | 财务副总裁、规划和投资者关系 | |||||||
| ALKInvestorRelations@alaskaair.com | ||||||||
阿拉斯加航空集团发布2024年第三季度业绩报告
完成收购夏威夷航空公司
在调整税前利润率方面领先行业
西雅图——阿拉斯加航空集团（纽交所：ALK）今天公布了截至2024年9月30日的第三季度财务业绩。
航空集团在第三季度取得了强劲的业绩，实现了10.7%的GAAP税前利润率和每股收益（EPS）1.84美元。在调整后的基础上，我们的税前利润率为13.0%，将领先于行业板块。考虑到航空集团于2024年9月18日完成对夏威夷航空公司的收购，季度财务报表包括约13天的夏威夷航空公司业绩。
“现在是成为阿拉斯加航空集团的一部分的最佳时机。 阿拉斯加航空和夏威夷航空的卓越服务、广泛网络、独特文化和共同价值观的融合，正在打造一个强大的航空公司，能够应对不断变化的行业格局挑战，”首席执行官本·米尼库奇表示。“我们拥有资源和灵活性来应对挑战，抓住新机遇，并为公司编写下一个篇章。我们行业领先的利润率和强劲的运营表现证明，我们正在进行正确的投资，以使自己与我们国内竞争对手区别开来。”
今天的结果证实我们正在走向未来的正确道路。
回顾本季度：
| 第三季度预期 2024年7月17日 | 第三季度预期 2024年9月12日 | 第三季度航空公司集团成果 | 第三季度夏威夷航空公司对成果的贡献 | |||||||||||||||||||||||
| 航空公司应用可用座程数（ASM）与2023年比较 | 增长2%至3% | 增长2%至3% | 上涨6.8% | 4.1 点 | ||||||||||||||||||||||
| CASMex 对比 2023 | 增长高个位数 | 增长高个位数 | 上涨6.9% | 0.2个百分点 | ||||||||||||||||||||||
| RASm对比2023年 | 持平或者为正 | 上升约2％ | 上升1.3％ | （0.8）个百分点 | ||||||||||||||||||||||
| 每加仑经济燃料成本 | $2.85至$2.95 | 2.60至2.70美元 | $2.61 | $2.35 | ||||||||||||||||||||||
| 调整前税前收入（以百万计） | — | — | $399 | $(14) | ||||||||||||||||||||||
| 每股调整后盈利 | 1.40美元至1.60美元 | $2.15至$2.25 | $2.25 | $(0.09) | ||||||||||||||||||||||
我们很高兴将于12月10日举办投资者日活动th届时，我们将分享更多有关我们作为一家合并公司愿景的细节，包括通过合并带来的更高协同效应估计，讨论扩大利润率和产生自由现金流的策略，并提供2025年的指引。考虑到第三季度业绩会与我们的投资者日活动接近，我们在10月21日宣布21世纪医疗改革法案 我们将在这季度不会举行业绩会电话会议。尽管我们预计将于2025年1月恢复定期季度业绩电话会议，但在这季度，我们将在今天的业绩发布中提供有关我们第三季度业绩的额外说明，包括在本季度的业绩里今天发布的除夏威夷航空公司外的Air Group趋势讨论。
2024年第三季度报告的空中集团综合业绩包括夏威夷航空公司13天的业绩，而之前的可比期间不包括任何夏威夷的业绩。除下文所述情况外，以下讨论涉及空中集团第三
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季度业绩反映了传统的阿拉斯加业绩，不包括夏威夷13天内成为合并公司的一部分。
收入和每股收益:
今天我们报告了2024年第三季度净利润为23600万美元，每股收益为1.84美元的GAAP净利润。在排除特殊项目和按市值计算的燃油对冲会计调整后，我们报告了净利润为28900万美元，每股收益为2.25美元，明显超出了本季度1.40至1.60美元的原始指导，并且位于我们9月12日公布的修订指导的高端。th我们的调整税前利润率为13.0%，在行业同行中领先第2季度，继续展示我们业务模式的力量。我们已经建立了稳固的盈利和运营现金流生成功能，我们很高兴通过阿拉斯加航空和夏威夷航空公司的合并来继续发展，因为我们在强劲的需求环境和建设性的行业背景中实现了可观的协同效应。nd 连续第2个季度，我们调整后税前利润率为13.0%，继续领先于行业同行，继续展示我们业务模式的力量。我们已经建立了稳固的盈利和运营现金流生成功能，我们很高兴通过阿拉斯加航空和夏威夷航空公司的合并来继续发展，因为我们在强劲的需求环境和建设性的行业背景中实现了可观的协同效应。
营业收入：
在这个季度，阿拉斯加的单位营业收入在八月份出现积极变化，预订趋势的强劲持续到第四季度。我们看到整个阿拉斯加网络的改善，特别是在太平洋西北部和拉丁美洲地区。公司需求在九月和十月重新显示出强劲势头，推动临近预订收益显著改善。第三季度托管公司收入同比增长9%，其中科技和专业服务行业实现两位数增长。高端收入表现在这个季度也持续强劲，继续优于主舱，头等舱和高级舱收入分别同比增长10%和8%，而高级座位容量同比增长5%。单位营业收入预计将继续保持积极发展轨迹，从第三季度微单个位数增长到第四季度中单个位数增长。
这家新的全球航空公司的机遇已经明显，我们准备成为一家通过关怀和表现连接西海岸与全球的航空公司，CCO安德鲁·哈里森表示。我们正在投资于我们的商业引擎，以更有效地与更大的航空公司竞争，增加客人的忠诚度，并从我们的商业和货运业务中实现协同效应。这些投资包括重新构想的休息室和机上服务，旨在满足我们最忠诚客人的需求，优化的航线网络可让人们在更短的时间内到达更多地方，无缝的预订到登机体验等等。
在运营方面，阿拉斯加在客人们的夏季旅行高峰期间表现可靠，不仅执行了有史以来最大规模的夏季飞行计划，而且完成率达到了99.2%。本年度的增长受到延迟的飞机交付影响，我们预计由于波音公司目前的罢工将继续，这种影响将持续下去。预计未来飞机交付的延迟将限制2024年年底相对于今年年初我们先前的资源规划预期的容量增长。
成本:
成本表现符合预期，并与我们之前的指导保持一致，尽管由于交付延迟导致单位成本仍受到压力。我们已经做好准备迎接更高的产能，并自2019年以来，全公司的离职率为历史最低。在2024年下半年，我们单位成本同比增长的三分之一直接与相对过剩的人手有关，这是由于最初计划的飞行量较高，以及低产能对我们的固定成本基数施加的自然压力，这约占总成本的一半。我们预计这种压力是暂时的，并将在2025年全年恢复到与我们产能相适应的优化资源水平。尽管如此，季度生产率同比提高了4.6%。
我们预期的利润分成支付在这个季度显著增加，主要是由于较低的燃油价格和改善的营业收入趋势所驱动，抵消了与我们的乘务员达成的暂定协议未在本季度获得批准所带来的预期工资支出的减少。
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资产负债表和资本支出:
在我们的资产负债表方面，在本季度结束时，我们的总流动性为34亿美元，其中包括约85000万美元的未动用授信额度，这些额度在夏威夷收购完成后得到增加。季度结束后，我们通过以阿拉斯加里程计划项目抵押的Term Loan b和债券债务筹集了20亿美元。债券发行吸引了大于我们发行金额7倍以上的投资者兴趣，我们实现了行业内疫情以外类似债务中最紧凑的利差，这证明了我们忠诚性抵押和资产负债表的实力。约14亿美元用于偿还合并中承担的高收益债务，我们预计这将使我们在接下来的十二个月内节省约3000万美元的年利息成本。在十月份进行忠诚度融资和债务偿还后，我们今天的债务资本化比率和净杠杆分别为58%和2.4倍，仍然是行业内最强大的资产负债表之一。
对于资本支出，我们计划在2024年承担大约1.2至13亿美元。这一金额假定我们今年支付购买18架737 Max飞机的费用，取决于波音的交付能力。
夏威夷航空公司趋势：
尽管我们最近才完成了对夏威夷航空公司的收购，但我们对夏威夷网络持续改善感到鼓舞。2023年第四季度出现重大亏损后，夏航的EBITDAR在第二季度转正，预计税前利润将在第四季度接近盈亏平衡。这一改善预计将由收入和成本驱动。北美PRASM在第三季度出现正增长，我们预计将在第四季度同比增长中单位数，而国际PRASM预计将在2024年第四季度从两位数下降逐渐改善至同比持平。邻近岛屿业绩也显示出显著的同比改善。一些曾困扰夏威夷业绩的暂时性成本逆风已基本消逝，A321 GTF引擎驱动停飞的影响已完全解决，而A330亚马逊货机和787新机队的启动相关成本大部分已完成。
整合：
凭借我们对维珍美国整合的成熟方案，我们已经做好准备并兴奋地开始认真着手将阿拉斯加航空和夏威夷航空的运营平台合二为一，同时保持两个品牌的传统和价值，这两个品牌分别已建立超过90年。我们计划在接下来的18个月内实现三个重要的整合里程碑——推出单一忠诚平台、获得单一运营证书以及整合我们的乘客服务系统。我们还将很快开始与我们代表劳工的工作组合作，开始联合集体谈判流程。
我们正走在完成强劲年度的轨道上，预计将在整个年度成为行业板块前三名的税前利润率生产商之一，包括夏威夷公司收购截止日期起的结果。随着我们继续前行并开始解锁我们作为一家联合公司可以实现的潜力倍增，我们的航空公司有许多令人兴奋的事情。
2024年第四季度指引：
对于第四季度，我们预计以下结果，包括夏威夷。第四季度的预期与按照假定收购于2023年1月1日发生的既往业绩进行比较。按照假定历史业绩已包含在本8-k表格中。2024全年每股收益预计将超过我们此前指引的3.50美元至4.50美元的中间值，包括夏威夷的业绩。
| 第四季度预期 | ||||||||
| 容量（ASMs）相对于2023年的变化 | 上涨1.5%至2.5% | |||||||
| CASMex相对于2023年的变化 | 增长高个位数 | |||||||
| 相对于2023年的RASm变化 | 中位数位数上升 | |||||||
| 每加仑经济燃料成本 | $2.55至$2.65 | |||||||
每股调整后盈利(a) | $0.20至$0.40 | |||||||
(a)每股收益指引假设非营运费用约为5000万美元，税率约为28%。
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财务业绩和更新:
•根据通用会计原则（"GAAP"），2024年第三季度报告的净利润为23600万美元，每股1.84美元，而2023年第三季度为13900万美元，每股1.08美元。
•2024年第三季度报告的净利润为28900万美元，不包括特殊项目和按照市价计价的燃油套期会计调整，每股盈利为2.25美元，相比于2023年第三季度的净利润为23700万美元，每股盈利为1.83美元
•在季末之后，Air Group完成了20亿美元的融资，由公司的Mileage Plan计划提供支持。大约14亿美元用于在十月份重新融资与夏威夷航空公司收购相关的某些债务，预计将在未来十二个月内节省大约3000万美元的利息成本。
•第三季度回购了367,705股普通股，约合1400万美元，使截至2024年9月30日的九个月总回购额达到6300万美元。
•第三季度创造了31800万美元的营运现金流。
•截至2024年9月30日，持有25亿美元的无限制现金和有市场价值的证券。
•为了支持我们的整体流动性目标，将公司现有的循环信贷额度整合并提高至85000万美元。
运营更新：
•阿拉斯加在本季度收到了两架737-9飞机和一架737-8飞机，使该航空公司的机队总数达到了72架737-9和5架737-8。
夏威夷从亚马逊收到了第四架A330-300货机。
•在夏威夷航空的24架A330飞机上完成了Starlink安装，为机上客人提供免费高速Wi-Fi服务。
•与波特兰国际机场合作，利用新技术帮助客人快速通过大厅。
•阿拉斯加度假与expedia集团推出了Stays，这是一个新平台，提供超过900,000家酒店和度假租赁房源的独家优惠，为里程计划会员提供赚取和兑换里程的能力。
•宣布与詹姆斯·比尔德奖获奖厨师Brandon Jew合作，在旧金山与纽约肯尼迪机场之间的航班上为客人提供独家的头等舱餐饮体验。
可持续更新：
•宣布投资JetZero，这是一家开发混合式机翼机身飞机的公司，旨在实现燃油燃烧减少50%，体现阿拉斯加公司致力于在2040年达到净零碳排放目标。
•与UP.Labs合作，推出了Odysee，这是一家利用人工智能和计算能力优化Air Group运营物流调度和管理的创新初创公司。
4
下表调解了公司截至2024年和2023年9月30日三个月和九个月的报告的按照美国通用会计准则（GAAP）每股收益（EPS）与调整后金额。
| 截至9月30日的三个月 | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| （以百万计，每股金额除外） | 美元 | 摊薄后每股 | 美元 | 摊薄后每股 | |||||||||||||||||||
| 每股净收益 | $ | 236 | $ | 1.84 | $ | 139 | $ | 1.08 | |||||||||||||||
| 按市值计价的燃料套期保值调整 | (4) | (0.03) | (35) | (0.27) | |||||||||||||||||||
| 特殊物品-操作 | 74 | 0.57 | 156 | 1.20 | |||||||||||||||||||
| 特殊物品-非营业净额 | 1 | 0.01 | 8 | 0.06 | |||||||||||||||||||
| 上述对账项目的所得税影响 | (18) | (0.14) | (31) | (0.24) | |||||||||||||||||||
| 调整后的每股净收益 | $ | 289 | $ | 2.25 | $ | 237 | $ | 1.83 | |||||||||||||||
| 截至9月30日的九个月 | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| （以百万计，每股金额除外） | 美元 | 摊薄后每股 | 美元 | 摊薄后每股 | |||||||||||||||||||
| 每股净收益 | $ | 324 | $ | 2.52 | $ | 237 | $ | 1.84 | |||||||||||||||
| 按市值计价的燃料套期保值调整 | (22) | (0.17) | (14) | (0.11) | |||||||||||||||||||
| 特殊物品-操作 | 254 | 1.98 | 406 | 3.14 | |||||||||||||||||||
| 特殊物品-非营业净额 | 1 | 0.01 | 14 | 0.11 | |||||||||||||||||||
| 上述对账项目的所得税影响 | (57) | (0.44) | (98) | (0.76) | |||||||||||||||||||
| 调整后的每股净收益 | $ | 500 | $ | 3.90 | $ | 545 | $ | 4.22 | |||||||||||||||
本更新中提到的“Air Group”、“公司”、“我们”、“我们”和“我们”的参考对象是阿拉斯加航空集团公司及其子公司，除非另有规定。
本新闻发布可能包含前瞻性声明，受1933年证券法第27A条、1934年证券交易法第21E条以及1995年《证券诉讼改革法》提供的安全港保护。这些声明涉及未来事件，并涉及已知和未知的风险和不确定性，可能导致实际结果与我们的前瞻性声明、假设或信念所示明显不同。有关可能导致我们的前瞻性声明在实质上有所不同的风险和不确定性的讨论，请参阅公司截至2023年12月31日的10-K表格第1A项的年度报告。其中一些风险包括竞争、劳动成本、关系和可用性、一般经济条件、运营成本的增加包括燃料、有关成功整合最近完成的收购夏威夷控股公司的营运和实现预期成本节约、协同效应或增长的不确定性、无法实现成本削减、esg和其他战略目标，需求和财务结果的季节性波动，供应链风险，对航空安全和安防产生负面影响的事件，以及影响我们业务的法律和法规变化。所有前瞻性声明均在其整体上通过参考我们最近的10-K表格和随后的SEC申报中讨论的风险因素进行合格。我们在不断变化的商业环境中运营，新的风险因素不时出现。管理层无法预测这些新的风险因素，也无法评估这些新的风险因素对我们业务或任何前瞻性声明描述的事件可能产生的影响。我们明确否认有义务公开更新或修订今天所作的任何前瞻性声明，以使其与实际结果一致。随着时间的推移，我们的实际结果、绩效或成就可能与我们的前瞻性声明、假设或信念所表达或暗示的预期结果、绩效或成就有所不同，这种差异可能是重大且实质性的。
阿拉斯加航空集团总部设在西雅图，旗下包括阿拉斯加航空公司、夏威夷控股公司、地平线航空和麦基航空服务。通过最近收购夏威夷航空，我们现在在北美、中美洲、亚洲和太平洋地区提供超过140个目的地。我们致力于安全、出色的客户关怀、运营卓越、财务表现和可持续发展。阿拉斯加航空公司是oneworld联盟的成员。凭借oneworld及我们的全球合作伙伴，我们的客人现在可以在alaskaair.com上选择更多购买、获取或兑换的方式，涵盖30家航空公司和1000多个全球目的地。在夏威夷航空上预订穿越太平洋的旅行，请访问hawaiianairlines.com。在 news.alaskaair.com 了解更多关于阿拉斯加航空公司的资讯，以及 newsroom.hawaiianairlines.com/blog 关于夏威夷航空公司的信息。阿拉斯加航空集团在纽交所交易，股票代码为“ALK”。
5
综合利润表（未经审计）
Alaska Air Group, Inc.
Amounts below reflect Hawaiian's results of operations for the period September 18, 2024 through September 30, 2024, and incorporate purchase accounting impacts for the same period. Prior period information does not reflect Hawaiian's historical results.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| (in millions, except per share amounts) | 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||||||||||||||||||||||||
| Operating Revenue | |||||||||||||||||||||||||||||||||||
| Passenger revenue | $ | 2,821 | $ | 2,618 | 8 | % | $ | 7,476 | $ | 7,200 | 4 | % | |||||||||||||||||||||||
| Mileage Plan other revenue | 171 | 159 | 8 | % | 509 | 483 | 5 | % | |||||||||||||||||||||||||||
| Cargo and other revenue | 80 | 62 | 29 | % | 216 | 190 | 14 | % | |||||||||||||||||||||||||||
| Total Operating Revenue | 3,072 | 2,839 | 8 | % | 8,201 | 7,873 | 4 | % | |||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||
| Wages and benefits | 883 | 782 | 13 | % | 2,469 | 2,259 | 9 | % | |||||||||||||||||||||||||||
| Variable incentive pay | 104 | 45 | 131 | % | 197 | 149 | 32 | % | |||||||||||||||||||||||||||
| Aircraft fuel, including hedging gains and losses | 624 | 694 | (10) | % | 1,804 | 1,932 | (7) | % | |||||||||||||||||||||||||||
| Aircraft maintenance | 140 | 118 | 19 | % | 391 | 367 | 7 | % | |||||||||||||||||||||||||||
| Aircraft rent | 49 | 48 | 2 | % | 142 | 161 | (12) | % | |||||||||||||||||||||||||||
| Landing fees and other rentals | 194 | 183 | 6 | % | 532 | 502 | 6 | % | |||||||||||||||||||||||||||
| Contracted services | 108 | 100 | 8 | % | 311 | 290 | 7 | % | |||||||||||||||||||||||||||
| Selling expenses | 82 | 84 | (2) | % | 243 | 231 | 5 | % | |||||||||||||||||||||||||||
| Depreciation and amortization | 139 | 113 | 23 | % | 393 | 330 | 19 | % | |||||||||||||||||||||||||||
| Food and beverage service | 69 | 62 | 11 | % | 194 | 176 | 10 | % | |||||||||||||||||||||||||||
| Third-party regional carrier expense | 63 | 58 | 9 | % | 181 | 164 | 10 | % | |||||||||||||||||||||||||||
| Other | 202 | 185 | 9 | % | 593 | 544 | 9 | % | |||||||||||||||||||||||||||
| Special items - operating | 74 | 156 | (53) | % | 254 | 406 | (37) | % | |||||||||||||||||||||||||||
| Total Operating Expenses | 2,731 | 2,628 | 4 | % | 7,704 | 7,511 | 3 | % | |||||||||||||||||||||||||||
| Operating Income | 341 | 211 | 62 | % | 497 | 362 | 37 | % | |||||||||||||||||||||||||||
| Non-operating Income (Expense) | |||||||||||||||||||||||||||||||||||
| Interest income | 28 | 23 | 22 | % | 69 | 62 | 11 | % | |||||||||||||||||||||||||||
| Interest expense | (44) | (34) | 29 | % | (115) | (90) | 28 | % | |||||||||||||||||||||||||||
| Interest capitalized | 7 | 7 | — | % | 19 | 21 | (10) | % | |||||||||||||||||||||||||||
| Special items - net non-operating | (1) | (8) | (88) | % | (1) | (14) | (93) | % | |||||||||||||||||||||||||||
| Other - net | (3) | (6) | (50) | % | (3) | (22) | (86) | % | |||||||||||||||||||||||||||
| Total Non-operating Expense | (13) | (18) | (28) | % | (31) | (43) | (28) | % | |||||||||||||||||||||||||||
| Income Before Income Tax | 328 | 193 | 466 | 319 | |||||||||||||||||||||||||||||||
| Income tax provision | (92) | (54) | (142) | (82) | |||||||||||||||||||||||||||||||
| Net Income | $ | 236 | $ | 139 | $ | 324 | $ | 237 | |||||||||||||||||||||||||||
| Basic Earnings Per Share | $ | 1.87 | $ | 1.09 | $ | 2.57 | $ | 1.86 | |||||||||||||||||||||||||||
| Diluted Earnings Per Share | $ | 1.84 | $ | 1.08 | $ | 2.52 | $ | 1.84 | |||||||||||||||||||||||||||
| Weighted Average Shares Outstanding used for computation: | |||||||||||||||||||||||||||||||||||
| Basic | 126.189 | 127.187 | 126.165 | 127.375 | |||||||||||||||||||||||||||||||
| Diluted | 128.590 | 129.188 | 128.347 | 129.085 | |||||||||||||||||||||||||||||||
6
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
Alaska Air Group, Inc.
Amounts as of September 30, 2024 reflect the acquisition of Hawaiian and incorporate purchase accounting adjustments.
| (in millions) | September 30, 2024 | December 31, 2023 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 1,015 | $ | 281 | |||||||
| Restricted cash | 27 | — | |||||||||
| Marketable securities | 1,490 | 1,510 | |||||||||
| Total cash, restricted cash, and marketable securities | 2,532 | 1,791 | |||||||||
| Receivables - net | 510 | 383 | |||||||||
| Inventories and supplies - net | 202 | 116 | |||||||||
| Prepaid expenses | 270 | 176 | |||||||||
| Other current assets | 223 | 239 | |||||||||
| Total Current Assets | 3,737 | 2,705 | |||||||||
| Property and Equipment | |||||||||||
| Aircraft and other flight equipment | 12,349 | 10,425 | |||||||||
| Other property and equipment | 2,109 | 1,814 | |||||||||
| Deposits for future flight equipment | 612 | 491 | |||||||||
| 15,070 | 12,730 | ||||||||||
| Less accumulated depreciation and amortization | (4,548) | (4,342) | |||||||||
| Total Property and Equipment - net | 10,522 | 8,388 | |||||||||
| Other Assets | |||||||||||
| Operating lease assets | 1,346 | 1,195 | |||||||||
| Goodwill | 2,703 | 1,943 | |||||||||
| Intangible assets - net | 888 | 90 | |||||||||
| Other noncurrent assets | 363 | 292 | |||||||||
| Total Other Assets | 5,300 | 3,520 | |||||||||
| Total Assets | $ | 19,559 | $ | 14,613 | |||||||
7
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
| (in millions, except share amounts) | September 30, 2024 | December 31, 2023 | |||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 242 | $ | 207 | |||||||
| Accrued wages, vacation and payroll taxes | 822 | 584 | |||||||||
| Air traffic liability | 1,878 | 1,136 | |||||||||
| Other accrued liabilities | 958 | 800 | |||||||||
| Deferred revenue | 1,614 | 1,221 | |||||||||
| Current portion of operating lease liabilities | 211 | 158 | |||||||||
| Current portion of long-term debt and finance leases | 523 | 353 | |||||||||
| Total Current Liabilities | 6,248 | 4,459 | |||||||||
| Noncurrent Liabilities | |||||||||||
| Long-term debt and finance leases, net of current portion | 4,159 | 2,182 | |||||||||
| Long-term operating lease liabilities, net of current portion | 1,249 | 1,125 | |||||||||
| Deferred income taxes | 889 | 695 | |||||||||
| Deferred revenue | 1,578 | 1,382 | |||||||||
| Obligation for pension and post-retirement medical benefits | 505 | 362 | |||||||||
| Other liabilities | 452 | 295 | |||||||||
| Total Noncurrent Liabilities | 8,832 | 3,859 | |||||||||
| Shareholders' Equity | |||||||||||
Preferred stock, $0.01 par value, Authorized: 5,000,000 shares, none issued or outstanding | — | — | |||||||||
Common stock, $0.01 par value, Authorized: 400,000,000 shares, Issued: 2024 - 140,588,216 shares; 2023 - 138,960,830 shares, Outstanding: 2024 - 126,125,771 shares; 2023 - 126,090,353 shares | 1 | 1 | |||||||||
| Capital in excess of par value | 769 | 695 | |||||||||
Treasury stock (common), at cost: 2024 - 14,462,445 shares; 2023 - 12,870,477 shares | (882) | (819) | |||||||||
| Accumulated other comprehensive loss | (268) | (299) | |||||||||
| Retained earnings | 4,859 | 4,535 | |||||||||
| Total Shareholders' Equity | 4,479 | 4,113 | |||||||||
| Total Liabilities and Shareholders' Equity | $ | 19,559 | $ | 14,613 | |||||||
8
| SUMMARY CASH FLOW (unaudited) | |||||||||||||||||
| (in millions) | Nine Months Ended September 30, 2024 | Six Months Ended June 30, 2024(a) | Three Months Ended September 30, 2024(b) | ||||||||||||||
| Cash Flows from Operating Activities: | |||||||||||||||||
| Net Income | $ | 324 | $ | 88 | $ | 236 | |||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | 451 | 291 | 160 | ||||||||||||||
| Changes in working capital | 415 | 493 | (78) | ||||||||||||||
| Net cash provided by operating activities | 1,190 | 872 | 318 | ||||||||||||||
| Cash Flows from Investing Activities: | |||||||||||||||||
| Property and equipment additions | (851) | (587) | (264) | ||||||||||||||
| Acquisition of Hawaiian Airlines, net of cash acquired | (659) | — | (659) | ||||||||||||||
| Supplier proceeds | 162 | 162 | — | ||||||||||||||
| Other investing activities | 912 | 290 | 622 | ||||||||||||||
| Net cash used in investing activities | (436) | (135) | (301) | ||||||||||||||
| Cash Flows from Financing Activities: | 7 | 87 | (80) | ||||||||||||||
| Net increase in cash and cash equivalents | 761 | 824 | (63) | ||||||||||||||
Cash, cash equivalents, and restricted cash at beginning of period(c) | 308 | 308 | 1,132 | ||||||||||||||
Cash, cash equivalents, and restricted cash at end of the period(c) | $ | 1,069 | $ | 1,132 | $ | 1,069 | |||||||||||
(a) As reported in Form 10-Q for the second quarter of 2024.
(b) Cash flows for the three months ended September 30, 2024 can be calculated by subtracting cash flows from the six months ended June 30, 2024 from the nine months ended September 30, 2024.
(c) Cash, cash equivalents, and restricted cash shown in the Summary Cash Flow consists of restricted cash presented within Restricted Cash as well as certain amounts presented within Other noncurrent assets in the condensed consolidated balance sheets.
9
SPECIAL ITEMS (unaudited)
Air Group has classified certain operating and non-operating expenses as special items due to their unusual or infrequently occurring nature. We believe disclosing information about these items separately improves comparable year-over-year analysis and allows stakeholders to better understand our results of operations. A description of the special items is provided below.
Fleet transition: Fleet transition costs (benefits) are associated with the retirement and disposition of Airbus acquired from Virgin America and Q400 aircraft.
Labor agreements: Labor agreement costs in 2024 are for retroactive pay for Alaska flight attendants pursuant to the tentative agreement reached in the second quarter of 2024; the agreement did not pass and negotiations are ongoing. Costs in 2023 are for contractual changes to Alaska pilots' sick leave benefits.
Integration costs: Integration costs are associated with the acquisition of Hawaiian Airlines and primarily consist of legal and professional fees, change in control payments, and other employee-related expenses.
Litigation: Litigation costs represent expenses associated with the Virgin trademark license agreement with the Virgin Group and recorded following a negative ruling in an appeal case in the second quarter of 2024.
Net non-operating: These costs are primarily for interest expense recognized in 2023 associated with certain Virgin America A321neo lease agreements which were modified as part of Alaska's fleet transition.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Fleet transition | $ | (16) | $ | 156 | $ | 51 | $ | 355 | |||||||||||||||
| Labor agreements | — | — | 30 | 51 | |||||||||||||||||||
| Integration costs | 90 | — | 128 | — | |||||||||||||||||||
| Litigation | — | — | 45 | — | |||||||||||||||||||
| Special items - operating | $ | 74 | $ | 156 | $ | 254 | $ | 406 | |||||||||||||||
| Non-operating Income (Expense) | |||||||||||||||||||||||
| Special items - net non-operating | $ | (1) | $ | (8) | $ | (1) | $ | (14) | |||||||||||||||
10
| OPERATING STATISTICS (unaudited) | |||||||||||||||||||||||||||||||||||
Amounts below reflect the results of operations for Hawaiian Airlines for the period September 18, 2024 through September 30, 2024. | |||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | ||||||||||||||||||||||||||||||
Consolidated Operating Statistics:(a) | |||||||||||||||||||||||||||||||||||
| Revenue passengers (000) | 13,237 | 12,210 | 8.4% | 34,899 | 33,654 | 3.7% | |||||||||||||||||||||||||||||
| RPMs (000,000) "traffic" | 16,970 | 15,718 | 8.0% | 44,803 | 43,208 | 3.7% | |||||||||||||||||||||||||||||
| ASMs (000,000) "capacity" | 19,847 | 18,582 | 6.8% | 53,422 | 51,447 | 3.8% | |||||||||||||||||||||||||||||
| Load factor | 85.5% | 84.6% | 0.9 pts | 83.9% | 84.0% | (0.1) pts | |||||||||||||||||||||||||||||
| Yield | 16.62¢ | 16.66¢ | (0.2)% | 16.69¢ | 16.66¢ | 0.2% | |||||||||||||||||||||||||||||
| PRASM | 14.21¢ | 14.09¢ | 0.9% | 13.99¢ | 14.00¢ | (0.1)% | |||||||||||||||||||||||||||||
| RASM | 15.48¢ | 15.28¢ | 1.3% | 15.35¢ | 15.30¢ | 0.3% | |||||||||||||||||||||||||||||
CASMex(b) | 10.16¢ | 9.50¢ | 6.9% | 10.48¢ | 9.98¢ | 5.0% | |||||||||||||||||||||||||||||
Economic fuel cost per gallon(b) (c) | $2.61 | $3.26 | (19.9)% | $2.82 | $3.14 | (10.2)% | |||||||||||||||||||||||||||||
Fuel gallons (000,000)(c) | 240 | 224 | 7.2% | 646 | 620 | 4.3% | |||||||||||||||||||||||||||||
| ASMs per gallon | 82.7 | 83.0 | (0.4)% | 82.6 | 83.0 | (0.5)% | |||||||||||||||||||||||||||||
| Departures (000) | 121.6 | 111.8 | 8.8% | 329.7 | 311.6 | 5.8% | |||||||||||||||||||||||||||||
| Average full-time equivalent employees (FTEs) | 24,963 | 23,879 | 4.5% | 23,784 | 23,386 | 1.7% | |||||||||||||||||||||||||||||
Operating fleet(d) | 394 | 303 | 91 a/c | 394 | 303 | 91 a/c | |||||||||||||||||||||||||||||
| Alaska Airlines Operating Statistics: | |||||||||||||||||||||||||||||||||||
| RPMs (000,000) "traffic" | 14,951 | 14,471 | 3.3% | 40,375 | 39,967 | 1.0% | |||||||||||||||||||||||||||||
| ASMs (000,000) "capacity" | 17,459 | 17,123 | 2.0% | 48,118 | 47,584 | 1.1% | |||||||||||||||||||||||||||||
| Economic fuel cost per gallon | $2.60 | $3.22 | (19)% | $2.80 | $3.11 | (10)% | |||||||||||||||||||||||||||||
| Hawaiian Airlines Operating Statistics: | |||||||||||||||||||||||||||||||||||
| RPMs (000,000) "traffic" | 634 | n/a | n/a | 634 | n/a | n/a | |||||||||||||||||||||||||||||
| ASMs (000,000) "capacity" | 763 | n/a | n/a | 763 | n/a | n/a | |||||||||||||||||||||||||||||
Economic fuel cost per gallon(c) | $2.35 | n/a | n/a | $2.35 | n/a | n/a | |||||||||||||||||||||||||||||
Regional Operating Statistics:(e) | |||||||||||||||||||||||||||||||||||
| RPMs (000,000) "traffic" | 1,385 | 1,247 | 11.1% | 3,795 | 3,241 | 17.1% | |||||||||||||||||||||||||||||
| ASMs (000,000) "capacity" | 1,625 | 1,459 | 11.4% | 4,540 | 3,862 | 17.6% | |||||||||||||||||||||||||||||
| Economic fuel cost per gallon | $2.74 | $3.49 | (21.5)% | $2.99 | $3.32 | (9.9)% | |||||||||||||||||||||||||||||
(a)Except for FTEs, data includes information related to third-party regional capacity purchase flying arrangements.
(b)See a reconciliation of this non-GAAP measure and Note A for a discussion of the importance of this measure to investors in the accompanying pages.
(c)Excludes operations under the Air Transportation Services Agreement (ATSA) with Amazon.
(d)Includes aircraft owned and leased by Alaska, Hawaiian, and Horizon as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excludes all aircraft removed from operating service.
(e)Data presented includes information related to flights operated by Horizon and third-party carriers.
11
| OPERATING SEGMENTS (unaudited) | |||||||||||||||||||||||||||||||||||||||||
| Alaska Air Group, Inc. | |||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Alaska Airlines | Hawaiian Airlines | Regional | Consolidating & Other(a) | Air Group Adjusted(b) | Special Items(c) | Consolidated | ||||||||||||||||||||||||||||||||||
| Operating Revenue | |||||||||||||||||||||||||||||||||||||||||
| Passenger revenue | $ | 2,261 | $ | 84 | $ | 476 | $ | — | $ | 2,821 | $ | — | $ | 2,821 | |||||||||||||||||||||||||||
| Mileage Plan other revenue | 151 | 5 | 15 | — | 171 | — | 171 | ||||||||||||||||||||||||||||||||||
| Cargo and other revenue | 71 | 6 | — | 3 | 80 | — | 80 | ||||||||||||||||||||||||||||||||||
| Total Operating Revenue | 2,483 | 95 | 491 | 3 | 3,072 | — | 3,072 | ||||||||||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||||||||
| Operating expenses, excluding fuel | 1,640 | 82 | 325 | (14) | 2,033 | 74 | 2,107 | ||||||||||||||||||||||||||||||||||
| Fuel expense | 510 | 23 | 95 | — | 628 | (4) | 624 | ||||||||||||||||||||||||||||||||||
| Total Operating Expenses | 2,150 | 105 | 420 | (14) | 2,661 | 70 | 2,731 | ||||||||||||||||||||||||||||||||||
| Non-operating Income (Expense) | 3 | (4) | — | (11) | (12) | (1) | (13) | ||||||||||||||||||||||||||||||||||
| Income (Loss) Before Income Tax | $ | 336 | $ | (14) | $ | 71 | $ | 6 | $ | 399 | $ | (71) | $ | 328 | |||||||||||||||||||||||||||
| Pretax Margin | 13.0 | % | 10.7 | % | |||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Alaska Airlines | Hawaiian Airlines | Regional | Consolidating & Other(a) | Air Group Adjusted(b) | Special Items(c) | Consolidated | ||||||||||||||||||||||||||||||||||
| Operating Revenue | |||||||||||||||||||||||||||||||||||||||||
| Passenger revenue | $ | 2,201 | $ | — | $ | 417 | $ | — | $ | 2,618 | $ | — | $ | 2,618 | |||||||||||||||||||||||||||
| Mileage Plan other revenue | 146 | — | 13 | — | 159 | — | 159 | ||||||||||||||||||||||||||||||||||
| Cargo and other revenue | 60 | — | — | 2 | 62 | — | 62 | ||||||||||||||||||||||||||||||||||
| Total Operating Revenue | 2,407 | — | 430 | 2 | 2,839 | — | 2,839 | ||||||||||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||||||||
| Operating expenses, excluding fuel | 1,484 | — | 297 | (3) | 1,778 | 156 | 1,934 | ||||||||||||||||||||||||||||||||||
| Fuel expense | 621 | — | 108 | — | 729 | (35) | 694 | ||||||||||||||||||||||||||||||||||
| Total Operating Expenses | 2,105 | — | 405 | (3) | 2,507 | 121 | 2,628 | ||||||||||||||||||||||||||||||||||
| Non-operating Income (Expense) | — | — | — | (10) | (10) | (8) | (18) | ||||||||||||||||||||||||||||||||||
| Income (Loss) Before Income Tax | $ | 302 | $ | — | $ | 25 | $ | (5) | $ | 322 | $ | (129) | $ | 193 | |||||||||||||||||||||||||||
| Pretax Margin | 11.4 | % | 6.8 | % | |||||||||||||||||||||||||||||||||||||
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| Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Alaska Airlines | Hawaiian Airlines | Regional | Consolidating & Other(a) | Air Group Adjusted(b) | Special Items(c) | Consolidated | ||||||||||||||||||||||||||||||||||
| Operating Revenue | |||||||||||||||||||||||||||||||||||||||||
| Passenger revenue | $ | 6,078 | $ | 84 | $ | 1,314 | $ | — | $ | 7,476 | $ | — | $ | 7,476 | |||||||||||||||||||||||||||
| Mileage Plan other revenue | 460 | 5 | 44 | — | 509 | — | 509 | ||||||||||||||||||||||||||||||||||
| Cargo and other revenue | 202 | 6 | — | 8 | 216 | — | 216 | ||||||||||||||||||||||||||||||||||
| Total Operating Revenue | 6,740 | 95 | 1,358 | 8 | 8,201 | — | 8,201 | ||||||||||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||||||||
| Operating expenses, excluding fuel | 4,670 | 82 | 946 | (52) | 5,646 | 254 | 5,900 | ||||||||||||||||||||||||||||||||||
| Fuel expense | 1,515 | 23 | 288 | — | 1,826 | (22) | 1,804 | ||||||||||||||||||||||||||||||||||
| Total Operating Expenses | 6,185 | 105 | 1,234 | (52) | 7,472 | 232 | 7,704 | ||||||||||||||||||||||||||||||||||
| Non-operating Income (Expense) | 6 | (4) | — | (32) | (30) | (1) | (31) | ||||||||||||||||||||||||||||||||||
| Income (Loss) Before Income Tax | $ | 561 | $ | (14) | $ | 124 | $ | 28 | $ | 699 | $ | (233) | $ | 466 | |||||||||||||||||||||||||||
| Pretax Margin | 8.5 | % | 5.7 | % | |||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Alaska Airlines | Hawaiian Airlines | Regional | Consolidating & Other(a) | Air Group Adjusted(b) | Special Items(c) | Consolidated | ||||||||||||||||||||||||||||||||||
| Operating Revenue | |||||||||||||||||||||||||||||||||||||||||
| Passenger revenue | $ | 6,082 | $ | — | $ | 1,118 | $ | — | $ | 7,200 | $ | — | $ | 7,200 | |||||||||||||||||||||||||||
| Mileage Plan other revenue | 447 | — | 36 | — | 483 | — | 483 | ||||||||||||||||||||||||||||||||||
| Cargo and other revenue | 184 | — | — | 6 | 190 | — | 190 | ||||||||||||||||||||||||||||||||||
| Total Operating Revenue | 6,713 | — | 1,154 | 6 | 7,873 | — | 7,873 | ||||||||||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||||||||
| Operating expenses, excluding fuel | 4,342 | — | 832 | (1) | 5,173 | 406 | 5,579 | ||||||||||||||||||||||||||||||||||
| Fuel expense | 1,672 | — | 274 | — | 1,946 | (14) | 1,932 | ||||||||||||||||||||||||||||||||||
| Total Operating Expenses | 6,014 | — | 1,106 | (1) | 7,119 | 392 | 7,511 | ||||||||||||||||||||||||||||||||||
| Non-operating Income (Expense) | (3) | — | — | (26) | (29) | (14) | (43) | ||||||||||||||||||||||||||||||||||
| Income (Loss) Before Income Tax | $ | 696 | $ | — | $ | 48 | $ | (19) | $ | 725 | $ | (406) | $ | 319 | |||||||||||||||||||||||||||
| Pretax Margin | 9.2 | % | 4.1 | % | |||||||||||||||||||||||||||||||||||||
(a)Includes consolidating entries, Air Group parent company, Horizon, McGee Air Services, and other immaterial business units.
(b)The Air Group Adjusted column represents the financial information that is reviewed by management to assess performance of operations and determine capital allocation and excludes certain charges.
(c)Includes special items and mark-to-market fuel hedge accounting adjustments.
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GAAP TO NON-GAAP RECONCILIATIONS (unaudited)
We are providing reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. Amounts in the tables below are rounded to the nearest million. As a result, a manual recalculation of certain figures using these rounded amounts may not agree directly to the actual figures presented in the tables below.
| Adjusted Income Before Income Tax Reconciliation | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Income before income tax | $ | 328 | $ | 193 | $ | 466 | $ | 319 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Mark-to-market fuel hedge adjustment | (4) | (35) | (22) | (14) | |||||||||||||||||||
| Special items - operating | 74 | 156 | 254 | 406 | |||||||||||||||||||
| Special items - net non-operating | 1 | 8 | 1 | 14 | |||||||||||||||||||
| Adjusted income before income tax | $ | 399 | $ | 322 | $ | 699 | $ | 725 | |||||||||||||||
| Pretax margin | 10.7 | % | 6.8 | % | 5.7 | % | 4.1 | % | |||||||||||||||
| Adjusted pretax margin | 13.0 | % | 11.4 | % | 8.5 | % | 9.2 | % | |||||||||||||||
| CASMex Reconciliation | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Consolidated: | |||||||||||||||||||||||
| Total operating expenses | $ | 2,731 | $ | 2,628 | $ | 7,704 | $ | 7,511 | |||||||||||||||
| Less the following components: | |||||||||||||||||||||||
| Aircraft fuel, including hedging gains and losses | 624 | 694 | 1,804 | 1,932 | |||||||||||||||||||
| Freighter costs | 17 | 12 | 46 | 38 | |||||||||||||||||||
| Special items - operating | 74 | 156 | 254 | 406 | |||||||||||||||||||
| Total operating expenses, excluding fuel, freighter costs, and special items | $ | 2,016 | $ | 1,766 | $ | 5,600 | $ | 5,135 | |||||||||||||||
| ASMs | 19,847 | 18,582 | 53,422 | 51,447 | |||||||||||||||||||
| CASMex | 10.16 | ¢ | 9.50 | ¢ | 10.48 | ¢ | 9.98 | ¢ | |||||||||||||||
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| Fuel Reconciliation | |||||||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| (in millions, except for per-gallon amounts) | Dollars | Cost/Gallon | Dollars | Cost/Gallon | |||||||||||||||||||
| Raw or "into-plane" fuel cost | $ | 619 | $ | 2.57 | $ | 711 | $ | 3.18 | |||||||||||||||
| Losses on settled hedges | 9 | 0.04 | 18 | 0.08 | |||||||||||||||||||
| Economic fuel expense | $ | 628 | $ | 2.61 | $ | 729 | $ | 3.26 | |||||||||||||||
| Mark-to-market fuel hedge adjustment | (4) | (0.01) | (35) | (0.16) | |||||||||||||||||||
| Aircraft fuel, including hedging gains and losses | $ | 624 | $ | 2.60 | $ | 694 | $ | 3.10 | |||||||||||||||
| Fuel gallons | 240 | 224 | |||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| (in millions, except for per gallon amounts) | Dollars | Cost/Gallon | Dollars | Cost/Gallon | |||||||||||||||||||
| Raw or "into-plane" fuel cost | $ | 1,795 | $ | 2.77 | $ | 1,899 | $ | 3.06 | |||||||||||||||
| Losses on settled hedges | 31 | 0.05 | 47 | 0.08 | |||||||||||||||||||
| Economic fuel expense | $ | 1,826 | $ | 2.82 | $ | 1,946 | $ | 3.14 | |||||||||||||||
| Mark-to-market fuel hedge adjustment | (22) | (0.03) | (14) | (0.02) | |||||||||||||||||||
| Aircraft fuel, including hedging gains and losses | $ | 1,804 | $ | 2.79 | $ | 1,932 | $ | 3.12 | |||||||||||||||
| Fuel gallons | 646 | 620 | |||||||||||||||||||||
| Debt-to-capitalization, including operating and finance leases | |||||||||||
| (in millions) | September 30, 2024 | December 31, 2023 | |||||||||
Long-term debt and finance leases, net of current portion(a) | $ | 4,159 | $ | 2,182 | |||||||
| Capitalized operating leases | 1,460 | 1,283 | |||||||||
Capitalized finance leases, current portion | 8 | 64 | |||||||||
| Adjusted debt, net of current portion of long-term debt | 5,627 | 3,529 | |||||||||
| Shareholders' equity | 4,479 | 4,113 | |||||||||
| Total Invested Capital | $ | 10,106 | $ | 7,642 | |||||||
| Debt-to-capitalization ratio, including operating and finance leases | 56 | % | 46 | % | |||||||
(a)As of September 30, 2024, $49 million of capitalized finance leases were recognized within the 'Long-term debt, net of current portion' line of the condensed consolidated balance sheets.
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| Adjusted net debt to earnings before interest, taxes, depreciation, amortization, rent, and special items | |||||||||||
| (in millions) | September 30, 2024 | December 31, 2023 | |||||||||
| Current portion of long-term debt and finance leases | $ | 523 | $ | 353 | |||||||
| Current portion of operating lease liabilities | 211 | 158 | |||||||||
| Long-term debt and finance leases, net of current portion | 4,159 | 2,182 | |||||||||
| Long-term operating lease liabilities, net of current portion | 1,249 | 1,125 | |||||||||
| Total adjusted debt | 6,142 | 3,818 | |||||||||
| Less: Total cash, restricted cash, and marketable securities | 2,532 | 1,791 | |||||||||
| Adjusted net debt | $ | 3,610 | $ | 2,027 | |||||||
| (in millions) | Twelve Months Ended September 30, 2024 | Twelve Months Ended December 31, 2023 | |||||||||
Operating Income(a) | $ | 529 | $ | 394 | |||||||
| Adjusted for: | |||||||||||
| Special items - operating | 291 | 443 | |||||||||
| Mark-to-market fuel hedge adjustments | (10) | (2) | |||||||||
| Depreciation and amortization | 514 | 451 | |||||||||
| Aircraft rent | 189 | 208 | |||||||||
| EBITDAR | $ | 1,513 | $ | 1,494 | |||||||
| Adjusted net debt to EBITDAR | 2.4x | 1.4x | |||||||||
(a)Operating income can be reconciled using the trailing twelve month operating income as filed quarterly with the SEC.
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Note A: Pursuant to Regulation G, we are providing reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. We believe that consideration of these non-GAAP financial measures may be important to investors for the following reasons:
•By excluding certain costs from our unit metrics, we believe that we have better visibility into the results of operations. Our industry is highly competitive and is characterized by high fixed costs, so even a small reduction in non-fuel operating costs can result in a significant improvement in operating results. We believe that all domestic carriers are similarly impacted by changes in jet fuel costs over the long run, so it is important for management and investors to understand the impact of company-specific cost drivers which are more controllable by management. We adjust for expenses related directly to our freighter aircraft operations to allow for better comparability to other domestic carriers that do not operate freighter aircraft. We also exclude certain special charges as they are unusual or nonrecurring in nature and adjusting for these expenses allows management and investors to better understand our cost performance.
•CASMex is one of the most important measures used by management and by the Air Group Board of Directors in assessing quarterly and annual cost performance. CASMex is also a measure commonly used by industry analysts, and we believe it is the basis by which they have historically compared our airline to others in the industry. The measure is also the subject of frequent questions from investors.
•Adjusted pretax income is an important metric for the employee incentive plan, which covers the majority of Air Group employees.
•Disclosure of the individual impact of certain noted items provides investors the ability to measure and monitor performance both with and without these special items. We believe that disclosing the impact of these items as noted above is important because it provides information on significant items that are not necessarily indicative of future performance. Industry analysts and investors consistently measure our performance without these items for better comparability between periods and among other airlines.
•Although we disclose our unit revenue, we do not, nor are we able to, evaluate unit revenue excluding the impact that changes in fuel costs have had on ticket prices. Fuel expense represents a large percentage of our total operating expenses. Fluctuations in fuel prices often drive changes in unit revenue in the mid-to-long term. Although we believe it is useful to evaluate non-fuel unit costs for the reasons noted above, we would caution readers of these financial statements not to place undue reliance on unit costs excluding fuel as a measure or predictor of future profitability because of the significant impact of fuel costs on our business.
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GLOSSARY OF TERMS
Adjusted net debt - long-term debt, including current portion, plus capitalized operating and finance leases, less cash, restricted cash, and marketable securities
Adjusted net debt to EBITDAR - represents net adjusted debt divided by EBITDAR (trailing twelve months earnings before interest, taxes, depreciation, amortization, special items and rent)
Aircraft Utilization - block hours per day; this represents the average number of hours per day our aircraft are in transit
Aircraft Stage Length - represents the average miles flown per aircraft departure
ASMs - available seat miles, or “capacity”; represents total seats available across the fleet multiplied by the number of miles flown
CASM - operating costs per ASM; represents all operating expenses including fuel, freighter costs, and special items
CASMex - operating costs excluding fuel, freighter costs, and special items per ASM, or "unit cost"
Debt-to-capitalization ratio - represents adjusted debt (long-term debt plus capitalized operating and finance lease liabilities) divided by total equity plus adjusted debt
Diluted Earnings per Share - represents earnings per share (EPS) using fully diluted shares outstanding
Diluted Shares - represents the total number of shares that would be outstanding if all possible sources of conversion, such as stock options, were exercised
Economic Fuel - best estimate of the cash cost of fuel, excluding operations under the Air Transportation Service Agreement (ATSA) with Amazon, net of the impact of our fuel-hedging program
Freighter Costs - operating expenses directly attributable to the operation of Alaska's B737 freighter aircraft and Hawaiian's A330-300 freighter aircraft exclusively performing cargo missions
Load Factor - RPMs as a percentage of ASMs; represents the number of available seats that were filled with paying passengers
PRASM - passenger revenue per ASM, or "passenger unit revenue"
RASM - operating revenue per ASMs, or "unit revenue"; operating revenue includes all passenger revenue, freight & mail, Mileage Plan and other ancillary revenue; represents the average total revenue for flying one seat one mile
RPMs - revenue passenger miles, or "traffic"; represents the number of seats that were filled with paying passengers; one passenger traveling one mile is one RPM
Yield - passenger revenue per RPM; represents the average revenue for flying one passenger one mile
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