Reported record full year revenue of $11.7 billion Fourth quarter and full year adjusted earnings per share exceed high end of previously reported guidance Repurchased approximately $250 million in outstanding shares in the fourth quarter Announced record performance-based pay, totaling six weeks pay for most Alaska and Horizon employees
Alaska Air Group Inc. (NYSE: ALK) today reported financial results for the fourth quarter and full year ended December 31, 2024.
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Air Group completed 2024 on a high note, with record revenues of $11.7 billion and a GAAP pretax margin of 4.6%. On an adjusted basis, the full year pretax margin of7.1% is expected to be amongst the best in the industry despite the completed acquisition of Hawaiian Airlines and fleet grounding in the first quarter of the year.
“This was a transformational year as we brought Hawaiian Airlines into Alaska Air Group and began our journey to unlock $1 billion in incremental pretax profit over the next three years,” said CEO Ben Minicucci. “We're proud that our incentive plan will reward Alaska Airlines and Horizon Air employees with nearly six weeks of pay, which we believe will lead the industry. Looking forward, our vision is clear and we're focused on executing our strategic plan – leveraging the strengths of our combined network, enhancing the end-to-end travel experience for our guests, and delivering value for everyone who depends on us.”
Quarter in Review
Air Group's consolidated results reported in the fourth quarter and full year 2024 include Hawaiian Airlines as of September 18, 2024 while prior comparable periods exclude any Hawaiian results. Discussion of fourth quarter results and forward-looking guidance refer to pro forma historical results as provided in prior 8-K filings and represented below.
Q4 2024 vs Q4 2023 Pro Forma, except EPS Prior Expectation Actual ResultsCapacity (ASMs) Up 1.5% Up 2.5%RASM Up mid-to-high single digits Up 7.0%CASMex Up low-double digits Up 8.6%Adjusted earnings per share $0.40 to $0.50 $0.97
Our GAAP pretax margin for the fourth quarter was 2.2% and GAAP earnings per share was $0.55. On an adjusted basis, our pretax margin was3.9% and earnings per share was$0.97, which exceeded our latest guidance by approximately $0.50 at the midpoint driven by revenue and cost improvement across our business as well as lower non-operating expenses. Due to these same out-performance factors, full year adjusted EPS of $4.87 also surpassed the better end of our prior guidance range.
Fourth quarter revenue was stronger than expected across both Alaska and Hawaiian, building on the strength seen in the fall, and exiting the year with momentum driven by sustained leisure demand and an uptick in corporate travel which improved close in demand. With mild winter weather to end the year, we delivered reliable operational performance for our guests throughout the holiday travel period, with higher-than-expected completion rate and load factor. After inflecting positive in August, unit revenues improved nearly 6 points sequentially from 1% in the third quarter to 7% in the fourth quarter. This momentum has continued, with ongoing close-in strength in early Q1 bookings. Combined with a stable industry capacity backdrop, we are encouraged by these early indications for Q1 and a constructive start to 2025.
Unit cost performance in the fourth quarter also exceeded our guidance, up 8.6% as compared to pro forma 2023, as disciplined non-fuel cost performance offset higher performance-based pay accruals and better completion rates drove higher capacity. Throughout 2024, unit costs remained pressured from constrained capacity as a result of aircraft delivery delays, but are expected to improve through 2025 as we normalize resource levels and capacity compared to 2024.
Alaska Accelerate
Following a great close to 2024, we continue to build on our strong foundation and execute on Alaska Accelerate – our vision for the future. This strategy is focused on building scale, relevance and loyalty to connect our guests to the world with a remarkable travel experience rooted in safety, care and performance and deliver $1 billion in incremental profit over the next 3 years.
“Our success this year and our optimistic look ahead is built upon a proven strategy that puts the guest at the center of everything we do and unlocks new opportunities across our business,” said Chief Commercial Officer, Andrew Harrison. “We're poised to capitalize on the strength of a combined global network, a powerful loyalty program, two beloved brands, and a remarkable travel experience that meets guests' needs at every phase of the travel journey.”
First Quarter & Full Year 2025 Guidance
For the first quarter and full year 2025, we expect the following results compared to pro forma historical results as if the acquisition had occurred on January 1, 2023.
Q1 2025 Expectation FY 2025 ExpectationCapacity (ASMs) % change versus pro Up 2.5% to 3.5% Up 2% to 3%forma 2024RASM % change versus pro forma 2024 Up high-single digitsCASMex % change versus pro forma 2024 Up low-single digits to mid-single digitsAdjusted earnings (loss) per share ($0.70) to ($0.50) >$5.75
FinancialResults and Updates:
— Reported net income for the fourth quarter and full year 2024 under Generally Accepted Accounting Principles (GAAP) of $71 million, or $0.55 per share, and $395 million, or $3.08 per share. These results compare to net loss for the fourth quarter and net income for the full year 2023 of $2 million, or $0.02 per share, and $235 million, or $1.83 per share.
— Reported net income for the fourth quarter and full year 2024, excluding special items and other adjustments, of $125 million, or $0.97 per share, and $625 million, or $4.87 per share. These results compare to net income for the fourth quarter and full year 2023, excluding special items and other adjustments, of $38 million, or $0.30 per share, and $583 million, or $4.53 per share.
— Generated an adjusted pretax margin of 7.1% for the full year 2024, among the highest in the industry.
— Generated $1.5 billion in operating cash flow for the full year 2024.
— Completed $2 billion in financing, backed by the Company's Mileage Plan program, and retired $1.6 billion of certain debt acquired with Hawaiian Airlines.
— Repurchased 3.9 million shares of common stock for approximately $250 million in the fourth quarter, bringing total repurchases to 5.5 million shares for $312 million in 2024.
— Authorized a new $1 billion dollar share repurchase plan to be executed over the next four years, with repurchases beginning in January 2025.
— Alaska and Horizon employees earned $325 million of incentive pay in 2024 by achieving profitability, safety, sustainability, and operational targets. The payout represents approximately six weeks of pay for most employees.
Operational Updates:
— Reached an Agreement in Concept with Alaska flight attendants for an updated collective bargaining agreement in January 2025.
— Announced the launch of Seattle as an international gateway with nonstop routes to Tokyo Narita and Seoul Incheon in 2025, with plans to add 12 international widebody destinations by 2030.
— Approved to fly nonstop service between San Diego International Airport and Ronald Reagan Washington National Airport, making Alaska the only airline to operate this route.
— Expanding service from the states of Alaska and Oregon beginning this summer, including nonstop service from Anchorage to Detroit and Sacramento; Portland to Houston, Fairbanks, and Eugene; and Medford to San Diego.
— Hawaiian received two A330-300 freighter aircraft from Amazon during the fourth quarter, bringing the total within the airline's fleet to six.
Commercial Updates:
— Announced improvements to Alaska's Mileage Plan for 2025, including more milestone rewards and new ways to earn elite qualifying miles.
— Introduced Alaska's new premium credit card, which will be available late summer 2025 and will provide holders exclusive travel benefits and perks.
— Launched Huaka'i by Hawaiian, a free program for HawaiianMiles members that offers kama'aina (Hawai'i residents) exclusive travel benefits when flying with Hawaiian Airlines.
The following table reconciles the company's reported GAAP net income (loss) per share (EPS) for the three and twelve months ended December 31, 2024 and 2023 to adjusted amounts.
Three Months Ended December 31, 2024 2023(in millions, except per share amounts) Dollars Per Share Dollars Per ShareNet income (loss) $ 71 $ 0.55 $ (2) $ (0.02)Mark-to-market fuel hedge adjustments (6) (0.05) 12 0.09Unrealized gain on foreign debt (10) (0.08) – -Special items – operating 91 0.71 37 0.29Special items – net non-operating (17) (0.13) 4 0.03Income tax effect of adjustments above(a) (4) (0.03) (13) (0.09)Adjusted net income $ 125 $ 0.97 $ 38 $ 0.30 Twelve Months Ended December 31, 2024 2023(in millions, except per share amounts) Dollars Per Share Dollars Per ShareNet income $ 395 $ 3.08 $ 235 $ 1.83Mark-to-market fuel hedge adjustments (28) (0.22) (2) (0.02)Unrealized gain on foreign debt (10) (0.08) – -Special items – operating 345 2.69 443 3.44Special items – net non-operating (16) (0.12) 18 0.14Income tax effect of adjustments above(a) (61) (0.48) (111) (0.86)Adjusted net income $ 625 $ 4.87 $ 583 $ 4.53
(a) Certain integration costs are non deductible for tax purposes, resulting in a smaller income tax effect for current year adjustments.
A conference call regarding the fourth quarter and full year results will be streamed online at 8:30 a.m. PST on January 23, 2025. It can be accessed at www.alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call.
Referencesin this update to “Air Group,” “Company,” “we,” “us,” and “our” refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified.
This news release may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by our forward-looking statements, assumptions or beliefs. For a discussion of risks and uncertainties that may cause our forward-looking statements to differ materially, see Item 1A of the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2024. Some of these risks include competition, labor costs, relations and availability, general economic conditions, increases in operating costs including fuel, uncertainties regarding the ability to successfully integrate the operations of the recently completed acquisition of Hawaiian Holdings, Inc. and the ability to realize anticipated cost savings, synergies, or growth from the acquisition, inability to meet cost reduction, ESG and other strategic goals, seasonal fluctuations in demand and financial results, supply chain risks, events that negatively impact aviation safety and security, and changes in laws and regulations that impact our business. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed in our most recent Form 10-Q and in our subsequent SEC filings. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We expressly disclaim any obligation to publicly update or revise any forward-looking statements made today to conform them to actual results. Over time, our actual results, performance or achievements may differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, assumptions or beliefs and such differences might be significant and materially adverse.
Alaska Air Group, Inc. is based in Seattle and comprised of subsidiaries Alaska Airlines, Hawaiian Holdings, Inc., Horizon Air and McGee Air Services. With our recent acquisition of Hawaiian Airlines, we now serve more than 140 destinations throughout North America, Central America, Asia and the Pacific. We are committed to safety, remarkable customer care, operational excellence, financial performance and sustainability. Alaska Airlines is a member of the oneworld Alliance. With oneworld and our additional global partners, our guests have more choices than ever to purchase, earn or redeem on alaskaair.com across 31 airlines and more than 1,000 worldwide destinations. Book travel throughout the Pacific on Hawaiian Airlines at hawaiianairlines.com. Learn more about Alaska Airlines at news.alaskaair.com and Hawaiian Airlines at newsroom.hawaiianairlines.com/blog. Alaska Air Group is traded on the New York Stock Exchange (NYSE) as “ALK.”
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)Alaska Air Group, Inc. Three Months Ended December 31, Twelve Months Ended December 31,(in millions, except per share amounts) 2024 2023 Change 2024 2023 ChangeOperating RevenuePassenger revenue $ 3,178 $ 2,326 37% $ 10,654 $ 9,526 12%Loyalty program other revenue 224 165 36% 733 648 13%Cargo and other revenue 132 62 113% 348 252 38%Total Operating Revenue 3,534 2,553 38% 11,735 10,426 13%Operating ExpensesWages and benefits 1,119 782 43% 3,588 3,041 18%Variable incentive pay 161 51 216% 358 200 79%Aircraft fuel, including hedging gains and 702 709 (1)% 2,506 2,641 (5)%lossesAircraft maintenance 229 121 89% 620 488 27%Aircraft rent 65 47 38% 207 208 -%Landing fees and other rentals 249 178 40% 781 680 15%Contracted services 133 99 34% 444 389 14%Selling expenses 106 72 47% 349 303 15%Depreciation and amortization 190 121 57% 583 451 29%Food and beverage service 93 65 43% 287 241 19%Third-party regional carrier expense 62 54 15% 243 218 11%Other 261 185 41% 854 729 17%Special items – operating 91 37 146% 345 443 (22)%Total Operating Expenses 3,461 2,521 37% 11,165 10,032 11%Operating Income 73 32 128% 570 394 45%Non-operating Income (Expense)Interest income 32 18 78% 101 80 26%Interest expense (56) (31) 81% (171) (121) 41%Interest capitalized 10 6 67% 29 27 7%Special items – net non-operating 17 (4) NM 16 (18) NMOther – net 3 (17) NM – (39) (100)%Total Non-operating Income (Expense) 6 (28) NM (25) (71) (65)%Income Before Income Tax 79 4 545 323Income tax expense 8 6 150 88Net Income (Loss) $ 71 $ (2) $ 395 $ 235BasicEarnings (Loss) Per Share $ 0.56 $ (0.02) $ 3.13 $ 1.84Diluted Earnings (Loss) Per Share $ 0.55 $ (0.02) $ 3.08 $ 1.83Weighted Average Shares Outstanding used forcomputation:Basic 126.047 127.376 126.136 127.375Diluted 128.931 127.376 128.372 128.708
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)Alaska Air Group, Inc.As of December 31 (in millions) 2024 2023ASSETSCurrent AssetsCash and cash equivalents $ 1,201 $ 281Restricted cash 29 -Marketable securities 1,274 1,510Total cash, restricted cash, and marketable securities 2,504 1,791Receivables – net 558 383Inventories and supplies – net 199 116Prepaid expenses 307 176Other current assets 192 239Total Current Assets 3,760 2,705Property and EquipmentAircraft and other flight equipment 12,270 10,425Other property and equipment 2,173 1,814Deposits for future flight equipment 883 491 15,326 12,730Less accumulated depreciation and amortization (4,548) (4,342)Total Property and Equipment – Net 10,778 8,388Other AssetsOperating lease assets 1,302 1,195Goodwill 2,721 1,943Intangible assets – net 873 90Other noncurrent assets 334 292Total Other Assets 5,230 3,520Total Assets $ 19,768 $ 14,613
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)Alaska Air Group, Inc.As of December 31 (in millions except share amounts) 2024 2023LIABILITIES AND SHAREHOLDERS' EQUITYCurrent LiabilitiesAccounts payable $ 186 $ 207Accrued wages, vacation and payroll taxes 1,001 584Air traffic liability 1,712 1,136Other accrued liabilities 997 800Deferred revenue 1,592 1,221Current portion of long-term debt 442 289Current portion of operating lease liabilities 207 158Current portion of finance lease liabilities 8 64Total Current Liabilities 6,145 4,459Noncurrent LiabilitiesLong-term debt, net of current portion 4,491 2,182Operating lease liabilities, net of current portion 1,198 1,125Finance lease liabilities, net of current portion 47 -Deferred income taxes 934 695Deferred revenue 1,664 1,382Obligation for pension and post-retirement medical benefits 460 362Other liabilities 457 295Total Noncurrent Liabilities 9,251 6,041Commitments and ContingenciesShareholders' EquityPreferred stock, $0.01 par value, Authorized: 5,000,000 shares, none – -issuedor outstandingCommon stock, $0.01 par value, Authorized: 400,000,000 shares, Issued: 1 12024 – 141,449,174 shares; 2023 – 138,960,830 shares, Outstanding: 2024 -123,119,199 shares; 2023 – 126,090,353 sharesCapital in excess of par value 811 695Treasury stock (common), at cost: 2024 – 18,329,975 shares; 2023 – (1,131) (819)12,870,477 sharesAccumulated other comprehensive loss (239) (299)Retained earnings 4,930 4,535Total Shareholders' Equity 4,372 4,113Total Liabilities and Shareholders' Equity $ 19,768 $ 14,613
SUMMARY CASH FLOW (unaudited)Alaska Air Group, Inc.(in millions) Year Ended Nine Months Ended Three Months Ended December 31, 2024 September30, 2024(a) December31, 2024(b)Cash Flows from Operating Activities:Net income $ 395 $ 324 $ 71Adjustments to reconcile net income to net cash 577 451 126provided by operating activitiesChanges in working capital 492 415 77Net cash provided by operating activities 1,464 1,190 274Cash Flows from Investing Activities:Property and equipment additions (1,281) (851) (430)Acquisition of Hawaiian Airlines, net of cash acquired (659) (659) -Supplier proceeds 162 162 -Other investing activities 1,144 912 232Net cash used in investing activities (634) (436) (198)Cash Flows from Financing Activities 119 7 112Net increase in cash and cash equivalents 949 761 188Cash, cash equivalents, and restricted cash at 308 308 1,069beginning of periodCash, cash equivalents, and restricted cash at end $ 1,257 $ 1,069 $ 1,257of period
(a) As reported in Form 10-Q for the third quarter of 2024.(b) Cash flows for the three months ended December 31, 2024 can be calculated by subtracting cash flows for the nine months ended September 30, 2024, as reported in Form 10-Q for the third quarter 2024, from the year ended December 31, 2024.(c) Cash, cash equivalents, and restricted cash shown in the Summary Cash Flow consists of restricted cash presented within Restricted Cash as well as certain restricted cash balances presented within Other noncurrent assets in the condensed consolidated balance sheets.
SPECIAL ITEMS (unaudited)
Air Group has classified certain operating and non-operating activity as special items due to their unusual or infrequently occurring nature. We believe disclosing information about these items separately improves comparable year-over-year analysis and allows stakeholders to better understand our results of operations. A description of the special items is provided below.
Fleet transition: Fleet transition costs (benefits) are associated with the retirement and disposition of Airbus acquired from Virgin America and Q400 aircraft.
Labor agreements: Labor agreement costs in 2024 are for retroactive pay for Alaska flight attendants pursuant to the agreement in concept reached in January 2025. Costs in 2023 are for contractual changes to Alaska pilots' sick leave benefits.
Integration costs: Integration costs are associated with the acquisition of Hawaiian Airlines and primarily consist of legal and professional fees, change in control payments, and other employee-related expenses.
Litigation: Litigation costs represent expenses associated with the Virgin trademark license agreement with the Virgin Group and recorded following a negative ruling in an appeal case in 2024.
Net non-operating: The income in 2024 is for gains on Hawaiian debt extinguishment in the fourth quarter. The expense in 2023 is primarily for interest expense associated with certain Virgin America A321neo lease agreements which were modified as part of Alaska's fleet transition.
Three Months Ended December 31, Twelve Months Ended December 31,(in millions) 2024 2023 2024 2023Operating ExpensesFleet transition $ (40) $ 30 $ 11 $ 385Labor agreements 43 – 73 51Integration costs 80 7 208 7Litigation 8 – 53 -Special items – operating $ 91 $ 37 $ 345 $ 443Non-operating Income (Expense)Special items – net non-operating $ 17 $ (4) $ 16 $ (18)
OPERATING STATISTICS SUMMARY (unaudited)Full year amounts below reflect the results of operations for Hawaiian Airlines for the period September 18, 2024 throughDecember 31, 2024. Three Months Ended December 31, Twelve Months Ended December 31, 2024 2023 Change 2024 2023 ChangeConsolidated Operating Statistics:(a)Revenue passengers (000) 14,339 10,903 32% 49,238 44,557 11%RPMs (000,000) “traffic” 19,068 14,153 35% 63,871 57,362 11%ASMs (000,000) “capacity” 22,744 17,077 33% 76,167 68,524 11%Load factor 83.8% 82.9% 0.9 pts 83.9% 83.7% 0.2 ptsYield 16.67¢ 16.43¢ 1% 16.68¢ 16.61¢ -%PRASM 13.97¢ 13.62¢ 3% 13.99¢ 13.90¢ 1%RASM 15.54¢ 14.95¢ 4% 15.41¢ 15.21¢ 1%CASMex(b) 11.57¢ 10.31¢ 12% 10.80¢ 10.06¢ 7%Economic fuel cost per gallon(b)(c) $2.54 $3.42 (26)% $2.74 $3.21 (15)%Fuel gallons (000,000)(c) 279 204 37% 925 824 12%ASMs per gallon 81.6 83.7 (3)% 82.3 83.2 (1)%Departures (000) 131 103 27% 461 414 11%Average full-time equivalent employees 30,396 23,117 31% 25,751 23,319 10%(FTEs)Operating fleet(d) 392 314 78 a/c 392 314 78 a/cAlaska Airlines Operating Statistics:RPMs (000,000) “traffic” 13,306 13,008 2% 53,680 52,975 1%ASMs (000,000) “capacity” 15,754 15,708 -% 63,873 63,292 1%Economic fuel cost per gallon $2.55 $3.38 (25)% $2.74 $3.18 (14)%Hawaiian Airlines Operating Statistics:RPMs (000,000) “traffic” 4,509 – n/a 5,143 – n/aASMs (000,000) “capacity” 5,481 – n/a 6,245 – n/aEconomic fuel cost per gallon(c) $2.44 – n/a $2.43 – n/aRegional Operating Statistics:(e)RPMs (000,000) “traffic” 1,253 1,145 9% 5,048 4,387 15%ASMs (000,000) “capacity” 1,509 1,369 10% 6,049 5,232 16%Economic fuel cost per gallon $2.74 $3.67 (25)% $2.93 $3.41 (14)%
(a) Except for FTEs, data includes information related to third-party regional capacity purchase flying arrangements.(b) See a reconciliation of this non-GAAP measure and Note A for a discussion of the importance of this measure to investors in the accompanying pages.(c) Excludes operations under the Air Transportation Services Agreement (ATSA) with Amazon.(d) Includes aircraft owned and leased by Alaska, Hawaiian, and Horizon as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excludes all aircraft removed from operating service.(e) Data presented includes information related to flights operated by Horizon and third-party carriers.
GAAP TO NON-GAAP RECONCILIATIONS (unaudited) Alaska Air Group, Inc.
We are providing reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. Amounts in the tables below are rounded to the nearest million. As a result, a manual recalculation of certain figures using these rounded amounts may not agree directly to the actual figures presented in the tables below.
Adjusted Income Before Income Tax Reconciliation Three Months Ended December 31, Twelve Months Ended December 31,(in millions) 2024 2023 2024 2023Income before income tax $ 79 $ 4 $ 545 $ 323Adjusted for:Mark-to-market fuel hedge adjustment (6) 12 (28) (2)Unrealized gain on foreign debt (10) – (10) -Special items – operating 91 37 345 443Special items – net non-operating (17) 4 (16) 18Adjusted income before income tax $ 137 $ 57 $ 836 $ 782Pretax margin 2.2% 0.2% 4.6% 3.1%Adjusted pretax margin 3.9% 2.2% 7.1% 7.5%
Adjusted Income Before Income Tax, excluding Hawaiian Reconciliation(in millions) Twelve Months Ended December 31, 2024Operating Revenue $ 11,735Adjusted for:Hawaiian Airlines Operating Revenue 869Operating Revenue, excluding Hawaiian $ 10,866Income before income tax $ 545Adjusted for:Mark-to-market fuel hedge adjustment (28)Unrealized gain on foreign debt (10)Special items – operating 345Special items – net non-operating (16)Hawaiian Airlines pretax loss 58Adjusted income before income tax, excluding Hawaiian $ 894Adjusted pretax margin, excluding Hawaiian 8.2%
CASMex Reconciliation Three Months Ended Twelve Months Ended December 31, December 31,(in millions) 2024 2023 2024 2023Total operating expenses $ 3,461 $ 2,521 $ 11,165 $ 10,032Less the following components:Aircraft fuel, including hedging gains and losses 702 709 2,506 2,641Freighter costs 37 15 84 53Special items – operating 91 37 345 443Total operating expenses, excluding fuel, freighter $ 2,631 $ 1,760 $ 8,230 $ 6,895costs, and special itemsASMs 22,744 17,077 76,167 68,524CASMex 11.57 ¢ 10.31 ¢ 10.80 ¢ 10.06 ¢
CASMex, excluding Hawaiian Reconciliation(in millions) Twelve Months Ended December 31, 2024Total operating expenses $ 11,165Less the following components:Aircraft fuel, including hedging gains and losses 2,506Freighter costs 84Special items – operating 345Hawaiian Airlines non-fuel operating expenses(a) 681Total operating expenses, excluding fuel, freighter costs, special items, and Hawaiian $ 7,549Consolidated ASMs 76,167Less Hawaiian ASMs: 6,245Consolidated ASMs, excluding Hawaiian 69,922CASMex, excluding Hawaiian 10.80 ¢
(a) Amount excludes $20 million of Hawaiian Airlines freighter costs already included within Freighter costs.
Fuel Reconciliation Three Months Ended December 31, 2024 2023(in millions, except for per gallon amounts) Dollars Cost/Gal Dollars Cost/GalRaw or “into-plane” fuel cost $ 701 $ 2.51 $ 679 $ 3.33Losses on settled hedges 7 0.03 18 0.09Economic fuel expense $ 708 $ 2.54 $ 697 $ 3.42Mark-to-market fuel hedge adjustment (6) (0.02) 12 0.06Aircraft fuel, including hedging gains and losses $ 702 $ 2.52 $ 709 $ 3.48Fuel gallons 279 204 Twelve Months Ended December 31, 2024 2023(in millions, except for per gallon amounts) Dollars Cost/Gal Dollars Cost/GalRaw or “into-plane” fuel cost $ 2,496 $ 2.70 $ 2,579 $ 3.13Losses on settled hedges 38 0.04 64 0.08Economic fuel expense $ 2,534 $ 2.74 $ 2,643 $ 3.21Mark-to-market fuel hedge adjustment (28) (0.03) (2) -Aircraft fuel, including hedging gains and losses $ 2,506 $ 2.71 $ 2,641 $ 3.21Fuel gallons 925 824
Debt-to-capitalization, including leases(in millions) December 31, 2024 December 31, 2023Long-term debt, net of current portion $ 4,491 $ 2,182Capitalized operating leases 1,405 1,283Capitalized finance leases 55 64Adjusted debt, net of current portion of long-term debt $ 5,951 $ 3,529Shareholders' equity 4,372 4,113Total invested capital $ 10,323 $ 7,642Debt-to-capitalization ratio, including leases 58% 46%
Adjusted net debt to earnings before interest, taxes, depreciation, amortization, rent, and special items(in millions) December 31, 2024 December 31, 2023Long-term debt $ 4,933 $ 2,471Capitalized operating leases 1,405 1,283Capitalized finance leases 55 64Total adjusted debt 6,393 3,818Less: Total cash and marketable securities 2,475 1,791Adjusted net debt $ 3,918 $ 2,027(in millions) Twelve Months Ended Twelve Months Ended December 31, 2024 December 31, 2023Operating Income $ 570 $ 394Adjusted for:Special items – operating 345 443Mark-to-market fuel hedge adjustments (28) (2)Unrealized gain on foreign debt (10) -Depreciation and amortization 583 451Aircraft rent 207 208EBITDAR $ 1,667 $ 1,494Adjusted net debt to EBITDAR 2.4x 1.4x
OPERATING SEGMENTS (unaudited)Alaska Air Group, Inc. Three Months Ended December 31, 2024(in millions) Alaska Hawaiian Regional Consolidating Air Group Adjustments(c) Consolidated Airlines Airlines & Other(a) Adjusted(b)Operating RevenuePassenger revenue $ 2,073 $ 673 $ 432 $ – $ 3,178 $ – $ 3,178Loyalty program other revenue 161 48 15 – 224 – 224Cargo and other revenue 77 53 – 2 132 – 132Total Operating Revenue 2,311 774 447 2 3,534 – 3,534Operating ExpensesOperating expenses, excluding 1,736 619 330 (17) 2,668 91 2,759fuelFuel expense 447 172 89 – 708 (6) 702Total Operating Expenses 2,183 791 419 (17) 3,376 85 3,461Non-operating Income 14 (27) – (8) (21) 27 6(Expense)Income (Loss) Before Income $ 142 $ (44) $ 28 $ 11 $ 137 $ (58) $ 79Tax Three Months Ended December 31, 2023(in millions) Alaska Hawaiian Regional Consolidating Air Group Adjustments(c) Consolidated Airlines Airlines & Other(a) Adjusted(b)Operating RevenuePassenger revenue $ 1,928 $ – $ 398 $ – $ 2,326 $ – $ 2,326Loyalty program other revenue 152 – 13 – 165 – 165Cargo and other revenue 60 – – 2 62 – 62Total Operating Revenue 2,140 – 411 2 2,553 – 2,553Operating ExpensesOperating expenses, excluding 1,499 – 289 (13) 1,775 37 1,812fuelFuel expense 592 – 105 – 697 12 709Total Operating Expenses 2,091 – 394 (13) 2,472 49 2,521Non-operating Income (12) – – (12) (24) (4) (28)(Expense)Income (Loss) Before Income $ 37 $ – $ 17 $ 3 $ 57 $ (53) $ 4Tax
OPERATING SEGMENTS (unaudited)Alaska Air Group, Inc. Twelve Months Ended December 31, 2024(in millions) Alaska Hawaiian Regional Consolidating Air Group Adjustments(c) Consolidated Airlines Airlines & Other(a) Adjusted(b)Operating RevenuePassenger revenue $ 8,151 $ 757 $ 1,746 $ – $ 10,654 $ – $ 10,654Loyalty program other revenue 621 53 59 – 733 – 733Cargo and other revenue 279 59 – 10 348 – 348Total Operating Revenue 9,051 869 1,805 10 11,735 – 11,735Operating ExpensesOperating expenses, excluding 6,406 701 1,276 (69) 8,314 345 8,659fuelFuel expense 1,962 195 377 – 2,534 (28) 2,506Total Operating Expenses 8,368 896 1,653 (69) 10,848 317 11,165Non-operating Income 20 (31) – (40) (51) 26 (25)(Expense)Income (Loss) Before Income $ 703 $ (58) $ 152 $ 39 $ 836 $ (291) $ 545Tax Twelve Months Ended December 31, 2023(in millions) Alaska Hawaiian Regional Consolidating Air Group Adjustments(c) Consolidated Airlines Airlines & Other(a) Adjusted(b)Operating RevenuePassenger revenue $ 8,010 $ – $ 1,516 $ – $ 9,526 $ – $ 9,526Loyalty program other revenue 599 – 49 – 648 – 648Cargo and other revenue 244 – – 8 252 – 252Total Operating Revenue 8,853 – 1,565 8 10,426 – 10,426Operating ExpensesOperating expenses, excluding 5,841 – 1,121 (14) 6,948 443 7,391fuelFuel expense 2,264 – 379 – 2,643 (2) 2,641Total Operating Expenses 8,105 – 1,500 (14) 9,591 441 10,032Non-operating Income (15) – – (38) (53) (18) (71)(Expense)Income (Loss) Before Income $ 733 $ – $ 65 $ (16) $ 782 $ (459) $ 323Tax
(a) Includes consolidating entries, Air Group parent company, Horizon, McGee Air Services, and other immaterial business units.(b) The Air Group Adjusted column represents the financial information that is reviewed by management to assess performance of operations and determine capital allocation and excludes certain charges.(c) Includes special items, mark-to-market fuel hedge accounting adjustments, and unrealized gain on foreign debt.
SUPPLEMENTARY PRO FORMA COMPARATIVE FINANCIAL AND OPERATING INFORMATION (unaudited)We believe that analysis of specific financial and operational results on a pro forma basis provides more meaningful year-over-year comparisons. The table below provides results comparing the three months ended December 31, 2024 as reported to thepro forma three months ended December 31, 2023. Hawaiian's financial information has been conformed to reflect AirGroup's historical financial statement presentation. This information does not purport to reflect what our financial andoperational results would have been had the acquisition been consummated at the beginning of the periods presented. Three Months Ended December 31, 2024 As Reported 2023 Pro Forma(a) ChangePassenger revenue $ 3,178 $ 2,928 9%Loyalty program other revenue 224 196 14%Cargo and other revenue 132 97 36%Total Operating Revenue 3,534 3,221 10%Operating expenses, excluding fuel 2,759 2,393 15%Fuel expense 702 919 (24)%Total Operating Expenses 3,461 3,312 4%Operating Income (Loss) 73 (91) NMNon-operating income (expense) 6 (38) NMIncome (Loss) Before Tax 79 (129) NMSpecial items – operating 91 15 NMSpecial items – net non-operating (17) (5) NMMark-to-market fuel hedge adjustments (6) 16 NMUnrealized (gain)/loss on foreign debt (10) 7 NMAdjusted Income (Loss) Before Tax $ 137 $ (96) NMPretax Margin 2.2% (4.0)%Adjusted Pretax Margin 3.9% (3.0)%Pro Forma Comparative Operating StatisticsRevenue passengers (000) 14,339 13,559 5.8%RPMs (000,000) “traffic” 19,068 18,374 3.8%ASMs (000,000) “capacity” 22,744 22,181 2.5%Load factor 83.8% 82.8% 1.0 ptYield 16.67¢ 15.92¢ 4.7%RASM 15.54¢ 14.52¢ 7.0%CASMex 11.57¢ 10.65¢ 8.6%
(a) As provided on Form 8-K filed with the SEC on October 31, 2024, with certain immaterial adjustments made to reflect permissible measurement period adjustments.
Pro Forma Comparative CASMex Reconciliation Three Months Ended December 31,(in millions) 2024 As 2023 Pro Reported Forma(a)Total operating expenses $ 3,461 $ 3,312Less the following components:Aircraft fuel, including hedging gains and losses 702 919Freighter costs 37 15Special items – operating 91 15Total operating expenses, excluding fuel, freighter costs, and special items $ 2,631 $ 2,363ASMs 22,744 22,181CASMex 11.57 ¢ 10.65 ¢
(a) As provided on Form 8-K filed with the SEC on October 31, 2024, with certain immaterial adjustments made to reflect permissible measurement period adjustments.
Note A:Pursuant to Regulation G, we are providing reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. We believe that consideration of these non-GAAP financial measures may be important to investors for the following reasons:
— By excluding certain costs from our unit metrics, we believe that we have better visibility into the results of operations. Our industry is highly competitive and is characterized by high fixed costs, so even a small reduction in non-fuel operating costs can result in a significant improvement in operating results. We believe that all U.S. carriers are similarly impacted by changes in jet fuel costs over the long run, so it is important for management and investors to understand the impact of company-specific cost drivers which are more controllable by management. We adjust for expenses related directly to our freighter aircraft operations, including those costs incurred under the ATSA with Amazon, to allow for better comparability to other carriers that do not operate freighter aircraft. We also exclude certain special charges as they are unusual or nonrecurring in nature and adjusting for these expenses allows management and investors to better understand our cost performance.
— CASMex is one of the most important measures used by management and by the Air Group Board of Directors in assessing quarterly and annual cost performance. CASMex is also a measure commonly used by industry analysts, and we believe it is the basis by which they have historically compared our airline to others in the industry. The measure is also the subject of frequent questions from investors.
— Adjusted pretax income is an important metric for the employee incentive plan, which covers the majority of Air Group employees.
— Disclosure of the individual impact of certain noted items provides investors the ability to measure and monitor performance both with and without these special items. We believe that disclosing the impact of these items as noted above is important because it provides information on significant items that are not necessarily indicative of future performance. Industry analysts and investors consistently measure our performance without these items for better comparability between periods and among other airlines.
— Although we disclose our unit revenue, we do not, nor are we able to, evaluate unit revenue excluding the impact that changes in fuel costs have had on ticket prices. Fuel expense represents a large percentage of our total operating expenses. Fluctuations in fuel prices often drive changes in unit revenue in the mid-to-long term. Although we believe it is useful to evaluate non-fuel unit costs for the reasons noted above, we would caution readers of these financial statements not to place undue reliance on unit costs excluding fuel as a measure or predictor of future profitability because of the significant impact of fuel costs on our business.
GLOSSARY OF TERMS
Adjusted net debt – long-term debt, including current portion, plus capitalized operating and finance leases, less cash, restricted cash, and marketable securities
Adjusted net debt to EBITDAR- represents net adjusted debt divided by EBITDAR (trailing twelve months earnings before interest, taxes, depreciation, amortization, special items and rent)
Aircraft Utilization- block hours per day; this represents the average number of hours per day our aircraft are in transit
Aircraft Stage Length- represents the average miles flown per aircraft departure
ASMs- available seat miles, or “capacity”; represents total seats available across the fleet multiplied by the number of miles flown
CASM- operating costs per ASM; represents all operating expenses including fuel, freighter costs, and special items
CASMex- operating costs excluding fuel, freighter costs, and special items per ASM, or “unit cost”
Debt-to-capitalization ratio- represents adjusted debt (long-term debt plus capitalized operating and finance lease liabilities) divided by total equity plus adjusted debt
Diluted Earnings per Share – represents earnings per share (EPS) using fully diluted shares outstanding
Diluted Shares – represents the total number of shares that would be outstanding if all possible sources of conversion, such as stock options, were exercised
Economic Fuel- best estimate of the cash cost of fuel, net of the impact of our fuel-hedging program and excluding operations under the Air Transportation Service Agreement (ATSA) with Amazon
Freighter Costs – operating expenses directly attributable to the operation of Alaska's B737 freighter aircraft and Hawaiian's A330-300 freighter aircraft exclusively performing cargo missions
Load Factor- RPMs as a percentage of ASMs; represents the number of available seats that were filled with paying passengers
PRASM- passenger revenue per ASM, or “passenger unit revenue”
RASM- operating revenue per ASMs, or “unit revenue”; operating revenue includes all passenger revenue, freight & mail, loyalty program revenue, and other ancillary revenue; represents the average total revenue for flying one seat one mile
RPMs- revenue passenger miles, or “traffic”; represents the number of seats that were filled with paying passengers; one passenger traveling one mile is one RPM
Yield- passenger revenue per RPM; represents the average passenger revenue for flying one passenger one mile
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