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Alaska Air Group reports second quarter 2023 results

Delivered industry-leading adjusted pre-tax margins of 18.3% on record quarterly revenue

Adjusted pre-tax margin exceeds 2019 second quarter results despite higher fuel costs

Achieved industry's best on-time performance and completion rate in June

SEATTLE, July 25, 2023 /PRNewswire/ -- Alaska Air Group (NYSE: ALK) today reported financial results for the second quarter ending June 30, 2023, and provided outlook for the third quarter ending September 30, 2023.

"People are hungry to travel and our frontline employees are delivering the safe, reliable and caring experience that people expect when they fly with us," said CEO Ben Minicucci. "I'm so proud of our team for knocking it out of the park and delivering industry-leading operational and financial outcomes. We chose to prioritize reliability, which is imperative to restoring stability, improving predictability for our guests and employees, capturing record revenue, and serving as the foundation for our long-term profitable growth."

Financial Highlights:

  • Reported net income for the second quarter of 2023 under Generally Accepted Accounting Principles (GAAP) of $240 million, or $1.86 per share, compared to a net income of $139 million, or $1.09 per share, for the second quarter of 2022.
  • Reported net income for the second quarter of 2023, excluding special items and mark-to-market fuel hedge accounting adjustments, of $387 million, or $3.00 per share, compared to $280 million, or $2.19 per share, for the second quarter of 2022. This quarter's adjusted results exceed the First Call analyst consensus estimate of $2.70 per share.
  • Generated adjusted pre-tax margins of 18.3%, a 250-basis point increase over the same period in 2019.
  • Recorded $2.8 billion in operating revenue for the second quarter, the highest quarterly total in company history.
  • Received $435 million in bank card partner commissions driven by increased consumer spending.
  • Repurchased 871,987 shares of common stock for approximately $39 million in the second quarter, bringing total repurchases to $57 million for the six months ended June 30, 2023. The company continues to expect share repurchases of at least $100 million in 2023.
  • Generated $610 million in operating cash flow for the second quarter.
  • Held $2.4 billion in unrestricted cash and marketable securities as of June 30, 2023.
  • Ended the quarter with a debt-to-capitalization ratio of 48%, within the target range of 40% to 50%.

Operational Updates: 

  • Received eight 737-9 aircraft and six E175 aircraft during the quarter, bringing the totals in the Alaska and Horizon fleets to 51 and 39, respectively.
  • Announced new routes to Nassau, Bahamas from Seattle and Los Angeles and Guatemala City, Guatemala from Los Angeles, marking six countries that Alaska will fly to and from its West Coast hubs.
  • Launched partnership with STARLUX Airlines, whose flights between Los Angeles and Taipei allow Mileage Plan members to connect to 16 destinations across Asia.
  • Reopened the renovated D Concourse Lounge in Seattle, offering 50% more seating and improved amenities.
  • Completed Intelsat satellite Wi-Fi installation across the Mainline fleet.

Environmental, Social and Governance Updates:

  • Released the 2022 Care Report, sharing the company's progress towards its environmental, social and governance goals, as well as highlighting accomplishments and ongoing initiatives.
  • Contributed a retired Q400 aircraft to ZeroAvia to support its development of a hydrogen-electric powertrain system, showcasing Alaska's commitment to creating a sustainable future for aviation.

Awards and Recognition:

  • Mileage Plan named Best Airline Reward program for 2023-2024 by U.S. News & World Report for the 9th consecutive year.
  • Presented with the award for "Executive Leadership - North America" at the Airline Strategy Awards in recognition of Alaska's strong financial performance and operational excellence.
  • Named to Forbes' Best Employers for Diversity list, receiving the highest ranking of all airlines.
  • Scored 100% for the second year in a row in Disability:IN's Disability Equality Index, which benchmarks companies on their disability inclusion and equality.
  • Rated by KAYAK users as the #1 overall airline in North America, earning the top scores for crew, comfort, food and boarding.

The following table reconciles the company's reported GAAP net income (loss) per share (EPS) for the three and six months ended June 30, 2023 and 2022 to adjusted amounts.


Three Months Ended June 30,


2023


2022

(in millions, except per-share amounts)

Dollars


Diluted EPS


Dollars


Diluted EPS

GAAP net income per share

$               240


$              1.86


$               139


$              1.09

Mark-to-market fuel hedge adjustments

1


0.01


40


0.31

Special items - fleet transition and other(a)

186


1.44


146


1.14

Special items - net non-operating(c)

6


0.05



Income tax effect of reconciling items above

(46)


(0.36)


(45)


(0.35)

Non-GAAP adjusted net income per share

$               387


$              3.00


$               280


$              2.19










Six Months Ended June 30,


2023


2022

(in millions, except per-share amounts)

Dollars


Diluted EPS


Dollars


Diluted EPS

GAAP net income (loss) per share

$                 98


$              0.76


$                 (4)


$            (0.03)

Mark-to-market fuel hedge adjustments

21


0.16


(67)


(0.53)

Special items - fleet transition and other(a)

199


1.54


221


1.75

Special items - labor and related(b)

51


0.40



Special items - net non-operating(c)

6


0.05



Income tax effect of reconciling items above

(67)


(0.52)


(37)


(0.30)

Non-GAAP adjusted net income per share

$               308


$              2.39


$               113


$              0.89



(a)

Special items - fleet transition and other in the three and six months ended June 30, 2023 and 2022 is primarily for impairment charges and accelerated costs associated with the retirement of Airbus and Q400 aircraft.

(b)

Special items - labor and related in the six months ended June 30, 2023 is primarily for changes to Alaska pilots' sick leave benefits resulting from an agreement signed in the first quarter of 2023.

(c)

Special items - net non-operating in the three and six months ended June 30, 2023 is for interest expense associated with certain A321neo lease agreements which were modified as part of Alaska's fleet transition.

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 25, 2023. 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 2023 Forecast Information




Q3 Expectation

Capacity (ASMs) % change versus 2022


Up 10% to 13%

Total revenue % change versus 2022


Up 0% to 3%

Cost per ASM excluding fuel and special items (CASMex) % change versus 2022


Down 0% to 2%

Economic fuel cost per gallon


$2.70 to $2.80

Adjusted pre-tax margin %


14% to 16%




Full Year Expectation

Capacity (ASMs) % change versus 2022


Up 11% to 13%

Total revenue % change versus 2022


Up 8% to 10%

Cost per ASM excluding fuel and special items (CASMex) % change versus 2022


Down 1% to 3%

Adjusted pre-tax margin %


9% to 12%

Earnings per share(a)


$5.50 to $7.50

Capital expenditures


~$1.8 billion



(a)

Earnings per share guidance assumes a full year tax rate of approximately 25%

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

This news release may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by our forward-looking statements, assumptions or beliefs. For a 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, 2022. 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 Airlines and our regional partners serve more than 120 destinations across the United States, Belize, Canada, Costa Rica and Mexico. We strive to be the most caring airline with award-winning customer service and an industry-leading loyalty program. As a member of the oneworld alliance, and with our additional global partners, our guests can travel to more than 1,000 destinations on more than 25 airlines while earning and redeeming miles on flights to locations around the world. Learn more about Alaska at news.alaskaair.com and follow @alaskaairnews for news and stories. Alaska Airlines and Horizon Air are subsidiaries of Alaska Air Group.

###

 

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)

2023


2022


Change


2023


2022


Change

Operating Revenue












Passenger revenue

$        2,598


$        2,418


7 %


$        4,582


$        3,929


17 %

Mileage Plan other revenue

170


175


(3) %


324


287


13 %

Cargo and other revenue

70


65


8 %


128


123


4 %

Total Operating Revenue

2,838


2,658


7 %


5,034


4,339


16 %













Operating Expenses












Wages and benefits

754


639


18 %


1,477


1,245


19 %

Variable incentive pay

57


56


2 %


104


92


13 %

Aircraft fuel, including hedging gains and
losses

573


776


(26) %


1,238


1,123


10 %

Aircraft maintenance

125


104


20 %


249


239


4 %

Aircraft rent

54


73


(26) %


113


146


(23) %

Landing fees and other rentals

167


136


23 %


319


274


16 %

Contracted services

95


82


16 %


190


160


19 %

Selling expenses

81


78


4 %


147


136


8 %

Depreciation and amortization

113


104


9 %


217


206


5 %

Food and beverage service

60


50


20 %


114


91


25 %

Third-party regional carrier expense

54


50


8 %


106


92


15 %

Other

182


177


3 %


359


329


9 %

Special items - fleet transition and other

186


146


27 %


199


221


(10) %

Special items - labor and related



NM


51



NM

Total Operating Expenses

2,501


2,471


1 %


4,883


4,354


12 %

Operating Income (Loss)

337


187


80 %


151


(15)


NM

Non-operating Income (Expense)












Interest income

22


11


100 %


39


18


117 %

Interest expense

(28)


(26)


8 %


(56)


(53)


6 %

Interest capitalized

7


3


133 %


14


5


180 %

Special items - net non-operating

(6)



NM


(6)



NM

Other - net

(7)


10


(170) %


(16)


24


(167) %

Total Non-operating Expense

(12)


(2)


NM


(25)


(6)


NM

Income (Loss) Before Income Tax

325


185




126


(21)



Income tax expense (benefit)

85


46




28


(17)



Net Income (Loss)

$           240


$           139




$             98


$              (4)















Basic Earnings (Loss) Per Share

$          1.88


$          1.10




$          0.77


$        (0.03)



Diluted Earnings (Loss) Per Share

$          1.86


$          1.09




$          0.76


$        (0.03)



Shares used for computation:












Basic

127.440


126.543




127.470


126.265



Diluted

128.919


127.795




128.860


126.265



 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)




Alaska Air Group, Inc.








(in millions)

June 30, 2023


December 31, 2022

ASSETS




Current Assets




Cash and cash equivalents

$                            536


$                            338

Marketable securities

1,906


2,079

Total cash and marketable securities

2,442


2,417

Receivables - net

351


296

Inventories and supplies - net

107


104

Prepaid expenses

187


163

Other current assets

157


60

Total Current Assets

3,244


3,040





Property and Equipment




Aircraft and other flight equipment

9,918


9,053

Other property and equipment

1,714


1,661

Deposits for future flight equipment

550


670


12,182


11,384

Less accumulated depreciation and amortization

4,219


4,127

Total Property and Equipment - net

7,963


7,257





Other Assets




Operating lease assets

1,318


1,471

Goodwill and intangible assets

2,036


2,038

Other noncurrent assets

268


380

Total Other Assets

3,622


3,889





Total Assets

$                      14,829


$                      14,186

 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)




Alaska Air Group, Inc.








(in millions, except share amounts)

June 30, 2023


December 31, 2022

LIABILITIES AND SHAREHOLDERS' EQUITY




Current Liabilities




Accounts payable

$                            212


$                            221

Accrued wages, vacation and payroll taxes

463


619

Air traffic liability

1,574


1,180

Other accrued liabilities

871


846

Deferred revenue

1,207


1,123

Current portion of operating lease liabilities

277


228

Current portion of long-term debt and finance leases

572


276

Total Current Liabilities

5,176


4,493





Long-Term Debt, Net of Current Portion

1,889


1,883





Noncurrent Liabilities




Long-term operating lease liabilities, net of current portion

1,148


1,393

Deferred income taxes

606


574

Deferred revenue

1,370


1,374

Obligation for pension and post-retirement medical benefits

362


348

Other liabilities

327


305

Total Noncurrent Liabilities

3,813


3,994





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: 2023 -
137,983,828 shares; 2022 - 136,883,042 shares, Outstanding: 2023 - 127,348,343
shares; 2022 - 127,533,916 shares

1


1

Capital in excess of par value

648


577

Treasury stock (common), at cost: 2023 - 10,635,485 shares; 2022 - 9,349,944
shares

(731)


(674)

Accumulated other comprehensive loss

(365)


(388)

Retained earnings

4,398


4,300


3,951


3,816

Total Liabilities and Shareholders' Equity

$                      14,829


$                      14,186

 

SUMMARY CASH FLOW (unaudited)





Alaska Air Group, Inc.






(in millions)

Six Months Ended
June 30, 2023


Three Months Ended
March 31, 2023 (a)


Three Months Ended
June 30, 2023(b)

Cash Flows from Operating Activities:






Net Income (Loss)

$                              98


$                      (142)


$                        240

Non-cash reconciling items

511


191


320

Changes in working capital

223


173


50

Net cash provided by operating activities

832


222


610







Cash Flows from Investing Activities:






Property and equipment additions

(634)


(124)


(510)

Other investing activities

155


184


(29)

Net cash provided by (used in) investing activities

(479)


60


(539)







Cash Flows from Financing Activities:

(165)


(114)


(51)







Net increase in cash and cash equivalents

188


168


20

Cash, cash equivalents, and restricted cash at beginning of
period

369


369


537

Cash, cash equivalents, and restricted cash at end of the
period

$                            557


$                        537


$                        557



(a)

As reported in Form 10-Q for the first quarter of 2023.

(b)

Cash flows for the three months ended June 30, 2023, can be calculated by subtracting cash flows for the three months ended March 31, 2023, as reported in Form 10-Q for the first quarter 2023, from the six months ended June 30, 2023.

 

OPERATING STATISTICS SUMMARY (unaudited)







Alaska Air Group, Inc.

























Three Months Ended June 30,


Six Months Ended June 30,


2023


2022


Change


2023


2022


Change

Consolidated Operating Statistics:(a)












Revenue passengers (000)

11,592


11,005


5 %


21,444


19,700


9 %

RPMs (000,000) "traffic"

14,936


13,746


9 %


27,491


24,332


13 %

ASMs (000,000) "capacity"

17,160


15,611


10 %


32,865


29,394


12 %

Load factor

87.0 %


88.1 %


(1.1) pts


83.6 %


82.8 %


0.8 pts

Yield

17.40¢


17.59¢


(1) %


16.67¢


16.15¢


3 %

RASM

16.54¢


17.03¢


(3) %


15.32¢


14.76¢


4 %

CASMex(b)

10.15¢


9.92¢


2 %


10.33¢


10.24¢


1 %

Economic fuel cost per gallon(b)

$2.76


$3.76


(27) %


$3.07


$3.23


(5) %

Fuel gallons (000,000)

207


196


6 %


396


368


8 %

ASMs per gallon

82.9


79.6


4 %


83.0


79.9


4 %

Departures (000)

104.4


105.7


(1) %


199.8


198.9


— %

Average full-time equivalent employees
(FTEs)

23,301


22,603


3 %


23,140


22,092


5 %

Mainline Operating Statistics:












Revenue passengers (000)

9,221


8,321


11 %


17,054


14,887


15 %

RPMs (000,000) "traffic"

13,827


12,460


11 %


25,496


21,972


16 %

ASMs (000,000) "capacity"

15,851


14,052


13 %


30,462


26,439


15 %

Load factor

87.2 %


88.7 %


(1.5) pts


83.7 %


83.1 %


0.6 pts

Yield

16.12¢


16.28¢


(1) %


15.37¢


14.89¢


3 %

RASM

15.48¢


16.02¢


(3) %


14.26¢


13.81¢


3 %

CASMex(b)

9.26¢


8.98¢


3 %


9.38¢


9.29¢


1 %

Economic fuel cost per gallon(b)

$2.74


$3.74


(27) %


$3.05


$3.21


(5) %

Fuel gallons (000,000)

179


165


8 %


345


311


11 %

ASMs per gallon

88.6


85.2


4 %


88.3


85.0


4 %

Departures (000)

67.2


61.6


9 %


129.8


117.4


11 %

Average full-time equivalent employees
(FTEs)

18,147


17,315


5 %


17,966


16,825


7 %

Aircraft utilization

11.5


10.1


14 %


11.3


9.8


15 %

Average aircraft stage length

1,384


1,363


2 %


1,375


1,349


2 %

Operating fleet(d)

226


233


(7) a/c


226


233


(7) a/c

Regional Operating Statistics:(c)












Revenue passengers (000)

2,372


2,685


(12) %


4,390


4,813


(9) %

RPMs (000,000) "traffic"

1,109


1,285


(14) %


1,994


2,360


(16) %

ASMs (000,000) "capacity"

1,309


1,559


(16) %


2,403


2,955


(19) %

Load factor

84.7 %


82.4 %


2.3 pts


83.0 %


79.9 %


3.1 pts

Yield

33.37¢


30.35¢


10 %


33.30¢


27.88¢


19 %

RASM

29.26¢


26.04¢


12 %


28.59¢


23.21¢


23 %

Departures (000)

37.2


44.1


(16) %


70.0


81.5


(14) %

Operating fleet(d)

81


104


(23) a/c


81


104


(23) 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.

 

OPERATING SEGMENTS (unaudited)

Alaska Air Group, Inc.





























Three Months Ended June 30, 2023

(in millions)

Mainline


Regional


Horizon


Consolidating
& Other(a)


Air Group
Adjusted(b)


Special
Items(c)


Consolidated

Operating Revenue














Passenger revenue

$     2,228


$        370


$          —


$                  —


$     2,598


$          —


$        2,598

CPA revenue



92


(92)




Mileage Plan other revenue

158


12




170



170

Cargo and other revenue

67




3


70



70

Total Operating Revenue

2,453


382


92


(89)


2,838



2,838

Operating Expenses














Operating expenses, excluding fuel

1,468


279


87


(92)


1,742


186


1,928

Fuel expense

490


81



1


572


1


573

Total Operating Expenses

1,958


360


87


(91)


2,314


187


2,501

Non-operating Income (Expense)

3



(10)


1


(6)


(6)


(12)

Income (Loss) Before Income Tax

$        498


$          22


$          (5)


$                    3


$        518


$      (193)


$           325

Pretax Margin









18.3 %




11.5 %
















Three Months Ended June 30, 2022

(in millions)

Mainline


Regional


Horizon


Consolidating
& Other(a)


Air Group
Adjusted(b)


Special
Items(c)


Consolidated

Operating Revenue














Passenger revenue

$     2,028


$        390


$          —


$                  —


$     2,418


$          —


$        2,418

CPA revenue



101


(101)




Mileage Plan other revenue

159


16




175



175

Cargo and other revenue

64




1


65



65

Total Operating Revenue

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 %

 


Six Months Ended June 30, 2023

(in millions)

Mainline


Regional


Horizon


Consolidating
& Other(a)


Air Group
Adjusted(b)


Special
Items(c)


Consolidated

Operating Revenue














Passenger revenue

$     3,918


$        664


$          —


$                  —


$    4,582


$          —


$        4,582

CPA revenue



170


(170)




Mileage Plan other revenue

301


23




324



324

Cargo and other revenue

124




4


128



128

Total Operating Revenue

4,343


687


170


(166)


5,034



5,034

Operating Expenses














Operating expenses, excluding fuel

2,858


535


171


(169)


3,395


250


3,645

Fuel expense

1,051


166




1,217


21


1,238

Total Operating Expenses

3,909


701


171


(169)


4,612


271


4,883

Non-operating Income (Expense)

(3)



(18)


2


(19)


(6)


(25)

Income (Loss) Before Income Tax

$        431


$        (14)


$        (19)


$                    5


$       403


$      (277)


$           126

Pretax Margin









8.0 %




2.5 %
















Six Months Ended June 30, 2022

(in millions)

Mainline


Regional


Horizon


Consolidating
& Other(a)


Air Group
Adjusted(b)


Special
Items(c)


Consolidated

Operating Revenue














Passenger revenue

$     3,271


$        658


$          —


$                  —


$    3,929


$          —


$        3,929

CPA revenue



195


(195)




Mileage Plan other revenue

259


28




287



287

Cargo and other revenue

121




2


123



123

Total Operating Revenue

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) %



(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 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)

2023


2022


2023


2022

Consolidated:








CASM

                14.57 ¢


                15.84 ¢


                14.86 ¢


                14.81 ¢

Less the following components:








Aircraft fuel, including hedging gains and losses

3.34


4.98


3.77


3.82

Special items - fleet transition and other(a)

1.08


0.94


0.61


0.75

Special items - labor and related(b)



0.15


CASM excluding fuel and special items

                10.15 ¢


                  9.92 ¢


                10.33 ¢


                10.24 ¢









Mainline:








CASM

                13.56 ¢


                15.06 ¢


                13.73 ¢


                13.69 ¢

Less the following components:








Aircraft fuel, including hedging gains and losses

3.10


5.06


3.52


3.84

Special items - fleet transition and other(a)

1.20


1.02


0.67


0.56

Special items - labor and related(b)



0.16


CASM excluding fuel and special items

                  9.26 ¢


                  8.98 ¢


                  9.38 ¢


                  9.29 ¢



(a)

Special items - fleet transition and other in the three and six months ended June 30, 2023 and 2022 is primarily for impairment charges and accelerated costs associated with the retirement of Airbus and Q400 aircraft.

(b)

Special items - labor and related in the six months ended June 30, 2023 is primarily for changes to Alaska pilots' sick leave benefits resulting from an agreement signed in the first quarter of 2023.

 

Fuel Reconciliation


Three Months Ended June 30,


2023


2022

(in millions, except for per-gallon amounts)

Dollars


Cost/Gallon


Dollars


Cost/Gallon

Raw or "into-plane" fuel cost

$                   555


$                  2.68


$                   824


$                  4.20

Losses (gains) on settled hedges

17


0.08


(88)


(0.44)

Consolidated economic fuel expense

572


2.76


736


3.76

Mark-to-market fuel hedge adjustment

1



40


0.20

GAAP fuel expense

$                   573


$                  2.76


$                   776


$                  3.96

Fuel gallons



207




196










Six Months Ended June 30,


2023


2022

(in millions, except for per gallon amounts)

Dollars


Cost/Gallon


Dollars


Cost/Gallon

Raw or "into-plane" fuel cost

$                1,188


$                  3.00


$                1,328


$                  3.61

Losses (gains) on settled hedges

29


0.07


(138)


(0.38)

Consolidated economic fuel expense

1,217


3.07


1,190


3.23

Mark-to-market fuel hedge adjustment

21


0.05


(67)


(0.18)

GAAP fuel expense

$                1,238


$                  3.12


$                1,123