Alaska Air Group reports first quarter 2025 results

Led the industry in domestic unit revenue performanceRatified two agreements with Alaska and Hawaiian flight attendants represented by AFAGenerated operating cash flow of $459 millionRepurchased $149 million in shares year-to-date1 , /PRNewswire/ -- Alaska Air Group (NYSE: ALK) today reported financial results for the first quarter ending March 31, 2025. Our team is executing well on integration milestones, cost performance, synergy capture and the initiatives that underpin the Alaska Accelerate plan. Our efforts to deliver $1 billion in incremental profit by 2027 are off to a strong start. "Alaska is built for times like these with our relentless focus on safety, care and performance," said CEO Ben Minicucci. "Amid the economic uncertainty, our teams controlled what they can control and delivered results that strengthen our foundation for the long term. We're growing scale, relevance and loyalty in our hubs, we're already recognizing synergies from the combination with Hawaiian Airlines, and our employees have never been more engaged and excited about our future. Between the progress on our Alaska Accelerate strategic plan and the resilient business model we've built over decades, Alaska is well positioned to thrive in the years ahead." Quarter in Review: Air Group's Consolidated Statement of Operations, Consolidated Balance Sheets, and Summary Cash Flow include Hawaiian Airlines from September 18, 2024 onward. For comparability of financial and operational results, historical information has also been provided on a pro forma basis within the Supplementary Combined Comparative Operating Information in this filing and in prior 8-K filings. The pro forma information provided assumes Hawaiian is included in both 2024 and 2025. 1 Year-to-date repurchases through April 22, 2025 Q1 2025 Results Prior Expectation Actual Results Capacity (ASMs) % change versus pro forma 2024 Up 2.5% to 3.5% Up ~3.9% RASM % change versus pro forma 2024 Up high-single digits Up ~5.0% CASMex % change versus pro forma 2024 Up low-single digits to mid-single digits Up ~2.1% Economic fuel cost per gallon n/a $2.61 Adjusted loss per share $(0.70) to $(0.50) $(0.77) Our Generally Accepted Accounting Principles (GAAP) pretax margin for the first quarter was (7.4)%, with a GAAP net loss per share of $1.35. On an adjusted basis, our pretax margin was (4.5)%, with a net loss per share of $0.77. While macroeconomic factors and a softening demand environment began to negatively impact our results in February, we still delivered a 7 point year-over-year improvement to our adjusted pretax margin on a pro forma basis. Air Group capacity grew 3.9% during the quarter, approximately 1 point higher than expected, reflecting lower than expected flight cancellation rates. Total revenue grew 9.0% year-over-year, with unit revenue up 5.0% year-over-year — a result we believe will lead the industry, despite a 3 point impact from softening demand. Premium revenue remains resilient, up 10% year-over-year, and our loyalty program cash remuneration grew 12% year-over-year. Our revenue results reflect progress on key initiatives, such as network changes and synergies which are tracking in line with expectations. Unit costs increased 2.1% year-over-year. This cost performance is in line with our expectations, and inclusive of the new Alaska flight attendant contract, which was ratified in February. Economic fuel price per gallon was $2.61 in the first quarter, reflecting moderating crude oil prices offset by elevated West Coast refining margins. Our consolidated results reflect strong initial progress on the integration of Hawaiian Airlines, and the synergies it unlocks. We are realizing benefits from our combined network, improved asset utilization and greater connectivity for our guests. In the first quarter, Hawaiian unit revenue increased 8.8% year-over-year, and Hawaiian's adjusted pretax margin improved 14 points. Second Quarter and Full Year Forecast Information: For the second quarter of 2025, we expect the following results. Although overall bookings have stabilized as we look forward, our guidance reflects approximately 6 points of revenue impact to the second quarter due to recent demand softness. Consistent with prior commentary and expectations, Q2 2025 faces the most cost pressure while unit costs are expected to improve sequentially through the second half of the year. Q2 Expectation Capacity (ASMs) % change versus pro forma 2024 Up 2% to 3% RASM % change versus pro forma 2024 Flat to down low single digits CASMex % change versus pro forma 2024 Up mid to high single digits Adjusted earnings per share $1.15 to $1.65 Given recent economic uncertainty and volatility, we are not providing an update to our full year 2025 guidance. We are assessing a variety of scenarios, and expect to be solidly profitable in 2025 even if revenue remains pressured throughout the second half of the year. Absent the softer macroeconomic outlook, areas of our business within our control are performing well and in line with our prior expectations. We will provide further updates to full year guidance later this year. Financial Results and Updates: Reported GAAP net loss for the first quarter of 2025 of $166 million, or $1.35 per share, which includes Hawaiian results, compared to net loss of $132 million, or $1.05 per share, for the first quarter of 2024, which does not include Hawaiian results. Reported net loss for the first quarter of 2025, excluding special items and other adjustments, of $95 million, or $0.77 per share, which includes Hawaiian results, compared to net loss of $116 million, or $0.92 per share, for the first quarter of 2024, which does not include Hawaiian results. On a pro forma basis, adjusted pretax loss improved $190 million from $330 million in the first quarter of 2024 to $140 million in the first quarter of 2025. Repurchased 1.8 million shares of common stock for approximately $107 million in the first quarter, with year-to-date repurchases totaling $149 million as of April 22, 2025. Generated $459 million in operating cash flow for the first quarter. Held $2.5 billion in unrestricted cash and marketable securities as of March 31, 2025. Operational Updates: Ratified a three-year collective bargaining agreement (CBA) with Alaska's more than 6,900 AFA-represented flight attendants, recognizing them for their contributions to the company's success. Ratified a three-year extension of the existing CBA with Hawaiian's more than 2,100 AFA-represented flight attendants. The extension includes Hawaiian flight attendants in the company's Performance-Based Pay and Operational Performance Rewards programs, as well as other improved benefits. Reached a Tentative Agreement for an updated CBA with Horizon technicians, represented by AMFA. Expanded our combined fleet by eight aircraft during the quarter, adding four 737-9s, one 787-9, one E175, and two A330-300 freighters. Announced growth at our San Diego hub with three new nonstop routes to Phoenix, Chicago O'Hare, and Denver, as well as increased flight frequencies to Las Vegas, Sacramento, Salt Lake City, and San Jose to begin later this year. Integration Updates: Enhanced loyalty program benefits by offering status matching and reciprocal mileage earn between our Mileage Plan and HawaiianMiles programs. Continued to bring our operations closer together by co-locating Alaska and Hawaiian stations in Los Angeles, New York JFK, Phoenix, and San Francisco in order to provide a more seamless travel experience for our guests. Completed co-location of Alaska and Hawaiian Air Cargo operations in four Hawaiian locations — Honolulu, Maui, Kona, and Līhuʻe. Unified cargo booking systems, allowing customers to book shipments across both networks more easily. Other Updates: Introduced the Horizon Air Pilot Development Program in Hawai'i, the first of its kind in the state, providing students with a path to join Horizon Air while easing the financial burden of training costs. Announced investment in Loft Dynamics to develop the first hyper-realistic, full-motion Boeing 737 VR simulator, aiming to enhance pilot training and inform future training solutions across the industry. Named the best airline of 2025 by NerdWallet based on loyalty program value, elite status benefits, operational strength, and more. Named to Newsweek Reader's Choice list of top 10 best airport lounges in the U.S., a recognition of our continued investment in the lounge experience for guests traveling through our hubs. The following table reconciles the company's reported GAAP net loss per share (EPS) for the three months ended March 31, 2025 and 2024 to adjusted amounts. Three Months Ended March 31, 2025 2024 (in millions, except per share amounts) Dollars Per Share Dollars Per Share Net loss $ (166) $ (1.35) $ (132) $ (1.05) Adjusted for: Mark-to-market fuel hedge adjustments (3) (0.02) (13) (0.10) Losses on foreign debt 5 0.04 — — Special items - operating 91 0.74 34 0.27 Income tax effect of adjustments above (22) (0.18) (5) (0.04) Adjusted net loss $ (95) $ (0.77) $ (116) $ (0.92) A conference call regarding the first quarter results will be streamed online at 8:30 a.m. PDT on April 24, 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. 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 discussion of risks and uncertainties that may cause our forward-looking statements to differ materially, see Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 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 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, Hawaiian Airlines and Horizon Air are subsidiaries of Alaska Air Group, with McGee Air Services a subsidiary of Alaska Airlines. With hubs in Seattle, Honolulu, Portland, Anchorage, Los Angeles, San Diego and San Francisco, we deliver remarkable care as we fly our guests to more than 140 destinations throughout North America, Latin America, Asia and the Pacific. Alaska is a member of the oneworld Alliance with Hawaiian scheduled to join in 2026. With oneworld and our additional global partners, guests can earn and redeem miles for travel to over 1,000 worldwide destinations. Guests can book travel at alaskaair.com and hawaiianairlines.com. Learn more about what's happening at Alaska and Hawaiian. 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 March 31, (in millions, except per share amounts) 2025 2024 Change Operating Revenue Passenger revenue $ 2,808 $ 2,004 40 % Loyalty program other revenue 207 164 26 % Cargo and other revenue 122 64 91 % Total Operating Revenue 3,137 2,232 41 % Operating Expenses Wages and benefits 1,127 804 40 % Variable incentive pay 62 44 41 % Aircraft fuel, including hedging gains and losses 681 565 21 % Aircraft maintenance 220 122 80 % Aircraft rent 62 47 32 % Landing fees and other rentals 242 165 47 % Contracted services 145 97 49 % Selling expenses 100 77 30 % Depreciation and amortization 194 126 54 % Food and beverage service 85 58 47 % Third-party regional carrier expense 64 54 19 % Other 261 205 27 % Special items - operating 91 34 168 % Total Operating Expenses 3,334 2,398 39 % Operating Loss (197) (166) (19) % Non-operating Income (Expense) Interest income 26 17 53 % Interest expense (66) (35) 89 % Interest capitalized 12 6 100 % Other - net (8) — NM Total Non-operating Expense (36) (12) 200 % Loss Before Income Tax (233) (178) Income tax benefit (67) (46) Net Loss $ (166) $ (132) Basic Loss Per Share $ (1.35) $ (1.05) Diluted Loss Per Share $ (1.35) $ (1.05) Weighted Average Shares Outstanding used for computation: Basic 123.134 125.970 Diluted 123.134 125.970 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) Alaska Air Group, Inc. (in millions) March 31, 2025 December 31, 2024 ASSETS Current Assets Cash and cash equivalents $ 1,044 $ 1,201 Restricted cash 28 29 Marketable securities 1,420 1,274 Total cash, restricted cash, and marketable securities 2,492 2,504 Receivables - net 569 558 Inventories and supplies - net 206 199 Prepaid expenses 281 307 Other current assets 173 192 Total Current Assets 3,721 3,760 Property and Equipment Aircraft and other flight equipment 12,619 12,273 Other property and equipment 2,197 2,173 Deposits for future flight equipment 700 883 15,516 15,329 Less accumulated depreciation and amortization (4,649) (4,548) Total Property and Equipment - net 10,867 10,781 Other Assets Operating lease assets 1,313 1,296 Goodwill 2,724 2,724 Intangible assets - net 859 873 Other noncurrent assets 334 334 Total Other Assets 5,230 5,227 Total Assets $ 19,818 $ 19,768 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in millions, except share amounts) March 31, 2025 December 31, 2024 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $ 237 $ 186 Accrued wages, vacation and payroll taxes 749 1,001 Air traffic liability 2,204 1,712 Other accrued liabilities 1,042 997 Deferred revenue 1,727 1,592 Current portion of long-term debt 519 442 Current portion of operating lease liabilities 214 207 Current portion of finance lease liabilities 8 8 Total Current Liabilities 6,700 6,145 Noncurrent Liabilities Long-term debt, net of current portion 4,290 4,491 Operating lease liabilities, net of current portion 1,200 1,198 Finance lease liabilities, net of current portion 45 47 Deferred income taxes 871 934 Deferred revenue 1,587 1,664 Obligation for pension and post-retirement medical benefits 457 460 Other liabilities 531 457 Total Noncurrent Liabilities 8,981 9,251 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: 2025 - 142,980,909 shares; 2024 - 141,449,174 shares, Outstanding: 2025 - 122,884,518 shares; 2024 - 123,119,199 shares 1 1 Capital in excess of par value 844 811 Treasury stock (common), at cost: 2025 - 20,096,391 shares; 2024 - 18,329,975 shares (1,238) (1,131) Accumulated other comprehensive loss (234) (239) Retained earnings 4,764 4,930 Total Shareholders' Equity 4,137 4,372 Total Liabilities and Shareholders' Equity $ 19,818 $ 19,768 SUMMARY CASH FLOW (unaudited) Alaska Air Group, Inc. Three Months Ended March 31, (in millions) 2025 2024 Cash Flows from Operating Activities: Net Loss $ (166) $ (132) Adjustments to reconcile net loss to net cash provided by operating activities 266 168 Changes in working capital 359 256 Net cash provided by operating activities 459 292 Cash Flows from Investing Activities: Property and equipment additions (238) (57) Supplier proceeds — 162 Other investing activities (143) 213 Net cash provided by (used in) investing activities (381) 318 Cash Flows from Financing Activities: (236) (5) Net increase (decrease) in cash and cash equivalents (158) 605 Cash, cash equivalents, and restricted cash at beginning of period 1,257 308 Cash, cash equivalents, and restricted cash at end of the period $ 1,099 $ 913 SPECIAL ITEMS (unaudited) Air Group has classified certain 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. Labor and other: Labor and other costs in 2025 were primarily for changes to Alaska flight attendants' sick leave benefits pursuant to a new collective bargaining agreement ratified in the first quarter. Costs in 2024 were primarily associated with the retirement of Alaska's Airbus and Horizon's Q400 aircraft. Integration costs: Integration costs are associated with the acquisition of Hawaiian Airlines and primarily consist of employee-related and other merger costs. Three Months Ended March 31, (in millions) 2025 2024 Operating Expenses Labor and other 51 26 Integration costs 40 8 Special items - operating $ 91 $ 34 OPERATING STATISTICS (unaudited) A manual recalculation of certain figures using rounded amounts may not agree directly to the actual figures presented in the table below. Three Months Ended March 31, 2025 2024 Change Consolidated Operating Statistics:(a) Revenue passengers (000) 13,159 9,774 34.6 % RPMs (000,000) "traffic" 17,257 12,524 37.8 % ASMs (000,000) "capacity" 21,219 15,378 38.0 % Load factor 81.3 % 81.4 % (0.1) pts Yield 16.28¢ 16.00¢ 1.8 % PRASM 13.24¢ 13.03¢ 1.6 % RASM 14.79¢ 14.51¢ 1.9 % CASMex(b) 11.89¢ 11.60¢ 2.5 % Economic fuel cost per gallon(b) (c) $2.61 $3.08 (15.3) % Fuel gallons (000,000)(c) 262 188 39.4 % ASMs per gallon 80.9 81.8 (1.1) % Departures (000) 123.8 95.7 29.4 % Average full-time equivalent employees (FTEs) 29,773 23,013 29.4 % Operating fleet(d) 399 315 84 a/c Alaska Airlines Operating Statistics: RPMs (000,000) "traffic" 11,723 11,422 2.6 % ASMs (000,000) "capacity" 14,345 14,035 2.2 % Economic fuel cost per gallon $2.61 $3.05 (14.4) % Hawaiian Airlines Operating Statistics: RPMs (000,000) "traffic" 4,307 — n/a ASMs (000,000) "capacity" 5,366 — n/a Economic fuel cost per gallon(c) $2.50 — n/a Regional Operating Statistics:(e) RPMs (000,000) "traffic" 1,227 1,102 11.3 % ASMs (000,000) "capacity" 1,508 1,343 12.3 % Economic fuel cost per gallon $2.80 $3.27 (14.4) % (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 Loss Before Income Tax Reconciliation Three Months Ended March 31, (in millions) 2025 2024 Loss before income tax $ (233) $ (178) Adjusted for: Mark-to-market fuel hedge adjustment (3) (13) Losses on foreign debt 5 — Special items - operating 91 34 Adjusted loss before income tax $ (140) $ (157) Pretax margin (7.4) % (8.0) % Adjusted pretax margin (4.5) % (7.0) % CASMex Reconciliation Three Months Ended March 31, (in millions) 2025 2024 Total operating expenses $ 3,334 $ 2,398 Less the following components: Aircraft fuel, including hedging gains and losses 681 565 Freighter costs 41 15 Special items - operating 91 34 Total operating expenses, excluding fuel, freighter costs, and special items $ 2,521 $ 1,784 ASMs 21,219 15,378 CASMex 11.89 ¢ 11.60 ¢ Fuel Reconciliation Three Months Ended March 31, 2025 2024 (in millions, except for per-gallon amounts) Dollars Cost/Gallon Dollars Cost/Gallon Raw or "into-plane" fuel cost $ 681 $ 2.60 $ 565 $ 3.01 Losses on settled hedges 3 0.01 13 0.07 Economic fuel expense $ 684 $ 2.61 $ 578 $ 3.08 Mark-to-market fuel hedge adjustment (3) (0.01) (13) (0.07) Aircraft fuel, including hedging gains and losses $ 681 $ 2.60 $ 565 $ 3.01 Fuel gallons 262 188 Debt-to-capitalization, including leases (in millions) March 31, 2025 December 31, 2024 Long-term debt, net of current portion $ 4,290 $ 4,491 Capitalized operating leases 1,414 1,405 Capitalized finance leases 53 55 Adjusted debt, net of current portion of long-term debt 5,757 5,951 Shareholders' equity 4,137 4,372 Total Invested Capital $ 9,894 $ 10,323 Debt-to-capitalization ratio, including leases 58 % 58 % Adjusted net debt to earnings before interest, taxes, depreciation, amortization, rent, and special items (in millions) March 31, 2025 December 31, 2024 Long-term debt $ 4,809 $ 4,933 Capitalized operating leases 1,414 1,405 Capitalized finance leases 53 55 Total adjusted debt 6,276 6,393 Less: Total cash and marketable securities 2,464 2,475 Adjusted net debt $ 3,812 $ 3,918 (in millions) Twelve Months Ended March 31, 2025 Twelve Months Ended December 31, 2024 Operating Income(a) $ 539 $ 570 Adjusted for: Special items - operating 402 345 Mark-to-market fuel hedge adjustments (18) (28) Gain on foreign debt (5) (10) Depreciation and amortization 651 583 Aircraft rent 222 207 EBITDAR $ 1,791 $ 1,667 Adjusted net debt to EBITDAR 2.1x 2.4x (a) Operating income can be reconciled using the trailing twelve month operating income as filed quarterly with the SEC. OPERATING SEGMENTS (unaudited) Alaska Air Group, Inc. Three Months Ended March 31, 2025 (in millions) Alaska Airlines Hawaiian Airlines Regional Consolidating & Other(a) Air Group Adjusted(b) Adjustments(c) Consolidated Operating Revenue Passenger revenue $ 1,757 $ 653 $ 398 $ — $ 2,808 $ — $ 2,808 Loyalty program other revenue 152 39 16 — 207 — 207 Cargo and other revenue 65 55 — 2 122 — 122 Total Operating Revenue 1,974 747 414 2 3,137 — 3,137 Operating Expenses Operating expenses, excluding fuel 1,608 640 333 (19) 2,562 91 2,653 Fuel expense 419 174 91 — 684 (3) 681 Total Operating Expenses 2,027 814 424 (19) 3,246 88 3,334 Non-operating Expense (2) (21) — (8) (31) (5) (36) Income (Loss) Before Income Tax $ (55) $ (88) $ (10) $ 13 $ (140) $ (93) $ (233) Three Months Ended March 31, 2024 (in millions) Alaska Airlines Hawaiian Airlines Regional Consolidating & Other(a) Air Group Adjusted(b) Adjustments(c) Consolidated Operating Revenue Passenger revenue $ 1,629 $ — $ 375 $ — $ 2,004 $ — $ 2,004 Loyalty program other revenue 149 — 15 — 164 — 164 Cargo and other revenue 62 — — 2 64 — 64 Total Operating Revenue 1,840 — 390 2 2,232 — 2,232 Operating Expenses Operating expenses, excluding fuel 1,514 — 299 (14) 1,799 34 1,833 Fuel expense 485 — 93 — 578 (13) 565 Total Operating Expenses 1,999 — 392 (14) 2,377 21 2,398 Non-operating Expense (3) — — (9) (12) — (12) Income (Loss) Before Income Tax $ (162) $ — $ (2) $ 7 $ (157) $ (21) $ (178) (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 gain and losses on foreign debt. SUPPLEMENTARY COMBINED COMPARATIVE FINANCIAL AND OPERATING INFORMATION (unaudited) We believe that analysis of specific financial and operational results on a combined basis provides more meaningful year-over-year comparisons. The table below provides results comparing the three months ended March 31, 2025 as reported to the combined three months ended March 31, 2024. Hawaiian's financial information has been conformed to reflect Air Group's historical financial statement presentation. This information does not purport to reflect what our financial and operational results would have been had the acquisition been consummated at the beginning of the periods presented. Three Months Ended March 31, (in millions) 2025 As Reported 2024 Combined(a) Change Operating Revenue Passenger revenue $ 2,808 $ 2,585 9 % Loyalty program other revenue 207 193 7 % Cargo and other revenue 122 99 23 % Total Operating Revenue 3,137 2,877 9 % Operating expenses, excluding fuel 2,653 2,443 9 % Aircraft fuel, including hedging gains and losses 681 759 (10) % Total Operating Expenses 3,334 3,202 4 % Operating Loss (197) (325) (39) % Non-operating expense (36) (18) 100 % Loss Before Income Tax (233) (343) (32) % Special items - operating 91 42 117 % Special items - net non-operating — (5) (100) % Mark-to-market fuel hedge adjustments (3) (15) (80) % (Gain)/Losses on foreign debt 5 (9) (156) % Adjusted Loss Before Income Tax $ (140) $ (330) (58) % Pretax Margin (7.4) % (11.9) % 4.5 pts Adjusted Pretax Margin (4.5) % (11.5) % 7.0 pts Combined Comparative Operating Statistics Revenue passengers (000) 13,159 12,395 6.2 % RPMs (000,000) "traffic" 17,257 16,597 4.0 % ASMs (000,000) "capacity" 21,219 20,429 3.9 % Load factor 81.3 % 81.2 % 0.1 pts Yield 16.28¢ 15.57¢ 4.6 % RASM 14.79¢ 14.08¢ 5.0 % CASMex 11.89¢ 11.65¢ 2.1 % Combined Comparative CASMex Reconciliation Total operating expenses $ 3,334 $ 3,202 4 % Less the following components: Aircraft fuel, including hedging gains and losses 681 759 (10) % Freighter costs 41 22 86 % Special items - operating 91 42 117 % Total operating expenses, excluding fuel, freighter costs, and special items $ 2,521 $ 2,379 6 % ASMs 21,219 20,429 3.9 % CASMex 11.89¢ 11.65¢ 2.1 % (a) As provided on Form 8-K filed with the SEC on January 22, 2025, including certain immaterial reclassification and policy 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 and marketable securities Adjusted net debt to EBITDAR - represents net adjusted debt divided by EBITDAR (trailing twelve months earnings before interest, taxes, depreciation, amortization, rent, and special items) ASMs - available seat miles, or "capacity"; represents total seats available across the fleet multiplied by the number of miles flown 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 programs 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 revenue 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 revenue 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 SOURCE Alaska Air Group WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

Alaska Air Group reports first quarter 2025 results

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