Alaska Air Group reports second quarter 2025 results

Announced first transatlantic route in Air Group history: Seattle to Rome starting May 2026Alaska Mileage Plan named #1 airline rewards program by U.S. News & World Report for the 11th consecutive yearReported earnings per share of $1.42, with adjusted earnings per share of $1.78, ahead of Wall Street expectation and previous guidance range , /PRNewswire/ -- Alaska Air Group (NYSE: ALK) today reported financial results for the second quarter ending June 30, 2025. The Alaska and Hawaiian teams closed out an impactful quarter that included the launch of a global network transformation and performance that beat expectations. "The results this quarter are clear evidence of our team's disciplined execution and unwavering focus on what we can control: delivering a remarkable guest experience, driving operational excellence and unlocking the value of our newly combined network and commercial platform," said CEO Ben Minicucci. "I've never been more confident in our team of 30,000 to execute our Alaska Accelerate plan and position Air Group for long-term success." Quarter in Review: Air Group's Consolidated Statements of Operations, Consolidated Balance Sheets, and Summary Cash Flow Statement 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 Pro Forma Comparative Financial and 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. Air Group delivered strong second quarter results, with a Generally Accepted Accounting Principles (GAAP) pretax margin of 6.4% and a GAAP net income per share of $1.42. Q2 2025 Results Prior Expectation Actual Results Capacity (ASMs) % change versus pro forma 2024 Up 2% to 3% Up ~2.7% RASM % change versus pro forma 2024 Flat to down low single digits Down ~(0.6)% CASMex % change versus pro forma 2024 Up mid to high single digits Up ~6.5% Adjusted earnings per share $1.15 to $1.65 $1.78 Our adjusted pretax margin was 8.0% and our adjusted earnings per share was $1.78, exceeding the high end of our previously issued guidance. Just 10 months post-acquisition, Hawaiian's second quarter adjusted pretax margin expanded by 11-points versus prior year, surpassing breakeven for the first time since 2019. Our second quarter results affirm our strategy is delivering notable progress across the network and providing greater connectivity for our guests. Our team is delivering on the initiatives that underpin Alaska Accelerate and we remain committed to delivering our goal of $1 billion in incremental profit by 2027. Second quarter record revenue topped $3.7 billion, resulting in year-over-year RASM that is down 0.6%, which we believe will once again lead the industry. This performance is enabled by our commercial initiatives and focus on revenue diversification; in the second quarter 49% of revenue was generated outside the main cabin. Premium revenue grew 5% year-over-year, cargo revenue grew 34% year-over-year, and our loyalty program cash remuneration grew 5% year-over-year. Unit costs excluding fuel, freighter costs, and special items increased 6.5% year-over-year, in line with prior guidance. Economic fuel price per gallon was $2.39 in the second quarter, reflecting both moderating crude oil and West Coast refining prices throughout much of the quarter. During the quarter Hawaiian Airlines experienced a cybersecurity incident. We took immediate steps to safeguard our airlines and remain engaged with authorities and experts to conclude our investigation. Our operations were not affected. Third Quarter and Full Year Forecast Information: We have recently seen a positive inflection in traffic, yield and revenue intake for both Alaska and Hawaiian Airlines' bookings. We have also adjusted our 2025 capacity expectations to approximately 2% year-over-year growth. These changes reflect 2-point reductions in off-peak flying in the third and fourth quarters relative to our prior expectations, and are expected to be margin accretive. With recent changes to the demand environment, and our continued delivery on synergy and commercial initiative commitments, our outlook for full year earnings per share is greater than $3.25. Our third quarter adjusted earnings per share is expected to be between $1.00 and $1.40, including an expected ~10 cent impact from an IT outage that resulted in irregular operations in July. Costs remain in line with our expectation, and reflect strategic investments as well as elevated real estate costs, maintenance costs and new labor agreements. Our capacity expectations will pressure unit costs in the third quarter, which are expected to be up mid to high single digits year-over-year, before improving meaningfully in the fourth quarter. We still anticipate delivering full year unit costs in line with our prior expectations. Q3 Expectation Full Year Expectation Capacity (ASMs) % change versus pro forma 2024 Down ~1% Up ~2% RASM % change versus pro forma 2024 Flat to up low single digits Flat to up low single digits CASMex % change versus pro forma 2024 Up mid to high single digits Up mid single digits Adjusted earnings per share $1.00 to $1.40 >$3.25 Financial Results and Updates: Reported GAAP net income for the second quarter of 2025 of $172 million, or $1.42 per share, which includes Hawaiian results, compared to net income of $220 million, or $1.71 per share, for the second quarter of 2024, which does not include Hawaiian results. Reported net income for the second quarter of 2025, excluding special items and other adjustments, of $215 million, or $1.78 per share, which includes Hawaiian results, compared to net income of $327 million, or $2.55 per share, for the second quarter of 2024, which does not include Hawaiian results. Repurchased 8.7 million shares of common stock for approximately $428 million in the second quarter, bringing total repurchases to 10.5 million shares for approximately $535 million for the six months ended June 30, 2025. Generated $376 million in operating cash flow for the second quarter. Held $2.1 billion in unrestricted cash and marketable securities as of June 30, 2025. Operational Updates: Announced new nonstop service between Seattle and Rome beginning in May 2026, the first transatlantic route for Air Group. Began new daily nonstop service between Seattle and Tokyo, the first long-haul aircraft international destination from Seattle for Air Group. Expanded summer service with twice-daily A330 flights between Seattle and Anchorage, boosting cargo capacity equivalent to two 737 freighters. Expanded our combined fleet by twelve aircraft during the second quarter, taking delivery of three 737-8s, four 737-9s, one 787-9, two E175s, and two A330-300 freighters. Exercised options for twelve 737-10s with expected deliveries through 2028. Announced a new Boeing 787-9 base in Seattle and five additional 787-9s to support our international growth. Reached an agreement to sell Alaska's twelve 737-900s, with four aircraft sold in the second quarter and the remaining eight to be sold in the second half of 2025. Began the cabin refresh of Alaska's 737 fleet to expand Premium and First Class seating and elevate our guests' travel experience, with modifications expected to be completed in 2026. Ratified a four-year CBA with Horizon's AMFA-represented technicians and reached a tentative agreement with IAM-represented McGee Air Services employees. Appointed Pete Shimer to the Air Group Board of Directors serving on the Audit and Safety Committees. Loyalty and Guest Experience: Launched enhanced benefit for Alaska Airlines Visa Signature® and Alaska Airlines Visa® Business cardholders, allowing Companion Fare redemption on Hawaiian Airlines flights within North America, including the state of Hawaiʻi. Announced expanded partnership with Qantas, enabling Qantas Frequent Flyers to redeem on Hawaiian Airlines' global network, and a new partnership with Philippine Airlines. Mileage Plan members can now earn on Philippine Airlines flights, and redemptions are coming soon. Launched Chef's (tray) Table, a new rotating First Class dining experience featuring seasonal menus crafted by celebrated West Coast chefs, including James Beard Award-winner Chef Brady Ishiwata Williams. Expanded fresh meal options for guests seated in the Main Cabin to more flights, now available on routes as short as 670 miles. Alaska Mileage Plan recognized as the Best Airline Rewards Program by U.S. News & World Report for the 11th consecutive year. Recognized by the Airline Passenger Experience Association as the Best Major Airline in North America in 2025. The following table reconciles the company's reported GAAP net income per share (EPS) for the three and six months ended June 30, 2025 and 2024 to adjusted amounts. Three Months Ended June 30, 2025 2024 (in millions, except per share amounts) Dollars Per Share Dollars Per Share Net income $ 172 $ 1.42 $ 220 $ 1.71 Adjusted for: Mark-to-market fuel hedge adjustments (1) (0.01) (5) (0.04) Losses on foreign debt 2 0.02 — — Special items - operating 56 0.46 146 1.14 Income tax effect of adjustments above (14) (0.11) (34) (0.26) Adjusted net income $ 215 $ 1.78 $ 327 $ 2.55 Six Months Ended June 30, 2025 2024 (in millions, except per-share amounts) Dollars Per Share Dollars Per Share Net income $ 6 $ 0.05 $ 88 $ 0.69 Adjusted for: Mark-to-market fuel hedge adjustments (4) (0.03) (18) (0.14) Losses on foreign debt 7 0.05 — — Special items - operating 147 1.19 180 1.41 Income tax effect of adjustments above (36) (0.29) (39) (0.31) Adjusted net income $ 120 $ 0.97 $ 211 $ 1.65 A conference call regarding the second quarter results will be streamed online at 8:30 a.m. PDT on July 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, cybersecurity risks, 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 June 30, Six Months Ended June 30, (in millions, except per share amounts) 2025 2024 Change 2025 2024 Change Operating Revenue Passenger revenue $ 3,355 $ 2,651 27 % $ 6,163 $ 4,655 32 % Loyalty program other revenue 210 174 21 % 417 338 23 % Cargo and other revenue 139 72 93 % 261 136 92 % Total Operating Revenue 3,704 2,897 28 % 6,841 5,129 33 % Operating Expenses Wages and benefits 1,165 782 49 % 2,292 1,586 45 % Variable incentive pay 61 49 24 % 123 93 32 % Aircraft fuel, including hedging gains and losses 700 615 14 % 1,381 1,180 17 % Aircraft maintenance 240 129 86 % 460 251 83 % Aircraft rent 64 46 39 % 126 93 35 % Landing fees and other rentals 278 173 61 % 520 338 54 % Contracted services 146 106 38 % 291 203 43 % Selling expenses 105 84 25 % 205 161 27 % Depreciation and amortization 199 128 55 % 393 254 55 % Food and beverage service 97 67 45 % 182 125 46 % Third-party regional carrier expense 69 64 8 % 133 118 13 % Other 247 186 33 % 508 391 30 % Special items - operating 56 146 (62) % 147 180 (18) % Total Operating Expenses 3,427 2,575 33 % 6,761 4,973 36 % Operating Income 277 322 (14) % 80 156 (49) % Non-operating Income (Expense) Interest income 22 24 (8) % 48 41 17 % Interest expense (66) (36) 83 % (132) (71) 86 % Interest capitalized 9 6 50 % 21 12 75 % Other - net (4) — NM (12) — NM Total Non-operating Expense (39) (6) NM (75) (18) NM Income Before Income Tax 238 316 5 138 Income tax expense (benefit) 66 96 (1) 50 Net Income $ 172 $ 220 $ 6 $ 88 Basic Earnings Per Share $ 1.45 $ 1.74 $ 0.05 $ 0.70 Diluted Earnings Per Share $ 1.42 $ 1.71 $ 0.05 $ 0.69 Weighted Average Shares Outstanding used for computation: Basic 118.847 126.337 120.979 126.153 Diluted 120.930 128.310 123.183 127.857 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) Alaska Air Group, Inc. (in millions) June 30, 2025 December 31, 2024 ASSETS Current Assets Cash and cash equivalents $ 750 $ 1,201 Restricted cash 28 29 Marketable securities 1,374 1,274 Total cash, restricted cash, and marketable securities 2,152 2,504 Receivables - net 737 558 Inventories and supplies - net 218 199 Prepaid expenses 264 307 Other current assets 136 192 Total Current Assets 3,507 3,760 Property and Equipment Aircraft and other flight equipment 13,056 12,273 Other property and equipment 2,267 2,173 Deposits for future flight equipment 621 883 15,944 15,329 Less accumulated depreciation and amortization (4,729) (4,548) Total Property and Equipment - net 11,215 10,781 Other Assets Operating lease assets 1,279 1,296 Goodwill 2,724 2,724 Intangible assets - net 844 873 Other noncurrent assets 316 334 Total Other Assets 5,163 5,227 Total Assets $ 19,885 $ 19,768 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in millions, except share amounts) June 30, 2025 December 31, 2024 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $ 240 $ 186 Accrued wages, vacation and payroll taxes 697 1,001 Air traffic liability 2,127 1,712 Other accrued liabilities 1,096 997 Deferred revenue 1,824 1,592 Current portion of long-term debt 500 442 Current portion of operating lease liabilities 217 207 Current portion of finance lease liabilities 8 8 Total Current Liabilities 6,709 6,145 Noncurrent Liabilities Long-term debt, net of current portion 4,448 4,491 Operating lease liabilities, net of current portion 1,157 1,198 Finance lease liabilities, net of current portion 43 47 Deferred income taxes 938 934 Deferred revenue 1,648 1,664 Obligation for pension and post-retirement medical benefits 452 460 Other liabilities 548 457 Total Noncurrent Liabilities 9,234 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 - 144,093,405 shares; 2024 - 141,449,174 shares, Outstanding: 2025 - 115,276,005 shares; 2024 - 123,119,199 shares 1 1 Capital in excess of par value 899 811 Treasury stock (common), at cost: 2025 - 28,817,400 shares; 2024 - 18,329,975 shares (1,666) (1,131) Accumulated other comprehensive loss (228) (239) Retained earnings 4,936 4,930 Total Shareholders' Equity 3,942 4,372 Total Liabilities and Shareholders' Equity $ 19,885 $ 19,768 SUMMARY CASH FLOW (unaudited) Alaska Air Group, Inc. (in millions) Six Months Ended June 30, 2025 Three Months Ended March 31, 2025(a) Three Months Ended June 30, 2025(b) Cash Flows from Operating Activities: Net income (loss) $ 6 $ (166) $ 172 Adjustments to reconcile net income (loss) to net cash provided by operating activities 455 266 189 Changes in working capital 374 359 15 Net cash provided by operating activities 835 459 376 Cash Flows from Investing Activities: Property and equipment additions (741) (238) (503) Other investing activities (6) (143) 137 Net cash used in investing activities (747) (381) (366) Cash Flows from Financing Activities: (544) (236) (308) Net decrease in cash and cash equivalents (456) (158) (298) Cash, cash equivalents, and restricted cash at beginning of period 1,257 1,257 1,099 Cash, cash equivalents, and restricted cash at end of the period $ 801 $ 1,099 $ 801 (a) As reported in Form 10-Q for the first quarter of 2025. (b) Cash flows for the three months ended June 30, 2025 can be calculated by subtracting cash flows from the three months ended March 31, 2025 from the six months ended June 30, 2025. 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. Integration costs: Integration costs were associated with the acquisition of Hawaiian Airlines and consist of employee-related, technology, and other merger costs. 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 of 2025. Costs in 2024 were associated with new labor agreements, the retirement of Alaska's Airbus and Horizon's Q400 aircraft, and certain litigation items. Three Months Ended June 30, Six Months Ended June 30, (in millions) 2025 2024 2025 2024 Operating Expenses Integration costs $ 53 $ 30 $ 93 $ 38 Labor and other 3 116 54 142 Special items - operating $ 56 $ 146 $ 147 $ 180 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. 2024 figures are as previously reported and do not include Hawaiian operations. Three Months Ended June 30, Six Months Ended June 30, 2025 2024 Change 2025 2024 Change Consolidated Operating Statistics:(a) Revenue passengers (000) 15,234 11,888 28.1 % 28,393 21,662 31.1 % RPMs (000,000) "traffic" 20,179 15,309 31.8 % 37,436 27,833 34.5 % ASMs (000,000) "capacity" 24,058 18,196 32.2 % 45,277 33,575 34.9 % Load factor 83.9 % 84.1 % (0.2) pts 82.7 % 82.9 % (0.2) pts Yield 16.62¢ 17.32¢ (4.0) % 16.46¢ 16.73¢ (1.6) % PRASM 13.94¢ 14.57¢ (4.3) % 13.61¢ 13.86¢ (1.8) % RASM 15.39¢ 15.92¢ (3.3) % 15.11¢ 15.28¢ (1.1) % CASMex(b) 10.90¢ 9.89¢ 10.2 % 11.36¢ 10.67¢ 6.5 % Economic fuel cost per gallon(b) (c) $2.39 $2.84 (15.8) % $2.49 $2.95 (15.6) % Fuel gallons (000,000)(c) 293 219 33.8 % 556 406 36.9 % ASMs per gallon 82.0 83.1 (1.3) % 81.5 82.7 (1.5) % Departures (000) 139.6 112.4 24.2 % 263.5 208.1 26.6 % Average full-time equivalent employees (FTEs) 31,299 23,368 33.9 % 30,536 23,190 31.7 % Operating fleet(d) 409 326 83 a/c 409 326 83 a/c Alaska Airlines Operating Statistics: RPMs (000,000) "traffic" 13,735 14,001 (1.9) % 25,458 25,423 0.1 % ASMs (000,000) "capacity" 16,449 16,624 (1.1) % 30,794 30,660 0.4 % Economic fuel cost per gallon $2.39 $2.80 (14.6) % $2.49 $2.92 (14.7) % Hawaiian Airlines Operating Statistics: RPMs (000,000) "traffic" 5,034 — n/a 9,341 — n/a ASMs (000,000) "capacity" 5,901 — n/a 11,267 — n/a Economic fuel cost per gallon(c) $2.29 — n/a $2.39 — n/a Regional Operating Statistics:(e) RPMs (000,000) "traffic" 1,410 1,308 7.8 % 2,637 2,410 9.4 % ASMs (000,000) "capacity" 1,708 1,572 8.7 % 3,216 2,915 10.3 % Economic fuel cost per gallon $2.58 $3.02 (14.6) % $2.68 $3.13 (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 Income Before Income Tax Reconciliation Three Months Ended June 30, Six Months Ended June 30, (in millions) 2025 2024 2025 2024 Income before income tax $ 238 $ 316 $ 5 $ 138 Adjusted for: Mark-to-market fuel hedge adjustment (1) (5) (4) (18) Losses on foreign debt 2 — 7 — Special items - operating 56 146 147 180 Adjusted income before income tax $ 295 $ 457 $ 155 $ 300 Pretax margin 6.4 % 10.9 % 0.1 % 2.7 % Adjusted pretax margin 8.0 % 15.8 % 2.3 % 5.8 % CASMex Reconciliation Three Months Ended June 30, Six Months Ended June 30, (in millions) 2025 2024 2025 2024 Total operating expenses $ 3,427 $ 2,575 $ 6,761 $ 4,973 Less the following components: Aircraft fuel, including hedging gains and losses 700 615 1,381 1,180 Freighter costs 48 13 89 28 Special items - operating 56 146 147 180 Total operating expenses, excluding fuel, freighter costs, and special items $ 2,623 $ 1,801 $ 5,144 $ 3,585 ASMs 24,058 18,196 45,277 33,575 CASMex 10.90 ¢ 9.89 ¢ 11.36 ¢ 10.67 ¢ Fuel Reconciliation Three Months Ended June 30, 2025 2024 (in millions, except for per-gallon amounts) Dollars Cost/Gallon Dollars Cost/Gallon Raw or "into-plane" fuel cost $ 700 $ 2.39 $ 610 $ 2.79 Losses on settled hedges 1 — 10 0.05 Economic fuel expense $ 701 $ 2.39 $ 620 $ 2.84 Mark-to-market fuel hedge adjustment (1) — (5) (0.03) Aircraft fuel, including hedging gains and losses $ 700 $ 2.39 $ 615 $ 2.81 Fuel gallons 293 219 Six Months Ended June 30, 2025 2024 (in millions, except for per gallon amounts) Dollars Cost/Gallon Dollars Cost/Gallon Raw or "into-plane" fuel cost $ 1,381 $ 2.48 $ 1,175 $ 2.89 Losses on settled hedges 4 0.01 23 0.06 Economic fuel expense $ 1,385 $ 2.49 $ 1,198 $ 2.95 Mark-to-market fuel hedge adjustment (4) (0.01) (18) (0.05) Aircraft fuel, including hedging gains and losses $ 1,381 $ 2.48 $ 1,180 $ 2.90 Fuel gallons 556 406 Debt-to-capitalization, including leases (in millions) June 30, 2025 December 31, 2024 Long-term debt, net of current portion $ 4,448 $ 4,491 Capitalized operating leases 1,374 1,405 Capitalized finance leases 51 55 Adjusted debt, net of current portion of long-term debt 5,873 5,951 Shareholders' equity 3,942 4,372 Total Invested Capital $ 9,815 $ 10,323 Debt-to-capitalization ratio, including leases 60 % 58 % Adjusted net debt to earnings before interest, taxes, depreciation, amortization, rent, and special items (in millions) June 30, 2025 December 31, 2024 Long-term debt $ 4,948 $ 4,933 Capitalized operating leases 1,374 1,405 Capitalized finance leases 51 55 Total adjusted debt 6,373 6,393 Less: Total cash and marketable securities 2,124 2,475 Adjusted net debt $ 4,249 $ 3,918 (in millions) Twelve Months Ended June 30, 2025 Twelve Months Ended December 31, 2024 Operating Income(a) $ 494 $ 570 Adjusted for: Special items - operating 312 345 Mark-to-market fuel hedge adjustments (14) (28) Gain on foreign debt (3) (10) Depreciation and amortization 722 583 Aircraft rent 240 207 EBITDAR $ 1,751 $ 1,667 Adjusted net debt to EBITDAR 2.4x 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 June 30, 2025 (in millions) Alaska Airlines Hawaiian Airlines Regional Consolidating & Other(a) Air Group Adjusted(b) Adjustments(c) Consolidated Operating Revenue Passenger revenue $ 2,132 $ 769 $ 454 $ — $ 3,355 $ — $ 3,355 Loyalty program other revenue 161 32 17 — 210 — 210 Cargo and other revenue 80 56 — 3 139 — 139 Total Operating Revenue 2,373 857 471 3 3,704 — 3,704 Operating Expenses Operating expenses, excluding fuel 1,663 662 371 (25) 2,671 56 2,727 Fuel expense 437 171 93 — 701 (1) 700 Total Operating Expenses (Income) 2,100 833 464 (25) 3,372 55 3,427 Non-operating Expense (6) (23) — (8) (37) (2) (39) Income (Loss) Before Income Tax $ 267 $ 1 $ 7 $ 20 $ 295 $ (57) $ 238 Three Months Ended June 30, 2024 (in millions) Alaska Airlines Hawaiian Airlines Regional Consolidating & Other(a) Air Group Adjusted(b) Adjustments(c) Consolidated Operating Revenue Passenger revenue $ 2,188 $ — $ 463 $ — $ 2,651 $ — $ 2,651 Loyalty program other revenue 160 — 14 — 174 — 174 Cargo and other revenue 69 — — 3 72 — 72 Total Operating Revenue 2,417 — 477 3 2,897 — 2,897 Operating Expenses Operating expenses, excluding fuel 1,509 — 329 (24) 1,814 146 1,960 Fuel expense 520 — 100 — 620 (5) 615 Total Operating Expenses (Income) 2,029 — 429 (24) 2,434 141 2,575 Non-operating Expense 6 — — (12) (6) — (6) Income (Loss) Before Income Tax $ 394 $ — $ 48 $ 15 $ 457 $ (141) $ 316 Six Months Ended June 30, 2025 (in millions) Alaska Airlines Hawaiian Airlines Regional Consolidating & Other(a) Air Group Adjusted(b) Adjustments(c) Consolidated Operating Revenue Passenger revenue $ 3,889 $ 1,422 $ 852 $ — $ 6,163 $ — $ 6,163 Loyalty program other revenue 313 71 33 — 417 — 417 Cargo and other revenue 145 111 — 5 261 — 261 Total Operating Revenue 4,347 1,604 885 5 6,841 — 6,841 Operating Expenses Operating expenses, excluding fuel 3,259 1,302 716 (44) 5,233 147 5,380 Fuel expense 856 345 184 — 1,385 (4) 1,381 Total Operating Expenses (Income) 4,115 1,647 900 (44) 6,618 143 6,761 Non-operating Income (Expense) (8) (44) — (16) (68) (7) (75) Income (Loss) Before Income Tax $ 224 $ (87) $ (15) $ 33 $ 155 $ (150) $ 5 Six Months Ended June 30, 2024 (in millions) Alaska Airlines Hawaiian Airlines Regional Consolidating & Other(a) Air Group Adjusted(b) Adjustments(c) Consolidated Operating Revenue Passenger revenue $ 3,817 $ — $ 838 $ — $ 4,655 $ — $ 4,655 Loyalty program other revenue 309 — 29 — 338 — 338 Cargo and other revenue 131 — — 5 136 — 136 Total Operating Revenue 4,257 — 867 5 5,129 — 5,129 Operating Expenses Operating expenses, excluding fuel 3,014 — 637 (38) 3,613 180 3,793 Fuel expense 1,005 — 193 — 1,198 (18) 1,180 Total Operating Expenses (Income) 4,019 — 830 (38) 4,811 162 4,973 Non-operating Income (Expense) 3 — — (21) (18) — (18) Income (Loss) Before Income Tax $ 241 $ — $ 37 $ 22 $ 300 $ (162) $ 138 (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 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 and six months ended June 30, 2025 as reported to the pro forma three and six months ended June 30, 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 June 30, Six Months Ended June 30, (in millions) 2025 2024 Pro forma(a) Change 2025 2024 Pro forma(b) Change Operating Revenue Passenger revenue $ 3,355 $ 3,315 1 % $ 6,163 $ 5,900 4 % Loyalty program other revenue 210 203 3 % 417 396 5 % Cargo and other revenue 139 111 25 % 261 210 24 % Total Operating Revenue 3,704 3,629 2 % 6,841 6,506 5 % Operating expenses, excluding fuel 2,727 2,572 6 % 5,380 5,015 7 % Aircraft fuel, including hedging gains and losses 700 801 (13) % 1,381 1,560 (11) % Total Operating Expenses 3,427 3,373 2 % 6,761 6,575 3 % Operating Income (Loss) 277 256 8 % 80 (69) NM Non-operating expense (39) (19) 105 % (75) (37) 103 % Income (Loss) Before Income Tax 238 237 — % 5 (106) (105) % Special items - operating 56 152 (63) % 147 194 (24) % Special items - net non-operating — (3) (100) % — (8) (100) % Mark-to-market fuel hedge adjustments (1) (5) (80) % (4) (20) (80) % (Gain)/Losses on foreign debt 2 (7) (129) % 7 (16) (144) % Adjusted Income Before Income Tax $ 295 $ 374 (21) % $ 155 $ 44 NM Pretax Margin 6.4 % 6.5 % (0.1) pts 0.1 % (1.6) % 1.7 pts Adjusted Pretax Margin 8.0 % 10.3 % (2.3) pts 2.3 % 0.7 % 1.6 pts Pro forma Comparative Operating Statistics Revenue passengers (000) 15,234 14,676 3.8 % 28,393 27,071 4.9 % RPMs (000,000) "traffic" 20,179 19,828 1.8 % 37,436 36,425 2.8 % ASMs (000,000) "capacity" 24,058 23,426 2.7 % 45,277 43,855 3.2 % Load factor 83.9 % 84.6 % (0.7) pts 82.7 % 83.1 % (0.4) pts Yield 16.62¢ 16.72¢ (0.6) % 16.46¢ 16.20¢ 1.6 % RASM 15.39¢ 15.49¢ (0.6) % 15.11¢ 14.84¢ 1.8 % CASMex 10.90¢ 10.23¢ 6.5 % 11.36¢ 10.89¢ 4.3 % Pro forma Comparative CASMex Reconciliation Total operating expenses $ 3,427 $ 3,373 2 % $ 6,761 $ 6,575 3 % Less the following components: Aircraft fuel, including hedging gains and losses 700 801 (13) % 1,381 1,560 (11) % Freighter costs 48 23 109 % 89 45 98 % Special items - operating 56 152 (63) % 147 194 (24) % Total operating expenses, excluding fuel, freighter costs, and special items $ 2,623 $ 2,397 9 % $ 5,144 $ 4,776 8 % (a) As provided on Form 8-K filed with the SEC on January 22, 2025, including certain immaterial reclassification and policy adjustments. (b) Pro forma six months ended June 30, 2024 can be calculated by adding the three months ended March 31, 2024 and June 30, 2024 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 second quarter 2025 results

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