• Achieved record first-quarter operating revenue of $2.2 billion
  • Ratified new agreement with AMFA-represented employees

Alaska Air Group (NYSE: ALK) today reported financial results for the first quarter ending March 31, 2024, and provided an outlook for the second quarter ending June 30, 2024.

"I want to recognize Alaska's employees for their uncompromising prioritization of safety, for taking great care of our guests, and for delivering strong performance in the first quarter," said CEO Ben Minicucci. "Despite significant challenges to start the year our results have far exceeded initial expectations. Thanks to thoughtful capacity planning, network optimization, and diligent cost control, we are well-positioned to carry our strong performance into the second quarter and beyond."

Impact of Flight 1282:

Air Group's first quarter operation and results were significantly impacted by Flight 1282 in January and the Boeing 737-9 MAX grounding which extended into February. The Company has received $162 million in initial cash compensation from Boeing to address the financial damages incurred during the first quarter.

The table below illustrates the financial impact of the Flight 1282 accident and 737-9 MAX grounding compared to the three months ended March 31, 2023:

Q1 2023


Q1 2024

(in millions, except per
share amounts)


As Reported


As Reported


Grounding Impact


Excluding Grounding
Impact

Adjusted income (loss)
before income tax


($115)


($157)


($162)


$5

Adjusted earnings (loss)
per share


($0.62)


($0.92)


~($0.95)


~$0.03

YoY change in capacity




(2 %)


~(5.5%)


~3.5%

Financial Results:

  • Reported net loss for the first quarter of 2024 under Generally Accepted Accounting Principles (GAAP) of $132 million, or $1.05 per share, compared to a net loss of $142 million, or $1.11 per share, for the first quarter of 2023.
  • Reported net loss for the first quarter of 2024, excluding special items and mark-to-market fuel hedge accounting adjustments, of $116 million, or $0.92 per share, compared to a net loss of $79 million, or $0.62 per share, for the first quarter of 2023.
  • Repurchased 561,086 shares of common stock for approximately $21 million in the first quarter.
  • Generated $292 million in operating cash flow for the first quarter.
  • Held $2.3 billion in unrestricted cash and marketable securities as of March 31, 2024.
  • Ended the quarter with a debt-to-capitalization ratio of 47%, within the target range of 40% to 50%.

Operational Updates:

  • Agreement to purchase Hawaiian Airlines for $18 per share was approved by Hawaiian shareholders. The proposed combination remains subject to regulatory approval.
  • Ratified a five-year collective bargaining agreement with approximately 1,000 Alaska Airlines employees represented by AMFA.
  • Completed inspections of all 737-9 MAX aircraft and returned the fleet to service in February.
  • Enhanced quality oversight program at the Boeing production facility to validate the work and quality of our aircraft as they progress through the manufacturing process.
  • Received two E175 aircraft during the quarter, bringing the total in the Horizon fleet to 43.

Commercial Updates:

  • Launched partnership with Bilt Rewards, which adds Alaska's Mileage Plan as a transfer partner and later in 2024 will allow Alaska Airlines Visa Signature® cardholders to earn 3x miles when paying rent via Bilt.
  • Announced growth plans out of Portland to provide guests with more travel options, including 25% increased capacity and a new daily nonstop flight to Atlanta, beginning later this year.
  • Announced new daily nonstop service between Santa Rosa and Las Vegas, which will be Air Group's seventh destination from Sonoma County.
  • Introduced Alaska Access, a monthly subscription program for price-conscious travelers that offers Wi-Fi vouchers, early access to sales, and a personalized fare page.

The following table reconciles the company's reported GAAP net loss per share (EPS) for the three months ended March 31, 2024 and 2023 to adjusted amounts.



Three Months Ended March 31,



2024


2023

(in millions, except per share amounts)


Dollars


Diluted EPS


Dollars


Diluted EPS

GAAP net loss per share


$ (132)


$ (1.05)


$ (142)


$ (1.11)

Mark-to-market fuel hedge adjustments


(13)


(0.10)


20


0.16

Special items - fleet transition(a)


26


0.21


13


0.10

Special items - integration costs(b)


8


0.06



Special items - labor and other(c)




51


0.40

Income tax effect of reconciling items above


(5)


(0.04)


(21)


(0.17)

Non-GAAP adjusted net loss per share


$ (116)


$ (0.92)


$ (79)


$ (0.62)

(a)

Special items - fleet transition in the three months ended March 31, 2024 and 2023 is primarily for costs associated with the retirement of Airbus and Q400 aircraft, as well as gains on the sale of certain Q400 aircraft.

(b)

Special items - integration costs is associated with our pending acquisition of Hawaiian Airlines.

(c)

Special items - labor and other is for changes to Alaska pilots' sick leave benefits resulting from an agreement signed in the first quarter of 2023.

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 first quarter results at 8:30 a.m. PDT on April 18, 2024. A webcast of the call is available to the public at www.investor.alaskaair.com. For those unable to listen to the live broadcast, a replay will be available after the call.

Second Quarter and Full Year 2024 Forecast Information



Q2 Expectation

Capacity (ASMs) % change versus 2023


Up 5% to 7%

Economic fuel cost per gallon


$3.00 to $3.20

Earnings per share(a)


$2.20 to $2.40



Full Year Expectation

Capacity (ASMs) % change versus 2023


< 3%

Earnings per share(a)


$3.25 to $5.25

Capital expenditures


$1.2 billion - $1.3 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, 2023. 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, the Bahamas, Belize, Canada, Costa Rica, Guatemala and Mexico. We offer our guests a premium flying experience with award-winning customer service and an industry-leading loyalty program, Mileage Plan. With our fellow oneworld Alliance members and additional global partners, our guests have more choices than ever to purchase, earn or redeem on alaskaair.com across 30 airlines and more than 1,000 worldwide destinations. 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 March 31,

(in millions, except per share amounts)


2024


2023


Change

Operating Revenue







Passenger revenue


$ 2,004


$ 1,984


1 %

Mileage Plan other revenue


164


154


6 %

Cargo and other revenue


64


58


10 %

Total Operating Revenue


2,232


2,196


2 %








Operating Expenses







Wages and benefits


804


723


11 %

Variable incentive pay


44


47


(6) %

Aircraft fuel, including hedging gains and losses


565


665


(15) %

Aircraft maintenance


122


124


(2) %

Aircraft rent


47


59


(20) %

Landing fees and other rentals


165


152


9 %

Contracted services


97


95


2 %

Selling expenses


77


66


17 %

Depreciation and amortization


126


104


21 %

Food and beverage service


58


54


7 %

Third-party regional carrier expense


54


52


4 %

Other


205


177


16 %

Special items - fleet transition


26


13


100 %

Special items - integration costs


8



NM

Special items - labor and other



51


(100) %

Total Operating Expenses


2,398


2,382


1 %

Operating Loss


(166)


(186)


11 %








Non-operating Income (Expense)







Interest income


17


17


— %

Interest expense


(35)


(28)


25 %

Interest capitalized


6


7


(14) %

Other - net



(9)


(100) %

Total Non-operating Expense


(12)


(13)


(8) %

Loss Before Income Tax


(178)


(199)



Income tax benefit


(46)


(57)



Net Loss


$ (132)


$ (142)










Basic Loss Per Share


$ (1.05)


$ (1.11)



Diluted Loss Per Share


$ (1.05)


$ (1.11)



Weighted Average Shares Outstanding used for computation:







Basic


125.970


127.501



Diluted


125.970


127.501



CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)




Alaska Air Group, Inc.








(in millions)

March 31, 2024


December 31, 2023

ASSETS




Current Assets




Cash and cash equivalents

$ 885


$ 281

Marketable securities

1,393


1,510

Total cash and marketable securities

2,278


1,791

Receivables - net

384


383

Inventories and supplies - net

104


116

Prepaid expenses

177


176

Other current assets

186


239

Total Current Assets

3,129


2,705





Property and Equipment




Aircraft and other flight equipment

10,363


10,425

Other property and equipment

1,839


1,814

Deposits for future flight equipment

431


491


12,633


12,730

Less accumulated depreciation and amortization

4,439


4,342

Total Property and Equipment - net

8,194


8,388





Other Assets




Operating lease assets

1,174


1,195

Goodwill and intangible assets

2,033


2,033

Other noncurrent assets

283


292

Total Other Assets

3,490


3,520





Total Assets

$ 14,813


$ 14,613

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)




Alaska Air Group, Inc.








(in millions, except share amounts)

March 31, 2024


December 31, 2023

LIABILITIES AND SHAREHOLDERS' EQUITY




Current Liabilities




Accounts payable

$ 181


$ 207

Accrued wages, vacation and payroll taxes

481


584

Air traffic liability

1,604


1,136

Other accrued liabilities

791


800

Deferred revenue

1,313


1,221

Current portion of operating lease liabilities

158


158

Current portion of long-term debt and finance leases

301


353

Total Current Liabilities

4,829


4,459





Long-Term Debt, Net of Current Portion

2,264


2,182





Noncurrent Liabilities




Long-term operating lease liabilities, net of current portion

1,098


1,125

Deferred income taxes

649


695

Deferred revenue

1,320


1,382

Obligation for pension and post-retirement medical benefits

365


362

Other liabilities

311


295

Total Noncurrent Liabilities

3,743


3,859





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: 2024 -
139,137,527 shares; 2023 - 138,960,830 shares, Outstanding: 2024 - 125,705,964
shares; 2023 - 126,090,353 shares

1


1

Capital in excess of par value

707


695

Treasury stock (common), at cost: 2024 - 13,431,563 shares; 2023 - 12,870,477
shares

(840)


(819)

Accumulated other comprehensive loss

(294)


(299)

Retained earnings

4,403


4,535


3,977


4,113

Total Liabilities and Shareholders' Equity

$ 14,813


$ 14,613

SUMMARY CASH FLOW (unaudited)



Alaska Air Group, Inc.





(in millions)


Three Months Ended March 31,

2024


2023

Cash Flows from Operating Activities:





Net Loss


$ (132)


$ (142)

Non-cash reconciling items


168


191

Changes in working capital


256


173

Net cash provided by operating activities


292


222






Cash Flows from Investing Activities:





Property and equipment additions


(57)


(124)

Supplier proceeds


162


Other investing activities


213


184

Net cash provided by investing activities


318


60






Cash Flows from Financing Activities:


(5)


(114)






Net increase in cash and cash equivalents


605


168

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


308


369

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


$ 913


$ 537

OPERATING STATISTICS SUMMARY (unaudited)

Alaska Air Group, Inc.









Three Months Ended March 31,



2024


2023


Change

Consolidated Operating Statistics:(a)







Revenue passengers (000)


9,774


9,852


(1) %

RPMs (000,000) "traffic"


12,524


12,554


— %

ASMs (000,000) "capacity"


15,378


15,705


(2) %

Load factor


81.4 %


79.9 %


1.5 pts

Yield


16.00¢


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