OPERATING SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2011

Segment Reporting [Abstract]

Operating Segment Information

OPERATING SEGMENT INFORMATION

Air Group has two operating airlines - Alaska Airlines and Horizon Air. Each is a regulated airline with separate management teams. Effective January 1, 2011, Horizon's business model changed such that 100% of its capacity is sold to Alaska under a capacity purchase agreement (CPA). Prior to 2011, Horizon operated a hybrid model where it sold a portion of its capacity to Alaska and had its own passenger revenues. Additionally, Alaska signed a signed a capacity agreement with SkyWest in May 2011, and continued its CPA with PenAir. To manage the two operating airlines and the revenues and expenses associated with the CPAs, management views the business in three operating segments.

Alaska Mainline - The 737 part of Alaska's business with average stage lengths greater than 1,000 miles.

Alaska Regional - Alaska's shorter distance network. In this segment, we record actual on board passenger revenue, less costs such as fuel, distribution costs, and payments made to Horizon, SkyWest and PenAir under CPAs

Horizon - Horizon operates regional aircraft. All of Horizon's capacity is sold to Alaska under a CPA.   Expenses included those typically borne by regional airlines such as crew costs, ownership costs, and maintenance costs.

All inter-company revenues and expenses between Alaska and Horizon are eliminated in consolidation, and these changes have no impact on the consolidated results. Prior year segment financial results have been recast to report the current management approach.

Additionally, the following table reports “Air Group adjusted”, which is not a measure determined in accordance with GAAP. The Company's chief operating decision-makers and others in management use this measure to evaluate operational performance and determine resources allocations. Adjustments are further explained below in reconciling to consolidated GAAP results.

Operating segment information is as follows (in millions):

	Alaska
Year ended December 31, 2011	Mainline			Regional		Horizon			Consolidating			Air Group Adjusted(a)			Special Charges			Consolidated
Operating revenues
Passenger
Mainline	$	3,176.2		$	—	$	—		$	—		$	3,176.2		$	—		$	3,176.2
Regional	—			774.5		—			—			774.5			—			774.5
Total passenger revenues	3,176.2			774.5		—			—			3,950.7			—			3,950.7
CPA revenues	—			—		369.4			(369.4		)	—			—			—
Freight and mail	104.6			3.9		0.2			—			108.7			—			108.7
Other-net	249.9			0.5		8.0			—			258.4			—			258.4
Total operating revenues	3,530.7			778.9		377.6			(369.4		)	4,317.8			—			4,317.8
Operating expenses
Operating expenses, excluding fuel(b)	2,015.4			543.5		340.3			(366.9		)	2,532.3			38.9			2,571.2
Economic fuel(c)	1,101.2			166.4		—			—			1,267.6			30.1			1,297.7
Total operating expenses	3,116.6			709.9		340.3			(366.9		)	3,799.9			69.0			3,868.9
Nonoperating income (expense)
Interest income	23.9			—		0.3			(2.3		)	21.9			—			21.9
Interest expense	(72.2		)	—		(17.2		)	2.1			(87.3		)	—			(87.3		)
Other	8.9			—		1.3			—			10.2			—			10.2
	(39.4		)	—		(15.6		)	(0.2		)	(55.2		)	—			(55.2		)
Income (loss) before income tax	$	374.7		$	69.0	$	21.7		$	(2.7	)	$	462.7		$	(69.0	)	$	393.7

	Alaska
Year ended December 31, 2010	Mainline			Regional		Horizon			Consolidating			Air Group Adjusted(a)			Special Charges			Consolidated
Operating revenues
Passenger
Mainline	$	2,763.4		$	—	$	—		$	—		$	2,763.4		$	—		$	2,763.4
Regional	—			330.6		394.5			0.1			725.2			—			725.2
Total passenger revenues	2,763.4			330.6		394.5			0.1			3,488.6			—			3,488.6
CPA revenues	—			—		274.4			(274.4		)	—			—			—
Freight and mail	101.9			1.8		2.5			—			106.2			—			106.2
Other-net	228.8			0.1		8.6			—			237.5			—			237.5
Total operating revenues	3,094.1			332.5		680.0			(274.3		)	3,832.3			—			3,832.3
Operating expenses
Operating expenses, excluding fuel(b)	1,916.9			298.9		502.1			(271.3		)	2,446.6			13.2			2,459.8
Economic fuel(c)	757.3			—		138.3			—			895.6			5.3			900.9
Total operating expenses	2,674.2			298.9		640.4			(271.3		)	3,342.2			18.5			3,360.7
Nonoperating income (expense)
Interest income	34.8			—		3.6			(9.0		)	29.4			—			29.4
Interest expense	(96.5		)	—		(20.5		)	8.7			(108.3		)	—			(108.3		)
Other	13.1			—		0.1			—			13.2			—			13.2
	(48.6		)	—		(16.8		)	(0.3		)	(65.7		)	—			(65.7		)
Income (loss) before income tax	$	371.3		$	33.6	$	22.8		$	(3.3	)	$	424.4		$	(18.5	)	$	405.9

	Alaska
Year ended December 31, 2009	Mainline			Regional		Horizon			Consolidating			Air Group Adjusted(a)			Special Charges			Consolidated
Operating revenues
Passenger
Mainline	$	2,438.8		$	—	$	—		$	—		$	2,438.8		$	—		$	2,438.8
Regional	—			286.7		381.9			—			668.6			—			668.6
Total passenger revenues	2,438.8			286.7		381.9			—			3,107.4			—			3,107.4
CPA revenues	—			—		261.7			(261.7		)	—			—			—
Freight and mail	91.5			1.7		2.7			—			95.9			—			95.9
Other-net	187.3			1.1		8.1			—			196.5			—			196.5
Total operating revenues	2,717.6			289.5		654.4			(261.7		)	3,399.8			—			3,399.8
Operating expenses
Operating expenses, excluding fuel(b)	1,910.9			280.5		504.5			(257.4		)	2,438.5			35.8			2,474.3
Economic fuel(c)	622.7			—		124.2			—			746.9			(88.8		)	658.1
Total operating expenses	2,533.6			280.5		628.7			(257.4		)	3,185.4			(53.0		)	3,132.4
Nonoperating income (expense)
Interest income	38.6			—		2.0			(8.0		)	32.6			—			32.6
Interest expense	(91.7		)	—		(20.1		)	7.5			(104.3		)	—			(104.3		)
Other	8.1			—		0.1			(1.0		)	7.2			—			7.2
	(45.0		)	—		(18.0		)	(1.5		)	(64.5		)	—			(64.5		)
Income (loss) before income tax	$	139.0		$	9.0	$	7.7		$	(5.8	)	$	149.9		$	53.0		$	202.9

^(a)  The adjusted column represents the financial information that is reviewed by management to assess performance of operations and determine capital allocations and does not include certain charges.

^(b)  Refer to Note 14 for a summary of special charges for each respective period.

^(c)  Represents adjustments to reflect the timing of gain or loss recognition resulting from mark-to-market fuel-hedge accounting.

	2011			2010			2009
Depreciation:
Alaska(a)	$	202.9		$	188.5		$	178.5
Horizon	43.4			41.0			39.5
Parent company	0.6			1.0			1.2
Consolidated	$	246.9		$	230.5		$	219.2
Capital expenditures:
Alaska(a)	$	250.5		$	166.2		$	357.5
Horizon	136.9			19.1			80.9
Consolidated	$	387.4		$	185.3		$	438.4
Total assets at end of period:
Alaska(a)	$	4,803.3		$	4,610.2
Horizon	846.5			747.2
Parent company	1,583.5			1,375.6
Elimination of inter-company accounts	(2,038.3		)	(1,716.4		)
Consolidated	$	5,195.0		$	5,016.6

^(a)  There are no depreciation expenses, capital expenditures or assets associated with purchased capacity flying at Alaska.