OPERATING SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2012

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 Boeing 737 part of Alaska's business.

Alaska Regional - Alaska's shorter distance network. In this segment, Alaska Regional records actual on board passenger revenue, less costs such as fuel, distribution costs, and payments made to Horizon, SkyWest and PenAir under CPAs. Additionally, Alaska Regional includes a small allocation of corporate overhead such as IT, finance and other administrative costs incurred by Alaska and on behalf of Horizon.

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.

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, 2012	Mainline			Regional		Horizon			Consolidating			Air Group Adjusted(a)			Special Charges			Consolidated
Operating revenues
Passenger
Mainline	$	3,284		$	—	$	—		$	—		$	3,284		$	—		$	3,284
Regional	—			746		—			—			746			—			746
Total passenger revenues	3,284			746		—			—			4,030			—			4,030
CPA revenues	—			—		369			(369		)	—			—			—
Freight and mail	107			4		—			—			111			—			111
Other-net	448			61		7			—			516			—			516
Total operating revenues	3,839			811		376			(369		)	4,657			—			4,657
Operating expenses
Operating expenses, excluding fuel	2,131			566		338			(369		)	2,666			—			2,666
Economic fuel(c)	1,238			183		—			—			1,421			38			1,459
Total operating expenses	3,369			749		338			(369		)	4,087			38			4,125
Nonoperating income (expense)
Interest income	19			—		—			—			19			—			19
Interest expense	(47		)	—		(16		)	(1		)	(64		)	—			(64		)
Other	24			—		2			1			27			—			27
	(4		)	—		(14		)	—			(18		)	—			(18		)
Income (loss) before income tax	$	466		$	62	$	24		$	—		$	552		$	(38	)	$	514

	Alaska
Year ended December 31, 2011	Mainline			Regional		Horizon			Consolidating			Air Group Adjusted(a)			Special Charges			Consolidated
Operating revenues
Passenger
Mainline	$	2,995		$	—	$	—		$	—		$	2,995		$	—		$	2,995
Regional	—			713		—			—			713			—			713
Total passenger revenues	2,995			713		—			—			3,708			—			3,708
CPA revenues	—			—		369			(369		)	—			—			—
Freight and mail	105			4		—			—			109			—			109
Other-net	431			62		8			—			501			—			501
Total operating revenues	3,531			779		377			(369		)	4,318			—			4,318
Operating expenses
Operating expenses, excluding fuel(b)	2,015			544		340			(367		)	2,532			39			2,571
Economic fuel(c)	1,101			167		—			—			1,268			30			1,298
Total operating expenses	3,116			711		340			(367		)	3,800			69			3,869
Nonoperating income (expense)
Interest income	24			—		—			(2		)	22			—			22
Interest expense	(72		)	—		(17		)	2			(87		)	—			(87		)
Other	8			—		2						10			—			10
	(40		)	—		(15		)	—			(55		)	—			(55		)
Income (loss) before income tax	$	375		$	68	$	22		$	(2	)	$	463		$	(69	)	$	394

	Alaska
Year ended December 31, 2010	Mainline			Regional		Horizon			Consolidating			Air Group Adjusted(a)			Special Charges			Consolidated
Operating revenues
Passenger
Mainline	$	2,595		$	—	$	—		$	—		$	2,595		$	—		$	2,595
Regional	—			308		363			—			671			—			671
Total passenger revenues	2,595			308		363			—			3,266			—			3,266
CPA revenues	—			—		274			(274		)	—			—			—
Freight and mail	102			2		2			—			106			—			106
Other-net	397			23		40			—			460			—			460
Total operating revenues	3,094			333		679			(274		)	3,832			—			3,832
Operating expenses
Operating expenses, excluding fuel(b)	1,917			299		502			(271		)	2,447			13			2,460
Economic fuel(c)	757			—		139			—			896			5			901
Total operating expenses	2,674			299		641			(271		)	3,343			18			3,361
Nonoperating income (expense)
Interest income	35			—		4			(10		)	29			—			29
Interest expense	(97		)	—		(20		)	9			(108		)	—			(108		)
Other	13			—		—			1			14			—			14
	(49		)	—		(16		)	—			(65		)	—			(65		)
Income (loss) before income tax	$	371		$	34	$	22		$	(3	)	$	424		$	(18	)	$	406

^(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 the Fleet Transition and Restructuring Related Expenses note 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.

	2012			2011			2010
Depreciation:
Alaska(a)	$	217		203			$	189
Horizon	47			43			41
Parent company	—			1			—
Consolidated	$	264		$	247		$	230
Capital expenditures:
Alaska(a)	$	477		$	250		$	166
Horizon	41			137			19
Consolidated	$	518		$	387		$	185
Total assets at end of period:
Alaska(a)	$	5,177		$	4,775
Horizon	823			847
Parent company	1,832			1,584
Elimination of inter-company accounts	(2,327		)	(2,039		)
Consolidated	$	5,505		$	5,167

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