COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS

COMMITMENTS AND CONTINGENCIES

Future minimum fixed payments for commitments as of December 31, 2013 (in millions):

	Aircraft Leases		Facility Leases		Aircraft Commitments		Capacity Purchase Agreements		Engine Maintenance
2014	$	128	$	93	$	407	$	50	$	11
2015	105		81		338		44		10
2016	82		72		289		32		—
2017	51		68		341		32		—
2018	36		19		429		14		—
Thereafter	43		117		1,034		—		—
Total	$	445	$	450	$	2,838	$	172	$	21

Lease Commitments

At December 31, 2013, the Company had lease contracts for 62 aircraft, which have remaining noncancelable lease terms ranging from 2014 to 2021. Of these aircraft, 15 are non-operating (i.e. not in the Company's fleet) and 13 are subleased to third-party carriers. The majority of airport and terminal facilities are also leased. Rent expense was $290 million, $275 million, and $275 million, in 2013, 2012, and 2011, respectively.

During the third quarter, the Company had three subleased Bombardier CRJ-700 aircraft returned. In connection with these aircraft the Company incurred costs to deliver the aircraft to SkyWest Airlines, which will sublease and operate the aircraft under a Capacity Purchase Agreement (CPA).

Aircraft Commitments

As of December 31, 2013, the Company is committed to purchasing 67 B737 aircraft, including 30 B737-900ER aircraft and 37 B737 MAX aircraft, with deliveries in 2014 through 2022. In addition, the Company has options to purchase an additional 64 B737 aircraft and seven Q400 aircraft.

Capacity Purchase Agreements (CPAs)

At December 31, 2013, Alaska had CPAs with three carriers, including the Company's wholly-owned subsidiary, Horizon. Horizon sells 100% of its capacity under a CPA with Alaska. On May 14, 2011, SkyWest Airlines, Inc. began flying certain routes under a CPA with Alaska. In addition, Alaska has a CPA with PenAir to fly certain routes in the state of Alaska. Under these agreements, Alaska pays the carriers an amount which is based on a determination of their cost of operating those flights and other factors intended to approximate market rates for those services. Future payments (excluding Horizon) are based on minimum levels of flying by the third-party carriers, which could differ materially due to variable payments based on actual levels of flying and certain costs associated with operating flights such as fuel.

Engine Maintenance

The Company has a power-by-the-hour (PBH) maintenance agreement for some of the B737-700 and B737-900 engines. This agreement transfers risk to third-party service provider and fixes the amount the Company pays per flight hour in exchange for maintenance and repairs under a predefined maintenance program. Future payments are based on minimum flight hours.

CONTINGENCIES

Contingencies

The Company is a party to routine litigation matters incidental to its business and with respect to which no material liability is expected. Management believes the ultimate disposition of these matters is not likely to materially affect the Company's financial position or results of operations. This forward-looking statement is based on management's current understanding of the relevant law and facts, and it is subject to various contingencies, including the potential costs and risks associated with litigation and the actions of arbitrators, judges and juries.