OPERATING SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2013

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. 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, 2013	Mainline			Regional			Horizon			Consolidating			Air Group Adjusted(a)			Special Items(b)			Consolidated
Operating revenues
Passenger
Mainline	$	3,490		$	—		$	—		$	—		$	3,490		$	—		$	3,490
Regional	—			777			—			—			777			—			777
Total passenger revenues	3,490			777			—			—			4,267			—			4,267
CPA revenues	—			—			368			(368		)	—			—			—
Freight and mail	109			4			—						113			—			113
Other-net	513			66			5						584			192			776
Total operating revenues	4,112			847			373			(368		)	4,964			192			5,156
Operating expenses
Operating expenses, excluding fuel	2,293			585			341			(368		)	2,851			—			2,851
Economic fuel	1,294			181			—			—			1,475			(8		)	1,467
Total operating expenses	3,587			766			341			(368		)	4,326			(8		)	4,318
Nonoperating income (expense)
Interest income	18			—			—			—			18			—			18
Interest expense	(38		)	—			(14		)	(4		)	(56		)	—			(56		)
Other	25			(12		)	2			1			16			—			16
	5			(12		)	(12		)	(3		)	(22		)	—			(22		)
Income (loss) before income tax	$	530		$	69		$	20		$	(3	)	$	616		$	200		$	816

	Alaska
Year Ended December 31, 2012	Mainline			Regional		Horizon			Consolidating			Air Group Adjusted(a)			Special Items(b)			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	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 Items(b)			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	2,015			544		340			(367		)	2,532			39			2,571
Economic fuel	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

^(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 income and charges.

^(b)  Includes accounting adjustments related to Special mileage plan revenue, mark-to-market fuel-hedge accounting charges, and fleet transition and restructuring expenses.

	2013			2012			2011
Depreciation:
Alaska(a)	$	223		217			$	203
Horizon	47			47			43
Parent company	—			—			1
Consolidated	$	270		$	264		$	247
Capital expenditures:
Alaska(a)	$	494		$	477		$	250
Horizon	72			41			137
Consolidated	$	566		$	518		$	387
Total assets at end of period:
Alaska(a)	$	5,832		$	5,177
Horizon	840			823
Parent company	2,762			1,832
Elimination of inter-company accounts	(3,596		)	(2,327		)
Consolidated	$	5,838		$	5,505

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