OPERATING SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2014

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 primarily in operational roles. Horizon sells 100% of its capacity to Alaska under a CPA, which is eliminated upon consolidation. In addition, Alaska has CPAs with SkyWest to fly certain routes and PenAir to fly one route in the state of Alaska. The Company attributes revenue between Mainline and Regional based on the coupon fare in effect on the date of issuance relative to the origin and destination of each flight segment. 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 - Flying Boeing 737 jets and all associated revenues and costs.

Alaska Regional - Alaska's CPAs with Horizon, SkyWest and PenAir. 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 the respective CPAs. Additionally, Alaska Regional includes an allocation of corporate overhead such as IT, finance, and other administrative costs incurred by Alaska on behalf of Horizon.

Horizon - Horizon operates turboprop Q400 aircraft. All of Horizon's capacity is sold to Alaska under a CPA.  Expenses include those typically borne by regional airlines such as crew costs, ownership costs, and maintenance costs. The results of Horizon's operations are eliminated upon consolidation.

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):

	Three Months Ended March 31, 2014
	Alaska
	Mainline			Regional			Horizon			Consolidating			Air Group Adjusted(a)			Special Items(b)			Consolidated
Operating revenues
Passenger
Mainline	$	854		$	—		$	—		$	—		$	854		$	—		$	854
Regional	—			186			—			—			186			—			186
Total passenger revenues	854			186			—			—			1,040			—			1,040
CPA revenues	—			—			91			(91		)	—			—			—
Freight and mail	23			1			—			—			24			—			24
Other - net	140			17			1			—			158			—			158
Total operating revenues	1,017			204			92			(91		)	1,222			—			1,222
Operating expenses
Operating expenses, excluding fuel	576			151			86			(90		)	723			—			723
Economic fuel	318			48			—			—			366			(8		)	358
Total operating expenses	894			199			86			(90		)	1,089			(8		)	1,081
Nonoperating income (expense)
Interest income	5			—			—			—			5			—			5
Interest expense	(8		)	—			(4		)	—			(12		)	—			(12		)
Other	18			(1		)	1			—			18			—			18
	15			(1		)	(3		)	—			11			—			11
Income (loss) before income tax	$	138		$	4		$	3		$	(1	)	$	144		$	8		$	152

	Three Months Ended March 31, 2013
	Alaska
	Mainline			Regional		Horizon			Consolidating			Air Group Adjusted(a)			Special Items(b)			Consolidated
Operating revenues
Passenger
Mainline	$	796		$	—	$	—		$	—		$	796		$	—		$	796
Regional	—			182		—			—			182			—			182
Total passenger revenues	796			182		—			—			978			—			978
CPA revenues	—			—		94			(94		)	—			—			—
Freight and mail	25			1		—			—			26			—			26
Other - net	113			14		2			—			129			—			129
Total operating revenues	934			197		96			(94		)	1,133			—			1,133
Operating expenses
Operating expenses, excluding fuel	547			147		89			(95		)	688			—			688
Economic fuel	323			46		—			—			369			12			381
Total operating expenses	870			193		89			(95		)	1,057			12			1,069
Nonoperating income (expense)
Interest income	4			—		—			—			4			—			4
Interest expense	(11		)	—		(3		)	(2		)	(16		)	—			(16		)
Other	6			—		—			1			7			—			7
	(1		)	—		(3		)	(1		)	(5		)	—			(5		)
Income (loss) before income tax	$	63		$	4	$	4		$	—		$	71		$	(12	)	$	59

^(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)  Includes mark-to-market fuel-hedge accounting charges.

Total assets were as follows (in millions):

	March 31, 2014			December 31, 2013
Alaska(a)	$	6,124		$	5,832
Horizon	849			840
Parent company	2,913			2,762
Elimination of inter-company accounts	(3,825		)	(3,596		)
Consolidated	$	6,061		$	5,838

^(a)  There are no assets associated with purchased capacity flying at Alaska.