OPERATING SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2015

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, for which all intercompany transactions are 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 the regional operations.

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 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 resource allocations. Adjustments are further explained below in reconciliation to consolidated GAAP results. Operating segment information is as follows (in millions):

	Three Months Ended June 30, 2015
	Alaska
	Mainline			Regional		Horizon			Consolidating			Air Group Adjusted(a)			Special Items(b)			Consolidated
Operating revenues
Passenger
Mainline	$	1,019		$	—	$	—		$	—		$	1,019		$	—		$	1,019
Regional	—			212		—			—			212			—			212
Total passenger revenues	1,019			212		—			—			1,231			—			1,231
CPA revenues	—			—		99			(99		)	—			—			—
Freight and mail	28			2		—			—			30			—			30
Other - net	156			19		1			—			176			—			176
Total operating revenues	1,203			233		100			(99		)	1,437			—			1,437
Operating expenses
Operating expenses, excluding fuel	645			169		90			(100		)	804			—			804
Economic fuel	232			35		—			—			267			(6		)	261
Total operating expenses	877			204		90			(100		)	1,071			(6		)	1,065
Nonoperating income (expense)
Interest income	5			—		—			1			6			—			6
Interest expense	(7		)	—		(1		)	(3		)	(11		)	—			(11		)
Other	7			—		(1		)	3			9			—			9
	5			—		(2		)	1			4			—			4
Income before income tax	$	331		$	29	$	8		$	2		$	370		$	6		$	376

	Three Months Ended June 30, 2014
	Alaska
	Mainline			Regional			Horizon			Consolidating			Air Group Adjusted(a)			Special Items(b)			Consolidated
Operating revenues
Passenger
Mainline	$	974		$	—		$	—		$	—		$	974		$	—		$	974
Regional	—			200			—			—			200			—			200
Total passenger revenues	974			200			—			—			1,174			—			1,174
CPA revenues	—			—			87			(87		)	—			—			—
Freight and mail	31			1			—			—			32			—			32
Other - net	147			20			2			—			169			—			169
Total operating revenues	1,152			221			89			(87		)	1,375			—			1,375
Operating expenses
Operating expenses, excluding fuel	602			151			86			(87		)	752			—			752
Economic fuel	324			49			—			—			373			(13		)	360
Total operating expenses	926			200			86			(87		)	1,125			(13		)	1,112
Nonoperating income (expense)
Interest income	5			—			—			—			5			—			5
Interest expense	(9		)	(1		)	(2		)	—			(12		)	—			(12		)
Other	9			1			(1		)	—			9			—			9
	5			—			(3		)	—			2			—			2
Income before income tax	$	231		$	21		$	—		$	—		$	252		$	13		$	265

	Six Months Ended June 30, 2015
	Alaska
	Mainline		Regional	Horizon		Consolidating		Air Group Adjusted(a)		Special Items(b)		Consolidated
Operating revenues
Passenger
Mainline	1,920		—	—		—		1,920		—		1,920
Regional	—		398	—		—		398		—		398
Total passenger revenues	1,920		398	—		—		2,318		—		2,318
CPA revenues	—		—	198		(198	)	—		—		—
Freight and mail	50		3	—		—		53		—		53
Other-net	298		35	2		—		335		—		335
Total operating revenues	2,268		436	200		(198	)	2,706		—		2,706
Operating expenses
Operating expenses, excluding fuel	1,284		333	181		(198	)	1,600		—		1,600
Economic fuel	436		66	—		—		502		(6	)	496
Total operating expenses	1,720		399	181		(198	)	2,102		(6	)	2,096
Nonoperating income (expense)
Interest income	10		—	—		1		11		—		11
Interest expense	(14	)	—	(5	)	(3	)	(22	)	—		(22	)
Other	14		—	—		3		17		—		17
	10		—	(5	)	1		6		—		6
Income before income tax	558		37	14		1		610		6		616

	Six Months Ended June 30, 2014
	Alaska
	Mainline		Regional		Horizon		Consolidating		Air Group Adjusted(a)		Special Items(b)		Consolidated
Operating revenues
Passenger
Mainline	1,828		—		—		—		1,828		—		1,828
Regional	—		386		—		—		386		—		386
Total passenger revenues	1,828		386		—		—		2,214		—		2,214
CPA revenues	—		—		178		(178	)	—		—		—
Freight and mail	54		2		—		—		56		—		56
Other-net	287		37		3		—		327		—		327
Total operating revenues	2,169		425		181		(178	)	2,597		—		2,597
Operating expenses
Operating expenses, excluding fuel	1,178		302		172		(178	)	1,474		—		1,474
Economic fuel	642		97		—		—		739		(21	)	718
Total operating expenses	1,820		399		172		(178	)	2,213		(21	)	2,192
Nonoperating income (expense)
Interest income	10		—		—		—		10		—		10
Interest expense	(17	)	(1	)	(6	)	(1	)	(25	)	—		(25	)
Other	27		—		—		—		27		—		27
	20		(1	)	(6	)	(1	)	12		—		12
Income before income tax	369		25		3		(1	)	396		21		417

^(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):

	June 30, 2015			December 31, 2014
Alaska	$	7,567		$	6,772
Horizon	781			818
Parent company	3,877			3,552
Elimination of inter-company accounts	(5,745		)	(4,961		)
Consolidated	$	6,480		$	6,181