NOTE 8. COMMITMENTS AND CONTINGENCIES

Future minimum fixed payments for commitments as of December 31, 2015 (in millions):



	Aircraft Leases		Facility Leases		Aircraft Commitments		Capacity Purchase Agreements
2016	$	113	$	92	$	505	$	67
2017	104		88		549		58
2018	98		41		444		60
2019	90		41		390		64
2020	81		38		327		68
Thereafter	467		142		418		554
Total	$	953	$	442	$	2,633	$	871

Lease Commitments

At December 31, 2015, the Company had lease contracts for 27 B737 aircraft, 15 Q400 aircraft, 6 CRJ-700 aircraft (operated under the CPA with SkyWest) and 8 CRJ-700 aircraft that are subleased and operated by another carrier (i.e. not in the Company's fleet). The Company has 15 E175 aircraft lease commitments under the CPA with SkyWest, 5 of which are included in the fleet as of December 31, 2015. All lease contracts have remaining noncancelable lease terms ranging from 2016 to 2028. The Company has the option to increase capacity flown by SkyWest with eight additional E175 aircraft with 2017 and 2018 delivery dates.

In addition to the above lease commitments, the Company has contracted for eight E175 regional aircraft that will enter service in 2017.

The majority of airport and terminal facilities are leased. Total rent expense for aircraft and facility leases was $295 million, $288 million, and $290 million, in 2015, 2014, and 2013, respectively.

Aircraft Commitments

As of December 31, 2015, the Company is committed to purchasing 68 B737 aircraft (31 B737-900ER aircraft and 37 B737 MAX aircraft, with deliveries in 2016 through 2022) and two Q400 aircraft, with deliveries in 2018. In addition, the Company has options to purchase 46 B737 aircraft and 5 Q400 aircraft.

Capacity Purchase Agreements (CPAs)

At December 31, 2015, 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. 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.

During the second quarter Alaska signed an amendment to the CPA with SkyWest to remove the eight CRJ-700 aircraft out of regional operations and replace them with eight E175 aircraft. Six of these CRJ-700 aircraft are leased by the Company and two of the aircraft are owned by the Company. The E175 aircraft will be introduced into service throughout 2016, at which time the CRJ-700 aircraft will be removed from service. The CPA with SkyWest is a service contract that, in accordance with GAAP, includes embedded leases related to the aircraft operated under the agreement.

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.