OPERATING SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2016

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 the regional operations.

Horizon - Horizon operates regional 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, station handling 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 resource allocations. Adjustments are further explained below in a reconciliation to consolidated GAAP results.

Operating segment information is as follows (in millions):

	Three Months Ended March 31, 2016
	Alaska
	Mainline			Regional		Horizon			Consolidating			Air Group Adjusted(a)			Special Items(b)			Consolidated
Operating revenues
Passenger
Mainline	$	927		$	—	$	—		$	—		$	927		$	—		$	927
Regional	—			206		—			—			206			—			206
Total passenger revenues	927			206		—			—			1,133			—			1,133
CPA revenues	—			—		103			(103		)	—			—			—
Freight and mail	23			1		—			—			24			—			24
Other - net	172			17		1			—			190			—			190
Total operating revenues	1,122			224		104			(103		)	1,347			—			1,347
Operating expenses
Operating expenses, excluding fuel	701			186		105			(102		)	890			—			890
Economic fuel	144			25		—			—			169			(2		)	167
Total operating expenses	845			211		105			(102		)	1,059			(2		)	1,057
Nonoperating income (expense)
Interest income	6			—		—			—			6			—			6
Interest expense	(12		)	—		(1		)	—			(13		)	—			(13		)
Other	7			—		—			2			9			—			9
	1			—		(1		)	2			2			—			2
Income (loss) before income tax	$	278		$	13	$	(2	)	$	1		$	290		$	2		$	292

	Three Months Ended March 31, 2015
	Alaska
	Mainline			Regional		Horizon			Consolidating			Air Group Adjusted(a)			Special Items(b)		Consolidated
Operating revenues
Passenger
Mainline	$	901		$	—	$	—		$	—		$	901		$	—	$	901
Regional	—			186		—			—			186			—		186
Total passenger revenues	901			186		—			—			1,087			—		1,087
CPA revenues	—			—		99			(99		)	—			—		—
Freight and mail	22			1		—			—			23			—		23
Other - net	142			16		1			—			159			—		159
Total operating revenues	1,065			203		100			(99		)	1,269			—		1,269
Operating expenses
Operating expenses, excluding fuel	639			164		91			(98		)	796			—		796
Economic fuel	203			32		—			—			235			—		235
Total operating expenses	842			196		91			(98		)	1,031			—		1,031
Nonoperating income (expense)
Interest income	5			—		—			—			5			—		5
Interest expense	(7		)	—		(4		)	—			(11		)	—		(11		)
Other	7			—		1			—			8			—		8
	5			—		(3		)	—			2			—		2
Income (loss) before income tax	$	228		$	7	$	6		$	(1	)	$	240		$	—	$	240

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

Total assets were as follows (in millions):

	March 31, 2016			December 31, 2015
Alaska(a)	$	8,630		$	8,127
Horizon	717			717
Parent company	4,929			4,734
Elimination of inter-company accounts	(7,447		)	(7,048		)
Consolidated	$	6,829		$	6,530

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