OPERATING SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

OPERATING SEGMENT INFORMATION

OPERATING SEGMENT INFORMATION

Air Group has two operating airlines - Alaska and Horizon. 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 June 30, 2016
	Alaska
	Mainline			Regional		Horizon			Parent & Consolidating(a)			Air Group Adjusted(b)			Special Items(c)			Consolidated
Operating revenues
Passenger
Mainline	$	1,036		$	—	$	—		$	—		$	1,036		$	—		$	1,036
Regional	—			227		—			—			227			—			227
Total passenger revenues	1,036			227		—			—			1,263			—			1,263
CPA revenues	—			—		110			(110		)	—			—			—
Freight and mail	26			1		—			—			27			—			27
Other - net	184			19		1			—			204			—			204
Total operating revenues	1,246			247		111			(110		)	1,494			—			1,494
Operating expenses
Operating expenses, excluding fuel	679			192		101			(111		)	861			14			875
Economic fuel	180			31		—			—			211			(10		)	201
Total operating expenses	859			223		101			(111		)	1,072			4			1,076
Nonoperating income (expense)
Interest income	6			—		1			—			7			—			7
Interest expense	(4		)	—		(4		)	(1		)	(9		)	—			(9		)
Other	3			—		—			1			4			—			4
	5			—		(3		)	—			2			—			2
Income (loss) before income tax	$	392		$	24	$	7		$	1		$	424		$	(4	)	$	420

	Three Months Ended June 30, 2015
	Alaska
	Mainline			Regional		Horizon			Parent & Consolidating(a)			Air Group Adjusted(b)			Special Items(c)			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 (loss) before income tax	$	331		$	29	$	8		$	2		$	370		$	6		$	376

	Six Months Ended June 30, 2016
	Alaska
	Mainline			Regional		Horizon			Parent & Consolidating(a)			Air Group Adjusted(b)			Special Items(c)			Consolidated
Operating revenues
Passenger
Mainline	1,963			—		$	—		$	—		$	1,963		$	—		$	1,963
Regional	—			433		—			—			433			—			433
Total passenger revenues	1,963			433		—			—			2,396			—			2,396
CPA revenues	—			—		213			(213		)	—			—			—
Freight and mail	49			2		—			—			51			—			51
Other - net	356			36		2			—			394			—			394
Total operating revenues	2,368			471		215			(213		)	2,841			—			2,841
Operating expenses
Operating expenses, excluding fuel	1,380			378		206			(213		)	1,751			14			1,765
Economic fuel	324			56		—			—			380			(12		)	368
Total operating expenses	1,704			434		206			(213		)	2,131			2			2,133
Nonoperating income (expense)
Interest income	12			—		1			—			13			—			13
Interest expense	(16		)	—		(5		)	(1		)	(22		)	—			(22		)
Other	10			—		—			3			13			—			13
	6			—		(4		)	2			4			—			4
Income (loss) before income tax	$	670		$	37	$	5		$	2		$	714		$	(2	)	$	712

	Six Months Ended June 30, 2015
	Alaska
	Mainline			Regional		Horizon			Parent & Consolidating(a)			Air Group Adjusted(b)			Special Items(c)			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 (loss) before income tax	$	558		$	37	$	14		$	1		$	610		$	6		$	616

^(a)  Includes consolidating entries, Parent Company, and other immaterial business units.

^(b)  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.

^(c)  Includes mark-to-market fuel-hedge accounting charges, and other special items described previously.

Total assets were as follows (in millions):

	June 30, 2016			December 31, 2015
Alaska(a)	$	9,101		$	8,127
Horizon	729			717
Parent company	5,200			4,734
Elimination of inter-company accounts	(7,995		)	(7,048		)
Consolidated	$	7,035		$	6,530

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