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OPERATING SEGMENT INFORMATION
 3 Months Ended
Mar. 31, 2019
Segment Reporting [Abstract]  
OPERATING SEGMENT INFORMATION OPERATING SEGMENT INFORMATION

Alaska Air Group has two operating airlines—Alaska (including Virgin America after the single operating certificate was received in January 2018) and Horizon. Each is regulated by the U.S. Department of Transportation’s Federal Aviation Administration. Alaska has CPAs for regional capacity with Horizon, as well as with third-party carriers SkyWest and PenAir, under which Alaska receives all passenger revenues.

Under U.S. GAAP, operating segments are defined as components of a business for which there is discrete financial information that is regularly assessed by the Chief Operating Decision Maker (CODM) in making resource allocation decisions. Financial performance for the operating airlines and CPAs is managed and reviewed by the Company's CODM as part of three reportable operating segments:
 
•
Mainline - includes scheduled air transportation on Alaska's Boeing or Airbus jet aircraft for passengers and cargo throughout the U.S., and in parts of Canada, Mexico, and Costa Rica.
•
Regional - includes Horizon's and other third-party carriers’ scheduled air transportation for passengers across a shorter distance network within the U.S. under CPAs. This segment includes the actual revenues and expenses associated with regional flying, as well as an allocation of corporate overhead incurred by Air Group on behalf of the regional operations.
•
Horizon - includes the capacity sold to Alaska under CPA. Expenses include those typically borne by regional airlines such as crew costs, ownership costs and maintenance costs.

The CODM makes resource allocation decisions for these reporting segments based on flight profitability data, aircraft type, route economics and other financial information.

The "Consolidating and Other" column reflects Air Group parent company activity, McGee Air Services, consolidating entries and other immaterial business units of the company. The “Air Group Adjusted” column represents a non-GAAP measure that is used by the Company's CODM to evaluate performance and allocate resources. Adjustments are further explained below in reconciling to consolidated GAAP results.

Operating segment information is as follows (in millions):
 
Three Months Ended March 31, 2019
 
Mainline
 
Regional
 
Horizon
 
Consolidating & Other(a)
 
Air Group Adjusted(b)
 
Special Items(c)
 
Consolidated
Operating revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Passenger revenues
$
1,422

 
$
294

 
$
—

 
$
—

 
$
1,716

 
$
—

 
$
1,716

CPA revenues
—

 
—

 
116

 
(116
)
 
—

 
—

 
—

Mileage Plan other revenue
100

 
10

 
—

 
—

 
110

 
—

 
110

Cargo and other
48

 
1

 
1

 
—

 
50

 
—

 
50

Total operating revenues
1,570

 
305

 
117

 
(116
)
 
1,876

 
—

 
1,876

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses, excluding fuel
1,152

 
274

 
97

 
(118
)
 
1,405

 
26

 
1,431

Economic fuel
358

 
66

 
—

 
—

 
424

 
(4
)
 
420

Total operating expenses
1,510

 
340

 
97

 
(118
)
 
1,829

 
22

 
1,851

Nonoperating income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
16

 
—

 
—

 
(7
)
 
9

 
—

 
9

Interest expense
(21
)
 
—

 
(8
)
 
7

 
(22
)
 
—

 
(22
)
Interest capitalized
4

 
—

 
—

 
—

 
4

 
—

 
4

Other - net
(10
)
 
—

 
—

 
—

 
(10
)
 
—

 
(10
)
Total nonoperating income (expense)
(11
)
 
—

 
(8
)
 
—

 
(19
)
 
—

 
(19
)
Income (loss) before income tax
$
49

 
$
(35
)
 
$
12

 
$
2

 
$
28

 
$
(22
)
 
$
6

 
Three Months Ended March 31, 2018
 
Mainline
 
Regional
 
Horizon
 
Consolidating & Other(a)
 
Air Group Adjusted(b)
 
Special Items(c)
 
Consolidated
Operating revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Passenger revenues
$
1,441

 
$
243

 
$
—

 
$
—

 
$
1,684

 
$
—

 
$
1,684

CPA revenues
—

 
—

 
110

 
(110
)
 
—

 
—

 
—

Mileage Plan other revenue
98

 
9

 
—

 
—

 
107

 
—

 
107

Cargo and other
40

 
—

 
1

 
—

 
41

 
—

 
41

Total operating revenues
1,579

 
252

 
111

 
(110
)
 
1,832

 
—

 
1,832

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses, excluding fuel
1,131

 
239

 
104

 
(111
)
 
1,363

 
31

 
1,394

Economic fuel
367

 
55

 
—

 
—

 
422

 
(13
)
 
409

Total operating expenses
1,498

 
294

 
104

 
(111
)
 
1,785

 
18

 
1,803

Nonoperating income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
11

 
—

 
—

 
(3
)
 
8

 
—

 
8

Interest expense
(22
)
 
—

 
(5
)
 
3

 
(24
)
 
—

 
(24
)
Interest capitalized
4

 
—

 
1

 
—

 
5

 
—

 
5

Other - net
(5
)
 
(7
)
 
—

 
—

 
(12
)
 
—

 
(12
)
Total nonoperating income (expense)
(12
)
 
(7
)
 
(4
)
 
—

 
(23
)
 
—

 
(23
)
Income (loss) before income tax
$
69

 
$
(49
)
 
$
3

 
$
1

 
$
24

 
$
(18
)
 
$
6

(a)
Includes consolidating entries, Air Group parent company, McGee Air Services, and other immaterial business units.
(b)
The Air Group 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 merger-related costs, mark-to-market fuel-hedge accounting adjustments, and other special items.


Total assets were as follows (in millions):
 
March 31, 2019
 
December 31, 2018
Mainline
$
18,698

 
$
16,853

Horizon
1,209

 
1,229

Consolidating & Other
(7,267
)
 
(7,170
)
Consolidated
$
12,640

 
$
10,912