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OPERATING SEGMENT INFORMATION
 9 Months Ended
Sep. 30, 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 September 30, 2019
 
Mainline
 
Regional
 
Horizon
 
Consolidating & Other(a)
 
Air Group Adjusted(b)
 
Special Items(c)
 
Consolidated
Operating revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Passenger revenues
$
1,850

 
$
361

 
$
—

 
$
—

 
$
2,211

 
$
—

 
$
2,211

CPA revenues
—

 
—

 
112

 
(112
)
 
—

 
—

 
—

Mileage Plan other revenue
107

 
11

 
—

 
—

 
118

 
—

 
118

Cargo and other
58

 
1

 
—

 
1

 
60

 
—

 
60

Total operating revenues
2,015

 
373

 
112

 
(111
)
 
2,389

 
—

 
2,389

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses, excluding fuel
1,226

 
275

 
94

 
(119
)
 
1,476

 
5

 
1,481

Economic fuel
411

 
75

 
—

 
—

 
486

 
—

 
486

Total operating expenses
1,637

 
350

 
94

 
(119
)
 
1,962

 
5

 
1,967

Nonoperating income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
17

 
—

 
—

 
(6
)
 
11

 
—

 
11

Interest expense
(18
)
 
—

 
(7
)
 
7

 
(18
)
 
—

 
(18
)
Interest capitalized
4

 
—

 
—

 
—

 
4

 
—

 
4

Other - net
(3
)
 
—

 
—

 
—

 
(3
)
 
—

 
(3
)
Total nonoperating income (expense)
—

 
—

 
(7
)
 
1

 
(6
)
 
—

 
(6
)
Income (loss) before income tax
$
378

 
$
23

 
$
11

 
$
9

 
$
421

 
$
(5
)
 
$
416

 
Three Months Ended September 30, 2018
 
Mainline
 
Regional
 
Horizon
 
Consolidating & Other(a)
 
Air Group Adjusted(b)
 
Special Items(c)
 
Consolidated
Operating revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Passenger revenues
$
1,727

 
$
316

 
$
—

 
$
—

 
$
2,043

 
$
—

 
$
2,043

CPA revenues
—

 
—

 
128

 
(128
)
 
—

 
—

 
—

Mileage Plan other revenue
104

 
10

 
—

 
—

 
114

 
—

 
114

Cargo and other
53

 
—

 
2

 
—

 
55

 
—

 
55

Total operating revenues
1,884

 
326

 
130

 
(128
)
 
2,212

 
—

 
2,212

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses, excluding fuel
1,126

 
267

 
118

 
(131
)
 
1,380

 
22

 
1,402

Economic fuel
438

 
70

 
—

 
—

 
508

 
5

 
513

Total operating expenses
1,564

 
337

 
118

 
(131
)
 
1,888

 
27

 
1,915

Nonoperating income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
15

 
—

 
—

 
(4
)
 
11

 
—

 
11

Interest expense
(20
)
 
—

 
(6
)
 
4

 
(22
)
 
—

 
(22
)
Interest capitalized
4

 
—

 
1

 
—

 
5

 
—

 
5

Other - net
(5
)
 
(2
)
 
—

 
—

 
(7
)
 
—

 
(7
)
Total nonoperating income (expense)
(6
)
 
(2
)
 
(5
)
 
—

 
(13
)
 
—

 
(13
)
Income (loss) before income tax
$
314

 
$
(13
)
 
$
7

 
$
3

 
$
311

 
$
(27
)
 
$
284


 
Nine Months Ended September 30, 2019
 
Mainline
 
Regional
 
Horizon
 
Consolidating & Other(a)
 
Air Group Adjusted(b)
 
Special Items(c)
 
Consolidated
Operating revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Passenger revenues
$
5,039

 
$
999

 
$
—

 
$
—

 
$
6,038

 
$
—

 
$
6,038

CPA revenues
—

 
—

 
340

 
(340
)
 
—

 
—

 
—

Mileage Plan other revenue
312

 
34

 
—

 
—

 
346

 
—

 
346

Cargo and other
163

 
2

 
1

 
3

 
169

 
—

 
169

Total operating revenues
5,514

 
1,035

 
341

 
(337
)
 
6,553

 
—

 
6,553

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses, excluding fuel
3,545

 
817

 
286

 
(353
)
 
4,295

 
39

 
4,334

Economic fuel
1,191

 
218

 
—

 
—

 
1,409

 
(1
)
 
1,408

Total operating expenses
4,736

 
1,035

 
286

 
(353
)
 
5,704

 
38

 
5,742

Nonoperating income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
50

 
—

 
—

 
(19
)
 
31

 
—

 
31

Interest expense
(58
)
 
—

 
(22
)
 
20

 
(60
)
 
—

 
(60
)
Interest capitalized
11

 
—

 
—

 
—

 
11

 
—

 
11

Other - net
(20
)
 
—

 
—

 
—

 
(20
)
 
—

 
(20
)
Total nonoperating income (expense)
(17
)
 
—

 
(22
)
 
1

 
(38
)
 
—

 
(38
)
Income (loss) before income tax
$
761

 
$
—

 
$
33

 
$
17

 
$
811

 
$
(38
)
 
$
773


 
Nine Months Ended September 30, 2018
 
Mainline
 
Regional
 
Horizon
 
Consolidating & Other(a)
 
Air Group Adjusted(b)
 
Special Items(c)
 
Consolidated
Operating revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Passenger revenues
$
4,879

 
$
845

 
$
—

 
$
—

 
$
5,724

 
$
—

 
$
5,724

CPA revenues
—

 
—

 
375

 
(375
)
 
—

 
—

 
—

Mileage Plan other revenue
301

 
28

 
—

 
—

 
329

 
—

 
329

Cargo and other
142

 
1

 
4

 
—

 
147

 
—

 
147

Total operating revenues
5,322

 
874

 
379

 
(375
)
 
6,200

 
—

 
6,200

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses, excluding fuel
3,392

 
755

 
345

 
(378
)
 
4,114

 
92

 
4,206

Economic fuel
1,237

 
190

 
—

 
—

 
1,427

 
(30
)
 
1,397

Total operating expenses
4,629

 
945

 
345

 
(378
)
 
5,541

 
62

 
5,603

Nonoperating income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
39

 
—

 
—

 
(10
)
 
29

 
—

 
29

Interest expense
(64
)
 
—

 
(16
)
 
9

 
(71
)
 
—

 
(71
)
Interest capitalized
12

 
—

 
2

 
—

 
14

 
—

 
14

Other - net
(9
)
 
(11
)
 
—

 
—

 
(20
)
 
—

 
(20
)
Total nonoperating income (expense)
(22
)
 
(11
)
 
(14
)
 
(1
)
 
(48
)
 
—

 
(48
)
Income (loss) before income tax
$
671

 
$
(82
)
 
$
20

 
$
2

 
$
611

 
$
(62
)
 
$
549

(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 excludes 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):
 
September 30, 2019
 
December 31, 2018
Mainline
$
19,129

 
$
16,853

Horizon
1,231

 
1,229

Consolidating & Other
(7,377
)
 
(7,170
)
Consolidated
$
12,983

 
$
10,912