OPERATING SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

OPERATING SEGMENT INFORMATION

OPERATING SEGMENT INFORMATION

Alaska Air Group has two operating airlines – Alaska and Horizon. Each is regulated by the U.S. Department of Transportation’s Federal Aviation Administration. Alaska has CPAs for regional capacity with Horizon and SkyWest, 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, Costa Rica, and Belize.

•Regional - includes Horizon's and other third-party carriers’ scheduled air transportation for passengers across a shorter distance network within the U.S. and Canada under a CPA. 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, 2023
	Mainline		Regional		Horizon		Consolidating & Other(a)		Air Group Adjusted(b)			Special Items(c)		Consolidated
Operating Revenue
Passenger revenue	$	1,690	$	294	$	—	$	—	$	1,984		$	—	$	1,984
CPA revenue	—		—		78		(78)		—			—		—
Mileage Plan other revenue	143		11		—		—		154			—		154
Cargo and other revenue	57		—		—		1		58			—		58
Total Operating Revenue	1,890		305		78		(77)		2,196			—		2,196
Operating Expenses
Operating expenses, excluding fuel	1,390		256		84		(77)		1,653			64		1,717
Fuel expense	561		85		—		(1)		645			20		665
Total Operating Expenses	1,951		341		84		(78)		2,298			84		2,382
Non-operating Income (Expense)	(6)		—		(8)		1		(13)			—		(13)
Income (Loss) Before Income Tax	$	(67)	$	(36)	$	(14)	$	2	$	(115)		$	(84)	$	(199)
Pretax Margin									(5.2)		%			(9.1)		%
	Three Months Ended March 31, 2022
	Mainline		Regional		Horizon		Consolidating & Other(a)		Air Group Adjusted(b)			Special Items(c)		Consolidated
Operating Revenue
Passenger revenue	$	1,243	$	268	$	—	$	—	$	1,511		$	—	$	1,511
CPA revenue	—		—		94		(94)		—			—		—
Mileage Plan other revenue	100		12		—		—		112			—		112
Cargo and other revenue	57		—		—		1		58			—		58
Total Operating Revenue	1,400		280		94		(93)		1,681			—		1,681
Operating Expenses
Operating expenses, excluding fuel	1,194		262		99		(94)		1,461			75		1,536
Fuel expense	381		73		—		—		454			(107)		347
Total Operating Expenses	1,575		335		99		(94)		1,915			(32)		1,883
Non-operating Income (Expense)	1		—		(5)		—		(4)			—		(4)
Income (Loss) Before Income Tax	$	(174)	$	(55)	$	(10)	$	1	$	(238)		$	32	$	(206)
Pretax Margin									(14.2)		%			(12.3)		%

(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 allocation and excludes certain charges.

(c)Includes special items and mark-to-market fuel hedge accounting adjustments.

Total assets were as follows (in millions):

	March 31, 2023		December 31, 2022
Mainline	$	19,896	$	19,733
Horizon	1,158		1,157
Consolidating & Other	(6,758)		(6,704)
Consolidated	$	14,296	$	14,186