OPERATING SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2024

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 revenue.

Under 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. Historically, our CODM has reviewed financial performance information for our airline operations and Horizon CPA as part of three reportable operating segments:

•Mainline - includes scheduled air transportation on Alaska's Boeing jet aircraft for passengers and cargo throughout the U.S., and in parts of Canada, Mexico, Costa Rica, Belize, Guatemala, and the Bahamas.

•Regional - includes Horizon's and other third-party carriers’ scheduled air transportation for passengers across a shorter distance network within the U.S., Canada, and Mexico under a CPA. This segment includes the actual revenue 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.

In addition to these reported segments, we have a "Consolidating and Other" column which 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.

Over time, our Mainline and Regional airline segments have increasingly been managed as a single component that provides scheduled air transportation for passengers and cargo, and includes our loyalty program. Managing this component in an integrated manner enables our team to leverage our comprehensive network, single route scheduling system, and fleet as a single business to deliver optimized consolidated financial results. In the first quarter of 2024, management began evaluating changes to internal reporting that may change the discrete information that is provided to our CODM in the future to better align with the way the business is managed. Such changes may have an impact on the company’s reportable segments once finalized. We will continue to report using the existing segment structure until changes in our internal reporting have been fully implemented, and a segment analysis has been performed to determine if any changes to reportable segments are indicated.

Operating segment information is as follows (in millions):

	Three Months Ended March 31, 2024
	Mainline		Regional		Horizon		Consolidating & Other(a)		Air Group Adjusted(b)			Special Items(c)		Consolidated
Operating Revenue
Passenger revenue	$	1,629	$	375	$	—	$	—	$	2,004		$	—	$	2,004
CPA revenue	—		—		104		(104)		—			—		—
Mileage Plan other revenue	149		15		—		—		164			—		164
Cargo and other revenue	62		—		—		2		64			—		64
Total Operating Revenue	1,840		390		104		(102)		2,232			—		2,232
Operating Expenses
Operating expenses, excluding fuel	1,514		299		88		(102)		1,799			34		1,833
Fuel expense	485		93		—		—		578			(13)		565
Total Operating Expenses	1,999		392		88		(102)		2,377			21		2,398
Non-operating Income (Expense)	(3)		—		(11)		2		(12)			—		(12)
Income (Loss) Before Income Tax	$	(162)	$	(2)	$	5	$	2	$	(157)		$	(21)	$	(178)
Pretax Margin									(7.0)		%			(8.0)		%
	Three Months Ended March 31, 2023
	Mainline		Regional		Horizon		Consolidating & Other(a)		Air Group Adjusted(b)			Special Items(c)		Consolidated
Operating Revenue
Passenger revenue	$	1,673	$	311	$	—	$	—	$	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	1,873		322		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	$	(84)	$	(19)	$	(14)	$	2	$	(115)		$	(84)	$	(199)
Pretax Margin									(5.2)		%			(9.1)		%