LEASES

12 Months Ended

Dec. 31, 2025

Leases [Abstract]

LEASES

LEASES

The Company leases property and equipment in the normal course of business under operating and finance leases. Leased assets are categorized into four asset classes: aircraft, capacity purchase arrangements for aircraft operated by third-party carriers (CPA aircraft), airport and terminal facilities, and corporate real estate and other equipment. Operating rent expense is recognized on a straight-line basis over the term of the lease.

As most leases do not provide a readily determinable implicit interest rate, the Company typically utilizes the incremental borrowing rate (IBR) based on information available at the commencement date of the lease to determine the present value of lease payments. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rate.

Aircraft and engines

At December 31, 2025, the Company had leases for 10 B737-800 aircraft, 2 B737-800 freighter aircraft, 14 B737-9 aircraft, 12 A330-200 aircraft, and 4 A321-200neo aircraft. Of these leases, 4 A330-200 aircraft and 2 A321neo aircraft are accounted for as finance leases, while the remaining are accounted for as operating leases. The Company also leases 10 A330-300 freighter aircraft under the ATSA, but because it does not have the right to control the use of the aircraft, the aircraft are not accounted for as a lease in the consolidated financial statements. Remaining lease terms for aircraft range from 1 to 10 years. Some leases have options to extend, subject to negotiation at the end of the term. As extension is not certain, and rates are highly likely to be

renegotiated, the extended term is only capitalized when it is reasonably determinable. While aircraft rent is primarily fixed, certain leases contain rental adjustments throughout the lease term which would be recognized as variable expense as incurred.

Capacity purchase agreements with aircraft (CPA aircraft)

At December 31, 2025, Alaska had a CPA with SkyWest covering 42 E175 aircraft. Under this agreement, Alaska pays the carrier an amount which is based on a determination of their cost of operating those flights and other factors intended to approximate market rates for those services. Alaska's CPA with Horizon, a wholly owned subsidiary, does not involve any leased aircraft.

The CPA aircraft have remaining lease terms ranging from 4 years to 9 years. Financial arrangements of the CPA include a fixed component, representing the costs to operate each aircraft which is capitalized. The CPA also includes variable rent based on actual levels of flying, which is expensed as incurred.

Airport and terminal facilities

The Company leases ticket counters, gates, cargo and baggage space, lounge space, office space and other support areas at numerous airports. For this asset class, the Company has elected to combine lease and non-lease components. The majority of airport and terminal facility leases are not capitalized because they do not meet the definition of controlled assets under the standard, or because the lease payments are entirely variable. For airports where leased assets are identified, and where the contract includes fixed lease payments, operating lease assets and lease liabilities have been recorded. The Company is also commonly responsible for maintenance, insurance and other facility-related expenses and services under these agreements. These costs are recognized as variable expense in the period incurred.

The Company leases twelve airport slots at LaGuardia Airport, eight airport slots at Reagan National Airport, and one airport gate at Dallas Love Field to third parties.

Corporate real estate and other leases

Leased corporate real estate is primarily for office space in hub cities, training centers, land leases, and reservation centers. For this asset class, the Company has elected to combine lease and non-lease components under the standard. Other leased assets are comprised of other ancillary contracts and items including Starlink satellite Wi-Fi equipment, leased data center space and ground equipment.

Lease position

Lease-related assets and liabilities recorded on the consolidated balance sheets was as follows:

(in millions)	Balance Sheet Presentation	2025			2024
Assets
Operating lease assets	Operating lease assets	$	1,268		$	1,296
Finance lease assets	Property and equipment, net	227			53
Total lease assets		$	1,495		$	1,349
Liabilities
Current
Operating	Current portion of operating lease liabilities	$	197		$	207
Finance	Current portion of long-term debt and finance leases	181			8
Noncurrent
Operating	Operating lease liabilities, net of current portion	1,141			1,198
Finance	Long-term debt and finance leases, net of current portion	65			47
Total lease liabilities		$	1,584		$	1,460
Weighted-average remaining lease term (in years)
Operating leases		9.1			8.9
Finance leases		2.6			6.5
Weighted-average discount rate
Operating leases		6.7		%	6.4		%
Finance leases		6.2		%	6.3		%

Components of lease expense

The components of lease expense for operating and finance leases were as follows:

(in millions)	Income Statement Presentation	2025		2024		2023
Expense
Operating lease cost	Aircraft rent, Landing fees and other rentals	$	279	$	217	$	218
Amortization of finance lease assets	Depreciation and amortization	24		2		—
Interest on finance lease liabilities	Interest expense	5		1		—
Variable and short-term lease costs	Aircraft rent, Landing fees and other rentals	768		557		472
Total lease expense		1,076		777		690
Revenue
Lease revenue	Cargo and other revenue	(15)		(15)		(15)
Net lease impact		$	1,061	$	762	$	675

Supplemental cash flow information

The table below presents supplemental cash flow information related to leases. Operating cash flows associated with finance leases were not material for the three years ended December 31, 2025, 2024, and 2023.

(in millions)	2025		2024		2023
Operating cash flows for operating leases	$	273	$	241	$	348
Financing cash flows for finance leases	9		31		211

Maturities of lease liabilities

Future minimum lease payments under non-cancellable leases as of December 31, 2025:

	Operating Leases				Finance Leases
(in millions)	Aircraft(a)		Other		Aircraft		Other
2026	$	244	$	35	$	193	$	—
2027	233		29		16		—
2028	213		27		16		—
2029	194		24		16		—
2030	159		24		10		—
Thereafter	305		394		14		7
Total Lease Payments(a)	1,348		533		265		7
Less: Imputed interest	(237)		(286)		(22)		(4)
Total	$	1,111	$	247	$	243	$	3

(a) Future minimum lease payments in the table reflect incentive credits related to leased B737-9 aircraft. As a result, the operating lease liabilities presented on the consolidated balance sheet will not agree to this table.

As of December 31, 2025, we have entered into but not yet commenced leases for Starlink satellite Wi-Fi equipment and for regional aircraft under CPAs. These leases will commence between 2026 and 2027, with lease terms ranging from 2030 to 2038. The liabilities expected with these leases are expected to be approximately $342 million.

LEASES

LEASES

The Company leases property and equipment in the normal course of business under operating and finance leases. Leased assets are categorized into four asset classes: aircraft, capacity purchase arrangements for aircraft operated by third-party carriers (CPA aircraft), airport and terminal facilities, and corporate real estate and other equipment. Operating rent expense is recognized on a straight-line basis over the term of the lease.

As most leases do not provide a readily determinable implicit interest rate, the Company typically utilizes the incremental borrowing rate (IBR) based on information available at the commencement date of the lease to determine the present value of lease payments. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rate.

Aircraft and engines

At December 31, 2025, the Company had leases for 10 B737-800 aircraft, 2 B737-800 freighter aircraft, 14 B737-9 aircraft, 12 A330-200 aircraft, and 4 A321-200neo aircraft. Of these leases, 4 A330-200 aircraft and 2 A321neo aircraft are accounted for as finance leases, while the remaining are accounted for as operating leases. The Company also leases 10 A330-300 freighter aircraft under the ATSA, but because it does not have the right to control the use of the aircraft, the aircraft are not accounted for as a lease in the consolidated financial statements. Remaining lease terms for aircraft range from 1 to 10 years. Some leases have options to extend, subject to negotiation at the end of the term. As extension is not certain, and rates are highly likely to be

renegotiated, the extended term is only capitalized when it is reasonably determinable. While aircraft rent is primarily fixed, certain leases contain rental adjustments throughout the lease term which would be recognized as variable expense as incurred.

Capacity purchase agreements with aircraft (CPA aircraft)

At December 31, 2025, Alaska had a CPA with SkyWest covering 42 E175 aircraft. Under this agreement, Alaska pays the carrier an amount which is based on a determination of their cost of operating those flights and other factors intended to approximate market rates for those services. Alaska's CPA with Horizon, a wholly owned subsidiary, does not involve any leased aircraft.

The CPA aircraft have remaining lease terms ranging from 4 years to 9 years. Financial arrangements of the CPA include a fixed component, representing the costs to operate each aircraft which is capitalized. The CPA also includes variable rent based on actual levels of flying, which is expensed as incurred.

Airport and terminal facilities

The Company leases ticket counters, gates, cargo and baggage space, lounge space, office space and other support areas at numerous airports. For this asset class, the Company has elected to combine lease and non-lease components. The majority of airport and terminal facility leases are not capitalized because they do not meet the definition of controlled assets under the standard, or because the lease payments are entirely variable. For airports where leased assets are identified, and where the contract includes fixed lease payments, operating lease assets and lease liabilities have been recorded. The Company is also commonly responsible for maintenance, insurance and other facility-related expenses and services under these agreements. These costs are recognized as variable expense in the period incurred.

The Company leases twelve airport slots at LaGuardia Airport, eight airport slots at Reagan National Airport, and one airport gate at Dallas Love Field to third parties.

Corporate real estate and other leases

Leased corporate real estate is primarily for office space in hub cities, training centers, land leases, and reservation centers. For this asset class, the Company has elected to combine lease and non-lease components under the standard. Other leased assets are comprised of other ancillary contracts and items including Starlink satellite Wi-Fi equipment, leased data center space and ground equipment.

Lease position

Lease-related assets and liabilities recorded on the consolidated balance sheets was as follows:

(in millions)	Balance Sheet Presentation	2025			2024
Assets
Operating lease assets	Operating lease assets	$	1,268		$	1,296
Finance lease assets	Property and equipment, net	227			53
Total lease assets		$	1,495		$	1,349
Liabilities
Current
Operating	Current portion of operating lease liabilities	$	197		$	207
Finance	Current portion of long-term debt and finance leases	181			8
Noncurrent
Operating	Operating lease liabilities, net of current portion	1,141			1,198
Finance	Long-term debt and finance leases, net of current portion	65			47
Total lease liabilities		$	1,584		$	1,460
Weighted-average remaining lease term (in years)
Operating leases		9.1			8.9
Finance leases		2.6			6.5
Weighted-average discount rate
Operating leases		6.7		%	6.4		%
Finance leases		6.2		%	6.3		%

Components of lease expense

The components of lease expense for operating and finance leases were as follows:

(in millions)	Income Statement Presentation	2025		2024		2023
Expense
Operating lease cost	Aircraft rent, Landing fees and other rentals	$	279	$	217	$	218
Amortization of finance lease assets	Depreciation and amortization	24		2		—
Interest on finance lease liabilities	Interest expense	5		1		—
Variable and short-term lease costs	Aircraft rent, Landing fees and other rentals	768		557		472
Total lease expense		1,076		777		690
Revenue
Lease revenue	Cargo and other revenue	(15)		(15)		(15)
Net lease impact		$	1,061	$	762	$	675

Supplemental cash flow information

The table below presents supplemental cash flow information related to leases. Operating cash flows associated with finance leases were not material for the three years ended December 31, 2025, 2024, and 2023.

(in millions)	2025		2024		2023
Operating cash flows for operating leases	$	273	$	241	$	348
Financing cash flows for finance leases	9		31		211

Maturities of lease liabilities

Future minimum lease payments under non-cancellable leases as of December 31, 2025:

	Operating Leases				Finance Leases
(in millions)	Aircraft(a)		Other		Aircraft		Other
2026	$	244	$	35	$	193	$	—
2027	233		29		16		—
2028	213		27		16		—
2029	194		24		16		—
2030	159		24		10		—
Thereafter	305		394		14		7
Total Lease Payments(a)	1,348		533		265		7
Less: Imputed interest	(237)		(286)		(22)		(4)
Total	$	1,111	$	247	$	243	$	3

(a) Future minimum lease payments in the table reflect incentive credits related to leased B737-9 aircraft. As a result, the operating lease liabilities presented on the consolidated balance sheet will not agree to this table.

As of December 31, 2025, we have entered into but not yet commenced leases for Starlink satellite Wi-Fi equipment and for regional aircraft under CPAs. These leases will commence between 2026 and 2027, with lease terms ranging from 2030 to 2038. The liabilities expected with these leases are expected to be approximately $342 million.