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EMPLOYEE BENEFIT PLANS
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
EMPLOYEE BENEFIT PLANS EMPLOYEE BENEFIT PLANS
 
The Company has five qualified defined-benefit pension plans. Alaska Airlines is the plan sponsor for four plans, covering salaried employees, pilots, clerical, office, passenger service employees, mechanics, and related craft employees. Hawaiian Airlines is the plan sponsor for one plan, covering eligible pilots. The defined-benefit plans provide benefits based on an employee’s term of service and average compensation for a specified period of time before retirement. The qualified defined-benefit pension plans are closed to new entrants. Twelve defined-contribution retirement plans cover various employee groups of Alaska, Hawaiian, Horizon, and McGee Air Services.
 
Accounting standards require recognition of the overfunded or underfunded status of an entity’s defined-benefit pension and other post-retirement plan as an asset or liability in the consolidated financial statements and requires recognition of the funded status in Accumulated other comprehensive loss (AOCL).
 
Qualified defined-benefit pension plans

The Company’s qualified defined-benefit pension plans are funded as required by the Employee Retirement Income Security Act of 1974. The defined-benefit plan assets consist primarily of marketable equity and fixed-income securities. The work groups covered by qualified defined-benefit pension plans include salaried employees, pilots, clerical, office, passenger service employees, mechanics, and related craft employees. The Company uses a December 31 measurement date for these plans. All plans are closed to new entrants.

Weighted average assumptions used to determine benefit obligations

The rates below vary by plan and related work group.
 20252024
Discount rates
5.36% to 5.58%
5.62% to 5.71%
Rate of compensation increases
2.00%
2.01% to 2.34%

Weighted average assumptions used to determine net periodic benefit cost

The rates below vary by plan and related work group.
 202520242023
Discount rates
5.62% to 5.71%
5.14% to 5.21%
5.41% to 5.42%
Expected return on plan assets
5.00% to 7.20%
5.00% to 7.10%
5.00% to 6.50%
Rate of compensation increases
2.01% to 2.34%
2.01% to 2.34%
2.01% to 2.35%

The discount rates are determined using current interest rates earned on high-quality, long-term bonds with maturities that correspond with the estimated cash distributions from the pension plans. In determining the expected return on plan assets, the Company assesses the current level of expected returns on risk-free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class is then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.
Plan assets are invested in common commingled trust funds invested in equity and fixed income securities and in certain real estate assets. As of December 31, 2025, Alaska and Hawaiian plans are all now managed by a single investment manager. The Alaska and Hawaiian plans each have different investment strategies and asset allocations.

The target and actual asset allocation of the funds in Alaska's qualified defined-benefit plans, by asset category, are as follows: 
Salaried Plan
All Other Plans
 Target20252024Target20252024
Asset category:  
Domestic equity securities
0%
— %— %
6%-35%
27 %34 %
Non-U.S. equity securities
0%
— %— %
0%-18%
12 %13 %
Fixed income securities
100%
100 %100 %
47%-85%
58 %50 %
Real estate
0%
— %— %
0%-10%
3 %3 %
Plan assets100 %100 %100 %100 %

The target and actual asset allocation of the funds in Hawaiian's qualified defined-benefit plan, by asset category, are as follows:
 Target20252024
Asset category:
Equity securities
50%-60%
56 %52 %
Fixed income securities
40%-50%
44 %44 %
Real estate— %— %4 %
Plan assets100 %100 %

The Company’s investment policy focuses on achieving maximum returns at a reasonable risk for pension assets over a full market cycle. The Company determines the strategic allocation between equities, fixed income, and real estate based on current funded status and other characteristics of the plans. As the funded status improves, the Company increases the fixed income allocation of the portfolio and decreases the equity allocation. Actual asset allocations are reviewed regularly and periodically rebalanced as appropriate.

Plan assets invested in common commingled trust funds are fair valued using the net asset values of these funds, as allowed using the practical expedient method outlined in the accounting standards. Fair value estimates for real estate are calculated using the present value of expected future cash flows based on independent appraisals, local market conditions and current and projected operating performance.

Plan assets by fund category:
(in millions)
20252024Fair Value Hierarchy
Fund type:  
Equity securities
$884 $944 2
Credit bond index fund1,541 1,293 2
Plan assets in common commingled trusts$2,425 $2,237 
Real estate52 64 (a)
Cash equivalents14 6 1
Total plan assets$2,491 $2,307 
(a) In accordance with Subtopic 820-10, certain investments that are measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.
The following table sets forth the status of the qualified defined-benefit pension plans:
(in millions)
20252024
Projected benefit obligation (PBO)  
Beginning of year$2,462 $2,183 
Acquisition impact
— 333 
Service cost28 28 
Interest cost129 113 
Actuarial (gain)/loss46 (86)
Benefits paid(141)(109)
End of year$2,524 $2,462 
Plan assets at fair value  
Beginning of year$2,307 $2,023 
Acquisition impact
— 290 
Actual return on plan assets272 72 
Employer contributions53 31 
Benefits paid(141)(109)
End of year$2,491 $2,307 
Unfunded status$(33)$(155)
Percent funded99 %94 %

The accumulated benefit obligation for the combined qualified defined-benefit pension plans was $2.5 billion and $2.4 billion at December 31, 2025 and 2024. Plan assets increased primarily due to positive market returns on the portfolio.

The amounts recognized in the consolidated balance sheets: 
(in millions)
20252024
Accrued benefit liability-long term (within Obligation for pension and post-retirement medical benefits)$(116)$(235)
Plan assets-long term (within Other noncurrent assets)83 80 
Total liability recognized$(33)$(155)
 
The amounts not yet reflected in net periodic benefit cost and included in AOCL:
(in millions)
20252024
Prior service cost (credit)$6 $7 
Net loss238 323 
Amount recognized in AOCL (pretax)$244 $330 

Defined benefit plans with projected benefit obligations and accumulated benefit obligations exceeding fair value of plan assets are as follows:
(in millions)
20252024
Projected benefit obligation$1,754 $1,716 
Accumulated benefit obligation1,705 1,654 
Fair value of plan assets1,638 1,480 
Net pension expense for the qualified defined-benefit plans included the following components: 
(in millions)
202520242023
Service cost$28 $28 $29 
Interest cost129 113 108 
Expected return on assets(147)(134)(114)
Recognized actuarial loss12 19 23 
Net pension expense$22 $26 $46 

The Company expects to have approximately $71 million in estimated required contributions for its plans in 2026.
 
Future benefits expected to be paid over the next ten years under the qualified defined-benefit pension plans from the assets of those plans: 
(in millions)
Total
2026$172 
2027187 
2028195 
2029196 
2030202 
2031-20351,022 
 
Other qualified plans

Hawaiian also sponsors four defined-benefit postretirement medical and life insurance plans and a separate plan to administer its pilots' disability benefits. Net benefit cost was $17 million in 2025 and was not material in 2024. Plan assets are invested in a common collective trust fund, consisting of a balanced profile fund and a conservative profile fund that primarily invest in mutual funds and exchange-traded funds. Asset allocation targets follow Hawaiian's pension plan as outlined above.

At December 31, 2025 and 2024, the combined fair value of plan assets was $51 million and $48 million, respectively. Fair value was estimated using the net asset value per share and is not required to be presented in the fair value hierarchy. The combined PBO was $177 million in 2025 and $159 million in 2024, resulting in net liabilities of $126 million and $111 million, respectively, which are presented as noncurrent liabilities in the consolidated balance sheets. Discount rates used to determine benefit obligations ranged from 5.40% to 5.58% in 2025, and from 5.61% to 5.70% in 2024. Future benefits expected to be paid over the next five years are $11 million, $11 million, $11 million, $12 million, and $13 million, and $76 million for the years 2031 through 2035.

Nonqualified defined-benefit pension plan
 
Alaska also maintains an unfunded, noncontributory defined-benefit plan for certain elected officers. This plan uses a December 31 measurement date. The assumptions used to determine benefit obligations and the net periodic benefit cost for the nonqualified defined-benefit pension plan are similar to those used to calculate the qualified defined-benefit pension plan. The plan's unfunded status, PBO, and accumulated benefit obligation are immaterial. The net pension expense in prior year and expected future expense is also immaterial.

Nonqualified post-retirement medical benefits
 
The Company allows certain retirees to continue their medical, dental and vision benefits by paying all or a portion of the active employee plan premium until eligible for Medicare, currently age 65. This results in a subsidy to retirees, because the premiums received by the Company are less than the actual cost of the retirees’ claims. The accumulated post-retirement benefit obligation for this subsidy is unfunded. The accumulated post-retirement benefit obligation was $112 million and $93 million at December 31, 2025 and 2024. The net periodic benefit cost was not material in 2025 or 2024.
Defined-contribution plans

The twelve defined-contribution plans are deferred compensation plans under section 401(k) of the Internal Revenue Code. All of these plans require Company contributions. Total expense for the defined-contribution plans was $348 million, $256 million and $203 million in 2025, 2024, and 2023.  

The Company also has a noncontributory, unfunded defined-contribution plan for certain elected officers of the Company who are ineligible for the nonqualified defined-benefit pension plan. Amounts recorded as liabilities under the plan are not material to the consolidated balance sheets at December 31, 2025 and 2024.

Alaska pilot long-term disability benefits

Alaska maintains a long-term disability plan for its pilots. The long-term disability plan does not have a service requirement. Therefore, the liability is calculated based on estimated future benefit payments associated with pilots that were assumed to be disabled on a long-term basis as of December 31, 2025 and does not include any assumptions for future disability. The liability includes the discounted expected future benefit payments and medical costs. The total liability was $94 million and $86 million, which was recorded net of a prefunded trust account of $16 million and $13 million, and included in long-term other liabilities in the consolidated balance sheets as of December 31, 2025 and December 31, 2024.

Employee incentive-pay plans
 
The Company has employee incentive plans that pay employees based on certain financial and operational metrics. These metrics are set and approved annually by the Compensation and Leadership Development Committee of the Board of Directors. The aggregate expense under these plans in 2025, 2024 and 2023 was $268 million, $358 million and $200 million. The incentive plans are summarized below.
 
•Performance-Based Pay (PBP) is a program that rewards the majority of Alaska, Hawaiian, and Horizon employees. The program is based on various metrics that adjust periodically, including those related to Air Group profitability, safety, acquisition synergies, and guest experience. The program also includes the potential for additional payout if Air Group profitability finishes among the highest in the industry.

•The Operational Performance Rewards Program (OPR) entitles the majority of Alaska, Hawaiian, and Horizon employees to quarterly payouts of up to $450 per person if certain operational and safety objectives are met.