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Achieved single operating certificate for Hawaiian Airlines and Alaska Airlines
Reported earnings per share of $0.18, with adjusted earnings per share of $0.43, ahead of expectations and previous guidance range
Generated $1.2 billion in operating cash flow for the full year
SEATTLE, Jan. 22, 2026 /PRNewswire/ -- Alaska Air Group Inc. (NYSE: ALK) today reported financial results for the fourth quarter and full year ended December 31, 2025.
"We feel momentum accelerating in 2026 as the Alaska-Hawaiian Airlines combination gains full strength," said CEO Ben Minicucci. "The people across our airlines delivered through a transformational year that set us up to win: an expanding global network, premium travel experiences delivered with care, and Atmos Rewards elevating our 11-year streak as the No. 1 airline loyalty program. Our model is positioned for where travelers are headed, and we're ready to compete as one of four global U.S. airlines."
Quarter in Review
Alaska Air Group's (Air Group) Consolidated Statements of Operations, Consolidated Balance Sheets, and Summary Cash Flow Statement include Hawaiian Airlines from September 18, 2024 onward. For comparability of financial and operational results, historical information has also been provided on a pro forma basis for the full year 2024 within the Supplementary Pro Forma Comparative Financial and Operating Information in this filing and in prior 8-K filings. The results presented for the fourth quarter of 2024 in the supplementary section are as reported given the inclusion of Hawaiian Airlines in Air Group for the full quarter.
Air Group reported fourth quarter GAAP pretax margin of 0.8% and net income per share of $0.18. Our fourth quarter adjusted pretax margin was 1.8% and our adjusted earnings per share was $0.43.
Q4 2025 Results | Prior Expectation | Actual Results | ||
Capacity (ASMs) % change versus 2024 | Up ~2% | Up 2.2% | ||
RASM % change versus 2024 | Up ~1% | Up 0.6% | ||
CASMex % change versus 2024 | Up ~3% | Up 1.3% | ||
Adjusted earnings per share | ~$0.10 | $0.43 |
We continued to build on key milestones for our Alaska Accelerate strategy during the quarter, including achieving a single operating certificate for Alaska and Hawaiian Airlines. We achieved record credit card acquisitions, with nearly one fourth of all signups being for the new premium credit card that we introduced late in the third quarter. We began selling our new international routes from Seattle to London and Rome during the quarter, with the first flights scheduled to operate in spring 2026. We are also now selling in six foreign currencies and recently unveiled our Japanese, Korean, and Italian-language based websites, helping drive point of sale outside of the United States to support our expanding international service. These achievements represent continued progress in building the infrastructure to support Air Group's future growth and profitability, and deliver on our Alaska Accelerate goal of $10 earnings per share in 2027 enabled by $1 billion in incremental profit.
Fourth quarter revenue was $3.6 billion, resulting in a 0.6% year-over-year RASM increase despite contending with temporary demand pullback from the government shutdown in November. We believe our fourth quarter unit revenue result will be among the highest in the industry. Corporate travel grew 9% year-over-year, while close-in demand remained strong throughout the fourth quarter as bookings and yields continue to rebound from the challenging environment earlier in the year. Our diverse revenue streams continued to deliver with premium revenue increasing 7% year-over-year, cargo revenue increasing 22% year-over-year, and loyalty revenue increasing 12% year-over-year. Commercial initiatives and synergy capture remained on track for the fourth consecutive quarter.
Unit costs, excluding fuel, freighter costs, and special items increased 1.3% year-over-year. This result is better than prior guidance and signals our teams' renewed focus on cost control. Economic fuel price per gallon was $2.57 per gallon in the fourth quarter, reflecting elevated West Coast refining prices during the quarter.
First Quarter & Full Year 2026 Guidance
In the first three weeks of January, bookings have inflected positive relative to last year. We have seen several of the highest booking days in our history since January 1st with managed corporate revenues up 20% year-over-year for the first quarter. We expect first quarter unit revenues to be solidly positive and earnings per share to be approximately flat year-over-year which would mark another sequential improvement towards earnings expansion.
Given the macroeconomic headwinds the industry experienced in 2025 and the positive emergent demand trends, our guidance for 2026 reflects a wide range of potential macroeconomic outcomes. We expect to continue to realize value from Alaska Accelerate initiatives and synergies from the Hawaiian integration, which remain on track or ahead of plan relative to our initial expectations. To hit the higher end of our guidance range we would require sustained macroeconomic recovery in 2026, at or improving on trends seen in the first three weeks of the year, and for fuel prices to stabilize. Given the inherent uncertainty of the macroeconomic environment, we remain as focused as ever on controlling what is within our control, including disciplined cost management, driving strong productivity and delivering on our initiatives.
Q1 2026 Expectation | FY 2026 Expectation | ||
Capacity (ASMs) % change versus 2025 | Up 1% to 2% | 2% to 3% | |
Adjusted earnings (loss) per share(a) | ($1.50) to ($0.50) | $3.50 to $6.50 | |
Capital Expenditures | n/a | ~$1.4 to $1.5B |
(a) Q1 adjusted tax rate is estimated to be 29%. Full year adjusted tax rate is estimated to be 26% to 27% |
Financial Results and Updates:
Operational Updates:
Network Updates:
Customer Experience:
Other Highlights:
The following table reconciles the company's reported GAAP net income per share (EPS) for the three and twelve months ended December 31, 2025 and 2024 to adjusted amounts.
Three Months Ended December 31, | |||||||
2025 | 2024 | ||||||
(in millions, except per share amounts) | Dollars | Per Share | Dollars | Per Share | |||
Net income | $ 21 | $ 0.18 | $ 71 | $ 0.55 | |||
Adjusted for: | |||||||
Mark-to-market fuel hedge adjustments | — | — | (6) | (0.05) | |||
Gains on foreign debt | (4) | (0.03) | (10) | (0.08) | |||
Special items - operating | 39 | 0.33 | 91 | 0.71 | |||
Special items - net non-operating | — | — | (17) | (0.13) | |||
Income tax effect(a) | (6) | (0.05) | (4) | (0.03) | |||
Adjusted net income | $ 50 | $ 0.43 | $ 125 | $ 0.97 | |||
Twelve Months Ended December 31, | |||||||
2025 | 2024 | ||||||
(in millions, except per share amounts) | Dollars | Per Share | Dollars | Per Share | |||
Net income | $ 100 | $ 0.83 | $ 395 | $ 3.08 | |||
Adjusted for: | |||||||
Mark-to-market fuel hedge adjustments | (4) | (0.03) | (28) | (0.22) | |||
Losses (gains) on foreign debt | 1 | 0.01 | (10) | (0.08) | |||
Special items - operating | 250 | 2.08 | 345 | 2.69 | |||
Special items - net non-operating | — | — | (16) | (0.12) | |||
Income tax effect(a) | (54) | (0.45) | (61) | (0.48) | |||
Adjusted net income | $ 293 | $ 2.44 | $ 625 | $ 4.87 | |||
(a) Includes income tax effect of the adjustments in the tables above as well as one-time effects of the One Big Beautiful Bill Act which was signed into law in the third quarter of 2025. |
A conference call regarding the fourth quarter and full year results will be streamed online at 11:30 a.m. EST/ 8:30 a.m. PST on January 23, 2026. It can be accessed at www.alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call.
References in this update to "Air Group," "Company," "we," "us," and "our" refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified.
This news release may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by our forward-looking statements, assumptions or beliefs. For a discussion of risks and uncertainties that may cause our forward-looking statements to differ materially, see Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Some of these risks include competition, labor costs, relations and availability, general economic conditions, increases in operating costs including fuel, uncertainties regarding the ability to successfully integrate operations following the acquisition of Hawaiian Holdings, Inc. and the ability to realize anticipated cost savings, synergies, or growth from the acquisition, inability to meet cost reduction and other strategic goals, seasonal fluctuations in demand and financial results, supply chain risks, events that negatively impact aviation safety and security, cybersecurity risks, and changes in laws and regulations that impact our business. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed in our most recent Form 10-K and in our subsequent SEC filings. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We expressly disclaim any obligation to publicly update or revise any forward-looking statements made today to conform them to actual results. Over time, our actual results, performance or achievements may differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, assumptions or beliefs and such differences might be significant and materially adverse.
Alaska Airlines, Hawaiian Airlines and Horizon Air are subsidiaries of Alaska Air Group, and McGee Air Services is a subsidiary of Alaska Airlines. We are a global airline with hubs in Seattle, Honolulu, Portland, Anchorage, Los Angeles, San Diego and San Francisco. We deliver remarkable care as we fly our guests to more than 140 destinations throughout North America, Latin America, Asia and the Pacific. We'll serve Europe beginning in spring 2026. Guests can book travel at alaskaair.com and hawaiianairlines.com. Alaska is a member of the oneworld alliance, with Hawaiian scheduled to join oneworld in spring 2026. With oneworld and our additional global partners, guests can earn and redeem points for travel to over 1,000 worldwide destinations with Atmos Rewards. Learn more about what's happening at Alaska and Hawaiian at news.alaskaair.com. Alaska Air Group is traded on the New York Stock Exchange (NYSE) as "ALK."
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | |||||||||||
Alaska Air Group, Inc. | |||||||||||
Three Months Ended December | Twelve Months Ended December | ||||||||||
(in millions, except per share amounts) | 2025 | 2024 | Change | 2025 | 2024 | Change | |||||
Operating Revenue | |||||||||||
Passenger revenue | $ 3,248 | $ 3,178 | 2 % | $ 12,835 | $ 10,654 | 20 % | |||||
Loyalty program other revenue | 238 | 224 | 6 % | 855 | 733 | 17 % | |||||
Cargo and other revenue | 146 | 132 | 11 % | 549 | 348 | 58 % | |||||
Total Operating Revenue | 3,632 | 3,534 | 3 % | 14,239 | 11,735 | 21 % | |||||
Operating Expenses | |||||||||||
Wages and benefits | 1,245 | 1,119 | 11 % | 4,763 | 3,588 | 33 % | |||||
Variable incentive pay | 74 | 161 | (54) % | 268 | 358 | (25) % | |||||
Aircraft fuel, including hedging gains and | 737 | 702 | 5 % | 2,879 | 2,506 | 15 % | |||||
Aircraft maintenance | 214 | 229 | (7) % | 912 | 620 | 47 % | |||||
Aircraft rent | 60 | 65 | (8) % | 250 | 207 | 21 % | |||||
Landing fees and other rentals | 284 | 249 | 14 % | 1,109 | 781 | 42 % | |||||
Contracted services | 148 | 133 | 11 % | 590 | 444 | 33 % | |||||
Selling expenses | 95 | 106 | (10) % | 407 | 349 | 17 % | |||||
Depreciation and amortization | 199 | 190 | 5 % | 795 | 583 | 36 % | |||||
Food and beverage service | 101 | 93 | 9 % | 383 | 287 | 33 % | |||||
Third-party regional carrier expense | 67 | 62 | 8 % | 272 | 243 | 12 % | |||||
Other | 294 | 261 | 13 % | 1,058 | 854 | 24 % | |||||
Special items - operating | 39 | 91 | (57) % | 250 | 345 | (28) % | |||||
Total Operating Expenses | 3,557 | 3,461 | 3 % | 13,936 | 11,165 | 25 % | |||||
Operating Income | 75 | 73 | 3 % | 303 | 570 | (47) % | |||||
Non-operating Income (Expense) | |||||||||||
Interest income | 23 | 32 | (28) % | 94 | 101 | (7) % | |||||
Interest expense | (70) | (56) | 25 % | (272) | (171) | 59 % | |||||
Interest capitalized | 8 | 10 | (20) % | 37 | 29 | 28 % | |||||
Special items - net non-operating | — | 17 | (100) % | — | 16 | (100) % | |||||
Other - net | (6) | 3 | NM | (16) | — | NM | |||||
Total Non-operating Income (Expense) | (45) | 6 | NM | (157) | (25) | NM | |||||
Income Before Income Tax | 30 | 79 | 146 | 545 | |||||||
Income tax expense | 9 | 8 | 46 | 150 | |||||||
Net Income | $ 21 | $ 71 | $ 100 | $ 395 | |||||||
Basic Earnings Per Share | $ 0.18 | $ 0.56 | $ 0.85 | $ 3.13 | |||||||
Diluted Earnings Per Share | $ 0.18 | $ 0.55 | $ 0.83 | $ 3.08 | |||||||
Weighted Average Shares Outstanding used for | |||||||||||
Basic | 115.533 | 126.047 | 118.171 | 126.136 | |||||||
Diluted | 117.356 | 128.931 | 119.926 | 128.372 | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | |||
Alaska Air Group, Inc. | |||
As of December 31 (in millions) | 2025 | 2024 | |
ASSETS | |||
Current Assets | |||
Cash and cash equivalents | $ 627 | $ 1,201 | |
Restricted cash | 28 | 29 | |
Marketable securities | 1,496 | 1,274 | |
Total cash, restricted cash, and marketable securities | 2,151 | 2,504 | |
Receivables - net | 565 | 558 | |
Inventories and supplies - net | 203 | 199 | |
Prepaid expenses | 278 | 307 | |
Other current assets | 69 | 192 | |
Total Current Assets | 3,266 | 3,760 | |
Property and Equipment | |||
Aircraft and other flight equipment | 13,647 | 12,273 | |
Other property and equipment | 2,424 | 2,173 | |
Deposits for future flight equipment | 731 | 883 | |
16,802 | 15,329 | ||
Less accumulated depreciation and amortization | (4,945) | (4,548) | |
Total Property and Equipment - Net | 11,857 | 10,781 | |
Other Assets | |||
Operating lease assets | 1,268 | 1,296 | |
Goodwill | 2,723 | 2,724 | |
Intangible assets - net | 815 | 873 | |
Other noncurrent assets | 432 | 334 | |
Total Other Assets | 5,238 | 5,227 | |
Total Assets | $ 20,361 | $ 19,768 | |
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | |||
Alaska Air Group, Inc. | |||
As of December 31 (in millions except share amounts) | 2025 | 2024 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Current Liabilities | |||
Accounts payable | $ 324 | $ 186 | |
Accrued wages, vacation and payroll taxes | 881 | 1,001 | |
Air traffic liability | 1,689 | 1,712 | |
Other accrued liabilities | 1,055 | 997 | |
Deferred revenue | 1,722 | 1,592 | |
Current portion of long-term debt and finance leases | 721 | 450 | |
Current portion of operating lease liabilities | 197 | 207 | |
Total Current Liabilities | 6,589 | 6,145 | |
Noncurrent Liabilities | |||
Long-term debt and finance leases, net of current portion | 4,834 | 4,538 | |
Operating lease liabilities, net of current portion | 1,141 | 1,198 | |
Deferred income taxes | 1,004 | 934 | |
Deferred revenue | 1,711 | 1,664 | |
Obligation for pension and post-retirement medical benefits | 369 | 460 | |
Other liabilities | 595 | 457 | |
Total Noncurrent Liabilities | 9,654 | 9,251 | |
Commitments and Contingencies | |||
Shareholders' Equity | |||
Preferred stock, $0.01 par value, Authorized: 5,000,000 shares, none | — | — | |
Common stock, $0.01 par value, Authorized: 400,000,000 shares, Issued: | 1 | 1 | |
Capital in excess of par value | 961 | 811 | |
Treasury stock (common), at cost: 2025 - 29,584,770 shares; 2024 - | (1,701) | (1,131) | |
Accumulated other comprehensive loss | (173) | (239) | |
Retained earnings | 5,030 | 4,930 | |
Total Shareholders' Equity | 4,118 | 4,372 | |
Total Liabilities and Shareholders' Equity | $ 20,361 | $ 19,768 | |
SUMMARY CASH FLOW (unaudited) | |||||
Alaska Air Group, Inc. | |||||
(in millions) | Year Ended | Nine Months Ended | Three Months Ended December 31, 2025(b) | ||
Cash Flows from Operating Activities: | |||||
Net income | $ 100 | $ 79 | $ 21 | ||
Adjustments to reconcile net income to net cash | 856 | 639 | 217 | ||
Changes in working capital | 293 | 346 | (53) | ||
Net cash provided by operating activities | 1,249 | 1,064 | 185 | ||
Cash Flows from Investing Activities: | |||||
Property and equipment additions | (1,588) | (963) | (625) | ||
Other investing activities | (35) | (33) | (2) | ||
Net cash used in investing activities | (1,623) | (996) | (627) | ||
Cash Flows from Financing Activities | (199) | (490) | 291 | ||
Net decrease in cash and cash equivalents | (573) | (422) | (151) | ||
Cash, cash equivalents, and restricted cash at | 1,257 | 1,257 | 835 | ||
Cash, cash equivalents, and restricted cash at end | $ 684 | $ 835 | $ 684 |
(a) As reported in Form 10-Q for the third quarter of 2025. |
(b) Cash flows for the three months ended December 31, 2025 can be calculated by subtracting cash flows for the nine months ended |
September 30, 2025, as reported in Form 10-Q for the third quarter 2025, from the year ended December 31, 2025. |
(c) Cash, cash equivalents, and restricted cash shown in the Summary Cash Flow consists of restricted cash presented within Restricted Cash as well as certain restricted cash balances presented within Other noncurrent assets in the condensed consolidated balance sheets. |
SPECIAL ITEMS (unaudited)
Air Group has classified certain operating and non-operating activity as special items due to their unusual or infrequently occurring nature. We believe disclosing information about these items separately improves comparable year-over-year analysis and allows stakeholders to better understand our results of operations. A description of the special items is provided below.
Integration costs: Integration costs were associated with the acquisition of Hawaiian Airlines and consist of employee-related, legal and professional fees, technology, and other merger costs.
Labor and other: Labor and other costs in 2025 were primarily for changes to Alaska flight attendants' sick leave benefits pursuant to a new collective bargaining agreement. Costs in 2024 were primarily for retroactive pay for Alaska flight attendants pursuant to a tentative agreement and litigation costs related to the Virgin trademark license agreement.
Net non-operating: The income in 2024 is primarily for gains on Hawaiian debt extinguishment in the fourth quarter.
Three Months Ended December | Twelve Months Ended December | ||||||
(in millions) | 2025 | 2024 | 2025 | 2024 | |||
Operating Expenses | |||||||
Integration costs | 39 | 80 | 193 | 208 | |||
Labor and other | $ — | $ 11 | $ 57 | $ 137 | |||
Special items - operating | $ 39 | $ 91 | $ 250 | $ 345 | |||
Non-operating Income (Expense) | |||||||
Special items - net non-operating | $ — | $ 17 | $ — | $ 16 | |||
OPERATING STATISTICS SUMMARY (unaudited) | |||||||||||
A manual recalculation of certain figures using rounded amounts may not agree directly to the actual figures presented in the | |||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||
2025 | 2024 | Change | 2025 | 2024 | Change | ||||||
Consolidated Operating Statistics:(a) | |||||||||||
Revenue passengers (000) | 14,355 | 14,339 | 0.1 % | 58,627 | 49,238 | 19.1 % | |||||
RPMs (000,000) "traffic" | 18,935 | 19,068 | (0.7) % | 77,110 | 63,871 | 20.7 % | |||||
ASMs (000,000) "capacity" | 23,238 | 22,744 | 2.2 % | 92,962 | 76,167 | 22.1 % | |||||
Load factor | 81.5 % | 83.8 % | (2.3) pts | 82.9 % | 83.9 % | (1.0) pts | |||||
Yield | 17.15¢ | 16.67¢ | 2.9 % | 16.64¢ | 16.68¢ | (0.2) % | |||||
PRASM | 13.98¢ | 13.97¢ | 0.1 % | 13.81¢ | 13.99¢ | (1.3) % | |||||
RASM | 15.63¢ | 15.54¢ | 0.6 % | 15.32¢ | 15.41¢ | (0.6) % | |||||
CASMex(b) | 11.72¢ | 11.57¢ | 1.3 % | 11.42¢ | 10.80¢ | 5.7 % | |||||
Economic fuel cost per gallon(b)(c) | $2.57 | $2.54 | 1.2 % | $2.52 | $2.74 | (8.0) % | |||||
Fuel gallons (000,000)(c) | 287 | 279 | 2.9 % | 1,146 | 925 | 23.9 % | |||||
ASMs per gallon | 81.1 | 81.6 | (0.6) % | 81.1 | 82.3 | (1.4) % | |||||
Departures (000) | 135 | 131 | 3.1 % | 543 | 461 | 17.8 % | |||||
Average full-time equivalent employees | 32,676 | 30,396 | 7.5 % | 31,585 | 25,751 | 22.7 % | |||||
Operating fleet(d) | 413 | 392 | 21 a/c | 413 | 392 | 21 a/c | |||||
Alaska Airlines Operating Statistics: | |||||||||||
RPMs (000,000) "traffic" | 12,806 | 13,306 | (3.8) % | 52,404 | 53,680 | (2.4) % | |||||
ASMs (000,000) "capacity" | 15,737 | 15,754 | (0.1) % | 63,161 | 63,873 | (1.1) % | |||||
Economic fuel cost per gallon | $2.57 | $2.55 | 0.8 % | $2.52 | $2.74 | (8.0) % | |||||
Hawaiian Airlines Operating Statistics: | |||||||||||
RPMs (000,000) "traffic" | 4,850 | 4,509 | 7.6 % | 19,304 | 5,143 | NM | |||||
ASMs (000,000) "capacity" | 5,896 | 5,481 | 7.6 % | 23,208 | 6,245 | NM | |||||
Economic fuel cost per gallon(c) | $2.49 | 2.44 | 2.0 % | $2.41 | 2.43 | (0.8) % | |||||
Regional Operating Statistics:(e) | |||||||||||
RPMs (000,000) "traffic" | 1,278 | 1,253 | 2.0 % | 5,401 | 5,048 | 7.0 % | |||||
ASMs (000,000) "capacity" | 1,606 | 1,509 | 6.4 % | 6,593 | 6,049 | 9.0 % | |||||
Economic fuel cost per gallon | $2.76 | $2.74 | 0.7 % | $2.71 | $2.93 | (7.5) % | |||||
(a) | Except for FTEs, data includes information related to third-party regional capacity purchase flying arrangements. |
(b) | See a reconciliation of this non-GAAP measure and Note A for a discussion of the importance of this measure to investors in the accompanying pages. |
(c) | Excludes operations under the Air Transportation Services Agreement (ATSA) with Amazon. |
(d) | Includes aircraft owned and leased by Alaska, Hawaiian, and Horizon, as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excludes all aircraft removed from operating service. |
(e) | Data presented includes information related to flights operated by Horizon and third-party carriers. |
GAAP TO NON-GAAP RECONCILIATIONS (unaudited)
Alaska Air Group, Inc.
We are providing reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. Amounts in the tables below are rounded to the nearest million. As a result, a manual recalculation of certain figures using these rounded amounts may not agree directly to the actual figures presented in the tables below.
Adjusted Income Before Income Tax Reconciliation | |||||||
Three Months Ended | Twelve Months Ended | ||||||
(in millions) | 2025 | 2024 | 2025 | 2024 | |||
Income before income tax | $ 30 | $ 79 | $ 146 | $ 545 | |||
Adjusted for: | |||||||
Mark-to-market fuel hedge adjustment | — | (6) | (4) | (28) | |||
Losses (gains) on foreign debt | (4) | (10) | 1 | (10) | |||
Special items - operating | 39 | 91 | 250 | 345 | |||
Special items - net non-operating | — | (17) | — | (16) | |||
Adjusted income before income tax | $ 65 | $ 137 | $ 393 | $ 836 | |||
Pretax margin | 0.8 % | 2.2 % | 1.0 % | 4.6 % | |||
Adjusted pretax margin | 1.8 % | 3.9 % | 2.8 % | 7.1 % | |||
CASMex Reconciliation | |||||||
Three Months Ended | Twelve Months Ended | ||||||
(in millions) | 2025 | 2024 | 2025 | 2024 | |||
Total operating expenses | $ 3,557 | $ 3,461 | $ 13,936 | $ 11,165 | |||
Less the following components: | |||||||
Aircraft fuel, including hedging gains and losses | 737 | 702 | 2,879 | 2,506 | |||
Freighter costs | 56 | 37 | 192 | 84 | |||
Special items - operating | 39 | 91 | 250 | 345 | |||
Total operating expenses, excluding fuel, freighter | $ 2,725 | $ 2,631 | $ 10,615 | $ 8,230 | |||
ASMs | 23,238 | 22,744 | 92,962 | 76,167 | |||
CASMex | 11.72 ¢ | 11.57 ¢ | 11.42 ¢ | 10.80 ¢ | |||
Fuel Reconciliation | |||||||
Three Months Ended December 31, | |||||||
2025 | 2024 | ||||||
(in millions, except for per gallon amounts) | Dollars | Cost/Gal | Dollars | Cost/Gal | |||
Raw or "into-plane" fuel cost | $ 737 | $ 2.57 | $ 701 | $ 2.51 | |||
Losses on settled hedges | — | — | 7 | 0.03 | |||
Economic fuel expense | $ 737 | $ 2.57 | $ 708 | $ 2.54 | |||
Mark-to-market fuel hedge adjustment | — | — | (6) | (0.02) | |||
Aircraft fuel, including hedging gains and losses | $ 737 | $ 2.57 | $ 702 | $ 2.52 | |||
Fuel gallons | 287 | 279 | |||||
Twelve Months Ended December 31, | |||||||
2025 | 2024 | ||||||
(in millions, except for per gallon amounts) | Dollars | Cost/Gal | Dollars | Cost/Gal | |||
Raw or "into-plane" fuel cost | $ 2,879 | $ 2.51 | $ 2,496 | $ 2.70 | |||
Losses on settled hedges | 4 | 0.01 | 38 | 0.04 | |||
Economic fuel expense | $ 2,883 | $ 2.52 | $ 2,534 | $ 2.74 | |||
Mark-to-market fuel hedge adjustment | (4) | (0.01) | (28) | (0.03) | |||
Aircraft fuel, including hedging gains and losses | $ 2,879 | $ 2.51 | $ 2,506 | $ 2.71 | |||
Fuel gallons | 1,146 | 925 | |||||
Debt-to-capitalization, including leases | |||
(in millions) | December 31, 2025 | December 31, 2024 | |
Long-term debt and finance leases, net of current portion | $ 4,834 | $ 4,538 | |
Capitalized operating leases | 1,338 | 1,405 | |
Current portion of finance lease liabilities(a) | 181 | 8 | |
Adjusted debt, net of current portion of long-term debt | $ 6,353 | $ 5,951 | |
Shareholders' equity | 4,118 | 4,372 | |
Total invested capital | $ 10,471 | $ 10,323 | |
Debt-to-capitalization ratio, including leases | 61 % | 58 % | |
(a) To best reflect our leverage, we included our short-term finance lease liabilities, which are recognized within 'Current portion of long-term debt and finance leases' in our condensed consolidated balance sheets. |
Adjusted net debt to earnings before interest, taxes, depreciation, amortization, rent, and special items | |||
(in millions) | December 31, 2025 | December 31, 2024 | |
Long-term debt | $ 5,309 | $ 4,933 | |
Capitalized operating leases | 1,338 | 1,405 | |
Capitalized finance leases | 246 | 55 | |
Total adjusted debt | 6,893 | 6,393 | |
Less: Total cash and marketable securities | 2,123 | 2,475 | |
Adjusted net debt | $ 4,770 | $ 3,918 | |
(in millions) | Twelve Months Ended | Twelve Months Ended | |
Operating Income | $ 303 | $ 570 | |
Adjusted for: | |||
Special items - operating | 250 | 345 | |
Mark-to-market fuel hedge adjustments | (4) | (28) | |
Losses (gains) on foreign debt | 1 | (10) | |
Depreciation and amortization | 795 | 583 | |
Aircraft rent | 250 | 207 | |
EBITDAR | $ 1,595 | $ 1,667 | |
Adjusted net debt to EBITDAR | 3.0x | 2.4x | |
OPERATING SEGMENTS (unaudited) | |||||||||||||
Alaska Air Group, Inc. | |||||||||||||
Three Months Ended December 31, 2025 | |||||||||||||
(in millions) | Alaska | Hawaiian | Regional | Consolidating | Air Group | Adjustments(c) | Consolidated | ||||||
Operating Revenue | |||||||||||||
Passenger revenue | $ 2,071 | $ 728 | $ 449 | $ — | $ 3,248 | $ — | $ 3,248 | ||||||
Loyalty program other revenue | 185 | 34 | 19 | — | 238 | — | 238 | ||||||
Cargo and other revenue | 81 | 60 | — | 5 | 146 | — | 146 | ||||||
Total Operating Revenue | 2,337 | 822 | 468 | 5 | 3,632 | — | 3,632 | ||||||
Operating Expenses | |||||||||||||
Operating expenses, excluding | 1,768 | 654 | 369 | (10) | 2,781 | 39 | 2,820 | ||||||
Fuel expense | 451 | 190 | 96 | — | 737 | — | 737 | ||||||
Total Operating Expenses | 2,219 | 844 | 465 | (10) | 3,518 | 39 | 3,557 | ||||||
Non-operating Income | (3) | (38) | — | (8) | (49) | 4 | (45) | ||||||
Income (Loss) Before Income | $ 115 | $ (60) | $ 3 | $ 7 | $ 65 | $ (35) | $ 30 | ||||||
Three Months Ended December 31, 2024 | |||||||||||||
(in millions) | Alaska | Hawaiian | Regional | Consolidating | Air Group | Adjustments(c) | Consolidated | ||||||
Operating Revenue | |||||||||||||
Passenger revenue | $ 2,073 | $ 673 | $ 432 | $ — | $ 3,178 | $ — | $ 3,178 | ||||||
Loyalty program other revenue | 161 | 48 | 15 | — | 224 | — | 224 | ||||||
Cargo and other revenue | 77 | 53 | — | 2 | 132 | — | 132 | ||||||
Total Operating Revenue | 2,311 | 774 | 447 | 2 | 3,534 | — | 3,534 | ||||||
Operating Expenses | |||||||||||||
Operating expenses, excluding | 1,725 | 619 | 341 | (17) | 2,668 | 91 | 2,759 | ||||||
Fuel expense | 447 | 172 | 89 | — | 708 | (6) | 702 | ||||||
Total Operating Expenses | 2,172 | 791 | 430 | (17) | 3,376 | 85 | 3,461 | ||||||
Non-operating Income | 14 | (27) | — | (8) | (21) | 27 | 6 | ||||||
Income (Loss) Before Income | $ 153 | $ (44) | $ 17 | $ 11 | $ 137 | $ (58) | $ 79 | ||||||
OPERATING SEGMENTS (unaudited) | |||||||||||||
Alaska Air Group, Inc. | |||||||||||||
Twelve Months Ended December 31, 2025 | |||||||||||||
(in millions) | Alaska | Hawaiian | Regional | Consolidating | Air Group | Adjustments(c) | Consolidated | ||||||
Operating Revenue | |||||||||||||
Passenger revenue | $ 8,132 | $ 2,918 | $ 1,785 | $ — | $ 12,835 | $ — | $ 12,835 | ||||||
Loyalty program other revenue | 653 | 134 | 68 | — | 855 | — | 855 | ||||||
Cargo and other revenue | 305 | 231 | — | 13 | 549 | — | 549 | ||||||
Total Operating Revenue | 9,090 | 3,283 | 1,853 | 13 | 14,239 | — | 14,239 | ||||||
Operating Expenses | |||||||||||||
Operating expenses, excluding | 6,772 | 2,640 | 1,471 | (76) | 10,807 | 250 | 11,057 | ||||||
Fuel expense | 1,777 | 723 | 383 | — | 2,883 | (4) | 2,879 | ||||||
Total Operating Expenses | 8,549 | 3,363 | 1,854 | (76) | 13,690 | 246 | 13,936 | ||||||
Non-operating Income | (15) | (109) | — | (32) | (156) | (1) | (157) | ||||||
Income (Loss) Before Income | $ 526 | $ (189) | $ (1) | $ 57 | $ 393 | $ (247) | $ 146 | ||||||
Twelve Months Ended December 31, 2024 | |||||||||||||
(in millions) | Alaska | Hawaiian | Regional | Consolidating | Air Group | Adjustments(c) | Consolidated | ||||||
Operating Revenue | |||||||||||||
Passenger revenue | $ 8,151 | $ 757 | $ 1,746 | $ — | $ 10,654 | $ — | $ 10,654 | ||||||
Loyalty program other revenue | 621 | 53 | 59 | — | 733 | — | 733 | ||||||
Cargo and other revenue | 279 | 59 | — | 10 | 348 | — | 348 | ||||||
Total Operating Revenue | 9,051 | 869 | 1,805 | 10 | 11,735 | — | 11,735 | ||||||
Operating Expenses | |||||||||||||
Operating expenses, excluding | 6,365 | 701 | 1,317 | (69) | 8,314 | 345 | 8,659 | ||||||
Fuel expense | 1,962 | 195 | 377 | — | 2,534 | (28) | 2,506 | ||||||
Total Operating Expenses | 8,327 | 896 | 1,694 | (69) | 10,848 | 317 | 11,165 | ||||||
Non-operating Income | 20 | (31) | — | (40) | (51) | 26 | (25) | ||||||
Income (Loss) Before Income | $ 744 | $ (58) | $ 111 | $ 39 | $ 836 | $ (291) | $ 545 | ||||||
(a) | Includes consolidating entries, Air Group parent company, Horizon, 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, mark-to-market fuel hedge accounting adjustments, and gains/losses on foreign debt. |
SUPPLEMENTARY PRO FORMA COMPARATIVE FINANCIAL AND OPERATING INFORMATION (unaudited) | |||||||||||
We believe that analysis of specific results on a pro forma basis provides more meaningful year-over-year comparisons. The | |||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||
(in millions) | 2025 | 2024 | Change | 2025 | 2024 Pro | Change | |||||
Operating Revenue | |||||||||||
Passenger revenue | $ 3,248 | $ 3,178 | 2 % | $ 12,835 | $ 12,502 | 3 % | |||||
Loyalty program other revenue | 238 | 224 | 6 % | 855 | 817 | 5 % | |||||
Cargo and other revenue | 146 | 132 | 11 % | 549 | 460 | 19 % | |||||
Total Operating Revenue | 3,632 | 3,534 | 3 % | 14,239 | 13,779 | 3 % | |||||
Operating expenses, excluding fuel | 2,820 | 2,759 | 2 % | 11,057 | 10,424 | 6 % | |||||
Aircraft fuel, including hedging gains and losses | 737 | 702 | 5 % | 2,879 | 3,045 | (5) % | |||||
Total Operating Expenses | 3,557 | 3,461 | 3 % | 13,936 | 13,469 | 3 % | |||||
Operating Income | 75 | 73 | 3 % | 303 | 310 | (2) % | |||||
Non-operating income (expense) | (45) | 6 | NM | (157) | (82) | 91 % | |||||
Income Before Tax | 30 | 79 | (62) % | 146 | 228 | (36) % | |||||
Special items - operating | 39 | 91 | (57) % | 250 | 363 | (31) % | |||||
Special items - net non-operating | — | (17) | (100) % | — | (24) | (100) % | |||||
Mark-to-market fuel hedge adjustments | — | (6) | (100) % | (4) | (30) | (87) % | |||||
Unrealized (gain)/loss on foreign debt | (4) | (10) | (60) % | 1 | (13) | (108) % | |||||
Adjusted Income Before Tax | $ 65 | $ 137 | (52) % | $ 393 | $ 524 | (25) % | |||||
Pretax Margin | 0.8 % | 2.2 % | -1.4 pts | 1.0 % | 1.7 % | -0.7 pts | |||||
Adjusted Pretax Margin | 1.8 % | 3.9 % | -2.1 pts | 2.8 % | 3.8 % | -1.0 pts | |||||
Pro Forma Comparative Operating Statistics | |||||||||||
Revenue passengers (000) | 14,355 | 14,339 | 0.1 % | 58,627 | 57,134 | 2.6 % | |||||
RPMs (000,000) "traffic" | 18,935 | 19,068 | (0.7) % | 77,110 | 76,566 | 0.7 % | |||||
ASMs (000,000) "capacity" | 23,238 | 22,744 | 2.2 % | 92,962 | 91,208 | 1.9 % | |||||
Load factor | 81.5 % | 83.8 % | (2.3) pt | 82.9 % | 83.9 % | (1.0) pt | |||||
Yield | 17.15¢ | 16.67¢ | 2.9 % | 16.64¢ | 16.33¢ | 1.9 % | |||||
RASM | 15.63¢ | 15.54¢ | 0.6 % | 15.32¢ | 15.11¢ | 1.4 % | |||||
CASMex | 11.72¢ | 11.57¢ | 1.3 % | 11.42¢ | 10.91¢ | 4.7 % | |||||
Pro Forma Comparative CASMex Reconciliation | |||||||||||
Total operating expenses | $ 3,557 | $ 3,461 | 2.8 % | $ 13,936 | $ 13,469 | 3.5 % | |||||
Less the following components: | |||||||||||
Aircraft fuel, including hedging gains and losses | 737 | 702 | 5.0 % | 2,879 | 3,045 | (5.5) % | |||||
Freighter costs | 56 | 37 | 51.4 % | 192 | 111 | 73.0 % | |||||
Special items - operating | 39 | 91 | (57.1) % | 250 | 363 | (31.1) % | |||||
Total operating expenses, excluding fuel, freighter | $ 2,725 | $ 2,631 | 3.6 % | $ 10,615 | $ 9,950 | 6.7 % | |||||
ASMs | 23,238 | 22,744 | 2.2 % | 92,962 | 91,208 | 1.9 % | |||||
CASMex | 11.72¢ | 11.57¢ | 1.3 % | 11.42¢ | 10.91¢ | 4.7 % | |||||
(a) As provided on Form 8-K filed with the SEC on January 22, 2025, including certain immaterial reclassification and policy adjustments. |
Note A: Pursuant to Regulation G, we are providing reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. We believe that consideration of these non-GAAP financial measures may be important to investors for the following reasons:
GLOSSARY OF TERMS
Adjusted net debt - long-term debt, including current portion, plus capitalized operating and finance leases, less cash, restricted cash, and marketable securities
Adjusted net debt to EBITDAR - represents net adjusted debt divided by EBITDAR (trailing twelve months earnings before interest, taxes, depreciation, amortization, special items and rent)
ASMs - available seat miles, or "capacity"; represents total seats available across the fleet multiplied by the number of miles flown
CASMex - operating costs excluding fuel, freighter costs, and special items per ASM, or "unit cost". Beginning in 2026, CASMex will also exclude Performance-Based Pay expense.
Debt-to-capitalization ratio - represents adjusted debt (long-term debt plus capitalized operating and finance lease liabilities) divided by total equity plus adjusted debt
Diluted Earnings per Share - represents earnings per share (EPS) using fully diluted shares outstanding
Diluted Shares - represents the total number of shares that would be outstanding if all possible sources of conversion, such as stock options, were exercised
Economic Fuel - best estimate of the cash cost of fuel, net of the impact of our fuel-hedging program and excluding operations under the Air Transportation Service Agreement (ATSA) with Amazon
Freighter Costs - operating expenses directly attributable to the operation of Alaska's B737 freighter aircraft and Hawaiian's A330-300 freighter aircraft exclusively performing cargo missions
Load Factor - RPMs as a percentage of ASMs; represents the number of available seats that were filled with paying passengers
PRASM - passenger revenue per ASM, or "passenger unit revenue"
RASM - operating revenue per ASMs, or "unit revenue"; operating revenue includes all passenger revenue, freight & mail, loyalty program revenue, and other ancillary revenue; represents the average total revenue for flying one seat one mile
RPMs - revenue passenger miles, or "traffic"; represents the number of seats that were filled with paying passengers; one passenger traveling one mile is one RPM
Yield - passenger revenue per RPM; represents the average passenger revenue for flying one passenger one mile
SOURCE Alaska Air Group
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