Delaware
|
|
91-1292054
|
(State of Incorporation)
|
|
(I.R.S. Employer Identification No.)
|
19300 International Boulevard, Seattle, Washington 98188
|
Telephone: (206) 392-5040
|
Large accelerated filer
T
|
Accelerated filer
£
|
Non-accelerated filer
£
|
Smaller reporting company
£
|
|
•
|
the competitive environment in our industry;
|
•
|
changes in our operating costs, primarily fuel, which can be volatile;
|
•
|
general economic conditions, including the impact of those conditions on customer travel behavior;
|
•
|
our ability to meet our cost reduction goals;
|
•
|
operational disruptions;
|
•
|
an aircraft accident or incident;
|
•
|
labor disputes and our ability to attract and retain qualified personnel;
|
•
|
the concentration of our revenue from a few key markets;
|
•
|
actual or threatened terrorist attacks, global instability and potential U.S. military actions or activities;
|
•
|
our reliance on automated systems and the risks associated with changes made to those systems;
|
•
|
changes in laws and regulations.
|
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in millions)
|
March 31,
2015 |
|
December 31,
2014 |
||||
ASSETS
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
51
|
|
|
$
|
107
|
|
Marketable securities
|
1,261
|
|
|
1,110
|
|
||
Total cash and marketable securities
|
1,312
|
|
|
1,217
|
|
||
Receivables - net
|
187
|
|
|
259
|
|
||
Inventories and supplies - net
|
52
|
|
|
58
|
|
||
Deferred income taxes
|
123
|
|
|
117
|
|
||
Prepaid expenses and other current assets
|
102
|
|
|
105
|
|
||
Total Current Assets
|
1,776
|
|
|
1,756
|
|
||
|
|
|
|
||||
Property and Equipment
|
|
|
|
|
|
||
Aircraft and other flight equipment
|
5,204
|
|
|
5,165
|
|
||
Other property and equipment
|
899
|
|
|
896
|
|
||
Deposits for future flight equipment
|
778
|
|
|
555
|
|
||
|
6,881
|
|
|
6,616
|
|
||
Less accumulated depreciation and amortization
|
2,384
|
|
|
2,317
|
|
||
Total Property and Equipment - Net
|
4,497
|
|
|
4,299
|
|
||
|
|
|
|
||||
Other Assets
|
137
|
|
|
126
|
|
||
|
|
|
|
||||
Total Assets
|
$
|
6,410
|
|
|
$
|
6,181
|
|
(in millions, except share amounts)
|
March 31,
2015 |
|
December 31,
2014 |
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Accounts payable
|
$
|
57
|
|
|
$
|
62
|
|
Accrued wages, vacation and payroll taxes
|
160
|
|
|
232
|
|
||
Other accrued liabilities
|
731
|
|
|
629
|
|
||
Air traffic liability
|
814
|
|
|
631
|
|
||
Current portion of long-term debt
|
118
|
|
|
117
|
|
||
Total Current Liabilities
|
1,880
|
|
|
1,671
|
|
||
|
|
|
|
||||
Long-Term Debt, Net of Current Portion
|
650
|
|
|
686
|
|
||
Other Liabilities and Credits
|
|
|
|
|
|
||
Deferred income taxes
|
753
|
|
|
750
|
|
||
Deferred revenue
|
382
|
|
|
374
|
|
||
Obligation for pension and postretirement medical benefits
|
247
|
|
|
246
|
|
||
Other liabilities
|
332
|
|
|
327
|
|
||
|
1,714
|
|
|
1,697
|
|
||
Commitments and Contingencies
|
|
|
|
|
|
||
Shareholders' Equity
|
|
|
|
|
|
||
Preferred stock, $0.01 par value Authorized: 5,000,000 shares, none issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, Authorized: 200,000,000 shares, Issued: 2015 - 130,551,503 shares; 2014 - 131,556,573 shares, Outstanding: 2015 - 130,444,006 shares; 2014 - 131,481,473
|
1
|
|
|
1
|
|
||
Capital in excess of par value
|
211
|
|
|
296
|
|
||
Treasury stock (common), at cost: 2015 - 107,497 shares; 2014 - 75,100 shares
|
(7
|
)
|
|
(4
|
)
|
||
Accumulated other comprehensive loss
|
(305
|
)
|
|
(310
|
)
|
||
Retained earnings
|
2,266
|
|
|
2,144
|
|
||
|
2,166
|
|
|
2,127
|
|
||
Total Liabilities and Shareholders' Equity
|
$
|
6,410
|
|
|
$
|
6,181
|
|
|
Three Months Ended March 31,
|
||||||
(in millions, except per share amounts)
|
2015
|
|
2014
|
||||
Operating Revenues
|
|
|
|
||||
Passenger
|
|
|
|
||||
Mainline
|
$
|
901
|
|
|
$
|
854
|
|
Regional
|
186
|
|
|
186
|
|
||
Total passenger revenue
|
1,087
|
|
|
1,040
|
|
||
Freight and mail
|
23
|
|
|
24
|
|
||
Other - net
|
159
|
|
|
158
|
|
||
Total Operating Revenues
|
1,269
|
|
|
1,222
|
|
||
|
|
|
|
||||
Operating Expenses
|
|
|
|
||||
Wages and benefits
|
306
|
|
|
272
|
|
||
Variable incentive pay
|
26
|
|
|
25
|
|
||
Aircraft fuel, including hedging gains and losses
|
235
|
|
|
358
|
|
||
Aircraft maintenance
|
63
|
|
|
51
|
|
||
Aircraft rent
|
26
|
|
|
28
|
|
||
Landing fees and other rentals
|
71
|
|
|
69
|
|
||
Contracted services
|
67
|
|
|
60
|
|
||
Selling expenses
|
53
|
|
|
46
|
|
||
Depreciation and amortization
|
76
|
|
|
70
|
|
||
Food and beverage service
|
25
|
|
|
21
|
|
||
Other
|
83
|
|
|
81
|
|
||
Total Operating Expenses
|
1,031
|
|
|
1,081
|
|
||
Operating Income
|
238
|
|
|
141
|
|
||
|
|
|
|
||||
Nonoperating Income (Expense)
|
|
|
|
||||
Interest income
|
5
|
|
|
5
|
|
||
Interest expense
|
(11
|
)
|
|
(12
|
)
|
||
Interest capitalized
|
8
|
|
|
5
|
|
||
Other - net
|
—
|
|
|
13
|
|
||
|
2
|
|
|
11
|
|
||
Income before income tax
|
240
|
|
|
152
|
|
||
Income tax expense
|
91
|
|
|
58
|
|
||
Net Income
|
$
|
149
|
|
|
$
|
94
|
|
|
|
|
|
||||
Basic Earnings Per Share:
|
$
|
1.13
|
|
|
$
|
0.69
|
|
Diluted Earnings Per Share:
|
$
|
1.12
|
|
|
$
|
0.68
|
|
|
|
|
|
||||
Shares used for computation:
|
|
|
|
||||
Basic
|
131.120
|
|
|
137.334
|
|
||
Diluted
|
132.230
|
|
|
138.822
|
|
||
|
|
|
|
||||
Cash dividend declared per share:
|
$
|
0.20
|
|
|
$
|
0.125
|
|
|
Three Months Ended March 31,
|
||||||
(in millions)
|
2015
|
|
2014
|
||||
|
|
|
|
||||
Net Income
|
$
|
149
|
|
|
$
|
94
|
|
|
|
|
|
||||
Other Comprehensive Income (Loss):
|
|
|
|
||||
Related to marketable securities:
|
|
|
|
||||
Unrealized holding gains (losses) arising during the period
|
7
|
|
|
3
|
|
||
Income tax effect
|
(3
|
)
|
|
(1
|
)
|
||
Total
|
4
|
|
|
2
|
|
||
|
|
|
|
||||
Related to employee benefit plans:
|
|
|
|
||||
Reclassification of net pension expense into Wages and benefits
|
3
|
|
|
2
|
|
||
Income tax effect
|
(1
|
)
|
|
(1
|
)
|
||
Total
|
2
|
|
|
1
|
|
||
|
|
|
|
||||
Related to interest rate derivative instruments:
|
|
|
|
||||
Unrealized holding gains (losses) arising during the period
|
(4
|
)
|
|
(3
|
)
|
||
Reclassification of (gains) losses into Aircraft rent
|
2
|
|
|
2
|
|
||
Income tax effect
|
1
|
|
|
—
|
|
||
Total
|
(1
|
)
|
|
(1
|
)
|
||
|
|
|
|
||||
Other Comprehensive Income
|
5
|
|
|
2
|
|
||
|
|
|
|
||||
Comprehensive Income
|
$
|
154
|
|
|
$
|
96
|
|
|
Three Months Ended March 31,
|
||||||
(in millions)
|
2015
|
|
2014
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
149
|
|
|
$
|
94
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
76
|
|
|
70
|
|
||
Stock-based compensation and other
|
9
|
|
|
4
|
|
||
Changes in certain assets and liabilities:
|
|
|
|
||||
Changes in deferred income taxes
|
(6
|
)
|
|
9
|
|
||
Increase in air traffic liability
|
183
|
|
|
185
|
|
||
Increase (decrease) in deferred revenue
|
8
|
|
|
(1
|
)
|
||
Other - net
|
95
|
|
|
(119
|
)
|
||
Net cash provided by operating activities
|
514
|
|
|
242
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Property and equipment additions:
|
|
|
|
|
|
||
Aircraft and aircraft purchase deposits
|
(245
|
)
|
|
(65
|
)
|
||
Other flight equipment
|
(21
|
)
|
|
(17
|
)
|
||
Other property and equipment
|
(13
|
)
|
|
(11
|
)
|
||
Total property and equipment additions
|
(279
|
)
|
|
(93
|
)
|
||
Purchases of marketable securities
|
(403
|
)
|
|
(305
|
)
|
||
Sales and maturities of marketable securities
|
259
|
|
|
227
|
|
||
Proceeds from disposition of assets and changes in restricted deposits
|
2
|
|
|
7
|
|
||
Net cash used in investing activities
|
(421
|
)
|
|
(164
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Long-term debt payments
|
(35
|
)
|
|
(37
|
)
|
||
Common stock repurchases
|
(102
|
)
|
|
(30
|
)
|
||
Dividends paid
|
(26
|
)
|
|
(17
|
)
|
||
Other financing activities
|
14
|
|
|
16
|
|
||
Net cash used in financing activities
|
(149
|
)
|
|
(68
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
(56
|
)
|
|
10
|
|
||
Cash and cash equivalents at beginning of year
|
107
|
|
|
80
|
|
||
Cash and cash equivalents at end of the period
|
$
|
51
|
|
|
$
|
90
|
|
|
|
|
|
||||
Supplemental disclosure:
|
|
|
|
|
|
||
Cash paid during the period for:
|
|
|
|
||||
Interest (net of amount capitalized)
|
$
|
7
|
|
|
$
|
11
|
|
Income taxes paid (received)
|
(65
|
)
|
|
6
|
|
March 31, 2015
|
Cost Basis
|
|
Unrealized
Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
Cash
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Cash equivalents
|
46
|
|
|
—
|
|
|
—
|
|
|
46
|
|
||||
Cash and cash equivalents
|
51
|
|
|
—
|
|
|
—
|
|
|
51
|
|
||||
U.S. government and agency securities
|
200
|
|
|
1
|
|
|
—
|
|
|
201
|
|
||||
Foreign government bonds
|
31
|
|
|
—
|
|
|
—
|
|
|
31
|
|
||||
Asset-backed securities
|
151
|
|
|
—
|
|
|
—
|
|
|
151
|
|
||||
Mortgage-backed securities
|
127
|
|
|
1
|
|
|
(1
|
)
|
|
127
|
|
||||
Corporate notes and bonds
|
721
|
|
|
6
|
|
|
—
|
|
|
727
|
|
||||
Municipal securities
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
||||
Marketable securities
|
1,254
|
|
|
8
|
|
|
(1
|
)
|
|
1,261
|
|
||||
Total
|
$
|
1,305
|
|
|
$
|
8
|
|
|
$
|
(1
|
)
|
|
$
|
1,312
|
|
December 31, 2014
|
Cost Basis
|
|
Unrealized
Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
Cash
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Cash equivalents
|
103
|
|
|
—
|
|
|
—
|
|
|
103
|
|
||||
Cash and cash equivalents
|
107
|
|
|
—
|
|
|
—
|
|
|
107
|
|
||||
U.S. government and agency securities
|
166
|
|
|
—
|
|
|
—
|
|
|
166
|
|
||||
Foreign government bonds
|
25
|
|
|
—
|
|
|
—
|
|
|
25
|
|
||||
Asset-backed securities
|
130
|
|
|
—
|
|
|
—
|
|
|
130
|
|
||||
Mortgage-backed securities
|
127
|
|
|
—
|
|
|
(1
|
)
|
|
126
|
|
||||
Corporate notes and bonds
|
644
|
|
|
3
|
|
|
(2
|
)
|
|
645
|
|
||||
Municipal securities
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
||||
Marketable securities
|
1,110
|
|
|
3
|
|
|
(3
|
)
|
|
1,110
|
|
||||
Total
|
$
|
1,217
|
|
|
$
|
3
|
|
|
$
|
(3
|
)
|
|
$
|
1,217
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Proceeds from sales and maturities
|
$
|
259
|
|
|
$
|
227
|
|
Gross realized gains
|
1
|
|
|
1
|
|
||
Gross realized losses
|
(1
|
)
|
|
(1
|
)
|
March 31, 2015
|
Cost Basis
|
|
Fair Value
|
||||
Due in one year or less
|
$
|
152
|
|
|
$
|
151
|
|
Due after one year through five years
|
1,099
|
|
|
1,106
|
|
||
Due after five years through 10 years
|
3
|
|
|
4
|
|
||
Due after 10 years
|
—
|
|
|
—
|
|
||
Total
|
$
|
1,254
|
|
|
$
|
1,261
|
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
Derivative Instruments Not Designated as Hedges
|
|
|
|
||||
Fuel hedge contracts
|
|
|
|
||||
Fuel hedge contracts, current assets
|
$
|
3
|
|
|
$
|
3
|
|
Fuel hedge contracts, noncurrent assets
|
2
|
|
|
4
|
|
||
|
|
|
|
||||
Derivative Instruments Designated as Hedges
|
|
|
|
||||
Interest rate swaps
|
|
|
|
||||
Other accrued liabilities
|
(6
|
)
|
|
(6
|
)
|
||
Other liabilities
|
(15
|
)
|
|
(13
|
)
|
||
Losses in accumulated other comprehensive loss (AOCL)
|
(21
|
)
|
|
(19
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Derivative Instruments Not Designated as Hedges
|
|
|
|
||||
Fuel hedge contracts
|
|
|
|
||||
Gains (losses) recognized in aircraft fuel expense
|
$
|
(6
|
)
|
|
$
|
(10
|
)
|
|
|
|
|
||||
Derivative Instruments Designated as Hedges
|
|
|
|
||||
Interest rate swaps
|
|
|
|
||||
Losses recognized in aircraft rent
|
(2
|
)
|
|
(2
|
)
|
||
Gains (losses) recognized in other comprehensive income (OCI)
|
(4
|
)
|
|
(3
|
)
|
March 31, 2015
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Assets
|
|
|
|
|
|
||||||
Marketable securities
|
|
|
|
|
|
||||||
U.S. government and agency securities
|
$
|
201
|
|
|
$
|
—
|
|
|
$
|
201
|
|
Foreign government bonds
|
—
|
|
|
31
|
|
|
31
|
|
|||
Asset-backed securities
|
—
|
|
|
151
|
|
|
151
|
|
|||
Mortgage-backed securities
|
—
|
|
|
127
|
|
|
127
|
|
|||
Corporate notes and bonds
|
—
|
|
|
727
|
|
|
727
|
|
|||
Municipal securities
|
—
|
|
|
24
|
|
|
24
|
|
|||
Derivative instruments
|
|
|
|
|
|
||||||
Fuel hedge call options
|
—
|
|
|
5
|
|
|
5
|
|
|||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Derivative instruments
|
|
|
|
|
|
||||||
Interest rate swap agreements
|
—
|
|
|
(21
|
)
|
|
(21
|
)
|
December 31, 2014
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Assets
|
|
|
|
|
|
||||||
Marketable securities
|
|
|
|
|
|
||||||
U.S. government and agency securities
|
$
|
166
|
|
|
$
|
—
|
|
|
$
|
166
|
|
Foreign government bonds
|
—
|
|
|
25
|
|
|
25
|
|
|||
Asset-backed securities
|
—
|
|
|
130
|
|
|
130
|
|
|||
Mortgage-backed securities
|
—
|
|
|
126
|
|
|
126
|
|
|||
Corporate notes and bonds
|
—
|
|
|
645
|
|
|
645
|
|
|||
Municipal securities
|
—
|
|
|
18
|
|
|
18
|
|
|||
Derivative instruments
|
|
|
|
|
|
||||||
Fuel hedge call options
|
—
|
|
|
7
|
|
|
7
|
|
|||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Derivative instruments
|
|
|
|
|
|
||||||
Interest rate swap agreements
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
Carrying amount
|
$
|
587
|
|
|
$
|
614
|
|
Fair value
|
640
|
|
|
666
|
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
Current Liabilities:
|
|
|
|
||||
Other accrued liabilities
|
$
|
360
|
|
|
$
|
343
|
|
Other Liabilities and Credits:
|
|
|
|
||||
Deferred revenue
|
375
|
|
|
367
|
|
||
Other liabilities
|
19
|
|
|
20
|
|
||
Total
|
$
|
754
|
|
|
$
|
730
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Passenger revenues
|
$
|
64
|
|
|
$
|
55
|
|
Other - net revenues
|
76
|
|
|
73
|
|
||
Total
|
$
|
140
|
|
|
$
|
128
|
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
Fixed-rate notes payable due through 2024
|
$
|
587
|
|
|
$
|
614
|
|
Variable-rate notes payable due through 2025
|
181
|
|
|
189
|
|
||
Total debt
|
768
|
|
|
803
|
|
||
Less current portion
|
118
|
|
|
117
|
|
||
Long-term debt, less current portion
|
$
|
650
|
|
|
$
|
686
|
|
|
|
|
|
||||
Weighted-average fixed-interest rate
|
5.7
|
%
|
|
5.7
|
%
|
||
Weighted-average variable-interest rate
|
1.6
|
%
|
|
1.6
|
%
|
|
Total
|
||
Remainder of 2015
|
$
|
83
|
|
2016
|
115
|
|
|
2017
|
120
|
|
|
2018
|
151
|
|
|
2019
|
114
|
|
|
Thereafter
|
185
|
|
|
Total
|
$
|
768
|
|
|
Three Months Ended March 31,
|
||||||||||||||
|
Qualified
|
|
Postretirement Medical
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Service cost
|
$
|
10
|
|
|
$
|
8
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
21
|
|
|
20
|
|
|
1
|
|
|
1
|
|
||||
Expected return on assets
|
(31
|
)
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
||||
Recognized actuarial loss (gain)
|
7
|
|
|
3
|
|
|
(3
|
)
|
|
(1
|
)
|
||||
Total
|
$
|
7
|
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
March 31, 2015
|
Aircraft Leases
|
|
Facility Leases
|
|
Aircraft Commitments
|
|
Capacity Purchase Agreements
|
||||||||
Remainder of 2015
|
$
|
39
|
|
|
$
|
70
|
|
|
$
|
385
|
|
|
$
|
39
|
|
2016
|
105
|
|
|
92
|
|
|
585
|
|
|
58
|
|
||||
2017
|
72
|
|
|
87
|
|
|
530
|
|
|
61
|
|
||||
2018
|
57
|
|
|
39
|
|
|
428
|
|
|
42
|
|
||||
2019
|
46
|
|
|
37
|
|
|
372
|
|
|
30
|
|
||||
Thereafter
|
164
|
|
|
194
|
|
|
650
|
|
|
245
|
|
||||
Total
|
$
|
483
|
|
|
$
|
519
|
|
|
$
|
2,950
|
|
|
$
|
475
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
2015
|
|
2014
|
||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
||||||
2014 Repurchase Program - $650 million
|
1,580,747
|
|
|
$
|
102
|
|
|
—
|
|
|
$
|
—
|
|
2012 Repurchase Program - $250 million
|
—
|
|
|
$
|
—
|
|
|
705,702
|
|
|
$
|
30
|
|
Total
|
1,580,747
|
|
|
$
|
102
|
|
|
705,702
|
|
|
$
|
30
|
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
Marketable securities
|
$
|
4
|
|
|
$
|
—
|
|
Employee benefit plans
|
(296
|
)
|
|
(298
|
)
|
||
Interest rate derivatives
|
(13
|
)
|
|
(12
|
)
|
||
Total
|
$
|
(305
|
)
|
|
$
|
(310
|
)
|
|
Three Months Ended March 31, 2015
|
||||||||||||||||||||||||||
|
Alaska
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Consolidating
|
|
Air Group Adjusted
(a)
|
|
Special Items
(b)
|
|
Consolidated
|
||||||||||||||
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Passenger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Mainline
|
$
|
901
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
901
|
|
|
$
|
—
|
|
|
$
|
901
|
|
Regional
|
—
|
|
|
186
|
|
|
—
|
|
|
—
|
|
|
186
|
|
|
—
|
|
|
186
|
|
|||||||
Total passenger revenues
|
901
|
|
|
186
|
|
|
—
|
|
|
—
|
|
|
1,087
|
|
|
—
|
|
|
1,087
|
|
|||||||
CPA revenues
|
—
|
|
|
—
|
|
|
99
|
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Freight and mail
|
22
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
|||||||
Other - net
|
142
|
|
|
16
|
|
|
1
|
|
|
—
|
|
|
159
|
|
|
—
|
|
|
159
|
|
|||||||
Total operating revenues
|
1,065
|
|
|
203
|
|
|
100
|
|
|
(99
|
)
|
|
1,269
|
|
|
—
|
|
|
1,269
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating expenses, excluding fuel
|
639
|
|
|
164
|
|
|
91
|
|
|
(98
|
)
|
|
796
|
|
|
—
|
|
|
796
|
|
|||||||
Economic fuel
|
203
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
235
|
|
|
—
|
|
|
235
|
|
|||||||
Total operating expenses
|
842
|
|
|
196
|
|
|
91
|
|
|
(98
|
)
|
|
1,031
|
|
|
—
|
|
|
1,031
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Nonoperating income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest income
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||||
Interest expense
|
(7
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|||||||
Other
|
7
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|||||||
|
5
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||||
Income (loss) before income tax
|
$
|
228
|
|
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
(1
|
)
|
|
$
|
240
|
|
|
$
|
—
|
|
|
$
|
240
|
|
|
Three Months Ended March 31, 2014
|
||||||||||||||||||||||||||
|
Alaska
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Consolidating
|
|
Air Group Adjusted
(a)
|
|
Special Items
(b)
|
|
Consolidated
|
||||||||||||||
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Passenger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Mainline
|
$
|
854
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
854
|
|
|
$
|
—
|
|
|
$
|
854
|
|
Regional
|
—
|
|
|
186
|
|
|
—
|
|
|
—
|
|
|
186
|
|
|
—
|
|
|
186
|
|
|||||||
Total passenger revenues
|
854
|
|
|
186
|
|
|
—
|
|
|
—
|
|
|
1,040
|
|
|
—
|
|
|
1,040
|
|
|||||||
CPA revenues
|
—
|
|
|
—
|
|
|
91
|
|
|
(91
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Freight and mail
|
23
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
|||||||
Other - net
|
140
|
|
|
17
|
|
|
1
|
|
|
—
|
|
|
158
|
|
|
—
|
|
|
158
|
|
|||||||
Total operating revenues
|
1,017
|
|
|
204
|
|
|
92
|
|
|
(91
|
)
|
|
1,222
|
|
|
—
|
|
|
1,222
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating expenses, excluding fuel
|
576
|
|
|
151
|
|
|
86
|
|
|
(90
|
)
|
|
723
|
|
|
—
|
|
|
723
|
|
|||||||
Economic fuel
|
318
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
366
|
|
|
(8
|
)
|
|
358
|
|
|||||||
Total operating expenses
|
894
|
|
|
199
|
|
|
86
|
|
|
(90
|
)
|
|
1,089
|
|
|
(8
|
)
|
|
1,081
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Nonoperating income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest income
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||||
Interest expense
|
(8
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|||||||
Other
|
18
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
|||||||
|
15
|
|
|
(1
|
)
|
|
(3
|
)
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|||||||
Income (loss) before income tax
|
$
|
138
|
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
(1
|
)
|
|
$
|
144
|
|
|
$
|
8
|
|
|
$
|
152
|
|
(a)
|
The adjusted column represents the financial information that is reviewed by management to assess performance of operations and determine capital allocations and does not include certain charges.
|
(b)
|
Includes mark-to-market fuel-hedge accounting charges.
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
Alaska
(a)
|
$
|
7,153
|
|
|
$
|
6,772
|
|
Horizon
|
821
|
|
|
818
|
|
||
Parent company
|
3,638
|
|
|
3,552
|
|
||
Elimination of inter-company accounts
|
(5,202
|
)
|
|
(4,961
|
)
|
||
Consolidated
|
$
|
6,410
|
|
|
$
|
6,181
|
|
(a)
|
There are no assets associated with purchased capacity flying at Alaska.
|
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
First
Quarter Review
—highlights from the
first
quarter of
2015
outlining some of the major events that happened during the period and how they affected our financial performance.
|
•
|
Results of Operations
—an in-depth analysis of our revenues by segment and our expenses from a consolidated perspective for the
three
months ended
March 31, 2015
. To the extent material to the understanding of segment profitability, we more fully describe the segment expenses per financial statement line item. Financial and statistical data is also included here. This section includes forward-looking statements regarding our view of the remainder of
2015
.
|
•
|
Liquidity and Capital Resources
—an overview of our financial position, analysis of cash flows, and relevant contractual obligations and commitments.
|
New Non-Stop Routes Launched in Q1
|
New Non-Stop Routes Announced (Launch Dates)
|
Las Vegas to Mammoth Lakes, California
|
Seattle to JFK, New York (9/16/15)
|
San Diego to Kona, Hawaii
|
Orange County, California to Cabo San Lucas, Mexico (10/8/15)
|
Seattle to Washington, D.C. Dulles
|
Orange County, California to Puerto Vallarta, Mexico (10/9/15)
|
|
Boise to Spokane, Washington (8/24/15)
|
|
Los Angeles to Baltimore, Maryland (9/10/15)
|
|
Seattle to Nashville, Tennessee (9/23/15)
|
|
Seattle to Raleigh, North Carolina (10/1/15)
|
|
Seattle to Charleston, South Carolina (11/16/15)
|
|
Los Angeles to San Jose, Costa Rica (10/31/15)
|
|
Los Angeles to Liberia, Costa Rica (11/1/15)
|
•
|
In the
first
quarter of
2014
there were adjustments to reflect the timing of unrealized mark-to-market
gains
of
$8 million
(
$5 million
after tax, or
$0.04
per diluted share) related to our fuel hedge positions.
|
•
|
CASM excluding fuel and certain special items is one of the most important measures used by management and by the Air Group Board of Directors in assessing quarterly and annual cost performance;
|
•
|
By eliminating fuel expense and certain special items from our unit metrics, we believe that we have better visibility into the results of our non-fuel continuing operations. Our industry is highly competitive and is characterized by high fixed costs, so even a small reduction in non-fuel operating costs can result in a significant improvement in operating results. In addition, we believe that all domestic carriers are similarly impacted by changes in jet fuel costs over the long run, so it is important for management (and thus investors) to understand the impact of (and trends in) company-specific cost drivers such as labor rates and productivity, airport costs, maintenance costs, etc., which are more controllable by management;
|
•
|
Our results excluding fuel expense and certain special items serve as the basis for our various employee incentive plans, thus the information allows investors to better understand the changes in variable incentive pay expense in our consolidated statements of operations; and
|
•
|
We believe it is the basis by which we are evaluated by industry analysts; and
|
•
|
It is useful to monitor performance without these items as it improves a reader’s ability to compare our results to those of other airlines.
|
|
Three Months Ended March 31,
|
||||||||||||||
|
2015
|
|
2014
|
||||||||||||
(in millions, except per share amounts)
|
Dollars
|
|
Diluted EPS
|
|
Dollars
|
|
Diluted EPS
|
||||||||
Net income and diluted EPS as reported
|
$
|
149
|
|
|
$
|
1.12
|
|
|
$
|
94
|
|
|
$
|
0.68
|
|
Mark-to-market fuel hedge adjustments, net of tax
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(0.04
|
)
|
||||
Non-GAAP adjusted income and per-share amounts
|
$
|
149
|
|
|
$
|
1.12
|
|
|
$
|
89
|
|
|
$
|
0.64
|
|
|
Three Months Ended March 31,
|
|||||||||
(in cents)
|
2015
|
|
2014
|
|
% Change
|
|||||
Consolidated:
|
|
|
|
|
|
|||||
CASM
|
|
11.14
|
¢
|
|
|
12.94
|
¢
|
|
(13.9
|
)
|
Less the following components:
|
|
|
|
|
|
|
|
|||
Aircraft fuel, including hedging gains and losses
|
2.53
|
|
|
4.28
|
|
|
(40.9
|
)
|
||
CASM excluding fuel
|
|
8.61
|
¢
|
|
|
8.66
|
¢
|
|
(0.6
|
)
|
|
|
|
|
|
|
|||||
Mainline:
|
|
|
|
|
|
|||||
CASM
|
|
10.09
|
¢
|
|
|
11.82
|
¢
|
|
(14.6
|
)
|
Less the following components:
|
|
|
|
|
|
|
|
|||
Aircraft fuel, including hedging gains and losses
|
2.43
|
|
|
4.14
|
|
|
(41.3
|
)
|
||
CASM excluding fuel
|
|
7.66
|
¢
|
|
|
7.68
|
¢
|
|
(0.3
|
)
|
|
Three Months Ended March 31,
|
||||
|
2015
|
|
2014
|
|
Change
|
Consolidated Operating Statistics:
(a)
|
|
|
|
|
|
Revenue passengers (000)
|
7,316
|
|
6,649
|
|
10.0%
|
Revenue passenger miles (RPM) (000,000) "traffic"
|
7,723
|
|
7,078
|
|
9.1%
|
Available seat miles (ASM) (000,000) "capacity"
|
9,257
|
|
8,352
|
|
10.8%
|
Load factor
|
83.4%
|
|
84.7%
|
|
(1.3) pts
|
Yield
|
14.08¢
|
|
14.70¢
|
|
(4.2%)
|
Passenger revenue per ASM (PRASM)
|
11.74¢
|
|
12.45¢
|
|
(5.7%)
|
Revenue per ASM (RASM)
(b)
|
13.71¢
|
|
14.64¢
|
|
(6.4%)
|
Operating expense per ASM (CASM) excluding fuel
(b)
|
8.61¢
|
|
8.66¢
|
|
(0.6%)
|
Economic fuel cost per gallon
(b)
|
$1.98
|
|
$3.32
|
|
(40.4%)
|
Fuel gallons (000,000)
|
119
|
|
110
|
|
8.2%
|
ASMs per fuel gallon
|
77.8
|
|
75.9
|
|
2.5%
|
Average full-time equivalent employees (FTEs)
|
13,274
|
|
12,386
|
|
7.2%
|
|
|
|
|
|
|
Mainline Operating Statistics:
|
|
|
|
|
|
Revenue passengers (000)
|
5,236
|
|
4,737
|
|
10.5%
|
RPMs (000,000) "traffic"
|
6,994
|
|
6,402
|
|
9.2%
|
ASMs (000,000) "capacity"
|
8,347
|
|
7,495
|
|
11.4%
|
Load factor
|
83.8%
|
|
85.4%
|
|
(1.6) pts
|
Yield
|
12.88¢
|
|
13.34¢
|
|
(3.4%)
|
PRASM
|
10.79¢
|
|
11.40¢
|
|
(5.4%)
|
RASM
|
12.75¢
|
|
13.57¢
|
|
(6.0%)
|
CASM excluding fuel
(b)
|
7.66¢
|
|
7.68¢
|
|
(0.3%)
|
Economic fuel cost per gallon
(b)
|
$1.97
|
|
$3.32
|
|
(40.7%)
|
Fuel gallons (000,000)
|
103
|
|
96
|
|
7.3%
|
ASMs per fuel gallon
|
81.0
|
|
78.1
|
|
3.7%
|
Average FTEs
|
10,380
|
|
9,591
|
|
8.2%
|
Aircraft utilization
|
10.6
|
|
10.2
|
|
3.9%
|
Average aircraft stage length
|
1,199
|
|
1,201
|
|
(0.2%)
|
Mainline operating fleet at period-end
|
137
|
|
133
|
|
4 a/c
|
|
|
|
|
|
|
Regional Operating Statistics:
(c)
|
|
|
|
|
|
Revenue passengers (000)
|
2,080
|
|
1,912
|
|
8.8%
|
RPMs (000,000) "traffic"
|
728
|
|
675
|
|
7.9%
|
ASMs (000,000) "capacity"
|
910
|
|
857
|
|
6.2%
|
Load factor
|
80.0%
|
|
78.8%
|
|
1.2 pts
|
Yield
|
25.58¢
|
|
27.53¢
|
|
(7.1%)
|
PRASM
|
20.46¢
|
|
21.69¢
|
|
(5.7%)
|
Regional operating fleet at period-end (Horizon and dedicated Skywest aircraft)
|
60
|
|
59
|
|
1 a/c
|
(a)
|
Except for FTEs, data includes information related to third-party Regional CPA arrangements.
|
(b)
|
See reconciliation of this measure to the most directly related GAAP measure in the "Results of Operations" section.
|
(c)
|
Data presented includes information related to Regional CPAs.
|
|
Three Months Ended March 31,
|
|||||||||
(in millions)
|
2015
|
|
2014
|
|
% Change
|
|||||
Passenger
|
|
|
|
|
|
|||||
Mainline
|
$
|
901
|
|
|
$
|
854
|
|
|
6
|
|
Regional
|
186
|
|
|
186
|
|
|
—
|
|
||
Total passenger revenue
|
1,087
|
|
|
1,040
|
|
|
5
|
|
||
Freight and mail
|
23
|
|
|
24
|
|
|
(4
|
)
|
||
Other - net
|
159
|
|
|
158
|
|
|
1
|
|
||
Total operating revenues
|
$
|
1,269
|
|
|
$
|
1,222
|
|
|
4
|
|
|
Three Months Ended March 31,
|
|||||||||
(in millions)
|
2015
|
|
2014
|
|
% Change
|
|||||
Fuel expense
|
$
|
235
|
|
|
$
|
358
|
|
|
(34
|
)
|
Non-fuel expenses
|
796
|
|
|
723
|
|
|
10
|
|
||
Total Operating Expenses
|
$
|
1,031
|
|
|
$
|
1,081
|
|
|
(5
|
)
|
|
Three Months Ended March 31,
|
||||||||
(in millions)
|
2015
|
|
2014
|
|
% Change
|
||||
Wages
|
$
|
230
|
|
|
$
|
209
|
|
|
10
|
Pension - Defined benefit plans
|
7
|
|
|
2
|
|
|
250
|
||
Defined contribution plans
|
15
|
|
|
13
|
|
|
15
|
||
Medical and other benefits
|
38
|
|
|
33
|
|
|
15
|
||
Payroll taxes
|
16
|
|
|
15
|
|
|
7
|
||
Total wages and benefits
|
$
|
306
|
|
|
$
|
272
|
|
|
13
|
|
Three Months Ended March 31,
|
||||||||||||||
|
2015
|
|
2014
|
||||||||||||
(in millions, except for per gallon amounts)
|
Dollars
|
|
Cost/Gal
|
|
Dollars
|
|
Cost/Gal
|
||||||||
Raw or "into-plane" fuel cost
|
$
|
229
|
|
|
$
|
1.93
|
|
|
$
|
348
|
|
|
$
|
3.16
|
|
Losses on settled hedges
|
6
|
|
|
0.05
|
|
|
18
|
|
|
0.16
|
|
||||
Consolidated economic fuel expense
|
235
|
|
|
1.98
|
|
|
366
|
|
|
3.32
|
|
||||
Mark-to-market fuel hedge adjustments
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(0.07
|
)
|
||||
GAAP fuel expense
|
$
|
235
|
|
|
$
|
1.98
|
|
|
$
|
358
|
|
|
$
|
3.25
|
|
Fuel gallons
|
119
|
|
|
|
|
110
|
|
|
|
|
Three Months Ended March 31,
|
|||||||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Change
|
|||||||||
(in millions, except CASM)
|
Amount
|
|
Amount
|
|
CASM
|
|
CASM
|
|
CASM
|
|||||||||
Wages and benefits
|
$
|
306
|
|
|
$
|
272
|
|
|
|
3.31
|
¢
|
|
|
3.26
|
¢
|
|
1.5
|
%
|
Variable incentive pay
|
26
|
|
|
25
|
|
|
0.28
|
|
|
0.30
|
|
|
(6.7
|
)%
|
||||
Aircraft maintenance
|
63
|
|
|
51
|
|
|
0.68
|
|
|
0.61
|
|
|
11.5
|
%
|
||||
Aircraft rent
|
26
|
|
|
28
|
|
|
0.28
|
|
|
0.34
|
|
|
(17.6
|
)%
|
||||
Landing fees and other rentals
|
71
|
|
|
69
|
|
|
0.77
|
|
|
0.83
|
|
|
(7.2
|
)%
|
||||
Contracted services
|
67
|
|
|
60
|
|
|
0.72
|
|
|
0.72
|
|
|
—
|
%
|
||||
Selling expenses
|
53
|
|
|
46
|
|
|
0.57
|
|
|
0.55
|
|
|
3.6
|
%
|
||||
Depreciation and amortization
|
76
|
|
|
70
|
|
|
0.83
|
|
|
0.84
|
|
|
(1.2
|
)%
|
||||
Food and beverage service
|
25
|
|
|
21
|
|
|
0.27
|
|
|
0.25
|
|
|
8.0
|
%
|
||||
Other
|
83
|
|
|
81
|
|
|
0.90
|
|
|
0.96
|
|
|
(6.3
|
)%
|
||||
Non-fuel Expenses
|
$
|
796
|
|
|
$
|
723
|
|
|
|
8.61
|
¢
|
|
|
8.66
|
¢
|
|
(0.6
|
)%
|
•
|
Our existing cash and marketable securities balance of
$1.3 billion
;
|
•
|
Our expected cash from operations;
|
•
|
Our
77
unencumbered aircraft in our operating fleet that could be financed, if necessary;
|
•
|
Our combined
$200 million
bank line-of-credit facilities, with no outstanding borrowings.
|
(in millions, except per share and debt-to-capital amounts)
|
March 31, 2015
|
|
December 31, 2014
|
|
Change
|
|||||
Cash and marketable securities
|
$
|
1,312
|
|
|
$
|
1,217
|
|
|
7.8
|
%
|
Cash, marketable securities, and unused lines of credit as a percentage of trailing twelve months revenue
|
28
|
%
|
|
26
|
%
|
|
2 pts
|
|
||
Long-term debt, net of current portion
|
$
|
650
|
|
|
$
|
686
|
|
|
(5.2)
|
%
|
Shareholders’ equity
|
$
|
2,166
|
|
|
$
|
2,127
|
|
|
1.8
|
%
|
Long-term debt-to-capital including net present value of aircraft operating lease payments
(a)
|
29%:71%
|
|
|
31%:69%
|
|
|
(2) pts
|
|
(a)
|
Calculated using the present value of remaining aircraft lease payments.
|
(in millions)
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||
Aircraft and aircraft purchase deposits - firm
|
$
|
580
|
|
|
$
|
530
|
|
|
$
|
500
|
|
|
$
|
400
|
|
Other flight equipment
|
55
|
|
|
55
|
|
|
30
|
|
|
25
|
|
||||
Other property and equipment
|
100
|
|
|
80
|
|
|
80
|
|
|
80
|
|
||||
Total property and equipment additions
|
$
|
735
|
|
|
$
|
665
|
|
|
$
|
610
|
|
|
$
|
505
|
|
Option aircraft and aircraft deposits, if exercised
(a)
|
$
|
—
|
|
|
$
|
60
|
|
|
$
|
140
|
|
|
$
|
290
|
|
(a)
|
Alaska has options to acquire
46
B737 aircraft with deliveries from
2018
through
2024
. Horizon has options to acquire
five
Q400 aircraft with deliveries from
2018
through
2019
.
|
|
Actual Fleet
|
|
Expected Fleet Activity
(a)
|
|||||||||||
Aircraft
|
Dec 31, 2014
|
|
2015 Changes
|
|
Dec 31, 2015
|
|
2016-2017 Changes
|
|
Dec 31, 2017
|
|||||
737 Freighters & Combis
|
6
|
|
|
—
|
|
|
6
|
|
|
(3
|
)
|
|
3
|
|
737 Passenger Aircraft
|
131
|
|
|
10
|
|
|
141
|
|
|
9
|
|
|
150
|
|
Total Mainline Fleet
|
137
|
|
|
10
|
|
|
147
|
|
|
6
|
|
|
153
|
|
Q400
|
51
|
|
|
1
|
|
|
52
|
|
|
2
|
|
|
54
|
|
E-175
|
—
|
|
|
5
|
|
|
5
|
|
|
2
|
|
|
7
|
|
CRJ700
|
8
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
Total Regional Fleet
|
59
|
|
|
6
|
|
|
65
|
|
|
4
|
|
|
69
|
|
Total
|
196
|
|
|
16
|
|
|
212
|
|
|
10
|
|
|
222
|
|
(a)
|
Expected fleet activity includes aircraft deliveries, net of planned retirements and lease returns.
|
|
Approximate % of Expected Fuel Requirements
|
|
Weighted-Average Crude Oil Price per Barrel
|
|
Average Premium Cost per Barrel
|
|
Second Quarter 2015
|
50
|
%
|
|
$97
|
|
$3
|
Third Quarter 2015
|
50
|
%
|
|
$90
|
|
$3
|
Fourth Quarter 2015
|
40
|
%
|
|
$86
|
|
$3
|
Remainder 2015
|
47
|
%
|
|
$95
|
|
$3
|
First Quarter 2016
|
30
|
%
|
|
$82
|
|
$3
|
Second Quarter 2016
|
20
|
%
|
|
$72
|
|
$3
|
Third Quarter 2016
|
10
|
%
|
|
$72
|
|
$3
|
Full Year 2016
|
15
|
%
|
|
$77
|
|
$3
|
(in millions)
|
Remainder of 2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
Beyond 2019
|
|
Total
|
||||||||||||||
Current and long-term debt obligations
|
$
|
83
|
|
|
$
|
115
|
|
|
$
|
120
|
|
|
$
|
151
|
|
|
$
|
114
|
|
|
$
|
185
|
|
|
$
|
768
|
|
Operating lease commitments
(a)
|
109
|
|
|
197
|
|
|
159
|
|
|
96
|
|
|
83
|
|
|
358
|
|
|
1,002
|
|
|||||||
Aircraft purchase commitments
|
385
|
|
|
585
|
|
|
530
|
|
|
428
|
|
|
372
|
|
|
650
|
|
|
2,950
|
|
|||||||
Interest obligations
(b)
|
24
|
|
|
32
|
|
|
27
|
|
|
21
|
|
|
13
|
|
|
13
|
|
|
130
|
|
|||||||
Other obligations
(c)
|
47
|
|
|
58
|
|
|
61
|
|
|
42
|
|
|
30
|
|
|
245
|
|
|
483
|
|
|||||||
Total
|
$
|
648
|
|
|
$
|
987
|
|
|
$
|
897
|
|
|
$
|
738
|
|
|
$
|
612
|
|
|
$
|
1,451
|
|
|
$
|
5,333
|
|
(a)
|
Operating lease commitments generally include aircraft operating leases, airport property and hangar leases, office space, and other equipment leases. Included here are seven E-175 aircraft that will be operated by SkyWest under a capacity
|
(b)
|
For variable-rate debt, future obligations are shown above using interest rates in effect as of
March 31, 2015
.
|
(c)
|
Includes minimum obligations under our long-term PBH maintenance agreement and obligations associated with third-party CPAs with SkyWest and PenAir. Refer to the "Commitments" note in the condensed consolidated financial statements for further information.
|
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|
ITEM 4. CONTROLS AND PROCEDURES
|
ITEM 1. LEGAL PROCEEDINGS
|
ITEM 1A. RISK FACTORS
|
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
|
Total Number of
Shares Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of Shares (or units) Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum remaining
dollar value of shares
that can be purchased
under the plan (in millions)
|
||||||
January 1, 2015 - January 31, 2015
|
197,081
|
|
|
$
|
61.39
|
|
|
197,081
|
|
|
|
||
February 1, 2015 - February 28, 2015
|
565,916
|
|
|
63.73
|
|
|
565,916
|
|
|
|
|||
March 1, 2015 - March 31, 2015
|
817,750
|
|
|
66.10
|
|
|
817,750
|
|
|
|
|||
Total
|
1,580,747
|
|
|
$
|
64.53
|
|
|
1,580,747
|
|
|
$
|
282
|
|
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4. MINE SAFETY DISCLOSURES
|
ITEM 5. OTHER INFORMATION
|
ITEM 6. EXHIBITS
|
1.
|
Exhibits:
See Exhibit Index.
|
ALASKA AIR GROUP, INC.
|
|
|
|
/s/ CHRISTOPHER M. BERRY
|
|
Christopher M. Berry
|
|
Controller, Alaska Airlines Managing Director, Accounting
|
|
(Principal Accounting Officer)
|
|
|
|
May 7, 2015
|
|
Exhibit
Number
|
Exhibit
Description
|
31.1
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
10.1
#
|
Boeing Supplemental Agreement No. 39
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
#
|
Pursuant to 17 CFR 240.24b-2, confidential information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission.
|
1.
|
I have reviewed this annual report on Form 10-Q of Alaska Air Group, Inc. for the period ended
March 31, 2015
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
e)
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By
|
/s/ BRADLEY D. TILDEN
|
|
Bradley D. Tilden
|
|
Chairman, President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-Q of Alaska Air Group, Inc. for the period ended
March 31, 2015
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By
|
/s/ BRANDON S. PEDERSEN
|
|
Brandon S. Pedersen
|
|
Executive Vice President/Finance and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By
|
/s/ BRADLEY D. TILDEN
|
|
Bradley D. Tilden
|
|
Chairman, President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By
|
/s/ BRANDON S. PEDERSEN
|
|
Brandon S. Pedersen
|
|
Executive Vice President/Finance and Chief Financial Officer
|