Company Quick10K Filing
Quick10K
Alaska Air Group
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$60.30 124 $7,450
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-07-11 Regulation FD, Exhibits
8-K 2019-06-13 Regulation FD, Exhibits
8-K 2019-05-15 Shareholder Vote
8-K 2019-04-25 Earnings, Regulation FD, Exhibits
8-K 2019-04-11 Regulation FD, Exhibits
8-K 2019-03-14 Regulation FD, Exhibits
8-K 2019-02-13 Regulation FD, Exhibits
8-K 2019-01-24 Earnings, Regulation FD, Exhibits
8-K 2019-01-24 Earnings, Regulation FD, Exhibits
8-K 2019-01-14 Regulation FD, Exhibits
8-K 2018-12-14 Regulation FD, Exhibits
8-K 2018-11-27 Regulation FD, Exhibits
8-K 2018-11-16 Regulation FD, Exhibits
8-K 2018-10-25 Earnings, Regulation FD, Exhibits
8-K 2018-10-12 Regulation FD, Exhibits
8-K 2018-09-17 Regulation FD, Exhibits
8-K 2018-08-14 Regulation FD, Exhibits
8-K 2018-07-26 Earnings, Regulation FD, Exhibits
8-K 2018-07-16 Regulation FD, Exhibits
8-K 2018-06-19 Officers
8-K 2018-06-15 Regulation FD, Exhibits
8-K 2018-05-15 Regulation FD, Exhibits
8-K 2018-05-08 Shareholder Vote, Other Events
8-K 2018-04-23 Earnings, Regulation FD, Exhibits
8-K 2018-04-13 Regulation FD, Exhibits
8-K 2018-03-13 Regulation FD, Exhibits
8-K 2018-01-25 Earnings, Regulation FD, Exhibits
8-K 2018-01-22 Officers, Regulation FD, Exhibits
8-K 2018-01-12 Officers, Regulation FD, Exhibits
8-K 2018-01-04 Officers
SCI Service International 7,710
RES RPC 2,130
BANR Banner 1,910
NTRA Natera 1,120
CHS Chico's FAS 431
LPNT Lifepoint Health 0
OUNZ Vaneck Merk Gold Trust 0
CCRE Can Cal Resources 0
SMPR Standard Metals Processing 0
NAHD New Asia Holdings 0
ALK 2019-03-31
Part I
Item 1. Condensed Consolidated Financial Statements
Note 1. General and Summary of Significant Accounting Policies
Note 2. Revenue
Note 3. Fair Value Measurements
Note 4. Long-Term Debt
Note 5. Leases
Note 6. Employee Benefit Plans
Note 7. Commitments and Contingencies
Note 8. Shareholders' Equity
Note 9. Operating Segment Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Item 4. Controls and Procedures
Part II
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 alk10-q12019ex311.htm
EX-31.2 alk10-q12019ex312.htm
EX-32.1 alk10-q12019ex321.htm
EX-32.2 alk10-q12019ex322.htm

Alaska Air Group Earnings 2019-03-31

ALK 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
false--12-31Q120190000766421falseLarge Accelerated FilerALASKA AIR GROUP, INC.false0.320.010.014000000004000000001308134761313382451231944301235043082021-06-302019-07-312022-03-310.010.0150000005000000000076190467833937 0000766421 2019-01-01 2019-03-31 0000766421 2019-04-30 0000766421 2018-12-31 0000766421 2019-03-31 0000766421 2018-01-01 2018-03-31 0000766421 us-gaap:CargoAndFreightMember alk:CargoandOtherRevenueMember 2018-01-01 2018-03-31 0000766421 alk:MileagePlanServicesOtherMember alk:MileagePlanRevenueMember 2019-01-01 2019-03-31 0000766421 us-gaap:CargoAndFreightMember alk:CargoandOtherRevenueMember 2019-01-01 2019-03-31 0000766421 us-gaap:PassengerMember alk:PassengerRevenueMember 2018-01-01 2018-03-31 0000766421 alk:MileagePlanServicesOtherMember alk:MileagePlanRevenueMember 2018-01-01 2018-03-31 0000766421 us-gaap:PassengerMember alk:PassengerRevenueMember 2019-01-01 2019-03-31 0000766421 us-gaap:TreasuryStockMember 2018-01-01 2018-03-31 0000766421 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0000766421 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0000766421 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0000766421 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0000766421 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0000766421 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0000766421 us-gaap:CommonStockMember 2018-01-01 2018-03-31 0000766421 us-gaap:RetainedEarningsMember 2017-12-31 0000766421 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0000766421 us-gaap:RetainedEarningsMember 2018-03-31 0000766421 us-gaap:CommonStockMember 2018-03-31 0000766421 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-01-01 0000766421 2018-01-01 2018-01-01 0000766421 us-gaap:TreasuryStockMember 2018-03-31 0000766421 2017-12-31 0000766421 us-gaap:RetainedEarningsMember 2018-01-01 2018-01-01 0000766421 2018-03-31 0000766421 us-gaap:CommonStockMember 2017-12-31 0000766421 us-gaap:TreasuryStockMember 2017-12-31 0000766421 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0000766421 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0000766421 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000766421 us-gaap:CommonStockMember 2019-03-31 0000766421 us-gaap:TreasuryStockMember 2019-01-01 2019-03-31 0000766421 us-gaap:TreasuryStockMember 2018-12-31 0000766421 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0000766421 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0000766421 us-gaap:CommonStockMember 2018-12-31 0000766421 us-gaap:RetainedEarningsMember 2019-03-31 0000766421 us-gaap:TreasuryStockMember 2019-03-31 0000766421 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000766421 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0000766421 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000766421 us-gaap:RetainedEarningsMember 2018-12-31 0000766421 alk:MileagePlanRevenueMember 2018-01-01 2018-03-31 0000766421 alk:MileagePlanRevenueMember 2019-01-01 2019-03-31 0000766421 us-gaap:PassengerMember alk:MileagePlanRevenueMember 2018-01-01 2018-03-31 0000766421 us-gaap:PassengerMember alk:MileagePlanRevenueMember 2019-01-01 2019-03-31 0000766421 alk:MileagePlanRevenueMember 2019-03-31 0000766421 alk:PassengerRevenueMember 2018-01-01 2018-03-31 0000766421 alk:PassengerRevenueMember 2019-01-01 2019-03-31 0000766421 alk:MileagePlanRevenueMember 2018-12-31 0000766421 alk:MileagePlanRevenueMember 2017-12-31 0000766421 alk:PassengerServicesMember alk:MileagePlanRevenueMember 2019-01-01 2019-03-31 0000766421 alk:MileagePlanRevenueMember 2018-03-31 0000766421 alk:PassengerServicesMember alk:MileagePlanRevenueMember 2018-01-01 2018-03-31 0000766421 alk:CargoandOtherRevenueMember 2019-01-01 2019-03-31 0000766421 alk:OtherServicesMember alk:CargoandOtherRevenueMember 2018-01-01 2018-03-31 0000766421 alk:CargoServicesMember alk:CargoandOtherRevenueMember 2019-01-01 2019-03-31 0000766421 alk:CargoandOtherRevenueMember 2018-01-01 2018-03-31 0000766421 alk:OtherServicesMember alk:CargoandOtherRevenueMember 2019-01-01 2019-03-31 0000766421 alk:CargoServicesMember alk:CargoandOtherRevenueMember 2018-01-01 2018-03-31 0000766421 alk:PassengerAncillaryServicesMember alk:PassengerRevenueMember 2019-01-01 2019-03-31 0000766421 alk:PassengerAncillaryServicesMember alk:PassengerRevenueMember 2018-01-01 2018-03-31 0000766421 alk:PassengerTicketsMember alk:PassengerRevenueMember 2018-01-01 2018-03-31 0000766421 alk:MileagePlanServicesMember alk:PassengerRevenueMember 2018-01-01 2018-03-31 0000766421 alk:MileagePlanServicesMember alk:PassengerRevenueMember 2019-01-01 2019-03-31 0000766421 alk:PassengerTicketsMember alk:PassengerRevenueMember 2019-01-01 2019-03-31 0000766421 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-03-31 0000766421 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2018-12-31 0000766421 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-03-31 0000766421 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-12-31 0000766421 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000766421 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignGovernmentDebtSecuritiesMember 2018-12-31 0000766421 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember 2019-03-31 0000766421 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0000766421 us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000766421 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesMember 2018-12-31 0000766421 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2019-03-31 0000766421 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000766421 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0000766421 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2018-12-31 0000766421 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0000766421 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0000766421 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-12-31 0000766421 us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesMember 2019-03-31 0000766421 us-gaap:InterestRateSwapMember us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-03-31 0000766421 us-gaap:InterestRateSwapMember us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000766421 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignGovernmentDebtSecuritiesMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-03-31 0000766421 us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0000766421 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000766421 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0000766421 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000766421 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0000766421 us-gaap:CommodityContractMember us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000766421 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0000766421 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-03-31 0000766421 us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember 2018-12-31 0000766421 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2019-03-31 0000766421 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000766421 us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignGovernmentDebtSecuritiesMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2019-03-31 0000766421 us-gaap:CommodityContractMember us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0000766421 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignGovernmentDebtSecuritiesMember 2019-03-31 0000766421 alk:Fixedratenotespayableduethrough2028Member 2019-03-31 0000766421 alk:Fixedratenotespayableduethrough2028Member 2018-12-31 0000766421 alk:Variableratenotespayableduethrough2028Member 2018-12-31 0000766421 alk:Variableratenotespayableduethrough2028Member 2019-03-31 0000766421 alk:CreditFacility2Member alk:SecuredByAircraftMember 2019-03-31 0000766421 alk:CreditFacility1Member alk:SecuredByAircraftMember 2019-03-31 0000766421 alk:CreditFacility3Member alk:SecuredByOtherMember 2019-03-31 0000766421 alk:CreditFacility3Member alk:SecuredByOtherMember 2019-01-01 2019-03-31 0000766421 alk:CreditFacility1Member alk:SecuredByAircraftMember 2019-01-01 2019-03-31 0000766421 alk:CreditFacility2Member alk:SecuredByAircraftMember 2019-01-01 2019-03-31 0000766421 alk:CPAAircraftMember 2019-03-31 0000766421 alk:AirportFacilitiesMember 2019-03-31 0000766421 alk:CorporaterealestateMember 2019-03-31 0000766421 alk:AircraftMember 2019-03-31 0000766421 alk:AircraftMember 2019-01-01 2019-03-31 0000766421 alk:CorporaterealestateMember 2019-01-01 2019-03-31 0000766421 alk:CPAAircraftMember 2019-01-01 2019-03-31 0000766421 alk:AirportFacilitiesMember 2019-01-01 2019-03-31 0000766421 alk:AirbusMember us-gaap:PropertySubjectToOperatingLeaseMember 2019-03-31 0000766421 alk:E175Member us-gaap:PropertyAvailableForOperatingLeaseMember 2019-03-31 0000766421 alk:E175Member us-gaap:PropertySubjectToOperatingLeaseMember 2019-03-31 0000766421 srt:B737Member us-gaap:PropertySubjectToOperatingLeaseMember 2019-03-31 0000766421 alk:CPAAircraftMember srt:MaximumMember 2019-03-31 0000766421 us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 2019-01-01 0000766421 alk:AirbusMember us-gaap:PropertyAvailableForOperatingLeaseMember 2019-03-31 0000766421 alk:AircraftMember srt:MaximumMember 2019-03-31 0000766421 alk:Q400Member us-gaap:PropertySubjectToOperatingLeaseMember 2019-03-31 0000766421 alk:CPAAircraftMember srt:MinimumMember 2019-03-31 0000766421 alk:LaborAndRelatedExpenseMember us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-03-31 0000766421 alk:LaborAndRelatedExpenseMember us-gaap:PensionPlansDefinedBenefitMember 2018-01-01 2018-03-31 0000766421 us-gaap:NonoperatingIncomeExpenseMember us-gaap:PensionPlansDefinedBenefitMember 2018-01-01 2018-03-31 0000766421 us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-03-31 0000766421 us-gaap:NonoperatingIncomeExpenseMember us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-03-31 0000766421 us-gaap:PensionPlansDefinedBenefitMember 2018-01-01 2018-03-31 0000766421 alk:E175Member 2019-03-31 0000766421 srt:A320NeoMember 2019-03-31 0000766421 alk:E175Member alk:CapacityPurchaseAgreementwithSkyWestMember 2019-03-31 0000766421 alk:VirginAmericaFlightAttendantsMember 2019-01-01 2019-03-31 0000766421 srt:B737Member 2019-03-31 0000766421 alk:AircraftMaintenanceDepositsMember 2019-03-31 0000766421 us-gaap:CapitalAdditionsMember 2019-03-31 0000766421 us-gaap:CapacityMember 2019-03-31 0000766421 alk:A20151BillionRepurchaseProgramMember 2015-09-01 2019-03-31 0000766421 alk:A20151BillionRepurchaseProgramMember 2015-08-31 0000766421 alk:A20151BillionRepurchaseProgramMember 2018-01-01 2018-03-31 0000766421 alk:A20151BillionRepurchaseProgramMember 2019-01-01 2019-03-31 0000766421 us-gaap:PassengerMember alk:SpecialRevenueandChargesMember 2018-01-01 2018-03-31 0000766421 alk:AirGroupAdjustedMember 2018-01-01 2018-03-31 0000766421 alk:HorizonMember 2018-01-01 2018-03-31 0000766421 alk:CapacityPurchaseAgreementsMember alk:AirGroupAdjustedMember 2018-01-01 2018-03-31 0000766421 alk:SpecialRevenueandChargesMember 2018-01-01 2018-03-31 0000766421 us-gaap:CargoAndFreightMember alk:HorizonMember 2018-01-01 2018-03-31 0000766421 alk:AlaskaMainlineMember 2018-01-01 2018-03-31 0000766421 us-gaap:PassengerMember alk:AirGroupAdjustedMember 2018-01-01 2018-03-31 0000766421 us-gaap:IntersegmentEliminationMember 2018-01-01 2018-03-31 0000766421 alk:AlaskaRegionalMember 2018-01-01 2018-03-31 0000766421 us-gaap:PassengerMember 2018-01-01 2018-03-31 0000766421 alk:CapacityPurchaseAgreementsMember alk:HorizonMember 2018-01-01 2018-03-31 0000766421 alk:CapacityPurchaseAgreementsMember us-gaap:IntersegmentEliminationMember 2018-01-01 2018-03-31 0000766421 alk:CapacityPurchaseAgreementsMember alk:AlaskaMainlineMember 2018-01-01 2018-03-31 0000766421 us-gaap:CargoAndFreightMember alk:SpecialRevenueandChargesMember 2018-01-01 2018-03-31 0000766421 alk:MileagePlanServicesOtherMember 2018-01-01 2018-03-31 0000766421 us-gaap:CargoAndFreightMember alk:AlaskaRegionalMember 2018-01-01 2018-03-31 0000766421 alk:CapacityPurchaseAgreementsMember alk:SpecialRevenueandChargesMember 2018-01-01 2018-03-31 0000766421 us-gaap:CargoAndFreightMember alk:AlaskaMainlineMember 2018-01-01 2018-03-31 0000766421 alk:MileagePlanServicesOtherMember alk:AirGroupAdjustedMember 2018-01-01 2018-03-31 0000766421 us-gaap:PassengerMember alk:AlaskaMainlineMember 2018-01-01 2018-03-31 0000766421 alk:CapacityPurchaseAgreementsMember alk:AlaskaRegionalMember 2018-01-01 2018-03-31 0000766421 us-gaap:PassengerMember us-gaap:IntersegmentEliminationMember 2018-01-01 2018-03-31 0000766421 us-gaap:CargoAndFreightMember alk:AirGroupAdjustedMember 2018-01-01 2018-03-31 0000766421 alk:MileagePlanServicesOtherMember alk:AlaskaMainlineMember 2018-01-01 2018-03-31 0000766421 us-gaap:PassengerMember alk:AlaskaRegionalMember 2018-01-01 2018-03-31 0000766421 alk:CapacityPurchaseAgreementsMember 2018-01-01 2018-03-31 0000766421 alk:MileagePlanServicesOtherMember alk:HorizonMember 2018-01-01 2018-03-31 0000766421 us-gaap:CargoAndFreightMember us-gaap:IntersegmentEliminationMember 2018-01-01 2018-03-31 0000766421 us-gaap:PassengerMember alk:HorizonMember 2018-01-01 2018-03-31 0000766421 alk:MileagePlanServicesOtherMember alk:SpecialRevenueandChargesMember 2018-01-01 2018-03-31 0000766421 us-gaap:CargoAndFreightMember 2018-01-01 2018-03-31 0000766421 alk:MileagePlanServicesOtherMember us-gaap:IntersegmentEliminationMember 2018-01-01 2018-03-31 0000766421 alk:MileagePlanServicesOtherMember alk:AlaskaRegionalMember 2018-01-01 2018-03-31 0000766421 alk:AlaskaAirlinesMember 2018-12-31 0000766421 alk:HorizonMember 2019-03-31 0000766421 us-gaap:MaterialReconcilingItemsMember 2019-03-31 0000766421 alk:AlaskaAirlinesMember 2019-03-31 0000766421 us-gaap:MaterialReconcilingItemsMember 2018-12-31 0000766421 alk:HorizonMember 2018-12-31 0000766421 us-gaap:IntersegmentEliminationMember 2019-01-01 2019-03-31 0000766421 us-gaap:PassengerMember alk:SpecialRevenueandChargesMember 2019-01-01 2019-03-31 0000766421 us-gaap:PassengerMember alk:AlaskaRegionalMember 2019-01-01 2019-03-31 0000766421 alk:MileagePlanServicesOtherMember alk:SpecialRevenueandChargesMember 2019-01-01 2019-03-31 0000766421 us-gaap:PassengerMember alk:AirGroupAdjustedMember 2019-01-01 2019-03-31 0000766421 us-gaap:PassengerMember us-gaap:IntersegmentEliminationMember 2019-01-01 2019-03-31 0000766421 alk:AlaskaMainlineMember 2019-01-01 2019-03-31 0000766421 alk:HorizonMember 2019-01-01 2019-03-31 0000766421 alk:AlaskaRegionalMember 2019-01-01 2019-03-31 0000766421 alk:AirGroupAdjustedMember 2019-01-01 2019-03-31 0000766421 us-gaap:CargoAndFreightMember us-gaap:IntersegmentEliminationMember 2019-01-01 2019-03-31 0000766421 alk:SpecialRevenueandChargesMember 2019-01-01 2019-03-31 0000766421 alk:CapacityPurchaseAgreementsMember alk:AirGroupAdjustedMember 2019-01-01 2019-03-31 0000766421 us-gaap:PassengerMember alk:HorizonMember 2019-01-01 2019-03-31 0000766421 alk:MileagePlanServicesOtherMember alk:AlaskaMainlineMember 2019-01-01 2019-03-31 0000766421 alk:CapacityPurchaseAgreementsMember 2019-01-01 2019-03-31 0000766421 us-gaap:PassengerMember 2019-01-01 2019-03-31 0000766421 alk:MileagePlanServicesOtherMember alk:AirGroupAdjustedMember 2019-01-01 2019-03-31 0000766421 alk:MileagePlanServicesOtherMember alk:HorizonMember 2019-01-01 2019-03-31 0000766421 us-gaap:CargoAndFreightMember alk:AirGroupAdjustedMember 2019-01-01 2019-03-31 0000766421 us-gaap:CargoAndFreightMember alk:AlaskaMainlineMember 2019-01-01 2019-03-31 0000766421 alk:MileagePlanServicesOtherMember us-gaap:IntersegmentEliminationMember 2019-01-01 2019-03-31 0000766421 alk:CapacityPurchaseAgreementsMember alk:HorizonMember 2019-01-01 2019-03-31 0000766421 alk:CapacityPurchaseAgreementsMember us-gaap:IntersegmentEliminationMember 2019-01-01 2019-03-31 0000766421 alk:CapacityPurchaseAgreementsMember alk:AlaskaRegionalMember 2019-01-01 2019-03-31 0000766421 us-gaap:PassengerMember alk:AlaskaMainlineMember 2019-01-01 2019-03-31 0000766421 alk:CapacityPurchaseAgreementsMember alk:SpecialRevenueandChargesMember 2019-01-01 2019-03-31 0000766421 us-gaap:CargoAndFreightMember alk:SpecialRevenueandChargesMember 2019-01-01 2019-03-31 0000766421 alk:CapacityPurchaseAgreementsMember alk:AlaskaMainlineMember 2019-01-01 2019-03-31 0000766421 alk:MileagePlanServicesOtherMember alk:AlaskaRegionalMember 2019-01-01 2019-03-31 0000766421 alk:MileagePlanServicesOtherMember 2019-01-01 2019-03-31 0000766421 us-gaap:CargoAndFreightMember alk:HorizonMember 2019-01-01 2019-03-31 0000766421 us-gaap:CargoAndFreightMember 2019-01-01 2019-03-31 0000766421 us-gaap:CargoAndFreightMember alk:AlaskaRegionalMember 2019-01-01 2019-03-31 iso4217:USD xbrli:shares utreg:Rate xbrli:pure iso4217:USD alk:aircraft xbrli:shares alk:credit_facility alk:segment


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 10-Q
 

x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019
 
OR

¨    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from                      to                      

Commission File Number 1-8957
ALASKA AIR GROUP, INC.
 
Delaware
 
91-1292054
(State of Incorporation)
 
(I.R.S. Employer Identification No.)

Title of each class
Name of each exchange on which registered
Ticker Symbol
Common stock, $0.01 par value
New York Stock Exchange
ALK
 
19300 International Boulevard, Seattle, Washington 98188
Telephone: (206) 392-5040

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No ¨ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer   x
Accelerated filer  ¨
Non-accelerated filer   ¨ 
(Do not check if a smaller reporting company)
Smaller reporting company   ¨
Emerging growth company   ¨

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ¨ No x
 
The registrant has 123,427,980 common shares, par value $0.01, outstanding at April 30, 2019.

This document is also available on our website at http://investor.alaskaair.com.




ALASKA AIR GROUP, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2019

 TABLE OF CONTENTS

 

As used in this Form 10-Q, the terms “Air Group,” the “Company,” “our,” “we” and "us" refer to Alaska Air Group, Inc. and its subsidiaries, unless the context indicates otherwise. Alaska Airlines, Inc., Virgin America Inc. (through July 20, 2018, at which point it was legally merged into Alaska Airlines, Inc), and Horizon Air Industries, Inc. are referred to as “Alaska,” “Virgin America” and “Horizon” and together as our “airlines.”
 

2



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
Cautionary Note Regarding Forward-Looking Statements
In addition to historical information, this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements containing the words "believe," "expect," "will," "anticipate," "intend," "estimate," "project," "assume" or other similar expressions, although not all forward-looking statements contain these identifying words. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or the Company’s present expectations. Some of the things that could cause actual results to differ from our expectations are:

the competitive environment in our industry;
changes in our operating costs, including fuel, which can be volatile;
our ability to meet our cost reduction goals;
our ability to achieve anticipated synergies and timing thereof in connection with our acquisition of Virgin America;
our ability to successfully integrate the Boeing and Airbus operations;
labor disputes and our ability to attract and retain qualified personnel;
operational disruptions;
general economic conditions, including the impact of those conditions on customer travel behavior;
the concentration of our revenue from a few key markets;
an aircraft accident or incident;
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.

You should not place undue reliance on our forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. Our forward-looking statements are based on the information currently available to us and speak only as of the date on which this report was filed with the SEC. We expressly disclaim any obligation to issue any updates or revisions to our forward-looking statements, even if subsequent events cause our expectations to change regarding the matters discussed in those statements. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse to our shareholders. For a discussion of these and other risk factors, see Item 1A. "Risk Factors” of the Company’s annual report on Form 10-K for the year ended December 31, 2018, and Item 1A. "Risk Factors" included herein. Please consider our forward-looking statements in light of those risks as you read this report.


3



PART I
 
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
ALASKA AIR GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in millions)
March 31, 2019
 
December 31, 2018
ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
215

 
$
105

Marketable securities
1,221

 
1,131

Total cash and marketable securities
1,436

 
1,236

Receivables—net
358

 
366

Inventories and supplies—net
58

 
60

Prepaid expenses and other current assets
149

 
125

Total Current Assets
2,001

 
1,787

 
 
 
 
Property and Equipment
 

 
 

Aircraft and other flight equipment
8,340

 
8,221

Other property and equipment
1,197

 
1,363

Deposits for future flight equipment
325

 
439

 
9,862

 
10,023

Less accumulated depreciation and amortization
3,233

 
3,242

Total Property and Equipment - Net
6,629

 
6,781

 
 
 
 
Operating lease assets
1,715

 

Goodwill
1,943

 
1,943

Intangible assets - net
127

 
127

Other noncurrent assets
225

 
274

Other Assets
4,010

 
2,344

 
 
 
 
Total Assets
$
12,640

 
$
10,912




4



CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in millions, except share amounts)
March 31, 2019
 
December 31, 2018
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
157

 
$
132

Accrued wages, vacation and payroll taxes
301

 
415

Air traffic liability
1,116

 
788

Other accrued liabilities
480

 
416

Deferred revenue
757

 
705

Current portion of operating lease liabilities
275

 

Current portion of long-term debt
300

 
486

Total Current Liabilities
3,386

 
2,942

 
 
 
 
Long-Term Debt, Net of Current Portion
1,664

 
1,617

 
 
 
 
Noncurrent Liabilities
 

 
 

Long-term operating lease liabilities, net of current portion
1,443

 

Deferred income taxes
520

 
512

Deferred revenue
1,158

 
1,169

Obligation for pension and postretirement medical benefits
513

 
503

Other liabilities
210

 
418

 
3,844

 
2,602

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: 400,000,000 shares, Issued: 2019 - 131,338,245 shares; 2018 - 130,813,476 shares, Outstanding: 2019 - 123,504,308 shares; 2018 - 123,194,430 shares
1

 
1

Capital in excess of par value
261

 
232

Treasury stock (common), at cost: 2019 - 7,833,937 shares; 2018 - 7,619,046 shares
(581
)
 
(568
)
Accumulated other comprehensive loss
(433
)
 
(448
)
Retained earnings
4,498

 
4,534

 
3,746

 
3,751

Total Liabilities and Shareholders' Equity
$
12,640

 
$
10,912



5



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
 
Three Months Ended March 31,
(in millions, except per share amounts)
2019
 
2018
Operating Revenues
 
 
 
Passenger revenue
$
1,716

 
$
1,684

Mileage Plan other revenue
110

 
107

Cargo and other
50

 
41

Total Operating Revenues
1,876

 
1,832

Operating Expenses
 
 
 
Wages and benefits
557

 
536

Variable incentive pay
35

 
39

Aircraft fuel, including hedging gains and losses
420

 
409

Aircraft maintenance
120

 
107

Aircraft rent
83

 
74

Landing fees and other rentals
132

 
126

Contracted services
72

 
81

Selling expenses
72

 
78

Depreciation and amortization
106

 
94

Food and beverage service
49

 
50

Third-party regional carrier expense
41

 
37

Other
138

 
141

Special items - merger-related costs
26

 
6

Special items - other

 
25

Total Operating Expenses
1,851

 
1,803

Operating Income
25

 
29

Nonoperating Income (Expense)
 
 
 
Interest income
9

 
8

Interest expense
(22
)
 
(24
)
Interest capitalized
4

 
5

Other—net
(10
)
 
(12
)
Total Nonoperating Income (Expense)
(19
)
 
(23
)
Income Before Income Tax
6

 
6

Income tax expense
2

 
2

Net Income
$
4

 
$
4

 
 
 
 
Basic Earnings Per Share:
$
0.03

 
$
0.03

Diluted Earnings Per Share:
$
0.03

 
$
0.03

Shares used for computation:
 
 
 
Basic
123.291

 
123.155

Diluted
123.915

 
123.630



6



CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS (unaudited)
 
Three Months Ended March 31,
(in millions)
2019
 
2018
Net Income
$
4

 
$
4

 
 
 
 
Other Comprehensive Income (Loss):
 
 
 
Related to marketable securities:
 
 
 
Unrealized holding gain (loss) arising during the period
14

 
(13
)
Reclassification of (gain) loss into Other - net nonoperating income (expense)
2

 
2

Income tax effect
(4
)
 
3

Total
12

 
(8
)
 
 
 
 
Related to employee benefit plans:
 
 
 
Reclassification of net pension expense into Wages and benefits and Other - net nonoperating income (expense)
8

 
7

Income tax effect
(2
)
 
(2
)
Total
6

 
5

 
 
 
 
Related to interest rate derivative instruments:
 
 
 
Unrealized holding gain (loss) arising during the period
(5
)
 
6

Reclassification of (gain) loss into Aircraft rent
1

 
1

Income tax effect
1

 
(2
)
Total
(3
)
 
5

 
 
 
 
Other Comprehensive Income
15

 
2

 
 
 
 
Comprehensive Income
$
19

 
$
6






7



CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited)
(in millions)
Common Stock Outstanding
 
Common Stock
 
Capital in Excess of Par Value
 
Treasury Stock
 
Accumulated Other Comprehensive Income (Loss)
 
Retained Earnings
 
Total
Balances at December 31, 2017
123.061

 
$
1

 
$
164

 
$
(518
)
 
$
(380
)
 
$
4,193

 
$
3,460

Reclassification of tax effects to Retained Earnings

 

 

 

 
(62
)
 
62

 

Net income

 

 

 

 

 
4

 
4

Other comprehensive income (loss)

 

 

 

 
2

 

 
2

Common stock repurchase
(0.186
)
 

 

 
(13
)
 

 

 
(13
)
Stock-based compensation

 

 
12

 

 

 

 
12

Cash dividend declared
($0.32 per share)

 

 

 

 

 
(40
)
 
(40
)
Stock issued for employee stock purchase plan
0.312

 

 
17

 

 

 

 
17

Stock issued under stock plans
0.163

 

 
(3
)
 

 

 

 
(3
)
Balances at March 31, 2018
123.35

 
$
1

 
$
190

 
$
(531
)
 
$
(440
)
 
$
4,219

 
$
3,439


(in millions)
Common Stock Outstanding
 
Common Stock
 
Capital in Excess of Par Value
 
Treasury Stock
 
Accumulated Other Comprehensive Income (Loss)
 
Retained Earnings
 
Total
Balances at December 31, 2018
123.194

 
$
1

 
$
232

 
$
(568
)
 
$
(448
)
 
$
4,534

 
$
3,751

Cumulative effect of accounting changes(a)

 

 

 

 

 
3

 
3

Net income

 

 

 

 

 
4

 
4

Other comprehensive income (loss)

 

 

 

 
15

 

 
15

Common stock repurchase
(0.215
)
 

 

 
(13
)
 

 

 
(13
)
Stock-based compensation

 

 
12

 

 

 

 
12

Cash dividend declared
($0.35 per share)

 

 

 

 

 
(43
)
 
(43
)
Stock issued for employee stock purchase plan
0.391

 

 
20

 

 

 
.
 
20

Stock issued under stock plans
0.134

 

 
(3
)
 

 

 

 
(3
)
Balances at March 31, 2019
123.504

 
$
1

 
$
261

 
$
(581
)
 
$
(433
)
 
$
4,498

 
$
3,746

(a)
Represents the opening balance sheet adjustment recorded as a result of the adoption of the new lease accounting standard.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 
Three Months Ended March 31,
(in millions)
2019
 
2018
Cash flows from operating activities:
 
 
 
Net income
$
4

 
$
4

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Depreciation and amortization
106

 
94

Stock-based compensation and other
11

 
8

Changes in certain assets and liabilities:
 
 
 
Changes in deferred tax provision
2

 
2

Increase in air traffic liability
328

 
316

Increase in deferred revenue
41

 
26

Other—net
(24
)
 
(144
)
Net cash provided by operating activities
468

 
306

Cash flows from investing activities:
 

 
 

Property and equipment additions:
 

 
 

Aircraft and aircraft purchase deposits
(53
)
 
(135
)
Other flight equipment
(29
)
 
(29
)
Other property and equipment
(33
)
 
(71
)
Total property and equipment additions, including capitalized interest
(115
)
 
(235
)
Purchases of marketable securities
(351
)
 
(238
)
Sales and maturities of marketable securities
275

 
301

Other investing activities
5

 
8

Net cash used in investing activities
(186
)
 
(164
)
Cash flows from financing activities:
 

 
 

Proceeds from issuance of debt
254

 

Long-term debt payments
(393
)
 
(120
)
Common stock repurchases
(13
)
 
(13
)
Dividends paid
(43
)
 
(40
)
Other financing activities
24

 
17

Net cash used in financing activities
(171
)
 
(156
)
Net increase (decrease) in cash, cash equivalents, and restricted cash
111

 
(14
)
Cash, cash equivalents, and restricted cash at beginning of year
114

 
197

Cash, cash equivalents, and restricted cash at end of the period
$
225

 
$
183

 
 
 
 
Cash paid during the period for:
 
 
 
Interest (net of amount capitalized)
$
18

 
$
24

Income taxes

 

 
 
 
 
Reconciliation of cash, cash equivalents, and restricted cash at end of the period
 
 
 
Cash and cash equivalents
$
215

 
$
177

Restricted cash included in Prepaid expenses and other current assets
10

 
6

Total cash, cash equivalents, and restricted cash at end of the period
$
225

 
$
183



8



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 1. GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Basis of Presentation
 
The condensed consolidated financial statements include the accounts of Air Group, or the Company, and its primary subsidiaries, Alaska (including Virgin America) and Horizon. Our condensed consolidated financial statements also include McGee Air Services, a ground services subsidiary of Alaska. The Company conducts substantially all of its operations through these subsidiaries. All significant intercompany balances and transactions have been eliminated. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information. Consistent with these requirements, this Form 10-Q does not include all the information required by GAAP for complete financial statements. It should be read in conjunction with the consolidated financial statements and accompanying notes in the Form 10-K for the year ended December 31, 2018. In the opinion of management, all adjustments have been made that are necessary to fairly present the Company’s financial position as of March 31, 2019 and the results of operations for the three months ended March 31, 2019 and 2018. Such adjustments were of a normal recurring nature.

Certain reclassifications and rounding adjustments have been made to prior year financial statements to conform to classifications used in the current year.

In preparing these statements, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities, as well as the reported amounts of revenues and expenses. Due to seasonal variations in the demand for air travel, the volatility of aircraft fuel prices, changes in global economic conditions, changes in the competitive environment and other factors, operating results for the three months ended March 31, 2019 are not necessarily indicative of operating results for the entire year.

NOTE 2. REVENUE

Ticket revenue is recorded as Passenger revenue, and represents the primary source of the Company's revenue. Also included in Passenger revenue are passenger ancillary revenues, such as bag fees, on-board food and beverage, ticket change fees, and certain revenue from the frequent flyer program. Mileage Plan other revenue includes brand and marketing revenue from our co-branded credit card and other partners and certain interline frequent flyer revenue, net of commissions. Cargo and other revenue includes freight and mail revenue, and to a lesser extent, other ancillary revenue products such as lounge membership and certain commissions.

The Company disaggregates revenue by segment in Note 9. The detail within the Company’s statements of operations, segment disclosures, and in this footnote depict the nature, amount, timing and uncertainty of revenue and how cash flows are affected by economic and other factors.

Passenger Ticket and Ancillary Services Revenue

Passenger revenue recognized in the condensed consolidated statements of operations (in millions):
 
Three Months Ended March 31,
 
2019
 
2018
Passenger ticket revenue, including ticket breakage and net of taxes and fees
$
1,439

 
$
1,428

Passenger ancillary revenue
124

 
117

Mileage Plan passenger revenue
153

 
139

Total Passenger revenue
$
1,716

 
$
1,684




9



Mileage Plan™ Loyalty Program

Mileage Plan™ revenue included in the condensed consolidated statements of operations (in millions):
 
Three Months Ended March 31,
 
2019
 
2018
Passenger revenue
$
153

 
$
139

Mileage Plan other revenue
110

 
107

Total Mileage Plan revenue
$
263

 
$
246



Cargo and Other

Cargo and other revenue included in the condensed consolidated statements of operations (in millions):
 
Three Months Ended March 31,
 
2019
 
2018
Cargo revenue
$
30

 
$
26

Other revenue
20

 
15

Total Cargo and other revenue
$
50

 
$
41



Air Traffic Liability and Deferred Revenue

Passenger ticket and ancillary services liabilities

The Company recognized Passenger revenue of $474 million and $434 million from the prior year-end air traffic liability balance for the three months ended March 31, 2019 and 2018, respectively.

Mileage PlanTM liabilities

The Company records a receivable for amounts due from the bank partner and from other partners as mileage credits are sold until the payments are collected. The Company had $115 million of such receivables as of March 31, 2019 and $119 million as of December 31, 2018.

The table below presents a roll forward of the total frequent flyer liability (in millions):
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Total Deferred Revenue balance at January 1
 
$
1,874

 
$
1,725

Travel miles and companion certificate redemption - Passenger revenue
 
(153
)
 
(139
)
Miles redeemed on partner airlines - Other revenue
 
(28
)
 
(19
)
Increase in liability for mileage credits issued
 
222

 
184

Total Deferred Revenue balance at March 31
 
$
1,915

 
$
1,751


 
NOTE 3. FAIR VALUE MEASUREMENTS

In determining fair value, there is a three-level hierarchy based on the reliability of the inputs used. Level 1 refers to fair values based on quoted prices in active markets for identical assets or liabilities. Level 2 refers to fair values estimated using significant other observable inputs and Level 3 refers to fair values estimated using significant unobservable inputs.


10



Fair Value of Financial Instruments on a Recurring Basis

As of March 31, 2019, total cost basis for all marketable securities was $1.2 billion. There were no significant differences between the cost basis and fair value of any individual class of marketable securities.

Fair values of financial instruments on the consolidated balance sheet (in millions):
 
March 31, 2019
 
December 31, 2018
 
Level 1
 
Level 2
 
Total
 
Level 1
 
Level 2
 
Total
Assets
 
 
 
 
 
 
 
 
 
 
 
Marketable securities
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agency securities
$
367

 
$

 
$
367

 
$
293

 
$

 
$
293

Foreign government bonds

 
22

 
22

 

 
26

 
26

Asset-backed securities

 
217

 
217

 

 
190

 
190

Mortgage-backed securities

 
87

 
87

 

 
92

 
92

Corporate notes and bonds

 
514

 
514

 

 
520

 
520

Municipal securities

 
14

 
14

 

 
10

 
10

Total Marketable securities
367

 
854

 
1,221

 
293

 
838

 
1,131

Derivative instruments
 
 
 
 
 
 
 
 
 
 
 
Fuel hedge—call options

 
9

 
9

 

 
4

 
4

Interest rate swap agreements

 
8

 
8

 

 
10

 
10

Total Assets
$
367

 
$
871

 
$
1,238

 
$
293

 
$
852

 
$
1,145

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Derivative instruments
 
 
 
 
 
 
 
 
 
 
 
Interest rate swap agreements

 
(8
)
 
(8
)
 

 
(7
)
 
(7
)
Total Liabilities
$

 
$
(8
)
 
$
(8
)
 
$

 
$
(7
)
 
$
(7
)

The Company uses both the market and income approach to determine the fair value of marketable securities. U.S. government securities are Level 1 as the fair value is based on quoted prices in active markets. Foreign government bonds, asset-backed securities, mortgage-backed securities, corporate notes and bonds, and municipal securities are Level 2 as the fair value is based on standard valuation models that are calculated based on observable inputs such as quoted interest rates, yield curves, credit ratings of the security and other observable market information.

The Company uses the market approach and the income approach to determine the fair value of derivative instruments. The fair value for fuel hedge call options is determined utilizing an option pricing model based on inputs that are readily available in active markets or can be derived from information available in active markets. In addition, the fair value considers the exposure to credit losses in the event of non-performance by counterparties. Interest rate swap agreements are Level 2 as the fair value of these contracts is determined based on the difference between the fixed interest rate in the agreements and the observable LIBOR-based interest forward rates at period end multiplied by the total notional value.

Activity and Maturities for Marketable Securities

Unrealized losses from marketable securities are primarily attributable to changes in interest rates. Management does not believe any unrealized losses represent other-than-temporary impairments based on its evaluation of available information as of March 31, 2019.

Maturities for marketable securities (in millions):
March 31, 2019
Cost Basis
 
Fair Value
Due in one year or less
$
217

 
$
217

Due after one year through five years
991

 
993

Due after five years through 10 years
11

 
11

Total
$
1,219

 
$
1,221



11



Fair Value of Other Financial Instruments

The Company uses the following methods and assumptions to determine the fair value of financial instruments that are not recognized at fair value as described below.

Cash, Cash Equivalents and Restricted Cash: Cash equivalents consist of highly liquid investments with original maturities of three months or less, such as money market funds, commercial paper and certificates of deposit. They are carried at cost, which approximates fair value.

The Company's restricted cash balances are primarily used to guarantee various letters of credit, self-insurance programs or other contractual rights. Restricted cash consists of highly liquid securities with original maturities of three months or less. They are carried at cost, which approximates fair value.

Debt: Debt assumed in the acquisition of Virgin America was subject to a non-recurring fair valuation adjustment as part of purchase price accounting. The adjustment is amortized over the life of the associated debt. All other fixed-rate debt is carried at cost. To estimate the fair value of all fixed-rate debt as of March 31, 2019, the Company uses the income approach by discounting cash flows using borrowing rates for comparable debt over the remaining life of the outstanding debt. The estimated fair value of the fixed-rate debt is Level 3 as certain inputs used are unobservable.

Fixed-rate debt on the consolidated balance sheet and the estimated fair value of long-term fixed-rate debt is as follows (in millions):
 
March 31, 2019
 
December 31, 2018
Fixed-rate debt at cost
$
512

 
$
639

Non-recurring purchase price accounting fair value adjustment
3

 
3

Total fixed-rate debt
$
515

 
$
642

 
 
 
 
Estimated fair value
$
518

 
$
641



Assets and Liabilities Measured at Fair Value on Nonrecurring Basis

Certain assets and liabilities are recognized or disclosed at fair value on a nonrecurring basis, including property, plant and equipment, operating lease assets, goodwill, and intangible assets. These assets are subject to fair valuation when there is evidence of impairment. No material impairment charges were taken in the three months ended March 31, 2019 and March 31, 2018.

NOTE 4. LONG-TERM DEBT
 
Long-term debt obligations on the consolidated balance sheet (in millions):
 
March 31, 2019
 
December 31, 2018
Fixed-rate notes payable due through 2028
$
515

 
$
642

Variable-rate notes payable due through 2028
1,461

 
1,473

Less debt issuance costs
(12
)
 
(12
)
Total debt
1,964

 
2,103

Less current portion
300

 
486

Long-term debt, less current portion
$
1,664

 
$
1,617

 
 
 
 
Weighted-average fixed-interest rate
3.8
%
 
4.1
%
Weighted-average variable-interest rate
3.8
%
 
3.9
%


During the three months ended March 31, 2019 the Company made debt payments of $393 million, including the prepayment of $320 million of debt. During the three months ended March 31, 2019, the Company obtained additional secured debt financing of $254 million from multiple lenders. The new debt is secured by a total of nine aircraft.


12



At March 31, 2019 long-term debt principal payments for the next five years and thereafter are as follows (in millions):
 
Total
Remainder of 2019
$
220

2020
300

2021
327

2022
288

2023
261

Thereafter
577

Total
$
1,973


 
Bank Lines of Credit
 
The Company has three credit facilities with availability totaling $516 million as of March 31, 2019. All three facilities have variable interest rates based on LIBOR plus a specified margin. One credit facility for $250 million expires in June 2021 and is secured by aircraft. The second credit facility for $116 million expires in July 2019, with a mechanism for annual renewal, and is secured by aircraft. A third credit facility for $150 million expires in March 2022 and is secured by certain accounts receivable, spare engines, spare parts and ground service equipment. The Company has secured letters of credit against the $116 million facility, but has no plans to borrow using either of the two other facilities. All three credit facilities have a requirement to maintain a minimum unrestricted cash and marketable securities balance of $500 million. The Company was in compliance with this covenant at March 31, 2019.

NOTE 5. LEASES

In 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which requires lessees to recognize assets and liabilities for certain operating leases. Under the new standard, a lessee must recognize a liability on the balance sheet representing the lease payments owed, and a lease asset representing its right to use the underlying asset for the lease term. In 2018, the FASB issued ASU 2018-11, "Targeted Improvements - Leases (Topic 842)," which amended Topic 842 to provide a transition method that would not require adjusting comparative period financial information.
The Company transitioned to the new lease accounting standard effective January 1, 2019 utilizing the alternative transition method. Upon transition, the Company recorded a cumulative-effect adjustment to the opening balance of retained earnings of $3 million. The new standard eliminated build-to-suit lease accounting guidance and resulted in the derecognition of build-to-suit assets and liabilities of approximately $150 million each.
The Company elected certain practical expedients under the standard, including the practical expedient allowing a policy election to not recognize short-term lease assets and lease liabilities for leases with an initial term of 12 months or less. Such expense was not material for the three months ended March 31, 2019. Additionally, the Company elected the available package of practical expedients allowing for no reassessment of lease classification for existing leases, no reassessment of expired contracts, and no reassessments of initial direct costs for existing leases.
The Company has five asset classes for operating leases: aircraft, capacity purchase arrangements with aircraft (CPA aircraft), airport and terminal facilities, corporate real estate and other equipment. All capitalized lease assets have been recorded on the condensed consolidated balance sheet as of March 31, 2019 as Operating lease assets, with the corresponding liabilities recorded as Operating lease liabilities. Consistent with past accounting, operating rent expense is recognized on a straight-line basis over the term of the lease.
At March 31, 2019, the Operating lease assets balance by asset class was as follows (in millions):
 
Operating lease assets
Aircraft
$
1,015

CPA aircraft
636

Airport and terminal facilities
19

Corporate real estate and other
45

Total Operating lease assets
$
1,715



13



Aircraft
At March 31, 2019, the Company had operating leases for 10 Boeing 737 (B737), 61 Airbus, and 9 Bombardier Q400 aircraft. Additionally, the Company operates 32 Embraer 175 (E175) aircraft through its capacity purchase arrangement with SkyWest Airlines, Inc. (SkyWest). Remaining lease terms for these aircraft extend up to 11 years, with options to extend, subject to negotiation at the end of the term. As extension is not certain, and rates are highly likely to be renegotiated, the extended term is only capitalized when it is reasonably determinable. While aircraft rent is primarily fixed, certain leases contain rental adjustments throughout the lease term which would be recognized as variable expense as incurred. Variable lease expense for aircraft was $1 million for the three months ended March 31, 2019.
Capacity purchase agreements with aircraft (CPA aircraft)
At March 31, 2019, Alaska had CPAs with three carriers, including the Company’s wholly-owned subsidiary, Horizon. Horizon sells 100% of its capacity under a CPA with Alaska. Alaska also has CPAs with SkyWest to fly certain routes in the Lower 48 and Canada, and with Peninsula Aviation Services, Inc., (PenAir) to fly certain routes in the state of Alaska. Under these agreements, Alaska pays the carriers an amount which is based on a determination of their cost of operating those flights and other factors intended to approximate market rates for those services. As Horizon is a wholly-owned subsidiary, intercompany leases between Alaska and Horizon have not been recognized under the standard. The agreement with PenAir does not contain a leasing arrangement, resulting in no asset or liability recognized.
Remaining lease terms for CPA aircraft range from 8 years to 11 years. Financial arrangements of the CPAs include a fixed component, representing the costs to operate each aircraft and is capitalized under the new lease accounting standard. CPAs also include variable rent based on actual levels of flying, which is expensed as incurred. Variable lease expense for CPA aircraft for the three months ended March 31, 2019 was not material.
Airport and terminal facilities
The Company leases ticket counters, gates, cargo and baggage space, ground equipment, office space and other support areas at numerous airports. For this asset class, the Company has elected to combine lease and non-lease components. The majority of airport and terminal facility leases are not capitalized because they do not meet the definition of controlled assets under the standard, or because the lease payments are entirely variable. For airports where leased assets are identified, and where the contract includes fixed lease payments, operating lease assets and lease liabilities have been recorded. The Company is also commonly responsible for maintenance, insurance and other facility-related expenses and services under these agreements. These costs are recognized as variable expense in the period incurred. Airport and terminal facilities variable lease expense was $84 million for the three months ended March 31, 2019.
In 2018, the Company leased 12 airport slots at LaGuardia Airport and eight airport slots at Reagan National Airport to a third party. For these leases, the Company recorded $3 million of lease income during the three months ended March 31, 2019.
Corporate real estate and other leases
Leased corporate real estate is primarily for office space in hub cities, land leases, and reservation centers. For this asset class, the Company has elected to combine lease and non-lease components under the standard. Other leased assets are comprised of other ancillary contracts and items including leased flight simulators and spare engines. Variable lease expense related to corporate real estate and other leases was not material.











14



Components of Lease Expense
The impact of leases, including variable lease cost, on earnings for the three months ended March 31, 2019 was as follows (in millions):
 
Classification
Three Months Ended March 31, 2019
Expense
 
 
Aircraft
Aircraft rent
61

CPA aircraft
Aircraft rent
20

Airport and terminal facilities
Landing fees and other rentals
85

Corporate real estate and other
Landing fees and other rentals
5

Total lease expense
 
$
171

Revenue
 
 
Lease income
Cargo and other revenues
(3
)
Net lease impact
 
$
168


Total rent expense for the three months ended March 31, 2018 was $153 million.
Supplemental Cash Flow Information
Supplemental cash flow information related to leases was as follows (in millions):
 
Three Months Ended March 31, 2019
Cash paid for capitalized operating leases
$
88

Operating lease assets obtained in exchange for lease obligations


Lease Term and Discount Rate
As most leases do not provide an implicit interest rate, the Company generally utilizes the incremental borrowing rate (IBR) based on information available at the commencement date of the lease to determine the present value of lease payments. The weighted average IBR and weighted average remaining lease term (in years) for all asset classes were as follows at March 31, 2019:
 
Weighted Average IBR
 
Weighted Average Remaining Lease Term
Aircraft
4.2
%
 
6.7
CPA aircraft
4.3
%
 
10.0
Airports and terminal facilities
4.1
%
 
10.6
Corporate real estate and other
4.2
%
 
38.7










15




Maturities of Lease Liabilities
Future minimum lease payments under non-cancellable leases as of March 31, 2019 (in millions):
 
Aircraft
 
CPA Aircraft
 
Airport and Terminal Facilities
 
Corporate Real Estate & Other
Remainder of 2019
$
191

 
$
60

 
2

 
$
6

2020
228

 
79

 
3

 
7

2021
189

 
79

 
3

 
6

2022
164

 
79

 
2

 
3

2023
110

 
79

 
2

 
2

Thereafter
287

 
408

 
12

 
73

Total lease payments
$
1,169

 
$
784

 
$
24

 
$
97

Less: Imputed interest
(150
)
 
(148
)
 
(5
)
 
(53
)
Total operating lease liabilities
$
1,019

 
$
636

 
$
19

 
$
44


As of March 31, 2019, the Company has two scheduled lease deliveries of A321neo aircraft in 2019, valued at $104 million. We also have three scheduled lease deliveries of E175 aircraft in 2021 to be operated by SkyWest. The Company does not intend to operate these E175 aircraft, and is working to remove those aircraft from the capacity purchase agreement. All future lease contracts have remaining non-cancelable lease terms ranging from 2019 to 2033.
NOTE 6. EMPLOYEE BENEFIT PLANS

Net periodic benefit costs for qualified defined-benefit plans include the following (in millions): 
 
Three Months Ended March 31,
 
2019
 
2018
Service cost
$
11

 
$
12

Pension expense included in Wages and benefits
11

 
12

 
 
 
 
Interest cost
22

 
20

Expected return on assets
(24
)
 
(27
)
Recognized actuarial loss
9

 
8

Pension expense included in Nonoperating Income (Expense)
$
7

 
$
1




16



NOTE 7. COMMITMENTS AND CONTINGENCIES

Future minimum payments for commitments, excluding operating leases, as of March 31, 2019 (in millions):
 
Aircraft Commitments(a)
 
Capacity Purchase Agreements (b)
 
Aircraft Maintenance Deposits
Remainder of 2019
$