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What changed in ALASKA AIR GROUP, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ALASKA AIR GROUP, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+333 added−344 removedSource: 10-K (2026-02-12) vs 10-K (2025-02-14)

Top changes in ALASKA AIR GROUP, INC.'s 2025 10-K

333 paragraphs added · 344 removed · 226 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

97 edited+44 added−56 removed39 unchanged
Biggest changeAlaska's Mileage Plan members can earn miles when purchasing these airlines' flights on www.alaskaair.com. 9 Hawaiian's marketing agreements with other airlines are as follows: Codeshare Airline HawaiianMiles Loyalty Program Agreement Hawaiian Flight # on Flights Operated by Other Airline Other Airline Flight # on Flights Operated by Hawaiian American Airlines No No Yes China Airlines Yes Yes Yes Delta Air Lines No No Yes Japan Airlines Yes Yes Yes JetBlue Yes Yes Yes Korean Air Yes Yes Yes Philippine Airlines No No Yes Turkish Airlines No No Yes United Airlines No No Yes Virgin Atlantic Airways Yes No No Virgin Australia Yes Yes No GENERAL The airline industry is highly competitive and subject to potentially volatile business cycles, resulting from factors such as uncertain economic conditions, volatile fuel prices, supply chain dependencies, pandemics, a largely unionized work force, the need to finance large capital expenditures and the related availability of capital, government regulation - including taxes and fees, and potential aircraft incidents.
Biggest change(c) Includes Japan Transocean (NU) 8 GENERAL The airline industry is highly competitive and subject to potentially volatile business cycles, resulting from factors such as uncertain economic conditions, volatile fuel prices, supply chain dependencies, pandemics, a largely unionized work force, the need to finance large capital expenditures and the related availability of capital, government regulation - including taxes and fees, and potential aircraft incidents.
We believe that the following competitive factors matter to guests when making an air travel purchase decision: 11 • Fares and ancillary services Ticket and other fee pricing is a significant competitive factor in the airline industry. Travelers are able to easily compare fares and identify competitor promotions and discounts.
We believe that the following competitive factors matter to guests when making an air travel purchase decision: • Fares and ancillary services Ticket and other fee pricing is a significant competitive factor in the airline industry. Travelers are able to easily compare fares and identify competitor promotions and discounts.
Authorities in several cities have established aircraft noise reduction programs, including the imposition of nighttime curfews. We believe we have sufficient scheduling flexibility to accommodate local noise restrictions. 20 The domestic U.S. airline industry committed to carbon neutral growth starting in 2020 for both domestic and international growth.
Authorities in several cities have established aircraft noise reduction programs, including the imposition of nighttime curfews. We believe we have sufficient scheduling flexibility to accommodate local noise restrictions. The domestic U.S. airline industry committed to carbon neutral growth starting in 2020 for both domestic and international growth.
Hawaiian Airlines was originally incorporated in 1929 in the Territory of Hawai'i, and has been a Delaware corporation and wholly-owned subsidiary of Hawaiian Holdings, Inc. since 2005. Horizon Air is a Washington corporation that was incorporated and began service in 1981, and was acquired by Air Group in 1986.
Hawaiian Airlines was originally incorporated in 1929 in the Territory of Hawai'i, and has been a Delaware corporation and wholly-owned subsidiary of Hawaiian Holdings, Inc. since 2005. Hawaiian Holdings, Inc. was acquired by Air Group in 2024. Horizon Air is a Washington corporation that was incorporated and began service in 1981, and was acquired by Air Group in 1986.
GLOSSARY OF TERMS Aircraft Utilization - block hours per day; this represents the average number of hours per day our aircraft are in transit Aircraft Stage Length - represents the average miles flown per aircraft departure ASMs - available seat miles, or “capacity”; represents total seats available across the fleet multiplied by the number of miles flown CASM - operating costs per ASM; represents all operating expenses including fuel, freighter costs, and special items CASMex - operating costs excluding fuel, freighter costs, and special items per ASM, or “unit cost” Debt-to-capitalization ratio - represents adjusted debt (long-term debt plus capitalized operating and finance lease liabilities) divided by total equity plus adjusted debt Diluted Earnings per Share - represents earnings per share (EPS) using fully diluted shares outstanding Diluted Shares - represents the total number of shares that would be outstanding if all possible sources of conversion, such as stock options, were exercised Economic Fuel - best estimate of the cash cost of fuel, net of the impact of our fuel-hedging program and excluding operations under the Air Transportation Service Agreement (ATSA) with Amazon 21 Freighter Costs - operating expenses directly attributable to the operation of Alaska's B737 freighter aircraft and Hawaiian's A330-300 freighter aircraft exclusively performing cargo missions Load Factor - RPMs as a percentage of ASMs; represents the number of available seats that were filled with revenue passengers PRASM - passenger revenue per ASM, or “passenger unit revenue” RASM - operating revenue per ASMs, or “unit revenue”; operating revenue includes all passenger revenue, freight & mail, loyalty program revenue, and other ancillary revenue; represents the average total revenue for flying one seat one mile RPMs - revenue passenger miles, or “traffic”; represents the number of seats that were filled with revenue passengers; one passenger traveling one mile is one RPM Yield - passenger revenue per RPM; represents the average passenger revenue for flying one passenger one mile
GLOSSARY OF TERMS Aircraft Utilization - block hours per day; this represents the average number of hours per day our aircraft are in transit Aircraft Stage Length - represents the average miles flown per aircraft departure ASMs - available seat miles, or “capacity”; represents total seats available across the fleet multiplied by the number of miles flown CASM - operating costs per ASM; represents all operating expenses including fuel, freighter costs, and special items CASMex - operating costs excluding fuel, freighter costs, and special items per ASM, or “unit cost” Debt-to-capitalization ratio - represents adjusted debt (long-term debt plus capitalized operating and finance lease liabilities) divided by total equity plus adjusted debt Diluted Earnings per Share - represents earnings per share (EPS) using fully diluted shares outstanding Diluted Shares - represents the total number of shares that would be outstanding if all possible sources of conversion, such as stock options, were exercised Economic Fuel - best estimate of the cash cost of fuel, net of the impact of our fuel-hedging program and excluding operations under the Air Transportation Service Agreement (ATSA) with Amazon Freighter Costs - operating expenses directly attributable to the operation of B737 freighter aircraft and A330-300 freighter aircraft exclusively performing cargo missions Load Factor - RPMs as a percentage of ASMs; represents the number of available seats that were filled with revenue passengers PRASM - passenger revenue per ASM, or “passenger unit revenue” RASM - operating revenue per ASMs, or “unit revenue”; operating revenue includes all passenger revenue, freight & mail, loyalty program revenue, and other ancillary revenue; represents the average total revenue for flying one seat one mile 19 RPMs - revenue passenger miles, or “traffic”; represents the number of seats that were filled with revenue passengers; one passenger traveling one mile is one RPM Yield - passenger revenue per RPM; represents the average passenger revenue for flying one passenger one mile
International treaties may also contain restrictions or requirements for flying outside of the U.S. and impose different carrier liability limits than those applicable to domestic flights.
International treaties may also contain restrictions or requirements 17 for flying outside of the U.S. and impose different carrier liability limits than those applicable to domestic flights.
The interchangeability of the flight code between carriers provides a greater selection of flights for customers, along with increased flexibility for mileage accrual and redemption. • Interline agreements allow airlines to jointly offer a competitive, single-fare itinerary to customers traveling via multiple carriers to a final destination.
The interchangeability of the flight code between carriers provides a greater selection of flights for customers, along with increased flexibility for point accrual and redemption. • Interline agreements allow airlines to jointly offer a competitive, single-fare itinerary to customers traveling via multiple carriers to a final destination.
Our airlines compete with other U.S. and foreign airlines on nearly all of our domestic and international routes. Our largest competitor is Delta Air Lines Inc. (Delta). Approximately 79% of our capacity to and from Seattle competes with Delta.
Our airlines compete with other U.S. and foreign airlines on nearly all of our domestic and international routes. Our largest competitor is Delta Air Lines Inc. (Delta). Approximately 78% of our capacity to and from Seattle competes with Delta.
She joined Alaska Airlines, Inc. in March 1989 and has served in several roles including Senior Vice President Inflight Services and Station Operations from September 1998 to July 2003, Senior Vice President Customer Service of Horizon Air Industries, Inc. from July 2003 to March 2009, Senior Vice President People and Customer Service of Horizon Air Industries, Inc. from March 2009 to August 2011, Vice President of Inflight Services from August 2011 to January 2017, Vice President Inflight Services and Call Center Services from January 2017 to August 2017, and Vice President of People from August 2017 to June 2019.
She joined Alaska Airlines, Inc. in March 1989 and has served in several roles including Senior Vice President Inflight Services and Station Operations from September 1998 to July 2003, Senior Vice President Customer Service of Horizon Air Industries, Inc. from July 2003 to March 2009, Senior Vice President People and Customer Service of Horizon Air Industries, Inc. from March 2009 to August 2011, Vice President of Inflight Services from August 2011 to January 2017, Vice President Inflight Services and Call Center Services from January 2017 to August 2017, Vice President of People from August 2017 to June 2019, and Senior Vice President of People at Alaska Airlines, Inc. from June 2019 to November 2025.
These agreements fall into three categories: loyalty program, codeshare, and interline. 7 • Loyalty program agreements enable our members to accrue miles and/or redeem them for flights on partner airlines. • Codeshare agreements allow one or more marketing carriers to sell seats on a single operating carrier that serves passengers under multiple flight numbers.
These agreements fall into three categories: loyalty program, codeshare, and interline. • Loyalty program agreements enable our members to accrue points and/or redeem them for flights on partner airlines. • Codeshare agreements allow one or more marketing carriers to sell seats on a single operating carrier that serves passengers under multiple flight numbers.
She joined Alaska Airlines, Inc. in July 2011 and has served in several roles including Managing Director Airframe, Engine, Components Maintenance Repair and Overhaul of Alaska Airlines, Inc. from December 2012 to January 2018, Chief Operating Officer of Horizon Air Industries, Inc. from January 2018 to January 2019, and Senior Vice President Maintenance and Engineering of Alaska Airlines, Inc. from January 2019 to April 2021.
She joined Alaska Airlines, Inc. in July 2011 and has served in several roles including Managing Director Airframe, Engine, Components Maintenance Repair and Overhaul of Alaska Airlines, Inc. from December 2012 to January 2018, Chief Operating Officer of Horizon Air Industries, Inc. from January 2018 to January 2019, Senior Vice President Maintenance and Engineering of Alaska Airlines, Inc. from January 2019 to April 2021, and Executive Vice President and Chief Operating Officer from April 2021 to November 2025.
INSURANCE We carry insurance of types customary in the airline industry and in amounts deemed adequate to protect our interests and property and to comply both with federal regulations and certain credit and lease agreements. The insurance policies principally provide coverage for airline hull, spares and comprehensive legal liability, war and allied perils, and workers’ compensation.
INSURANCE We carry insurance of types customary in the airline industry and in amounts deemed adequate to protect our interests and property and to comply both with applicable regulations and certain credit and lease agreements. The insurance policies principally provide coverage for airline hull, spares and comprehensive legal liability, war and allied perils, physical and real property, and workers’ compensation.
In a typical year, in addition to passenger loads, factors that could cause our operating results to vary include: • pricing initiatives by us or our competitors; • changes in fuel costs; • increases in competition at our primary airports; • general economic conditions, in both the U.S. and other countries, and resulting changes in both leisure and business passenger demand; • increases or decreases in passenger and volume-driven variable costs; and • air space and Air Traffic Control delays, particularly in Seattle and San Francisco.
In a typical year, in addition to passenger loads, factors that could cause our operating results to vary include: • pricing initiatives by us or our competitors; • changes in fuel costs; • increases in competition at our primary airports; • general economic conditions, in both the U.S. and other countries, and resulting changes in both leisure and business passenger demand; • increases or decreases in passenger and volume-driven variable costs; and • air space and Air Traffic Control delays, particularly in our West Coast hubs.
Air Group acquired Virgin America in 2016, then legally merged the entity with Alaska in 2018, at which time the airlines' operating certificates were also combined. The Company also includes McGee Air Services, an aviation services provider that was established as a wholly-owned subsidiary of Alaska in 2016, and other subsidiaries. Alaska, Hawaiian, and Horizon operate as separate airlines.
Air Group acquired Virgin America in 2016, then legally merged the entity with Alaska in 2018, at which time the airlines' operating certificates were also combined. The Company also includes McGee Air Services, an aviation services provider that was established as a wholly-owned subsidiary of Alaska in 2016, and other subsidiaries.
The program is regulated by the FAA who then affirms compliance to the International Civil Aviation Organization. The FAA has approved both Alaska, Hawaiian, and Horizon's monitoring, verification, and reporting plans. As a result of the COVID-19 pandemic, the CORSIA growth baseline year was modified and set to 85% of 2019 carbon dioxide emissions.
The program is regulated by the FAA who then affirms compliance to the International Civil Aviation Organization. The FAA has approved Alaska's and Horizon's monitoring, verification, and reporting plans. 18 As a result of the COVID-19 pandemic, the CORSIA growth baseline year was modified and set to 85% of 2019 carbon dioxide emissions.
At December 31, 2024, Transition and Process Agreements are in place for certain workgroups, which define the process for negotiating JCBAs and set forth interim agreements until a JCBA is reached. Our relations with U.S. labor organizations representing Alaska, Hawaiian, and Horizon employees are governed by the Railway Labor Act (RLA).
At December 31, 2025, Transition and Process Agreements are in place for certain workgroups, which define the process for negotiating JCBAs and set forth interim agreements until a JCBA is reached. Our relations with U.S. labor organizations representing our employees are governed by the Railway Labor Act (RLA).
Our codeshare and interline agreements generated 5% of our total operating revenue for each of the years ended December 31, 2024, 2023, and 2022. 8 Alaska's marketing agreements with other airlines are as follows: Codeshare Airline Mileage Plan Loyalty Program Agreement Alaska Flight # on Flights Operated by Other Airline Other Airline Flight # on Flights Operated by Alaska or CPA Partners Aer Lingus Yes No No Air Tahiti Nui Yes Yes Yes Aleutian Airways (b) Yes No No American Airlines Yes Yes Yes Bahamasair (b) Yes No No British Airways Yes Yes Yes Cape Air (b) Yes No No Cathay Pacific Airways Yes No Yes Condor Airlines (a) Yes Yes Yes Contour Airlines (b) Yes No No Fiji Airways (a) Yes No Yes Finnair Yes Yes Yes Hainan Airlines Yes No No Iberia Yes Yes Yes Icelandair Yes Yes Yes Japan Airlines Yes Yes Yes Kenmore Air (b) Yes No No Korean Air Yes No Yes LATAM Yes No Yes Malaysia Airlines Yes No No Mokulele Airlines (b) Yes No No Oman Air Yes No No Porter Airlines Yes No No Qantas Airways Yes Yes Yes Qatar Airways Yes Yes Yes Royal Air Maroc Yes No No Royal Jordanian Yes No No Singapore Airlines Yes No Yes Southern Airways Express (b) Yes No No SriLankan Airlines Yes No No STARLUX Airlines Yes No No (a) These airlines do not have their own loyalty program.
Our codeshare and interline agreements generated approximately 5% of our total operating revenue for each of the years ended December 31, 2025, 2024, and 2023. 7 Alaska's marketing agreements with other airlines are as follows: Codeshare Airline Atmos Rewards Loyalty Program Agreement Alaska Flight # on Flights Operated by Other Airline Other Airline Flight # on Flights Operated by Alaska or CPA Partners Aer Lingus Yes No No Air Tahiti Nui Yes Yes Yes Aleutian Airways (b) Yes No No American Airlines Yes Yes Yes Bahamasair (b) Yes No No British Airways Yes Yes Yes Cape Air (b) Yes No No Cathay Pacific Airways Yes No Yes Condor Airlines (a) Yes Yes Yes Contour Airlines (b) Yes No No Fiji Airways (a) Yes No Yes Finnair Yes Yes Yes Hainan Airlines Yes No No Iberia Yes Yes Yes Icelandair Yes Yes Yes Japan Airlines (c) Yes Yes Yes Kenmore Air (b) Yes No No Korean Air (b) Yes No Yes Malaysia Airlines Yes No No Mokulele Airlines (b) Yes No No Oman Air Yes No No Philippine Airlines (b) Yes No No Porter Airlines Yes No No Qantas Airways Yes Yes Yes Qatar Airways Yes Yes Yes Royal Air Maroc Yes No No Royal Jordanian Yes No No Singapore Airlines (b) Yes No No Southern Airways Express (b) Yes No No SriLankan Airlines Yes No No STARLUX Airlines Yes No Yes United Airlines No No Yes (a) These airlines do not have their own loyalty program.
In 2024, Air Group companies donated $15 million in cash and in-kind travel to approximately 1,300 charitable organizations, and our employees volunteered more than 45,000 hours of community service related to youth and education, medical research, and transportation. Air Group also encourages its guests to play a role in supporting these communities.
In 2025, Air Group companies donated approximately $19 million in cash and in-kind travel to over 1,190 charitable organizations, and our employees volunteered more than 45,000 hours of community service related to youth and education, medical research, and transportation. Air Group also encourages its guests to play a role in supporting these communities.
Our loyalty programs also offer exclusive benefits to residents in the states of Alaska and Hawai'i through our Club 49 and Huaka'i programs, which show our gratitude for major communities we serve. Members of our loyalty programs also have access to co-branded credit cards as an additional way to accumulate miles and take advantage of additional benefits.
Our loyalty program also offers exclusive benefits to residents in the states of Alaska and Hawai'i through our Club 49 and Huaka'i programs, which show our gratitude for major communities we serve. Members of our loyalty program also have access to co-branded credit cards as an additional way to earn points and take advantage of additional benefits.
He joined Alaska Airlines, Inc. in February 2006 and has served in several roles including Senior Attorney from February 2006 to July 2009, Associate General Counsel and Managing Director Commercial Law and General Litigation from July 2009 to February 2011, 18 Deputy General Counsel and Managing Director Legal from February 2011 to January 2016, Vice President Legal from January 2016 to January 2020 .
He joined Alaska Airlines, Inc. in February 2006 and has served in several roles including Senior Attorney from February 2006 to July 2009, Associate General Counsel and Managing Director Commercial Law and General Litigation from July 2009 to February 2011, Deputy General Counsel and Managing Director Legal from February 2011 to January 2016, Vice President Legal from January 2016 to 16 January 2020, Senior Vice President Legal from January 2020 to August 2025, and General Counsel of Alaska Air Group, Inc. and Alaska Airlines, Inc. since January 2016 .
He was Vice President Cargo of Air Canada from January 2021 to February 2023 and returned to Alaska Air Group, Inc. as Senior Vice President Operations of Horizon Air Industries, Inc. from February 2023 to October 2023. Mr.
He was Vice President Cargo of Air Canada from January 2021 to February 2023 and returned to Alaska Air Group, Inc. as Senior Vice President Operations of Horizon Air Industries, Inc. from February 2023 to October 2023, Executive Vice President Cargo of Alaska Air Group, Inc. from September 2024 to October 2025, and President of Horizon Air Industries, Inc. from November 2023 to November 2025.
Some of our competitors rely on this distribution channel to a lesser extent than we do, and, as a result, may have lower ticket distribution costs. In 2024, 73% of our total sales were conducted direct to customer with the remaining 27% through traditional and online travel agencies.
Some of our competitors may rely on travel agencies to a lesser extent than we do, and, as a result, may have lower ticket distribution costs. 11 In 2025, 74% of our total sales were conducted direct to customer with the remaining 26% through traditional and online travel agencies.
Selling direct is our most cost efficient sales channel. We also believe direct sales are preferable from a branding and customer relationship standpoint because we can establish ongoing communication with the guest and tailor offers accordingly. As a result, we prioritize efforts that drive more business to our websites. We also have reservation call centers where guests can book reservations.
Direct sales are also preferable from a branding and customer relationship standpoint, because we can establish ongoing communication with the guest and tailor outreach accordingly. As a result, we prioritize efforts that drive more business to our direct sales channels. We also have reservation call centers where guests can book reservations.
Through one world, guests can travel to more than 900 destinations in 170 territories. • Loyalty programs We compete with other airlines for customer loyalty in order to build long-term relationships with our guests.
Through one world, guests can travel to more than 900 destinations in 170 territories. We expect Hawaiian to join the one world alliance in spring 2026. 10 • Loyalty programs We compete with other airlines for customer loyalty in order to build long-term relationships with our guests.
With our regional partners, we fly to more than 140 destinations throughout North America, Central America, Asia, and across the Pacific. Alaska is a member of the one world® alliance. With one world and other global partners, Alaska's guests have access to more than 900 destinations in 170 territories.
With our regional partners, we fly to more than 140 destinations throughout North America, Latin America, Asia, and the Pacific. We will serve Europe beginning in spring 2026. Alaska is a member of the one world® alliance. With one world and other global partners, our guests have access to more than 900 destinations in 170 territories.
Alaska and Horizon employees are also rewarded for reporting safety concerns and meeting measurable safety targets as both our Performance Based Pay (PBP) and Operational Performance Rewards (OPR) programs include payouts for achievement to stated goals. As of December 31, 2024, Alaska and Horizon operate under one SMS and Hawaiian operates under its own SMS.
Alaska, Hawaiian, and Horizon employees are also rewarded for reporting safety concerns and meeting measurable safety targets as both our Performance Based Pay (PBP) and Operational Performance Rewards (OPR) programs include payouts for achievement to stated goals. All Air Group airlines operate under one SMS.
Our competitors consist primarily of other airlines and, to a lesser extent, other forms of transportation. Competition can be direct, in the form of another carrier flying the exact non-stop route, or indirect, where a carrier serves the same two cities non-stop from an alternative airport in that city or via an itinerary requiring a connection at another airport.
Competition can be direct, in the form of another carrier flying the exact non-stop route, or indirect, where a carrier serves the same two cities non-stop from an alternative airport in that city or via an itinerary requiring a connection at another airport.
Certificates do not expire, but may be revoked for failure to comply with federal aviation statutes, regulations, orders or the terms of the certificates. 19 While airlines are permitted to establish their own fares without government regulation, the DOT has jurisdiction over the approval of international codeshare agreements, marketing alliance agreements between major U.S. carriers, international and some domestic route authorities, Essential Air Service market subsidies, carrier liability for personal or property damage, and certain airport rates and charges disputes.
While airlines are permitted to establish their own fares without government regulation, the DOT has jurisdiction over the approval of international codeshare agreements, marketing alliance agreements between major U.S. carriers, international and some domestic route authorities, Essential Air Service market subsidies, carrier liability for personal or property damage, and certain airport rates and charges disputes.
Both traditional and online travel agencies typically use Global Distribution Systems to obtain their fare and inventory data from airlines. Bookings made through these agencies result in a fee that is charged to our airlines. Many large corporate customers require use of these agencies.
Corporate travel agencies typically use Global Distribution Systems to obtain their fare and inventory data from airlines. Bookings made through these agencies result in a fee that is charged to our airlines. Many large corporate customers require use of these agencies. Online travel agencies source content from the airline directly via more modern and cost-efficient alternatives.
SAFETY The safety and well-being of our employees and guests is the foundation of our work at Alaska Air Group. The Company's primary safety objective is to identify, monitor, and mitigate safety risks, which we do using our airlines’ Safety Management Systems (SMS).
SAFETY The safety and well-being of our employees and guests is the foundation of our work at Alaska Air Group. The Company's primary safety objectives are to identify, assess, monitor, and mitigate safety risks to as low as reasonably practical, which we do using our Safety Management System (SMS).
Currently, not all airports have the necessary infrastructure in place to support charging and use of these units to enable their full operational reliability, and we are actively working with our airport partners to make these improvements. • Renewing our fleet with more efficient airplanes: Alaska and Hawaiian have purchase commitments for B737 and B787-9 aircraft.
Currently, not all airports have the necessary infrastructure in place to support charging and use of these units to enable their full operational reliability, and we are actively working with our airport partners to make these improvements. • Renewing our fleet with more efficient airplanes: We strive to operate our airlines with aircraft that are as fuel efficient as possible.
Due to their designs, up-gauged capacity, and engines, the new aircraft are between 20% to 25% more efficient on a seat-by-seat basis than the aircraft they replace. • Using SAF: Among available technologies, SAF has the greatest potential for enabling near-term progress towards our net zero emissions goal, as it can be used alongside traditional jet fuel as a drop-in fuel while producing up to 80% lower carbon emissions on a lifecycle basis.
Due to their designs, up-gauge capacity, and engines, the new aircraft are approximately 15% to 25% more efficient on a seat-by-seat basis than the aircraft they replace. • Using SAF: The use of SAF is important in enabling near-term progress towards our net zero carbon emissions ambitions, as it can be used alongside traditional jet fuel as a drop-in fuel while producing up to 80% lower carbon 12 emissions on a lifecycle basis.
Our Leader Academy, which launched in 2022, helps supervisors and managers further develop their leadership and communication skills. Providing meaningful advancement opportunities to employees throughout Air Group is important, and we continue to evaluate new programs which support our people and advance our long-term strategic goals. COMMUNITY INVOLVEMENT We are dedicated to actively supporting the communities we serve.
Providing meaningful advancement opportunities to employees throughout Air Group is important, and we continue to evaluate new programs which support our people and advance our long-term strategic goals. COMMUNITY INVOLVEMENT We are dedicated to actively supporting the communities we serve.
Ms. Birkett Rakow was elected Senior Vice President Public Affairs and Sustainability of Alaska Airlines, Inc. in November 2021 and is a member of Air Group's Executive Management Executive Committee.
Ms. Birkett Rakow was elected Executive Vice President of Alaska Airlines, Inc. and Chief Executive Officer of Hawaiian Airlines in November 2025 and is a member of Air Group's Executive Management Executive Committee.
During the year, Alaska and Horizon employees participated in the PBP and OPR programs, which reward employees across all work groups based on metrics related to profitability, safety, sustainability, guest satisfaction, completion rate, and on-time rate.
During the year, Alaska, Hawaiian, and Horizon employees participated in the PBP and OPR programs, which reward employees across all work groups based on metrics related to profitability, safety, synergy capture, guest experience, completion rate, and on-time rate. Alaska, Hawaiian, and Horizon employees earned $245 million under these incentive programs during the year.
The cost composition of our aircraft fuel expense, inclusive of Hawaiian for the post-acquisition period from September 18, 2024 through December 31, 2024, is as follows: 2024 2023 2022 Crude oil 67 % 58 % 64 % Refining margins 22 % 33 % 35 % Other (a) 11 % 9 % 1 % Total 100 % 100 % 100 % Aircraft fuel, including hedging gains and losses (in millions) $ 2,506 $ 2,641 $ 2,668 Percentage of Total Operating Expenses 22 % 26 % 28 % Fuel gallons (000,000) 925 824 758 (a) Other includes gains and losses on settled fuel hedges, unrealized mark-to-market fuel hedge gains and losses, taxes, and other into-plane costs.
The cost composition of our aircraft fuel expense is as follows: 2025 2024 (b) 2023 Crude oil 62 % 67 % 58 % Refining margins 27 % 22 % 33 % Other (a) 11 % 11 % 9 % Total 100 % 100 % 100 % Aircraft fuel, including hedging gains and losses (in millions) $ 2,879 $ 2,506 $ 2,641 Percentage of Total Operating Expenses 21 % 22 % 26 % Fuel gallons (000,000) 1,146 925 824 (a) Other includes gains and losses on settled fuel hedges, unrealized mark-to-market fuel hedge gains and losses, taxes, and other into-plane costs.
Ms. von Muehlen was elected Executive Vice President and Chief Operating Officer of Alaska Airlines, Inc. in April 2021 and is a member of Air Group’s Management Executive Committee.
Mr. Berry was elected Executive Vice President and Chief Operating Officer of Alaska Airlines, Inc. in November 2025 and is a member of Air Group's Management Executive Committee.
Our success over many decades is attributable to the prioritization of safety as our number one value, as well as our people, business model, and commitment to sustainable growth over the long-term. In 2024, Alaska Air Group acquired Hawaiian Holdings, Inc.
Our success over many decades is attributable to the prioritization of safety as our number one value, as well as our people, business model, and commitment to sustainable growth over the long-term. In 2025, we made significant progress towards integrating Hawaiian into Air Group.
He was Chief Executive Officer of Virgin America, Inc. from December 2016 to July 2018, when Virgin America, Inc. was merged into Alaska Airlines, Inc. Mr. Tackett was elected Executive Vice President Finance and Chief Financial Officer of Alaska Air Group, Inc. and Alaska Airlines, Inc. in March 2020, and is a member of Air Group’s Management Executive Committee.
Mr. Tackett was elected Executive Vice President Finance and Chief Financial Officer of Alaska Air Group, Inc. and Alaska Airlines, Inc. in March 2020, and is a member of Air Group’s Management Executive Committee.
This is part of our commitment to Do the Right Thing by our guests, employees, and communities, and to create a culture in which employees can do their best work, and best serve the breadth of our customer base.
This is part of our commitment to Do the Right Thing by our guests, employees, and communities, and to create a culture in which employees can do their best work, and best serve the breadth of our customer base. EMPLOYEE TRAINING The Alaska Air Group companies invest in employee programs and training that aid advancement throughout the enterprise.
Advisor to the CEO of Alaska Airlines, Inc. from November 2023 to December 2023, and Regional President Hawai'i and Pacific of Alaska Airlines, Inc. from December 2023 to December 2024. Mr. Harrison was elected Executive Vice President and Chief Commercial Officer of Alaska Airlines, Inc. in August 2015 and is a member of Air Group's Management Executive Committee.
Mr. Harrison was elected Executive Vice President and Chief Commercial Officer of Alaska Airlines, Inc. in August 2015 and is a member of Air Group's Management Executive Committee.
We have operated in a highly competitive and often challenging industry for more than 90 years. Our airlines' top priority is ensuring the safety of our guests and employees, an area we continually invest in.
Starting in spring 2026, Alaska's one world benefits will extend to guests traveling on Hawaiian-branded aircraft. We have operated in a highly competitive and often challenging industry for more than 90 years. Our airlines' top priority is ensuring the safety of our guests and employees, an area we continually invest in.
McGee Air Services union contract at December 31, 2024 was as follows: Union Employee Group Number of Employees Contract Status IAM Fleet and ramp service 2,543 Amendable 7/19/2025 CARE AND BELONGING We remain steadfast in our commitment to recruit, retain, and promote the best talent.
A mediator from the National Mediation Board is participating in negotiations with AFA and TWU. McGee Air Services' union contract at December 31, 2025 was as follows: Union Employee Group Number of Employees Contract Status IAM Fleet and ramp service 2,897 Amendable 7/19/2030 CULTURE AND BELONGING We remain steadfast in our commitment to recruit, retain, and promote the best talent.
Mr. Levine was elected Senior Vice President Legal in January 2020, General Counsel and Corporate Secretary of Alaska Air Group, Inc. and Alaska Airlines, Inc. in August 2017 and Horizon Air Industries, Inc. in January 2020, and Chief Ethics and Compliance Officer in January 2016. He is a member of Air Group’s Management Executive Committee.
Levine was elected Executive Vice President Corporate and Public Affairs and Chief Legal Officer of Alaska Air Group, Inc. and Alaska Airlines, Inc. in September 2025, and Corporate Secretary of Alaska Air Group, Inc. and Alaska Airlines, Inc. in August 2017 and Corporate Secretary of Horizon Air Industries, Inc. in January 2020, and Chief Ethics and Compliance Officer in January 2016.
In addition, management reviews economic fuel costs, which include the impact of settled fuel hedge positions but excludes mark-to-market adjustments. Management considers economic fuel costs to be the best estimate of the cash cost of fuel.
In addition, management reviews economic fuel costs, which include the impact of settled fuel hedge positions but excludes mark-to-market adjustments. Management considers economic fuel costs to be the best estimate of the cash cost of fuel. Air Group primarily purchases its fuel based on U.S. West Coast and Singapore jet fuel prices.
Alliances are an important part of our strategy and enhance our revenue by: • offering our guests more travel destinations and better mileage credit and redemption opportunities, including elite qualifying miles on U.S. and international airline partners; • providing a consistent and seamless guest experience whether flying on Alaska or one of our partners; • giving us access to more connecting traffic from other airlines; and • providing members of our partners’ loyalty programs an opportunity to travel on Alaska and our regional partners while earning mileage credit in our partners’ programs.
Depending on tier status, guests can enjoy a variety of privileges, including access to more than 600 international first and business class lounges, fast track through security, priority baggage benefits, priority check-in desks, upgrades, and priority boarding. 6 Alliances are an important part of our strategy and enhance our revenue by: • offering our guests more travel destinations and better point earn and redemption opportunities, including status points on U.S. and international airline partners; • providing a consistent and seamless guest experience whether flying on Alaska or one of our partners; • giving us access to more connecting traffic from other airlines; and • providing members of our partners’ loyalty programs an opportunity to travel on Alaska and our regional partners while earning points in our partners’ programs.
He leads Air Group's Management Executive Committee, and was elected to the Alaska Air Group, Inc. Board of Directors in May 2020. He joined Alaska Airlines, Inc. in May 2004 and has served in several roles including Executive Vice President Operations from December 2008 to May 2016 and Chief Operating Officer from December 2008 to November 2019.
He joined Alaska Airlines, Inc. in May 2004 and has served in several roles including Executive Vice President Operations from December 2008 to May 2016 and Chief Operating Officer from December 2008 to November 2019. He was Chief Executive Officer of Virgin America, Inc. from December 2016 to July 2018, when Virgin America, Inc. was merged into Alaska Airlines, Inc.
Tackett Executive Vice President Finance and Chief Financial Officer of Alaska Air Group, Inc. and Alaska Airlines, Inc. 46 2011 Kyle B. Levine Senior Vice President Legal, General Counsel and Corporate Secretary of Alaska Air Group, Inc., Alaska Airlines, Inc. and Horizon Air Industries, Inc., and Chief Ethics and Compliance Officer of Alaska Air Group, Inc. 53 2016 Jason M.
Levine Executive Vice President Corporate and Public Affairs, Chief Legal Officer, and Corporate Secretary of Alaska Air Group, Inc., Alaska Airlines, Inc. and Corporate Secretary of Horizon Air Industries, Inc., and Chief Ethics and Compliance Officer of Alaska Air Group, Inc. 54 2016 Jason M.
We believe that operating fuel-efficient aircraft and executing on operational best practices are the best strategies to mitigate high fuel prices. Maintaining a young, fuel-efficient fleet helps reduce our fuel consumption rate, as well as the amount of greenhouse gases and other pollutants that our aircraft emit. COMPETITION Competition in the airline industry can be intense and unpredictable.
Maintaining a young, fuel-efficient fleet helps reduce our fuel consumption rate, as well as the amount of greenhouse gases and other pollutants that our aircraft emit. COMPETITION Competition in the airline industry can be intense and unpredictable. Our competitors consist primarily of other airlines and, to a lesser extent, other forms of transportation.
Harrison Executive Vice President and Chief Commercial Officer of Alaska Airlines, Inc. 55 2008 Constance E. von Muehlen Executive Vice President and Chief Operating Officer of Alaska Airlines, Inc. 57 2018 Andrea L.
Harrison Executive Vice President and Chief Commercial Officer of Alaska Airlines, Inc. 56 2008 Constance E. von Muehlen Executive Vice President and Advisor to the Chief Operating Officer of Alaska Airlines, Inc. 58 2018 Andrea L. Schneider President and Chief Executive Officer of Horizon Air Industries, Inc. 60 2003 Mr.
Regional operations carried approximately 10 million revenue passengers in 2024, up from 9 million in 2023. Horizon is the largest regional airline in the Pacific Northwest and carried approximately 52% of Air Group's Regional passengers.
Horizon is the largest regional airline in the Pacific Northwest and carried approximately 55% of Air Group's Regional passengers.
She joined Alaska Airlines, Inc. in September 2017 and has served as Vice President External Relations from September 2017 to February 2021 and Vice President Public Affairs and Sustainability from February 2021 to November 2021. REGULATION GENERAL The airline industry is highly regulated, most notably by the federal government.
She joined Alaska Airlines, Inc. in September 2017 and has served as Vice President External Relations from September 2017 to February 2021 and Vice President Public Affairs and Sustainability from February 2021 to November 2021, Senior Vice President Public Affairs and Sustainability from November 2021 to August 2025, and Executive Vice President Public Affairs and Sustainability from September 2025 to November 2025.
Hawaiian’s union contracts at December 31, 2024 were as follows: Union Employee Group Number of Employees Contract Status ALPA Pilots 1,155 Amendable 3/2/2027 AFA Flight attendants 2,181 Amendable 4/2/2025 IAM Technicians and related 910 Amendable 2/15/2027 IAM Clerical 1,723 Amendable 2/15/2027 TWU Dispatchers 69 Amendable 4/21/2027 Horizon’s union contracts at December 31, 2024 were as follows: Union Employee Group Number of Employees Contract Status International Brotherhood of Teamsters (IBT) (a) Pilots 642 Amendable 12/31/2024 AFA (a) Flight attendants 561 Amendable 4/30/2024 AMFA (a) Mechanics and related classifications 174 Amendable 5/10/2024 TWU Dispatchers 22 Amendable 1/29/2026 (a) Negotiations with IBT, AFA, and AMFA for updated collective bargaining agreements are ongoing as of the date of this filing.
Alaska’s union contracts at December 31, 2025 were as follows: Union Employee Group Number of Employees Contract Status Air Line Pilots Association, International (ALPA) Pilots 3,360 Amendable 3/2/2027 Association of Flight Attendants (AFA) Flight attendants 7,164 Amendable 2/28/2028 International Association of Machinists and Aerospace Workers (IAM) Ramp service and stock clerks 911 Amendable 9/27/2026 IAM Clerical, office and passenger service 5,421 Amendable 9/27/2026 Aircraft Mechanics Fraternal Association (AMFA) Technicians and related 1,046 Amendable 10/17/2028 Transport Workers Union of America (TWU) Dispatchers 114 Amendable 3/24/2027 14 Hawaiian’s union contracts at December 31, 2025 were as follows: Union Employee Group Number of Employees Contract Status ALPA Pilots 1,242 Amendable 3/2/2027 AFA Flight attendants 2,507 Amendable 2/28/2028 IAM Technicians and related 957 Amendable 2/15/2027 IAM Clerical 1,679 Amendable 2/15/2027 TWU Dispatchers 71 Amendable 4/21/2027 Horizon’s union contracts at December 31, 2025 were as follows: Union Employee Group Number of Employees Contract Status International Brotherhood of Teamsters (IBT) (a) Pilots 662 Amendable 12/31/2024 AFA (a) Flight attendants 670 Amendable 4/30/2024 AMFA Mechanics and related classifications 184 Amendable 5/10/2029 TWU (a) Dispatchers 27 Amendable 1/29/2026 (a) Negotiations with IBT, AFA, and TWU for updated collective bargaining agreements are ongoing as of the date of this filing.
However, Alaska's Mileage Plan members can earn and redeem miles on these airlines' route systems. (b) These airline partnerships are limited to earning miles.
However, Atmos Rewards members can earn and redeem points on these airlines' route systems. (b) These airline partnerships are limited to earning points. Atmos Rewards members can earn points when purchasing these airlines' flights on www.alaskaair.com and www.hawaiianairlines.com.
Subject to certain individual airport capacity, noise and other restrictions, this certificate permits an air carrier to operate between any two points in the U.S.
Subject to certain individual airport capacity, noise and other restrictions, this certificate permits an air carrier to operate between any two points in the U.S. Certificates do not expire, but may be revoked for failure to comply with federal aviation statutes, regulations, orders or the terms of the certificates.
Under the ATSA, Hawaiian supplies flight crews, performs maintenance and certain administrative functions, and procures aircraft insurance. Additionally, Hawaiian receives a fixed monthly fee per aircraft, a per flight hour fee, and a per flight cycle fee for each flight cycle operated, and is reimbursed for certain operating expenses, including fuel, certain maintenance, and insurance premiums.
In return, we receive a fixed monthly fee per aircraft, a per flight hour fee, and a per flight cycle fee for each flight cycle operated, and are reimbursed for certain operating expenses, including fuel, certain maintenance, and insurance premiums.
Ms. Schneider was elected Senior Vice President People at Alaska Airlines, Inc. in June 2019 and is a member of Air Group’s Management Executive Committee.
Ms. Schneider was elected President and Chief Executive Officer of Horizon Air Industries, Inc. in November 2025 and is a member of Air Group’s Management Executive Committee.
To enable these technologies and accelerate our path to net zero carbon emissions, among other business needs, we established an investment arm in 2021, called Alaska Star Ventures (ASV). Through ASV, we have partnered with companies focused on new aircraft technologies.
We are focused on doing our part to aid in the development of these technologies, and to foster support via public policy and private sector capital investments. To enable these technologies and accelerate our path to net zero carbon emissions, among other business needs, we have an investment arm called Alaska Star Ventures (ASV).
The Audit Committee of the Board of Directors oversees Air Group's financial reporting process, including disclosures on corporate responsibility matters within the Company's financial statements. The Company's Executive Committee is responsible for overseeing the progress toward our climate goals and providing input on Air Group's climate strategy. HUMAN CAPITAL OUR PEOPLE Our business is labor intensive.
The Climate Working Group is responsible for providing expert guidance on, and oversight for, our work to achieve net zero carbon emissions and other climate-related goals and strategy. The Audit Committee of the Board of Directors oversees Air Group's financial reporting process, including disclosures on corporate responsibility matters within the Company's financial statements.
Loyalty program revenue, including that in the Passenger revenue line item in the consolidated statements of operations, represented approximately 16% of Air Group's total revenue in 2024. Alaska Airlines Alaska Airlines Mileage Plan™ members can earn miles by flying on Alaska.
Loyalty program revenue, including that in the Passenger revenue line item in the consolidated statements of operations, represented approximately 16% of Air Group's total revenue in 2025. Atmos Rewards awards points for flights on any of our airlines.
Pricing is driven by a variety of factors including, but not limited to, market-specific capacity, market share per route/geographic area, cost structure, fare vs. ancillary revenue strategies, and demand. Airlines often discount fares to drive traffic in new markets or to stimulate traffic when necessary to improve load factors.
Pricing is driven by a variety of factors including, but not limited to, market-specific capacity, market share per route/geographic area, cost structure, fare vs. ancillary revenue strategies, and demand. The airline industry is highly competitive, with carriers constantly seeking to defend and grow market share.
Fares that are substantially below our cost to operate can be harmful if sustained over a long period of time. We will defend our position in our core markets and, if necessary, adjust capacity to better match supply with demand.
We will defend our position in our core markets, and if necessary, adjust capacity to better match supply with demand.
Organizations are invited to apply bi-annually for grants ranging from $5,000 to $20,000, with preference given to organizations that can demonstrate partnership and long-term program sustainability. Since inception in 1999, the Foundation has donated more than $4 million in grants, including more than $500,000 in 2024.
During the year, Atmos Rewards members donated more than 100 million points through the Atmos Giving program. The Alaska Airlines Foundation provides grants to nonprofits that offer educational and career-development programs to young people. Organizations are invited to apply bi-annually for grants ranging from $5,000 to $20,000, with preference given to organizations that can demonstrate partnership and long-term program sustainability.
Many of the markets we serve experience inclement weather conditions in the winter, causing increased costs associated with deicing aircraft, flight cancellations, and accommodating displaced passengers.
Many of the markets we serve experience inclement weather conditions in the winter, causing increased costs associated with deicing aircraft, flight cancellations, and accommodating displaced passengers. In certain geographies such as the Pacific Northwest, Alaska, and Hawai'i, we may be more susceptible to adverse weather conditions than some of our competitors who have different network exposures.
All capacity is sold to Alaska under a CPA. Our Company is the fifth largest provider of air transportation in the United States, offering unparalleled guest service, connectivity, and schedules from our hub markets along the West Coast and in Hawai'i.
All capacity is sold to Alaska under capacity purchase agreements (CPA). Alaska is the fourth largest global carrier in the United States, and the fifth largest provider of air transportation, offering unparalleled guest service, connectivity, and schedules from hubs in Seattle, Honolulu, Portland, Anchorage, Los Angeles, San Diego, and San Francisco.
The ATSA provides for Hawaiian to operate up to ten A330-300F aircraft. As of December 31, 2024, Hawaiian has taken delivery of and is operating six A330-300F aircraft. The Company also earns other revenue for lounge memberships, hotel and car commissions, travel insurance, and certain other immaterial items not intrinsically tied to providing air travel to passengers.
The Company also earns other revenue for lounge memberships, hotel and car commissions, travel insurance, and certain other immaterial items not intrinsically tied to providing air travel to passengers. AGREEMENTS WITH OTHER AIRLINES Alaska has various types of marketing agreements with other airlines.
Departures from West Coast markets to other regions are captured in other categories. The percentage of Alaska passenger capacity by principal geographic region (as defined by the U.S.
The percentage of Alaska and Hawaiian passenger capacity by principal geographic region (as defined by the U.S.
Aircraft fuel expense includes raw fuel expense, or the price that we generally pay at the airport, including taxes and fees, plus the impact of our fuel hedge program, including the effect of mark-to-market adjustments to our portfolio as the value of that portfolio increases and decreases.
FUEL Our business and financial results are highly impacted by the price and the availability of aircraft fuel. Aircraft fuel expense includes raw fuel expense, or the price that we generally pay at the airport, including taxes and fees, plus any impact of our fuel hedging.
In 2024, the DOT issued a final rule mandating refunds to passengers in certain situations and a final rule requiring disclosure of certain ancillary fees. However, in August 2024, the U.S. Court of Appeals for the Fifth Circuit granted a motion for a stay of the ancillary fee rule.
In 2024, the DOT issued a final rule requiring disclosure of certain ancillary fees, which was stayed by the U.S. Court of Appeals for the Fifth Circuit. We continue to monitor activity related to the rule and will assess its impact.
Hawaiian also seeks to broaden opportunities for students to consider Hawaiian as an employer by forming educational partnerships with schools, establishing scholarship programs, and hosting Aviation Exposure onsite events with the Department of Education. 17 EXECUTIVE OFFICERS The executive officers of Alaska Air Group, Inc. and its airline subsidiaries who have significant decision-making responsibilities, their positions, and their respective ages are as follows: Name Position Age Air Group or Subsidiary Officer Since Benito Minicucci President and Chief Executive Officer of Alaska Air Group, Inc. and Alaska Airlines, Inc. 58 2004 Shane R.
The Company launched the combined Alaska Airlines | Hawaiian Airlines Foundation, which will begin accepting grant requests in 2026. 15 EXECUTIVE OFFICERS The executive officers of Alaska Air Group, Inc. and its airline subsidiaries who have significant decision-making responsibilities, their positions, and their respective ages are as follows: Name Position Age Air Group or Subsidiary Officer Since Benito Minicucci President and Chief Executive Officer of Alaska Air Group, Inc. and Alaska Airlines, Inc. 59 2004 Shane R.
A summary of each airline's operations is presented below: • Alaska - includes scheduled air transportation on Alaska's Boeing 737 (B737) aircraft for passengers and cargo from the western United States (U.S.) throughout North America, Mexico, Costa Rica, Belize, the Bahamas, and Guatemala. • Hawaiian - includes scheduled air transportation on Hawaiian's Boeing 787-9 (B787-9), Boeing 717-200 (B717-200), Airbus A330-200 (A330-200), Airbus A321neo, and Airbus A330-300F (A330-300F) aircraft for passengers and cargo between the Hawaiian Islands (the Neighbor Island routes), as well as between Hawai'i and the continental U.S., parts of Asia, the South Pacific, Australia, and New Zealand. • Horizon - includes scheduled air transportation on Horizon's Embraer 175 (E175) aircraft for passengers throughout the western region of North America.
A summary of our operations is presented below: • Alaska and Hawaiian - includes scheduled air transportation of passengers and cargo on Boeing 737 (B737), Boeing 787 (B787), Boeing 717 (B717), Airbus A330 (A330), Airbus A321neo (A321neo), and Airbus A330-300F (A330-300F) aircraft throughout North America, Latin America, Asia, and the Pacific. • Regional - includes scheduled air transportation of passengers on Horizon and a third-party carrier (SkyWest) on Embraer E175 (E175) aircraft throughout the western region of North America.
(b) Represents Hawaiian's capacity in the full year 2024, including the period prior to acquisition by Air Group on September 18, 2024. REGIONAL Regional operations include passenger service on E175 aircraft operated by Horizon and SkyWest under CPAs with Alaska, primarily in the states of Washington, Oregon, California, Alaska, and Idaho.
Regional operations include passenger service on E175 aircraft operated by Horizon and third-party carrier SkyWest under CPAs with Alaska, primarily in the states of Washington, Oregon, California, Alaska, and Idaho. Regional operations carried approximately 11 million revenue passengers in 2025, up from 10 million in 2024.
Alaska's largest concentrations of departures are from our hubs in Anchorage, Seattle, Portland, San Francisco, Los Angeles, and San Diego. Alaska carried 36 million revenue passengers in 2024, up from 35 million in 2023.
The largest concentration of departures is from hubs in Seattle, Honolulu, Portland, Anchorage, Los Angeles, San Diego, and San Francisco. Alaska and Hawaiian carried 47 million revenue passengers in 2025, up from 39 million in 2024, which includes Hawaiian results from September 18, 2024 through December 31, 2024.
ENVIRONMENTAL INITIATIVES We have both short and long-term goals to reduce fuel consumption, with the long-term aim to reach net zero carbon emissions by 2040. Our roadmap for achieving this goal includes the following focus areas: • Increasing operational efficiency: We take pride in consistently delivering top-of-industry operational performance.
We developed a five-part path to guide our long-term journey to net zero carbon emissions, and this strategy is complemented with near-term voluntary environmental sustainability goals. Our five-part path roadmap includes: • Increasing operational efficiency: We take pride in consistently delivering top-of-industry operational performance. By having consistently leading operational performance, we also optimize our fuel efficiency.
Club 49™ offers members two free checked bags, last-minute travel discounts, exclusive weekly fare sales, and discounts on cargo shipments to, from or within the state of Alaska. Hawaiian Airlines HawaiianMiles™ awards miles based on distance, providing generous earning potential on longer haul routes between the U.S. mainland and international cities and Hawai'i.
Club 49 ™ is offered to Alaska Residents who are Atmos Rewards members, providing benefits such as two free checked bags, last-minute travel discounts, exclusive weekly fare sales, and discounts on cargo shipments to, from or within the state of Alaska.
We heavily emphasize our service standards with our 12 employees through training and education programs, and monetary incentives related to operational performance and guest satisfaction. Besides competing with other airlines, we compete with ground transportation in our short-haul markets. Our airlines also compete with technology, such as video conferencing and internet-based meeting tools.
Besides competing with other airlines, we compete with ground transportation in our short-haul markets. Demand for our services, especially business related travel, is also impacted by alternative technologies, such as video conferencing and internet-based meeting tools.
We expect that the advancement and increased utilization of these tools will eliminate the need for some business-related travel. TICKET DISTRIBUTION Our tickets are distributed through multiple channels: • Direct to customer : Alaska sells direct at www.alaskaair.com and through the Alaska Airlines app. Hawaiian sells direct at www.hawaiianairlines.com and through the Hawaiian Airlines app.
TICKET DISTRIBUTION Our tickets are distributed through multiple channels: • Direct to customer : The Company sells direct at www.alaskaair.com and www.hawaiianairlines.com and through the Alaska Airlines and Hawaiian Airlines apps. Selling direct is our most cost efficient sales channel.
The Company is also in the process of implementing improvements to our airport facilities that provide an enhanced guest experience, including lobby updates and lounge expansions. Our employees are a critical element of our reputation. We have a highly engaged workforce that strives to provide genuine and caring service to our guests, both at the airport and onboard.
Our employees are a critical element of our brand and reputation. We have a highly engaged workforce that strives to provide genuine and caring service to our guests at the airport, lounge, onboard, and call centers. We heavily emphasize our service standards with our employees through training and education programs, and incentive pay related to operational performance and guest satisfaction.
The percentage of Regional passenger capacity by region and average stage length is presented below: 2024 2023 2022 West Coast 78 % 76 % 75 % Pacific Northwest 8 % 10 % 8 % Canada 2 % 2 % 2 % Alaska 6 % 5 % 3 % Transcon/midcon 5 % 7 % 12 % Mexico 1 % — % — % Total 100 % 100 % 100 % Average Stage Length (miles) 475 470 488 CARGO AND OTHER REVENUE The Company provides freight and mail services (cargo) using both freighter aircraft and the bellies of its passenger aircraft.
The percentage of Regional passenger capacity by region is presented below: 2025 2024 2023 West Coast 78 % 78 % 76 % Pacific Northwest 7 % 8 % 10 % Alaska 5 % 6 % 5 % Transcon/midcon 5 % 5 % 7 % Canada 3 % 2 % 2 % Mexico 2 % 1 % — % Total 100 % 100 % 100 % LOYALTY PROGRAM Our loyalty program, Atmos™ Rewards, brings together the best features of Alaska Airlines’ Mileage Plan™ and Hawaiian Airlines’ HawaiianMiles™ into a single program.
Air Group has started the process of integrating the two systems as it works towards combining Alaska and Hawaiian under a single operating certificate. Air Group's Board of Directors has a Safety Committee that is responsible for oversight of safety-related risk and management's efforts to ensure the safety of all passengers and employees.
Air Group's Board of Directors has a Safety Committee that is responsible for oversight of safety-related risk and management's efforts to ensure the safety of all passengers and employees. The Committee receives regular updates from management throughout the year and provides feedback to create and maintain a strong safety culture.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changePotential difficulties we may encounter as part of the integration process include the following: • the inability to successfully combine the Hawaiian Airlines business with that of Alaska's in a manner that permits us to achieve anticipated net synergies and other anticipated benefits of the acquisition; • successfully managing relationships with our combined customer base and retaining Hawaiian’s customers; • integrating complex systems, operating procedures, regulatory compliance programs, technology, aircraft fleets, networks, and other assets of the two companies in a manner that minimizes any adverse impact on customers, suppliers, employees, and other constituencies; • managing Alaska Airlines and Hawaiian Airlines as two distinct brands, a strategy that has not been implemented in the U.S. commercial airline industry; • managing Hawaiian's international network successfully, which comprises multiple countries in which Air Group did not have prior experience; • diversion of the attention of our and Hawaiian's management and other key employees; • integrating the workforces of the two companies while maintaining focus on providing consistent, high quality customer service and running a safe and efficient operation; 30 • disruption of, or the loss of momentum in, our ongoing business; • liabilities that are significantly larger than we currently anticipate and unforeseen increased expenses or delays associated with the acquisition, including transition costs to integrate the two businesses that may exceed the costs that we currently anticipate; • maintaining productive and effective employee relationships and, in particular, successfully and promptly integrating seniority lists and achieving cost-competitive collective bargaining agreements that cover the combined union-represented work groups; • the increased scale of our operations resulting from the acquisition; • retaining key employees of our company and Hawaiian; and • obligations that we will have to counterparties of Hawaiian that arise as a result of the change in control of Hawaiian.
Biggest changePotential difficulties we may encounter as part of the integration process include the following: • the inability to successfully combine the Hawaiian Airlines business with that of Alaska's in a manner that permits us to achieve anticipated net synergies and other anticipated benefits of the acquisition; • successfully managing relationships with our combined customer base and retaining Hawaiian’s customers; • integrating complex systems, operating procedures, regulatory compliance programs, technology, aircraft fleets, networks, and other assets of the two companies in a manner that minimizes any adverse impact on customers, suppliers, employees, and other constituencies; 22 • managing Alaska Airlines and Hawaiian Airlines as two distinct brands, a strategy that has not been implemented in the U.S. commercial airline industry; • managing Hawaiian's international network successfully, which comprises multiple countries in which Air Group did not have prior experience; • integrating the workforces of the two companies while maintaining focus on providing consistent, high quality customer service and running a safe and efficient operation; • disruption of, or the loss of momentum in, our ongoing business; • liabilities that are significantly larger than we currently anticipate and unforeseen increased expenses or delays associated with the acquisition, including transition costs to integrate the two businesses that may exceed the costs that we currently anticipate; • maintaining productive and effective employee relationships and, in particular, successfully and promptly integrating seniority lists and achieving cost-competitive collective bargaining agreements that cover the combined union-represented work groups; and • retaining key employees of our company If we do not successfully manage these issues and the other challenges inherent in integrating an acquired business the size of Hawaiian, then we may not achieve the anticipated benefits of the acquisition of Hawaiian and our revenue, expenses, operating results and financial condition could be materially adversely affected.
Our airlines are parties to marketing agreements with a number of domestic and international air carriers, or “partners,” including an expanded relationship with American and other one world carriers. These agreements provide that certain flight segments operated by us are held out as partner “codeshare” flights and that certain partner flights are held out for sale as codeshare flights.
Our airlines are parties to marketing agreements with a number of domestic and international air carriers, or “partners,” including an expanded relationship with American Airlines and other one world carriers. These agreements provide that certain flight segments operated by us are held out as partner “codeshare” flights and that certain partner flights are held out for sale as codeshare flights.
The successful integration of Hawaiian Airlines and achievement of the anticipated benefits of the acquisition depend significantly on integrating Hawaiian Airlines’ employees into Alaska and on maintaining productive employee relations. Failure to do so presents the potential for delays in achieving expected synergies and other benefits of integration or labor disputes that could adversely affect our operations and costs.
The successful integration of Hawaiian Airlines and achievement of the anticipated benefits of the acquisition depend significantly on integrating Hawaiian Airlines’ employees into Alaska and on maintaining productive employee relations. Failure to do so presents the potential for delays in achieving expected synergies and other benefits of integration or labor 26 disputes that could adversely affect our operations and costs.
Factors that might impact our operations include: • congestion, construction, space constraints at airports, and/or air traffic control problems, all of which many restrict flow; • lack of adequate staffing or other resources within critical third parties; • adverse weather conditions and natural disasters; • lack of operational approval (e.g. new routes, aircraft deliveries, etc.); 22 • contagious illness and fear of contagion; • increased security measures or breaches in security; • changes in international treaties concerning air rights; • international or domestic conflicts or terrorist activity; • random acts of violence on our aircraft or at airports; • interference by modernized telecommunications equipment with aircraft navigation technology; • disruption, failure, or inadequacy of systems or infrastructure under the control of third parties, including government entities; and • other changes in business conditions.
Factors that might impact our operations include: • congestion, construction, space constraints at airports, and/or air traffic control problems, all of which many restrict flow; • lack of adequate staffing or other resources within critical third parties; • adverse weather conditions and natural disasters; • lack of operational approval (e.g. new routes, aircraft deliveries, etc.); • contagious illness and fear of contagion; • increased security measures or breaches in security; • changes in international treaties concerning air rights; • international or domestic conflicts or terrorist activity; • random acts of violence on our aircraft or at airports; 20 • interference by modernized telecommunications equipment with aircraft navigation technology; • disruption, failure, or inadequacy of systems or infrastructure under the control of third parties, including government entities; and • other changes in business conditions.
Should these suppliers be unable to manufacture, obtain certification for, and deliver new aircraft, we may not be able to grow our airlines' fleet at intended rates, which could impact our financial position. Boeing has significant production constraints for the B737 and B787-9 aircraft, as well as regulatory delays for certain B737 aircraft.
Should these suppliers be unable to manufacture, obtain certification for, and deliver new aircraft, we may not be able to grow our airlines' fleet at intended rates, which could impact our financial position. Boeing has significant production constraints for the B737 and B787 aircraft, as well as regulatory delays for certain B737 aircraft.
Although we have a long track record of fostering good communications, negotiating approaches, and developing other strategies to enhance workforce engagement in our long-term vision, unsuccessful attempts to strengthen relationships with union employees could 27 divert management’s attention from other projects and issues and negatively impact the business.
Although we have a long track record of fostering good communications, negotiating approaches, and developing other strategies to enhance workforce engagement in our long-term vision, unsuccessful attempts to strengthen relationships with union employees could divert management’s attention from other projects and issues and negatively impact the business.
As a result, we are vulnerable to issues associated with the supply of those aircraft and parts including design or manufacturing defects, mechanical problems, contractual performance by the manufacturers, or adverse perception by the public about safety that would result in customer avoidance or actions by the FAA.
As a result, we are vulnerable to issues associated with the supply of those aircraft, engines, and parts including design or manufacturing defects, mechanical problems, contractual performance by the manufacturers, or adverse perception by the public about safety that would result in customer avoidance or actions by the FAA.
Terrorist attacks, the fear of such attacks or other hostilities involving the U.S. could have a significant negative effect on the airline industry, including us, and could: 23 • significantly reduce passenger traffic and yields as a result of a dramatic drop in demand for air travel; • significantly increase security and insurance costs; • make war risk or other insurance unavailable or extremely expensive; • increase fuel costs and the volatility of fuel prices; • increase costs from airport shutdowns, flight cancellations, and delays resulting from security breaches and perceived safety threats; and • result in a grounding of commercial air traffic by the FAA.
Terrorist attacks, the fear of such attacks or other hostilities involving the U.S. could have a significant negative effect on the airline industry, including us, and could: • significantly reduce passenger traffic and yields as a result of a dramatic drop in demand for air travel; • significantly increase security and insurance costs; • make war risk or other insurance unavailable or extremely expensive; • increase fuel costs and the volatility of fuel prices; • increase costs from airport shutdowns, flight cancellations, and delays resulting from security breaches and perceived safety threats; and 21 • result in a grounding of commercial air traffic by the FAA.
We also rely on government-controlled systems such as air traffic control technology that could malfunction for reasons out of our control. Our use of outside vendors increases our exposure to several risks. Even though we strive to formalize agreements with these vendors that define expected service levels, we may not have the ability to influence change with all vendors.
We also rely on government-controlled systems such as air traffic control technology that could malfunction for reasons out of our control. Our use of outside vendors increases our exposure to several risks. Even though we strive to formalize agreements with these vendors that define expected service levels, we may not have the ability to influence performance of all vendors.
In many instances, our competitors have been able to grow and increase their competitive influence by merging with other airlines, as Alaska did with Virgin America in 2016 and Hawaiian Holdings, Inc. in 2024. Some competitors have also benefited from the ability to reduce their cost structures through the U.S. bankruptcy process and restructuring laws.
In many instances, our competitors have been able to grow and increase their competitive influence by merging with other airlines, as Alaska did with Virgin America in 2016 and Hawaiian in 2024. Some competitors have also benefited from the ability to reduce their cost structures through the U.S. bankruptcy process and restructuring laws.
In accordance with acquisition accounting rules, we recorded goodwill and identifiable intangible assets associated with the acquisitions of Virgin America and Hawaiian Holdings, Inc. on our consolidated balance sheet. Goodwill was recorded to the extent the acquisition purchase prices exceeded the net fair value of tangible and identifiable intangible assets and liabilities as of the acquisition date.
In accordance with acquisition accounting rules, we recorded goodwill and identifiable intangible assets associated with the acquisitions of Virgin America and Hawaiian on our consolidated balance sheet. Goodwill was recorded to the extent the acquisition purchase prices exceeded the net fair value of tangible and identifiable intangible assets and liabilities as of the acquisition date.
As part of our core business, we are required to collect, process, store and share personal and financial information from our guests and employees. Under current or future privacy legislation, we are subject to significant legal risk should we not appropriately protect that data.
As part of our core business, we are required to collect, process, store and share personal and financial information from our guests and employees. Under current or future privacy legislation, both domestically and internationally, we are subject to significant legal risk should we not appropriately protect that data.
Should partners not make available enough inventory within their cabins for our members, the attractiveness of our program may be decreased. Alaska's membership in the one world global alliance may limit options to bring non- one world carrier partners into Alaska's Mileage Plan program. Further, maintaining an alliance with another U.S. airline may expose us to additional regulatory scrutiny.
Should partners not make available enough inventory within their cabins for our members, the attractiveness of our program may be decreased. Alaska's membership in the one world global alliance may limit options to bring non- one world carrier partners into the Atmos Rewards program. Further, maintaining an alliance with another U.S. airline may expose us to additional regulatory scrutiny.
The failure of these systems could lead to increased delays and inefficiencies in flight operations, resulting in an adverse impact to our financial condition and results of operations. 28 We continue to monitor emerging technologies, including technologies which may have disruptive impacts which are out of our control.
The failure of these systems could lead to increased delays and inefficiencies in flight operations, resulting in an adverse impact to our financial condition and results of operations. We continue to monitor emerging technologies, including artificial intelligence, that may have disruptive impacts which are out of our control.
Should these providers fail to meet established service requirements or provide inadequate technical support, we could experience disruptions in our operation, ticketing or financial systems. All of our automated systems cannot be completely protected against events beyond our control, including natural disasters, computer viruses, cyberattacks, other security breaches, or telecommunications failures.
Should these providers fail to meet established service requirements or provide inadequate technical support, we could experience disruptions in our operation, ticketing or financial systems. All of our automated systems cannot be completely protected against events beyond our control, including natural disasters, computer viruses, cyberattacks, unexpected third party IT outages, other security breaches, or telecommunications failures.
Any of these factors could adversely impact our operations and financial results. 26 Economic uncertainty, including a recession, would likely impact demand for our product and could harm our financial condition and results of operations. The airline industry, which is subject to relatively high fixed costs and highly variable and unpredictable demand, is particularly sensitive to changes in economic conditions.
Economic uncertainty, including a recession, would likely impact demand for our product and could harm our financial condition and results of operations. The airline industry, which is subject to relatively high fixed costs and highly variable and unpredictable demand, is particularly sensitive to changes in economic conditions.
Further, a significant portion of our office employees have maintained remote work arrangements, which increases our exposure to cyberattacks, and could compromise our financial or operational systems. REGULATION Changes in government regulation imposing additional requirements and restrictions on our operations and business model could negatively impact our revenue and operating costs and result in service delays and disruptions.
Further, a number of our employees have maintained remote or hybrid work arrangements, which increases our exposure to cyberattacks, and could compromise our financial or operational systems. 28 REGULATION Changes in government regulation imposing additional requirements and restrictions on our operations and business model could negatively impact our revenue and operating costs and result in service delays and disruptions.
Labor costs have recently increased significantly driven by inflationary pressure on wages. Ongoing and periodic negotiations with labor unions could result in job actions, such as slow-downs, sick-outs, or other actions designed to disrupt normal operations and pressure the employer to acquiesce to bargaining demands during negotiations. Although unlawful until after lengthy mediation attempts, the operation could be significantly impacted.
Ongoing and periodic negotiations with labor unions could result in job actions, such as slow-downs, sick-outs, or other actions designed to disrupt normal operations and pressure the employer to acquiesce to bargaining demands during negotiations. Although unlawful until after lengthy mediation attempts, the operation could be significantly impacted.
Future increases in the price of jet fuel may harm our business, financial condition, and results of operations unless we are able to increase fares and fees or add ancillary services to attempt to recover increasing fuel costs.
Fuel costs constitute a significant portion of our total operating expenses. Future increases in the price of jet fuel may harm our business, financial condition, and results of operations unless we are able to increase fares and fees or add ancillary services to attempt to recover increasing fuel costs.
We are unable to predict the future supply of jet fuel, which may be impacted by various factors, including but not limited to geopolitical conflict, economic sanctions against oil-producing countries, natural disasters, or staffing and equipment shortages in the oil industry.
We are unable to predict the future supply of jet fuel, which may be impacted by various factors, including but not limited to geopolitical conflict, economic sanctions against oil-producing countries, natural disasters, or staffing and equipment shortages in the oil industry. Any of these factors could adversely impact our operations and financial results.
Additionally, increases in interest rates may mean that future borrowings are more costly for the Company, which could harm our future financial results. We carry, and will continue to carry for the foreseeable future, a substantial amount of debt and aircraft lease commitments.
These obligations could lead to liquidity constraints and have a material adverse effect on our financial position. Additionally, increases in interest rates may mean that future borrowings are more costly for the Company, which could harm our future financial results. We carry, and will continue to carry for the foreseeable future, a substantial amount of debt and aircraft lease commitments.
This could result in production instability in the locations in which the aircraft and its parts are manufactured or an inability to operate our aircraft. We rely on partner airlines for codeshare and loyalty program marketing arrangements.
Additionally, further consolidation among aircraft and aircraft parts manufacturers could further limit the number of suppliers. This could result in production instability in the locations in which the aircraft and its parts are manufactured or an inability to operate our aircraft. 23 We rely on partner airlines for codeshare and loyalty program marketing arrangements.
If other airlines participate in consolidation or reorganization, those airlines may significantly improve their cost 25 structures or revenue generation capabilities, thereby potentially making them stronger competitors of ours and potentially impairing our ability to realize expected benefits from our own strategic relationships.
If other airlines participate in consolidation or reorganization, those airlines may significantly improve their cost structures or revenue generation capabilities, thereby potentially making them stronger competitors of ours and potentially impairing our ability to realize expected benefits from our own strategic relationships. The Company's reputation could be harmed if it is exposed to significant negative publicity.
The Court of Chancery of the State of Delaware may also reach different judgments or results than would other courts, including courts where a stockholder would otherwise choose to bring the action, and such judgments or results may be more favorable to our company than to our stockholders. ACQUISITION AND INTEGRATION OF HAWAIIAN HOLDINGS, INC.
The Court of Chancery of the State of Delaware may also reach different judgments or results than would other courts, including courts where a stockholder would otherwise choose to bring the action, and such judgments or results may be more favorable to our company than to our stockholders. 29 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
The need to integrate Hawaiian’s workforce into joint collective bargaining agreements with Alaska's workforce presents the potential for delay in achieving expected synergies and other benefits or labor disputes that could adversely affect our operations and costs.
As part of this process, we may continue to incur substantial costs for employee programs. The need to integrate Hawaiian’s workforce into joint collective bargaining agreements with Alaska's workforce presents the potential for delay in achieving expected synergies and other benefits or labor disputes that could adversely affect our operations and costs.
The emergence of merger-friendly antitrust policy at the federal level, and the possibility that this policy may be short-lived, might prompt other entities to act on opportunities that could have a material adverse effect on our business, financial condition, and results of operations. 24 Our concentration in certain markets could cause us to be disproportionately impacted by adverse changes in circumstances in those locations.
The emergence of merger-friendly antitrust policy at the federal level, and the possibility that this policy may be short-lived, might prompt other entities to act on opportunities that could have a material adverse effect on our business, financial condition, and results of operations.
As part of this process, we may continue to incur substantial costs for employee programs. TECHNOLOGY We rely heavily on automated systems to operate our business, including expanded reliance on systems managed or hosted by third parties. Failure to invest in new technology or a disruption of our current systems or their operators could harm our business.
TECHNOLOGY We rely heavily on automated systems to operate our business, including expanded reliance on systems managed or hosted by third parties. Failure to invest in new technology or a disruption of our current systems or their operators could harm our business. We heavily depend on automated systems to operate our business.
Labor costs remain a significant component of our total expenses. In addition to costs associated with represented employee groups, labor costs could also increase for non-unionized employees and via vendor agreements as we work to compete for highly skilled and qualified employees against the major U.S. airlines and other businesses in a competitive job market.
In addition to costs associated with represented employee groups, labor costs could also increase for non-unionized employees and via vendor agreements as we work to compete for highly skilled and qualified employees against the major U.S. airlines and other businesses in a competitive job market. Labor costs have recently increased significantly driven by inflationary pressure on wages.
We heavily depend on automated systems to operate our business. This includes our airline reservation system, website, telecommunication systems, maintenance systems, airline operations control systems, flight deck/route optimization systems, planning and scheduling, mobile applications and devices, and many other systems. These systems require significant investment of employee time and cost for maintenance and upgrades.
This includes internally hosted technologies as well as third-party software solutions, such as our airline reservation system, website, telecommunication systems, maintenance systems, airline operations control systems, flight deck/route optimization systems, planning and scheduling, mobile applications and devices, and many other systems. These systems require significant investment of employee time and cost for maintenance and upgrades.
Hawaiian is similarly dependent on a limited number of suppliers for its aircraft, aircraft engines, and many aircraft parts.
We are dependent on a limited number of suppliers for aircraft and parts. Our carriers are dependent on limited suppliers for aircraft, aircraft engines, and many aircraft parts.
Our business, financial condition, and results of operations are substantially exposed to the volatility of jet fuel prices. Significant increases in jet fuel costs or significant disruptions in the supply of jet fuel would harm our business. Fuel costs constitute a significant portion of our total operating expenses.
If a default were to occur, this would have a material adverse impact on our financial position. 24 Our business, financial condition, and results of operations are substantially exposed to the volatility of jet fuel prices. Significant increases in jet fuel costs or significant disruptions in the supply of jet fuel would harm our business.
Failure to appropriately comply with evolving and expanding information security rules and regulations or to safeguard our employee or guest data could result in damage to our reputation and cause us to incur substantial legal and regulatory cost.
We will continue to work with regulatory agencies and other air carriers to mitigate potential impacts of these technologies on the safety and security of air travel. 27 Failure to appropriately comply with evolving and expanding information security rules and regulations or to safeguard our employee or guest data could result in damage to our reputation and cause us to incur substantial legal and regulatory cost.
Application of these laws may result in operational disruption, increased litigation risk and expense, and undermining of negotiated labor agreements. 29 In recent years, the state of California and the federal government have enacted and proposed, respectively, rules that significantly expand required disclosures discussing the impact of environmental change.
Application of these laws may result in operational disruption, increased litigation risk and expense, and undermining of negotiated labor agreements. Our operations are subject to federal, state, and international rules that require disclosures discussing the impact of environmental change.
Our sensitive information is securely transmitted over public and private networks. Our systems are subject to increasing and evolving cybersecurity risks. Unauthorized parties have attempted and continue to attempt to gain access to our systems and information, including through fraudulent misrepresentation and other means of deception. Methods used by unauthorized parties are continually evolving and may be difficult to identify.
Our sensitive information is securely transmitted over public and private networks. Our systems are subject to increasing and evolving cybersecurity risks. While we have not experienced a material breach of our systems and information to date, unauthorized parties have previously gained access to our systems and information, including through fraudulent misrepresentation and other means of deception.
Recently, Boeing was impacted by an employee strike which temporarily halted production of B737 aircraft. These challenges have impacted and will continue to impact the timing of deliveries. If we are unable to receive aircraft in a timely manner, our growth plans could be negatively impacted.
These challenges have impacted and will continue to impact the timing of deliveries. If we are unable to receive aircraft in a timely manner, our growth plans could be negatively impacted. Given our size relative to its competitors, these challenges may have a disproportionate impact on us.
Our strategy involves a high concentration of our business in key West Coast markets. A significant portion of our flights occur to and from our stations in Seattle, Portland, and the Bay Area.
Our concentration in certain markets could cause us to be disproportionately impacted by adverse changes in circumstances in those locations. Our strategy involves a high concentration of our business in key West Coast markets. A significant portion of our flights occur to and from our stations in Seattle, Honolulu, Portland, and California.
Airlines are subject to extensive regulatory and legal requirements, both domestically and internationally, that involve substantial operational impacts and compliance costs. In recent years, U.S. regulators have issued regulations or mandates concerning airline operations or consumer rights that have increased the cost and complexity of our business and involve greater civil enforcement and legal liability exposure.
Obtaining access to these slots to support our growth plans may require significant financial commitments. In recent years, U.S. regulators have issued regulations or mandates concerning airline operations or consumer rights that have increased the cost and complexity of our business and involve greater civil enforcement and legal liability exposure.
The price of jet fuel can be dependent on geography and may have a disproportionate impact on our operating results due to our concentration on the West Coast.
Due to our concentration on the West Coast, the price of jet fuel may have a disproportionate impact on our operating results compared to other carriers which may have operations that span a larger geographic area.
Negative publicity, including as a result of misconduct by our guests or employees, failures by our suppliers and other vendors, failure to achieve our stated goals, or other circumstances, can spread rapidly through such channels. Should the Company not respond in a timely and appropriate manner to address negative publicity, the Company's reputation may be significantly harmed.
We operate in a highly visible industry that has significant exposure to social media and other media channels. Negative publicity, including as a result of misconduct by our guests or employees, failures by our suppliers and other vendors, failure to achieve our stated goals, or other circumstances, can spread rapidly through such channels.
A cybersecurity attack impacting our onboard or other operational systems may result in an accident or incident onboard or significant operational disruptions, which could adversely affect our reputation, operation and financial position. The continued evolution and increased usage of artificial intelligence technologies may further increase our cybersecurity risks.
Additionally, a cybersecurity attack impacting our onboard or other operational systems may result in an accident or incident onboard or significant operational disruptions, which could adversely affect our reputation, operation and financial position. Methods used by unauthorized parties are continually evolving and may be difficult to identify.
We can provide no assurance that a significant impairment charge will not occur in one or more future periods. Any such charges may materially affect our financial results. PEOPLE AND LABOR A significant increase in labor costs or unsuccessful attempts to strengthen our relationships with union employees could adversely affect our business and results of operations.
PEOPLE AND LABOR A significant increase in labor costs or unsuccessful attempts to strengthen our relationships with union employees could adversely affect our business and results of operations. Labor costs remain a significant component of our total expenses.
A compromise of our systems, the security of our infrastructure, or those of our vendors or other business partners that result in our information being accessed or stolen by unauthorized persons could result in substantial costs for response and remediation, adversely affect our operations and our reputation, and expose us to litigation, regulatory enforcement, or other legal action.
Although we have protocols in place to address cybersecurity incidents, unauthorized access to or misuse of the personal and financial information of our guests and employees as a result of a cyber-attack could result in substantial costs for response and remediation, adversely affect our operations and our reputation, and expose us to litigation, regulatory enforcement, or other legal action.
Such harm could have a negative impact on our operating results. FINANCIAL CONDITION We have a significant amount of debt and fixed obligations. These obligations could lead to liquidity restraints and have a material adverse effect on our financial position.
Should the Company not respond in a timely and appropriate manner to address negative publicity, the Company's reputation may be significantly harmed. Such harm could have a negative impact on our operating results. FINANCIAL CONDITION We have a significant amount of debt and fixed obligations.
Additionally, we rely on the FAA and its systems for critical aspects of flight operations.
Although we are taking action to ensure the resiliency of our IT infrastructure, additional technology outages may occur in the future which could disrupt operations and may affect our results of operations. Additionally, we rely on the FAA and its systems for critical aspects of flight operations.
Our presence in international locations and our membership in the one world alliance exposes us to incremental global regulation and therefore risk. In addition, we continue to expand our reliance on third-party software providers and data processors, including cloud providers.
The regulatory environment may pose material risks to our business, including additional compliance costs, regulatory enforcement, and legal claims or proceedings. In addition, we continue to expand our reliance on third-party software providers and data processors, including cloud providers.
These integration expenses likely will continue to result in us taking significant charges against earnings in future periods, and the amount and timing of such charges are uncertain at present. 31 Our ability to use Hawaiian Airlines' net operating loss carryforwards to offset future taxable income for U.S. federal and state income tax purposes may be limited as a result of the previous ownership changes, this acquisition or taxable income if it does not reach sufficient levels.
We can provide no assurance that a significant impairment charge will not occur in one or more future periods. Any such charges may materially affect our financial results. 25 The Company’s ability to use its net operating loss carryforwards to offset future taxable income for U.S. federal and state income tax purposes may be limited.
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In addition to these markets, the acquisition of Hawaiian Holdings, Inc. in 2024 significantly increases the concentration of our operation in Hawai'i, with Honolulu now representing Air Group's second largest hub.
Added
Certain debt agreements and credit facilities contain customary financial covenants, including compliance with certain debt service coverage ratios and minimum liquidity requirements. If we fail to comply with any of these covenants and are unable to renegotiate the terms of the agreements, this could result in default and acceleration of our outstanding obligations or repossession of collateral by our lenders.
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We are dependent on a limited number of suppliers for aircraft and parts. Alaska is dependent on Boeing as its sole supplier for mainline aircraft and many aircraft parts. Horizon is dependent on Embraer. Each carrier is dependent on sole suppliers for aircraft engines for each aircraft type.
Added
The price of jet fuel can be dependent on geography, as refining margins on the West Coast can be elevated compared to other geographic locations.
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Given Alaska's and Hawaiian's size relative to its competitors, these challenges may have a disproportionate impact on Alaska and Hawaiian. Additionally, further consolidation among aircraft and aircraft parts manufacturers could further limit the number of suppliers.
Added
At December 31, 2025, Air Group had $2 billion of gross U.S. federal net operating loss (“NOL”) carryforwards, which can be carried forward indefinitely. Air Group also had $1.7 billion of gross state NOL carryforwards which begin to expire in 2026. The Company’s ability to utilize these NOLs depends on generating sufficient taxable income in future periods.
Removed
As we evolve our brand we will engage in strategic initiatives that may not be favorably received by all of our guests. We continue to focus on strategic initiatives designed to increase our brand appeal to a diverse and evolving demographic of airline travelers.
Added
In addition, NOLs remain subject to examination and adjustment by federal and state taxing authorities. If future operating results or economic conditions are less favorable than expected, the company may be required to record additional valuation allowances against its deferred tax assets, which could be material.
Removed
These efforts could include significant enhancements to our in-airport and on-board environments, increasing our direct customer relationships through improvements to our purchasing portals (digital and mobile), and management of our customer loyalty program. In pursuit of these efforts, we may negatively affect our reputation with some of our existing customer base.
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In July and October of 2025, Alaska Air Group experienced IT outages that affected operations. Temporary ground stops were put in place for Alaska and Horizon. Following the outages, we brought in outside technical experts to diagnose our entire IT infrastructure.
Removed
The Company's reputation could be harmed if it is exposed to significant negative publicity. We operate in a highly visible industry that has significant exposure to social media and other media channels.
Added
Our increasing presence in international locations and our membership in the one world alliance exposes us to additional global regulations and risks. With our operations to Europe beginning in 2026, we will be subject to the European Union's General Data Protection Regulation, which imposes strict information security requirements and the potential for substantial non-compliance penalties.
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We will continue to work with regulatory agencies and other air carriers to mitigate potential impacts of these technologies on the safety and security of air travel.
Added
In June 2025, Hawaiian Airlines identified a cybersecurity incident affecting certain information technology systems. Upon identifying this incident, we followed our response protocols and immediately took steps to safeguard our network by disconnecting impacted Hawaiian systems and applications. Access for all systems was restored. Hawaiian's flights were not interrupted and continued to operate safely throughout our response.
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Emerging cybercrime threats include the loss of functionality of critical systems through ransomware, denial of service, or other attacks.
Added
The continued evolution and increased usage of artificial intelligence technologies may further increase our cybersecurity risks.
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If we do not successfully manage these issues and the other challenges inherent in integrating an acquired business the size of Hawaiian, then we may not achieve the anticipated benefits of the acquisition of Hawaiian and our revenue, expenses, operating results and financial condition could be materially adversely affected.
Added
Airlines are subject to extensive regulatory and legal requirements, both domestically and internationally, that involve substantial operational impacts and compliance costs.The FAA will periodically issue directives or other regulations regarding maintenance or operation of aircraft, which could result in temporary groundings, delays, or adjustments to operations and consequently could negatively impact our financial results.
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We are expected to incur substantial expenses related to the acquisition and the integration of Hawaiian Airlines’ business. We are expected to incur substantial integration and transition expenses in connection with the acquisition of Hawaiian Airlines, including the necessary costs associated with integrating the operations of Alaska and Hawaiian Airlines.
Added
Additionally, the FAA is responsible for the efficient and safe operation of air traffic. Any inefficiencies in air traffic control, including the failure to modernize the air traffic control system in a manner consistent with the growth of air travel, could adversely affect our operations. Access to airport slots can also be limited due to government regulation.
Removed
There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including reservations, loyalty program, ticketing/distribution, maintenance, and flight operations. While we have assumed that a certain level of expenses will be incurred, there are many factors beyond our control that could affect the total amount or the timing of the integration expenses.
Removed
Moreover, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These expenses could, particularly in the near term, exceed the financial benefits we expect to achieve from the acquisition, including the elimination of duplicative expenses and the realization of economies of scale and cost savings.
Removed
As of the acquisition closing date, Hawaiian Airlines had federal net operating loss carryforwards (“NOLs”) of approximately $817 million available to offset future taxable income, that have indefinite carryover, but are limited to 80% utilization, and state NOLs of approximately $1.0 billion. The majority of the state NOLs relate to the state of Hawai'i.
Removed
Certain state NOLs will expire, if unused, beginning in 2025. Hawaiian Airlines has experienced an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). Section 382 of the Code imposes an annual limitation on the amount of pre-ownership change NOLs of the corporation that experiences ownership change.
Removed
The limitation imposed by Section 382 of the Code for any post-ownership change year generally would be determined by multiplying the value of such corporation’s stock immediately before the ownership change by the applicable long-term tax-exempt rate.
Removed
Any unused annual limitation may, subject to certain limits, be carried over to later years, and the limitation may, under certain circumstances, be increased by built-in gains or reduced by built-in losses in the assets held by such corporation at the time of the ownership change.
Removed
Our use of NOLs generated after the date of an ownership change would not be limited unless we were to experience a subsequent ownership change. Our ability to use the NOLs will also depend on the amount of taxable income generated in future periods. Certain state NOLs may expire before we can generate sufficient taxable income to utilize the NOLs.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeBecause of the industry in which we operate, we are subject to extensive cybersecurity regulation, including but not limited to those regulations overseen by the FAA, TSA, and DOT. As a result, it is imperative our cybersecurity risk management is well-planned and sufficiently robust to maintain compliance with these regulations.
Biggest changeThe threat of cybersecurity incidents is included within our company’s annual Enterprise Risk Management (ERM) program that assesses the most significant risks to the enterprise. Because of the industry in which we operate, we are subject to extensive cybersecurity regulation, including but not limited to those regulations imposed by the FAA, TSA, and DOT.
The CISO leads a team dedicated to the prevention, mitigation, detection, and remediation of any cybersecurity incidents. If a potential incident is identified, the CISO is notified and engages the cybersecurity incident response team (CyberSIRT). This team is responsible for declaring a cybersecurity incident and comprises individuals from multiple relevant departments.
The CISO leads a team dedicated to the prevention, mitigation, detection, and remediation of any cybersecurity incidents. If a potential incident is identified, the CISO is notified and engages the cybersecurity incident response team (CyberSIRT), which includes individuals from multiple departments. This team is responsible for assessing the incident and declaring a cybersecurity incident, if appropriate.
The Company’s Chief Information Security Officer (CISO) is responsible for management of material risks from cybersecurity threats. The CISO has multiple years of experience working in information and network security management, and has in-depth knowledge of compliance requirements and standards set by various regulatory agencies.
Our cybersecurity risk management is designed to maintain compliance with these regulations. The Company’s Chief Information Security Officer (CISO) is responsible for management of material risks from cybersecurity threats. The CISO has multiple years of experience working in information and network security management, and has in-depth knowledge of compliance requirements and standards set by various regulatory agencies.
In the event the CyberSIRT declares an incident, the CISO provides overall direction for the response and mitigation of the threat. This response includes actions taken to protect our data and networks, evaluation of the potential materiality of the incident, and the communication of the incident to critical parties, including senior leadership and the Board of Directors.
When an incident is declared, the CISO provides overall direction for the response and mitigation of the threat. This response may include taking action to protect our data and networks, evaluation of the potential materiality of the incident, and communicating the incident to critical parties, including senior leadership and the Board of Directors.
ITEM 1C. CYBERSECURITY Air Group’s management and Board consider cybersecurity to be a critical component of the Company’s risk management plan. Our systems are subject to increasing and evolving cybersecurity risks. Unauthorized parties have attempted and continue to attempt to gain access to our systems and information, including through fraudulent misrepresentation and other means of deception.
ITEM 1C. CYBERSECURITY Air Group’s management and Board consider cybersecurity to be a critical component of the Company’s risk management plan. Our systems are subject to increasing and evolving cybersecurity risks.
The Board’s Audit Committee leads the review and discussion of cybersecurity threats with management and receives updates from the CISO each quarter.
The Board’s Audit Committee leads the review and discussion of cybersecurity threats with management and receives updates from the CISO each quarter. Senior management, including the CISO, are available to address questions or concerns from the Audit Committee related to our risk management plan.
Removed
The systems of our suppliers, vendors, and other business partners are also at risk. The threat of cybersecurity incidents is included within our company’s annual Enterprise Risk Management (ERM) program that assesses the most significant risks to the enterprise.
Added
While we have not experienced a material breach of our systems and information to date, unauthorized parties have previously gained access to our systems and information, including through fraudulent misrepresentation and other means of deception. The systems of our suppliers, vendors, and other business partners are also at risk.
Removed
Senior management, including the CISO, are available to address questions or concerns from the Audit Committee related to our risk management plan. 32 In 2024, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our organization.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES AIRCRAFT The following table describes the aircraft we operate and their average age at December 31, 2024: Aircraft Seats Owned Leased Total Average Age in Years Alaska Airlines B737-700 Freighters — 3 — 3 23.9 B737-800 Freighters — — 2 2 17.4 B737-700 124 11 — 11 24.7 B737-800 159 49 10 59 16.7 B737-900 178 6 — 6 22.6 B737-900ER 178 79 — 79 8.9 B737-8 159 5 — 5 0.6 B737-9 178 58 14 72 2.1 Total Alaska Airlines Fleet 211 26 237 9.9 Hawaiian Airlines A330-300 Freighters — — 6 6 6.6 A330-200 278 12 12 24 11.5 A321neo 189 14 4 18 6.0 B717-200 128 19 — 19 22.7 B787-9 300 2 — 2 0.8 Total Hawaiian Airlines Fleet 47 22 69 12.4 Regional E175 76 44 42 86 5.8 Total Regional Fleet 44 42 86 5.8 Total Air Group Fleet 302 90 392 9.4 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” discusses future orders and options for additional aircraft.
Biggest changePROPERTIES 30 AIRCRAFT The following table describes the aircraft we operate and their average age at December 31, 2025: Aircraft Seats Owned Leased Total Average Age in Years Mainline B737-700 Freighters — 3 — 3 24.9 B737-800 Freighters — — 2 2 18.4 A330-300 Freighters — — 10 10 10.4 A321-200neo 189 14 4 18 7.0 A330-200 278 12 12 24 12.5 B717-200 128 19 — 19 23.7 B737-700 124 11 — 11 25.7 B737-800 159 - 161 49 10 59 17.7 B737-900ER 178 79 — 79 9.9 B737-8 159 - 161 14 — 14 0.8 B737-9 178 66 14 80 2.8 B787-9 300 5 — 5 1.0 Total Mainline Fleet 272 52 324 10.6 Regional E175 76 47 42 89 6.6 Total Regional Fleet 47 42 89 6.6 Total Air Group Fleet 319 94 413 9.7 Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K discusses future orders and options for additional aircraft.
We also lease operations, training, administrative, and data center facilities in Burlingame, CA; Long Beach, CA; Honolulu, HI; Portland, OR; Puyallup, WA; Quincy, WA; Renton, WA; Seattle, WA; and Spokane, WA, call center facilities in Phoenix, AZ and Boise, ID, and hangars in Portland, OR, Everett, WA, and Spokane, WA.
We also lease operations, training, administrative, and data center facilities in Burlingame, CA; Long Beach, CA; Honolulu, HI; Portland, OR; Puyallup, WA; Quincy, WA; Seattle, WA; and Spokane, WA, call center facilities in Phoenix, AZ and Boise, ID, and hangars in Portland, OR, Everett, WA, and Spokane, WA.
We also own or lease several buildings located at or near Seattle-Tacoma International Airport. These include a multi-bay hangar and shops complex (used primarily for line maintenance), a flight operations and training center, an air cargo facility, a data center, and various other commercial office buildings. In various cities in Hawai'i, we own or lease various properties.
OTHER PROPERTIES In various cities in Alaska, we own terminal buildings and hangars. We also own or lease several buildings located at or near Seattle-Tacoma International Airport. These include a multi-bay hangar and shops complex (used primarily for line maintenance), a flight operations and training center, an air cargo facility, a data center, and various other commercial office buildings.
In Honolulu, our principal terminal facilities, cargo facilities and hangar and maintenance facilities are located at Daniel K. Inouye International Airport (HNL). The majority of the facilities at HNL are leased on a month-to-month basis. We are also charged for the use of terminal facilities at other Neighbor Island airports owned by the State of Hawai'i.
In various cities in Hawai'i, we own or lease various properties. In Honolulu, our principal terminal facilities, cargo facilities and hangar and maintenance facilities are located at Daniel K. Inouye International Airport (HNL). The majority of the facilities at HNL are leased on a month-to-month basis.
Some terminal facilities, including gates and holding rooms, are considered by the State of Hawai'i to be common areas and thus are not exclusively controlled by us. We also utilize other State of Hawai'i facilities, including station manager offices, Premier Club lounges, and operations support space.
We are also charged for the use of terminal facilities at other Neighbor Island airports owned by the State of Hawai'i. Some terminal facilities, including gates and holding rooms, are considered by the State of Hawai'i to be common areas and thus are not exclusively controlled by us.
“Liquidity and Capital Resources” provides more information about aircraft that are used to secure long-term debt arrangements or collateralize credit facilities. Note 7 to the consolidated financial statements provides more information regarding leased aircraft as capitalized on our consolidated balance sheets. Aircraft leases Alaska leases B737-800F, B737-800, B737-9, and E175 aircraft types. The leases for the B737-800F expire in 2034.
“Liquidity and Capital Resources” provides more information about aircraft that are used to secure long-term debt arrangements or collateralize credit facilities. Note 6 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K provides more information regarding leased aircraft as capitalized on our consolidated balance sheets.
At the majority of the airports we serve, we lease ticket counters, gates, cargo and baggage space, ground equipment, office space, and other support areas. Airport leases contain provisions for periodic adjustments of lease rates. We are typically responsible for maintenance, insurance and other facility-related expenses and services under these agreements.
We also utilize other State of Hawai'i facilities, including station manager offices, Premier Club lounges, and operations support space. 31 At the majority of the airports we serve, we lease ticket counters, gates, cargo and baggage space, ground equipment, office space, and other support areas. Airport leases contain provisions for periodic adjustments of lease rates.
The leases for the B737-800 aircraft expire between 2026 and 2028. The leases for the B737-9 aircraft expire between 2031 and 2035. The leased E175 aircraft support Alaska's capacity purchase agreement with SkyWest, and are under agreement t hrough 2034. Alaska has the option to extend some of the leases for additional periods.
The leases for the A330-200 aircraft expire between 2026 and 2034. The leases for the A330-300F expire in 2030. The leases for the E175 aircraft, which support Alaska's capacity purchase agreement with SkyWest, expire between 2030 and 2034. Our airlines have the option to extend some of the leases for additional periods.
Removed
Hawaiian leases A330-300F, A330-200, and A321neo aircraft types. The leases for the A330-300F expire in 2030. The leases for the A330-200 aircraft expire between 2025 and 2029. The leases for the A321neo aircraft expire between 2030 and 2032. 33 OTHER PROPERTIES In various cities in Alaska, we own terminal buildings and hangars.
Added
Aircraft leases Our airlines lease B737-800F, B737-800, B737-9, A321-200neo, A330-200, A330-300F, and E175 aircraft types. The leases for the B737-800F expire in 2034. The leases for the B737-800 aircraft expire between 2026 and 2030. The leases for the B737-9 aircraft expire between 2031 and 2035. The leases for the A321neo aircraft expire between 2030 and 2032.
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We are typically responsible for maintenance, insurance and other facility-related expenses and services under these agreements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOther than as described in Note 10 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, Management believes the ultimate outcome of these matters is not likely to materially affect our financial position or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Biggest changeOther than as described in Note 9 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, Management believes the ultimate outcome of these matters is not likely to materially affect our financial position or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS The following table summarizes our share repurchase activity for the fourth quarter of 2024: 34 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) October 1, 2024 - October 31, 2024 — — — November 1, 2024 - November 30, 2024 — — — December 1, 2024 - December 31, 2024 3,867,530 $ 64.23 3,867,530 Total 3,867,530 $ 64.23 3,867,530 $ — Shares were purchased pursuant to the $1 billion repurchase plan authorized by the Board of Directors in August 2015, which was completed in 2024.
Biggest changePURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS The following table summarizes our share repurchase activity for the fourth quarter of 2025: Total Number of Shares Purchased (a) 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) October 1, 2025 - October 31, 2025 203,122 $ 45.78 203,122 November 1, 2025 - November 30, 2025 323,845 $ 41.07 323,845 December 1, 2025 - December 31, 2025 152,833 $ 48.87 152,833 Total 679,800 $ 44.23 679,800 $ 430 (a) Purchase pursuant to the $1 billion repurchase plan authorized by the Board of Directors in December 2024. 32 PERFORMANCE GRAPH The following Performance Graph and related information shall not be deemed "soliciting material" or "filed" with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934.
Future decisions to pay cash dividends continue to be at the discretion of our Board of Directors and will be dependent on our market and economic conditions, applicable legal requirements, and other relevant factors. SALES OF NON-REGISTERED SECURITIES None.
Future decisions to pay cash dividends continue to be at the discretion of our Board of Directors and will be dependent on market and economic conditions, applicable legal requirements, and other relevant factors. SALES OF NON-REGISTERED SECURITIES None.
The following graph compares our cumulative total stockholder return since December 31, 2019 with the S&P 500 Index and the NYSE ARCA Airline Index. The graph assumes that the value of the investment in our common stock and each index (including reinvestment of dividends) was $100 on December 31, 2019. 35 ITEM 6. [RESERVED] None.
The following graph compares our cumulative total stockholder return since December 31, 2020 with the S&P 500 Index and the NYSE ARCA Airline Index. The graph assumes that the value of the investment in our common stock and each index (including reinvestment of dividends) was $100 on December 31, 2020. ITEM 6. [RESERVED] None.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the New York Stock Exchange (symbol: ALK). As of December 31, 2024, there were 2,265 holders of record of our common stock. There were no cash dividend payments during the year ended December 31, 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the New York Stock Exchange (symbol: ALK). As of December 31, 2025, there were 2,183 holders of record of our common stock. There were no cash dividend payments during the year ended December 31, 2025.
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In the fourth quarter of 2024, the Board of Directors authorized a new $1 billion repurchase plan. Purchases under this plan started in 2025.
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PERFORMANCE GRAPH The following Performance Graph and related information shall not be deemed "soliciting material" or "filed" with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeTwelve Months Ended December 31, 2024 2023 Change Consolidated Operating Statistics: (a) Revenue passengers (000) 49,238 44,557 11% RPMs (000,000) "traffic" 63,871 57,362 11% ASMs (000,000) "capacity" 76,167 68,524 11% Load factor 83.9% 83.7% 0.2 pts Yield 16.68¢ 16.61¢ —% PRASM 13.99¢ 13.90¢ 1% RASM 15.41¢ 15.21¢ 1% CASMex (b) 10.80¢ 10.06¢ 7% Economic fuel cost per gallon (b)(c) $2.74 $3.21 (15)% Fuel gallons (000,000) (c) 925 824 12% ASMs per gallon 82.3 83.2 (1)% Departures (000) 461 414 11% Average full-time equivalent employees (FTEs) 25,751 23,319 10% Operating fleet (d) 392 314 78 a/c Alaska Airlines Operating Statistics: RPMs (000,000) "traffic" 53,680 52,975 1% ASMs (000,000) "capacity" 63,873 63,292 1% Economic fuel cost per gallon $2.74 $3.18 (14)% Hawaiian Airlines Operating Statistics: RPMs (000,000) "traffic" 5,143 — n/a ASMs (000,000) "capacity" 6,245 — n/a Economic fuel cost per gallon (c) $2.43 — n/a Regional Operating Statistics: (e) RPMs (000,000) "traffic" 5,048 4,387 15% ASMs (000,000) "capacity" 6,049 5,232 16% Economic fuel cost per gallon $2.93 $3.41 (14)% (a) Except for FTEs, data includes information related to third-party regional capacity purchase flying arrangements.
Biggest changeTwelve Months Ended December 31, 2025 2024 As Reported 2024 Hawaiian Airlines (a) 2024 Pro Forma Change Consolidated Operating Statistics: Revenue passengers (000) 58,627 49,238 7,896 57,134 2.6% RPMs (000,000) "traffic" 77,110 63,871 12,695 76,566 0.7% ASMs (000,000) "capacity" 92,962 76,167 15,041 91,208 1.9% Load factor 82.9% 83.9% 84.4% 83.9% (1.0) pts Yield 16.64¢ 16.68¢ 14.56¢ 16.33¢ 1.9% PRASM 13.81¢ 13.99¢ 12.29¢ 13.71¢ 0.7% RASM 15.32¢ 15.41¢ 13.58¢ 15.11¢ 1.4% CASMex 11.42¢ 10.80¢ 11.54¢ 10.91¢ 4.7% Economic fuel cost per gallon $2.52 $2.74 $2.73 $2.74 (8.0)% Fuel gallons (000,000) 1,146 925 198 1,123 2.0% ASMs per gallon 81.1 82.3 76.0 81.2 (0.1)% Departures (000) 543 461 58 519 4.6% Average full-time equivalent employees (FTEs) 31,585 25,751 6,456 30,144 4.8% (a) The Hawaiian column reflects results prior to the consummation of the merger, comprising the period January 1, 2024 to September 17, 2024.
These obligations include the purchase of aircraft and other flight equipment, payments for our CPA with SkyWest, debt service payments, lease payments for aircraft and other property and equipment, costs for aircraft and engine maintenance, sponsorship and license agreements, and other miscellaneous agreements for services associated with operating and marketing our airlines.
These obligations include the purchase of aircraft and other flight equipment, payments for Alaska's CPA with SkyWest, debt service payments, lease payments for aircraft and other property and equipment, costs for aircraft and engine maintenance, sponsorship and license agreements, and other miscellaneous agreements for services associated with operating and marketing our airlines.
CASMex is also a measure commonly used by industry analysts, and we believe it is the basis by which they have historically compared our airline to others in the industry.
CASMex is also a measure commonly used by industry analysts, and we believe it is the basis by which 43 they have historically compared our airline to others in the industry.
We estimate the selling prices and volumes over the terms of the agreements in order to determine the allocation of proceeds to each of the multiple deliverables. 47 2.
We estimate the selling prices and volumes over the terms of the agreements in order to determine the allocation of proceeds to each of the multiple deliverables. 2.
For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023.
For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Investing cash flows Capital expenditures to acquire aircraft, flight equipment, and other property and equipment is the primary use of investing cash flow. Total capital expenditures in 2024 were $1.3 billion, excluding the acquisition of Hawaiian. We discuss our aircraft-related commitments in more detail below.
Investing cash flows Capital expenditures to acquire aircraft, flight equipment, and other property and equipment is the primary use of investing cash flow. Total capital expenditures in 2025 were $1.6 billion, compared to $1.3 billion in 2024, excluding the acquisition of Hawaiian. We discuss our aircraft-related commitments in more detail below.
The rate at which we defer sales proceeds related to services sold: We estimate the standalone selling price for each performance obligation, including mileage credits, by considering multiple inputs and methods, including but not limited to, the estimated selling price of comparable travel, discounted cash flows, brand value, published selling prices, number of miles awarded, and the number of miles redeemed.
The rate at which we defer sales proceeds related to services sold: We estimate the standalone selling price for each performance obligation, including points, by considering multiple inputs and methods, including but not limited to, the estimated selling price of comparable travel, discounted cash flows, brand value, published selling prices, number of points awarded, and the number of points redeemed.
The number of miles that will not be redeemed for travel (breakage): We estimate how many miles will be used per award by employing a relative selling price method to allocate revenue from passenger ticket sales between air transportation and earned mileage credits. The portion attributed to mileage credits is deferred initially and recognized in passenger revenue upon redemption.
The number of points that will not be redeemed for travel (breakage): We estimate how many points will be used per award by employing a relative selling price method to allocate revenue from passenger ticket sales between air transportation and earned loyalty points. The portion attributed to points is deferred initially and recognized in passenger revenue upon redemption.
Amounts in the tables below are rounded to the nearest million. As a result, a manual recalculation of certain figures using these rounded amounts may not agree directly to our actual figures presented in the tables below.
As a result, a manual recalculation of certain figures using these rounded amounts may not agree directly to our actual figures presented in the tables below.
We determine the estimated value of mileage credits using an equivalent ticket approach, considering historical data on award redemption patterns. Our estimates are based on the current requirements in our Mileage Plan program and historical and future award redemption patterns.
We determine the estimated value of points using an equivalent ticket approach, considering historical data on award redemption patterns. Our estimates are based on the current requirements in our Atmos Rewards program and historical and future award redemption patterns.
Mileage credits and the various other services we sell under Mileage Plan represent performance obligations that are part of a multiple deliverable revenue arrangement. Accounting guidance requires that we use a relative standalone selling price model to allocate consideration received to the material performance obligations in these contracts.
Points and the various other services we provide under Atmos Rewards represent performance obligations that are part of a multiple deliverable revenue arrangement. Accounting guidance requires that we use a relative standalone selling price model to allocate consideration received to the material performance obligations in these contracts.
We discuss our sources and uses of cash in more detail below. Operating cash flows Cash provided by ticket sales and from our co-branded credit card agreements are the primary sources of our operating cash flow.
Operating cash flows Cash provided by ticket sales and from our co-branded credit card agreements are the primary sources of our operating cash flow.
We also anticipate we may have material cash outlays to meet our fuel efficiency targets. Currently, Alaska and Hawaiian have agreements to purchase SAF to be delivered in the coming years. These agreements are dependent on suppliers' ability to obtain all required governmental and regulatory approvals, achieve commercial operation, and produce sufficient quantities of SAF.
We also anticipate we may have material cash outlays associated with new technologies for the future of the business. Currently, Alaska has agreements to purchase sustainable aviation fuel (SAF) to be delivered in the coming years. These agreements are dependent on suppliers' ability to obtain all required governmental and regulatory approvals, achieve commercial operation, and produce sufficient quantities of SAF.
We review significant Mileage Plan assumptions on an annual basis, or more frequently should circumstances indicate a need, and change our assumptions if facts and circumstances indicate that a change is necessary. We regularly update our breakage estimates for the portion of Mileage Plan mileage credits not expected to be redeemed.
We review significant Atmos Rewards assumptions on an annual basis, or more frequently should circumstances indicate a need, and change our assumptions if facts and circumstances indicate that a change is necessary. We regularly update our breakage estimates for the portion of Atmos Rewards points not expected to be redeemed. These estimates are based upon statistical analyses of historical data.
Raw fuel expense approximates cash paid to suppliers and does not reflect the effect of our fuel hedges. 40 We evaluate economic fuel expense, which we define as raw fuel expense adjusted for the cash we receive from counterparties for hedges that settle during the period and for the premium expense that we paid for those contracts.
We evaluate economic fuel expense, which we define as raw fuel expense adjusted for the cash we receive from counterparties for hedges that settle during the period and for the premium expense that we paid for those contracts.
To a lesser extent, miles for transportation are also sold to other non-airline partners, such as hotels, and car rental agencies. Outstanding miles may be redeemed for travel on our airlines or eligible airline partners, and for non-airline products such as hotels. The existence of outstanding miles held by Mileage Plan members represents an obligation to provide future travel.
To a lesser extent, points are also sold to other non-airline partners, such as hotels, and car rental agencies. Points can be redeemed for travel on our airlines or eligible airline partners, and for non-airline products such as hotels. Outstanding points held by Atmos Rewards members represent an obligation to provide future travel.
Our relative standalone selling price models are refreshed when contracts originate or are materially modified. At December 31, 2024, Alaska's Mileage Plan program had 360 billion miles outstanding, resulting in a deferred revenue balance of $2.7 billion. For the year ended December 31, 2024, Mileage Plan revenue recognized from deferred revenue and recorded in passenger revenue was $1.1 billion.
Our relative standalone selling price models are refreshed when contracts originate or are materially modified. At December 31, 2025, Atmos Rewards program had approximately 480 billion points outstanding, resulting in a deferred revenue balance of $2.9 billion. For the year ended December 31, 2025, Loyalty program revenue recognized from deferred revenue and recorded in passenger revenue was $1.3 billion.
The deferred revenue resulting from our relative selling price allocations requires significant management judgment. There are uncertainties inherent in these estimates. Therefore, different assumptions could affect the amount and/or timing of revenue recognition or expenses. The most significant assumptions are described below. 1.
Determination of our relative selling price allocations require significant management judgment, impacting revenue recognition and liabilities that we carry on our balance sheet. There are uncertainties inherent in these estimates. Therefore, different assumptions could affect the amount and/or timing of revenue recognition or expenses. The most significant assumptions are described below. 1.
The preparation of these financial statements requires us to make estimates and judgments that affect our financial position and results of operations. See Note 1 to the consolidated financial statements for a description of our significant accounting policies.
The preparation of these financial statements requires us to make estimates and judgments that affect our financial position and results of operations. See Note 1 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a description of our significant accounting policies.
Within the notes accompanying our consolidated financial statements, refer to Note 6 for discussion of scheduled debt obligations, Note 7 for discussion of future minimum payments for operating and finance leases, and Note 10 for discussion of aircraft-related purchase commitments and CPA obligations.
Within the notes accompanying our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, refer to Note 5 for discussion of scheduled debt obligations, Note 6 for discussion of future minimum payments for operating and finance leases, and Note 9 for discussion of aircraft-related purchase commitments and CPA obligations.
Please consider our forward-looking statements in light of the risks referred to in this report’s introductory cautionary note and the risks mentioned in Item 1A. "Risk Factors" within this document. This section of the Form 10-K covers discussion of 2024 and 2023 results, and comparisons between those years.
Please consider our forward-looking statements in light of the risks referred to in this report’s introductory cautionary note and the risks mentioned in Item 1A. "Risk Factors" within this document.
Alaska Mileage Plan Alaska's Mileage Plan program awards mileage credits, referred to as miles, to members who fly on our airlines and our airline partners. We also sell services, including miles for transportation, Companion Fare™ certificates, priority boarding, bag fee waivers, and access to our brand and customer lists to major banks that offer Alaska co-branded credit cards.
Atmos Rewards Atmos Rewards awards points to members who fly on our airlines and our airline partners. We also provide other benefits, including Companion Fare™ certificates, priority boarding, bag fee waivers, and access to our brand and customer lists to major banks that offer our co-branded credit cards.
These estimates are based upon statistical analyses of historical data. A hypothetical 1% change in the amount of outstanding miles estimated to be redeemed would result in an approximately $12 million impact on annual revenue recognized.
A hypothetical 1% change in the amount of outstanding points estimated to be redeemed would result in an approximately $17 million impact on annual revenue recognized.
The decrease was driven primarily by lower refining margins associated with the conversion of crude oil to jet fuel, as well as lower per gallon costs on crude oil. It was partially offset by higher fuel consumption consistent with increased capacity and the inclusion of $193 million of raw fuel expense attributable to Hawaiian.
Raw fuel expense decreased 5% compared to pro forma 2024, primarily driven by lower per gallon costs on crude oil. Decreases were partially offset by higher fuel consumption consistent with increased capacity and higher refining margins associated with the conversion of crude oil to jet fuel.
For Alaska, this includes B737-9 aircraft contracted for delivery in 2024 that have been moved to 2025, certain B737-8 aircraft contracted for delivery in 2024 and 2025 that have been moved later in the contracted year or into the year following the contracted delivery, and certain B737-10 aircraft contracted for delivery in 2025 and 2026 that have been moved to 2026 or 2027, pending certification of the aircraft type.
This includes certain B737-8 aircraft contracted for delivery in 2025 and 2026 that have moved into 2026 and 2027, and certain B787 aircraft contracted for delivery in 2025 that have moved into 2026. B737-10 aircraft contracted for delivery between 2027 and 2035 may be delayed pending certification of the aircraft type.
Actual Fleet Count Anticipated Fleet Activity Aircraft Dec 31, 2023 Dec 31, 2024 2025 Changes Dec 31, 2025 2026 Changes Dec 31, 2026 2027 Changes Dec 31, 2027 Alaska Airlines Fleet: B737-700 Freighters 3 3 — 3 — 3 — 3 B737-800 Freighters 1 2 — 2 — 2 — 2 B737-700 11 11 — 11 — 11 — 11 B737-800 59 59 — 59 — 59 — 59 B737-900 12 6 (6) — — — — — B737-900ER 79 79 — 79 — 79 — 79 B737-8 1 5 9 14 6 20 — 20 B737-9 65 72 8 80 — 80 — 80 B737-10 — — — — 3 3 17 20 Total Alaska Airlines Fleet 231 237 11 248 9 257 17 274 Hawaiian Airlines Fleet: A330-300 Freighters (a) — 6 4 10 — 10 — 10 A330-200 — 24 — 24 — 24 — 24 A321neo — 18 — 18 — 18 — 18 B717-200 — 19 — 19 — 19 — 19 B787-9 — 2 3 5 2 7 4 11 Total Hawaiian Airlines Fleet — 69 7 76 2 78 4 82 Regional Fleet: E175 operated by Horizon 41 44 3 47 3 50 — 50 E175 operated by third party 42 42 1 43 — 43 — 43 Total Regional Fleet 83 86 4 90 3 93 — 93 Total Air Group Fleet 314 392 22 414 14 428 21 449 (a) A330-300 freighter aircraft to be utilized under the ATSA with Amazon.
Actual Fleet Count Anticipated Fleet Activity Aircraft Dec 31, 2024 Dec 31, 2025 2026 Changes Dec 31, 2026 2027 Changes Dec 31, 2027 2028 Changes Dec 31, 2028 Mainline Fleet: B737-700 Freighters 3 3 — 3 — 3 — 3 B737-800 Freighters 2 2 — 2 — 2 — 2 A330-300 Freighters (a) 6 10 — 10 — 10 — 10 A321-200neo 18 18 — 18 — 18 — 18 A330-200 24 24 — 24 — 24 (4) 20 B717-200 19 19 — 19 — 19 — 19 B737-700 11 11 — 11 — 11 — 11 B737-800 59 59 (1) 58 — 58 — 58 B737-900 6 — — — — — — — B737-900ER 79 79 — 79 — 79 — 79 B737-8 5 14 6 20 5 25 — 25 B737-9 72 80 — 80 — 80 — 80 B737-10 — — — — 25 25 25 50 B787-9 2 5 1 6 1 7 — 7 B787-10 — — — — — — 4 4 Total Mainline Fleet 306 324 6 330 31 361 25 386 Regional Fleet: E175 operated by Horizon 44 47 3 50 — 50 — 50 E175 operated by third party 42 42 1 43 — 43 — 43 Total Regional Fleet 86 89 4 93 — 93 — 93 Total Air Group Fleet 392 413 10 423 31 454 25 479 (a) A330-300 freighter aircraft utilized under the ATSA with Amazon.
Losses recognized for hedges that settled during the year were $38 million in 2024, compared to losses of $64 million in 2023. These amounts represent cash paid for premium expense, offset by any cash received from those hedges at settlement. Alaska's fuel hedge program was suspended in 2023. Hawaiian's program was temporarily paused as of September 30, 2024.
Losses recognized for hedges that settled during the year were $4 million in 2025, compared to losses of $44 million in pro forma 2024. These amounts represent cash paid for premium expense, offset by any cash received from those hedges at settlement.
Operating cash flow also includes payments to, or refunds from, federal, state, and local taxing authorities. In 2024, cash provided by operating activities was $1.5 billion, compared to $1.1 billion in 2023.
Operating cash flow also includes payments to, or refunds from, federal, state, and local taxing authorities. In 2025, cash provided by operating activities was $1.2 billion, compared to $1.5 billion in 2024. Advance ticket sales and our co-branded credit card agreements are the primary sources of our operating cash flow.
Alaska also had rights for 100 additional B737 aircraft through 2030. Hawaiian had firm orders to purchase 10 B787-9 aircraft with deliveries expected between 2025 and 2028. Horizon had firm orders to purchase six E175 aircraft with deliveries between 2025 and 2026.
As of December 31, 2025, Alaska had firm orders to purchase 174 B737 aircraft, with deliveries expected between 2026 and 2035, and firm orders to purchase 12 B787 aircraft with deliveries expected between 2026 and 2032. Alaska also had rights for 71 additional B737 aircraft through 2035. Horizon had firm orders to purchase three E175 aircraft with deliveries in 2026.
Our aircraft fuel expense can be volatile because it includes these gains or losses in the value of the underlying instrument as crude oil prices increase or decrease. Raw fuel expense is defined as the price that we generally pay at the airport, or the “into-plane” price, including taxes and fees.
Fuel expense Aircraft fuel expense includes raw fuel expense plus the effect of mark-to-market adjustments to our fuel hedge portfolio as the value of that portfolio increases and decreases. Our aircraft fuel expense can be volatile because it includes these gains or losses in the value of the underlying instrument as crude oil prices increase or decrease.
We expect our current cash and marketable securities balance, combined with our available sources of liquidity, are sufficient to fund our liquidity needs for the next 12 months. We expect to meet our liquidity needs for the foreseeable future using cash flows from our operations, our available sources of liquidity, and future financing arrangements.
We expect to meet our liquidity needs for the foreseeable future using cash flows from our operations, our available sources of liquidity, and future financing arrangements. We discuss our sources and uses of cash in more detail below.
Although we believe it is useful to evaluate non-fuel unit costs for the reasons noted above, we would caution readers of these financial statements not to place undue reliance on unit costs excluding fuel as a measure or predictor of future profitability because of the significant impact of fuel costs on our business. 36 We are providing reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis.
Although we believe it is useful to evaluate non-fuel unit costs for the reasons noted above, we would caution readers of these financial statements not to place undue reliance on unit costs excluding fuel as a measure or predictor of future profitability because of the significant impact of fuel costs on our business. • Adjusted capital expenditures includes certain amounts that are not classified as investing cash outflows within our consolidated statements of cash flows, but are viewed by management and other stakeholders as significant long-term investments in the business.
GAAP TO NON-GAAP RECONCILIATIONS (unaudited) Twelve Months Ended December 31, (in millions) 2024 2023 Income before income tax $ 545 $ 323 Adjusted for: Mark-to-market fuel hedge adjustment (28) (2) Unrealized gain on foreign debt (10) — Special items - operating 345 443 Special items - net non-operating (16) 18 Adjusted income before income tax $ 836 $ 782 Pretax margin 4.6 % 3.1 % Adjusted pretax margin 7.1 % 7.5 % Twelve Months Ended December 31, 2024 2023 (in millions, except per share amounts) Dollars Per Share Dollars Per Share Net income $ 395 $ 3.08 $ 235 $ 1.83 Adjusted for: Mark-to-market fuel hedge adjustments (28) (0.22) (2) (0.02) Unrealized gain on foreign debt (10) (0.08) — — Special items - operating 345 2.69 443 3.44 Special items - net non-operating (16) (0.12) 18 0.14 Income tax effect of adjustments above (a) (61) (0.48) (111) (0.86) Adjusted net income $ 625 $ 4.87 $ 583 $ 4.53 (a) Certain integration costs are non deductible for tax purposes, resulting in a smaller income tax effect for current year adjustments.
GAAP TO NON-GAAP RECONCILIATIONS (unaudited) Adjusted Income Before Income Tax Reconciliation Twelve Months Ended December 31, (in millions) 2025 2024 Income before income tax $ 146 $ 545 Adjusted for: Mark-to-market fuel hedge adjustment (4) (28) Losses (gains) on foreign debt 1 (10) Special items - operating 250 345 Special items - net non-operating — (16) Adjusted income before income tax $ 393 $ 836 Pretax margin 1.0 % 4.6 % Adjusted pretax margin 2.8 % 7.1 % 44 Adjusted Net Income Reconciliation Twelve Months Ended December 31, 2025 2024 (in millions, except per share amounts) Dollars Per Share Dollars Per Share Net income $ 100 $ 0.83 $ 395 $ 3.08 Adjusted for: Mark-to-market fuel hedge adjustments (4) (0.03) (28) (0.22) Losses (gains) on foreign debt 1 0.01 (10) (0.08) Special items - operating 250 2.08 345 2.69 Special items - net non-operating — — (16) (0.12) Income tax effect (a) (54) (0.45) (61) (0.48) Adjusted net income $ 293 $ 2.44 $ 625 $ 4.87 (a) Includes income tax effect of the adjustments in the tables above as well as one-time effects of the One Big Beautiful Bill Act which was signed into law in the third quarter of 2025.
Raw fuel prices are impacted by world oil prices and refining costs, which can vary by region in the U.S.
Raw fuel expense is defined as the price that we generally pay at the airport, or the “into-plane” price, including taxes and fees. Raw fuel prices are impacted by world oil prices and refining costs, which can vary by region in the U.S.
Indicators of financial condition and liquidity The table below presents the major indicators of financial condition and liquidity: (in millions) December 31, 2024 December 31, 2023 Change Cash and marketable securities (a) $ 2,475 $ 1,791 38% Cash, marketable securities, and unused lines of credit as a percentage of trailing twelve months' revenue 28 % 22 % 6 pts Long-term debt, net of current portion $ 4,491 $ 2,182 106% Shareholders’ equity $ 4,372 $ 4,113 6% (a) Excludes restricted cash balance of $29 million as of December 31, 2024.
This metric was elevated as of December 31, 2024 as it did not include a full year of Hawaiian revenue, but has returned to target levels as of December 31, 2025. 41 The table below presents the major indicators of financial condition and liquidity: (in millions) December 31, 2025 December 31, 2024 Change Cash, marketable securities, and unused lines of credit (a) $ 2,973 $ 3,325 (11)% Trailing twelve months' revenue $ 14,239 $ 11,735 21% Liquidity as a percentage of trailing twelve months' revenue 21 % 28 % (7) pts Long-term debt and finance leases, net of current portion $ 4,834 $ 4,538 7% Shareholders’ equity $ 4,118 $ 4,372 (6)% (a) Excludes restricted cash of $28 million as of December 31, 2025 and $29 million as of December 31, 2024.
Boeing has communicated that certain B737 and B787-9 aircraft are expected to be delivered later than the contracted delivery timing.
Alaska also has an agreement with SkyWest Airlines to expand our long-term capacity purchase agreement by one aircraft in 2026. 42 Boeing has communicated that certain B737 and B787 aircraft are expected to be delivered later than the contracted delivery timing.
The remaining $18 million increase was driven by growth in revenue passengers, as well as higher costs for food, food service supplies, and transportation. Third-party regional carrier expense Third-party regional carrier expense, which represents payments made to SkyWest under the CPA with Alaska, increased $25 million, or 11% driven by incremental departures and block hours operated by SkyWest.
Third-party regional carrier expense On a pro forma basis, third-party regional carrier expense, which represents payments made to SkyWest under the CPA with Alaska, increased $29 million, or 12%, driven by incremental departures and block hours operated by SkyWest.
LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2024, we had cash and marketable securities of $2.5 billion. We also had 104 unencumbered aircraft, which can be financed if necessary, and an $850 million bank line-of-credit facility with no outstanding borrowings.
We also had 103 unencumbered aircraft, which can be financed if necessary, and an $850 million bank line-of-credit facility with no outstanding borrowings. We expect our current cash and marketable securities balance, combined with our available sources of liquidity, to be sufficient to fund our liquidity needs for the next 12 months.
We are also obligated to make periodic interest payments at fixed and variable rates, depending on the terms of our debt agreements.
We are also obligated to make periodic interest payments at fixed and variable rates, depending on the terms of our debt agreements. As of December 31, 2025, these interest obligations are expected to be $254 million in 2026, $266 million in 2027, $230 million in 2028, $211 million in 2029, $162 million in 2030, and $217 million thereafter.
We believe it is useful to summarize operating expenses as follows, which is consistent with the way expenses are reported internally and evaluated by management: Twelve Months Ended December 31, (in millions) 2024 2023 % Change Aircraft fuel, including hedging gains and losses $ 2,506 $ 2,641 (5) % Non-fuel operating expenses, excluding special items 8,314 6,948 20 % Special items - operating 345 443 (22) % Total Operating Expenses $ 11,165 $ 10,032 11 % Fuel expense Aircraft fuel expense includes raw fuel expense plus the effect of mark-to-market adjustments to our fuel hedge portfolio as the value of that portfolio increases and decreases.
We believe it is useful to summarize operating expenses as follows, which is consistent with the way expenses are reported internally and evaluated by management: Twelve Months Ended December 31, (in millions) 2025 2024 As Reported 2024 Hawaiian Airlines (a) 2024 Pro Forma % Change Aircraft fuel, including hedging gains and losses $ 2,879 $ 2,506 $ 539 $ 3,045 (5) % Non-fuel operating expenses, excluding special items 10,807 8,314 1,747 10,061 7 % Special items - operating 250 345 18 363 (31) % Total Operating Expenses $ 13,936 $ 11,165 $ 2,304 $ 13,469 3 % (a) As provided on Form 8-K filed with the SEC on January 22, 2025, including certain immaterial reclassification and policy adjustments.
Variable incentive pay Variable incentive pay expense increased $158 million, or 79%, compared to 2023. The increase was driven by a higher payout percentage for Alaska's and Horizon's Performance-Based Pay program compared to the prior year on an increased wage base. Aircraft maintenance Aircraft maintenance expense increased $132 million, or 27%, of which $82 million was attributable to Hawaiian.
Variable incentive pay On a pro forma basis, variable incentive pay expense decreased $104 million, or 28%, driven by a lower payout percentage for the Company's Performance-Based Pay program compared to the prior year, partially offset by an increased wage base and inclusion of Hawaiian employees in the plan.
At December 31, 2024, Transition and Process Agreements have been negotiated for certain workgroups which define the process for negotiating JCBAs and set forth interim agreements until a JCBA is reached. Outlook Looking ahead to 2025, we are focused on the successful integration of Hawaiian into Air Group.
At December 31, 2025, Transition and Process Agreements have been negotiated for certain workgroups which define the process for negotiating JCBAs and set forth interim agreements until a JCBA is reached. Loyalty program update In August 2025, we launched Atmos Rewards, a single loyalty program combining Alaska’s Mileage Plan and Hawaiian’s HawaiianMiles.
The elements of the change are illustrated in the following table: Twelve Months Ended December 31, 2024 2023 (in millions, except for per gallon amounts) Dollars Cost/Gal Dollars Cost/Gal Raw or "into-plane" fuel cost $ 2,496 $ 2.70 $ 2,579 $ 3.13 Losses on settled hedges 38 0.04 64 0.08 Economic fuel expense $ 2,534 $ 2.74 $ 2,643 $ 3.21 Mark-to-market fuel hedge adjustments (28) (0.03) (2) — Aircraft fuel, including hedging gains and losses $ 2,506 $ 2.71 $ 2,641 $ 3.21 Fuel gallons 925 824 Raw fuel expense decreased 3% compared to 2023.
Management considers economic fuel costs to be the best estimate of the cash cost of fuel. 37 Twelve Months Ended December 31, 2025 2024 Pro Forma (in millions, except for per gallon amounts) Dollars Cost/Gal Dollars Cost/Gal Raw or "into-plane" fuel cost $ 2,879 $ 2.51 $ 3,031 $ 2.70 Losses on settled hedges 4 0.01 44 0.04 Economic fuel expense $ 2,883 $ 2.52 $ 3,075 $ 2.74 Mark-to-market fuel hedge adjustments (4) (0.01) (30) (0.03) Aircraft fuel, including hedging gains and losses $ 2,879 $ 2.51 $ 3,045 $ 2.71 Fuel gallons 1,146 1,123 On a pro forma basis, aircraft fuel expense decreased by $166 million, or 5%.
Loyalty program other revenue On a consolidated basis, Loyalty program other revenue increased $85 million, or 13%, of which $53 million was attributable to Hawaiian. The remaining $32 million increase was primarily driven by higher commissions from bank card and third party partners.
Loyalty program other revenue On a pro forma basis, Loyalty program other revenue increased $38 million, or 5%, due to higher commission revenue from bank card and third party partners, which was driven by increased consumer spend and incremental credit card acquisitions from the launch of the Atmos Rewards program and Summit Visa Infinite premium credit card.
Regional Regional reported a pretax profit, excluding special items and other adjustments, of $152 million in 2024, compared to a profit of $65 million in 2023. The $87 million improvement was driven by higher passenger revenue consistent with the increase in traffic, partially offset by higher operating expenses driven by increased capacity.
Regional Regional reported a pretax loss, excluding special items and other adjustments, of $1 million in 2025, compared to a profit of $111 million in 2024. The $112 million decrease was primarily due to $154 million in increased non-fuel operating expenses associated with increased capacity and variable costs.
Prior Year (in millions) Total Operating Revenue Passenger Revenue RPMs ASMs Yield PRASM Domestic $ 10,814 10% 9% 8% 1% 2% Latin America 751 15% 18% 22% (3)% (6)% Pacific 170 n/a n/a n/a n/a n/a Total $ 11,735 12% 11% 11% —% 1% Passenger revenue On a consolidated basis, Passenger revenue increased $1.1 billion, or 12%, of which $757 million was attributable to Hawaiian.
Pro Forma Prior Year (in millions) Total Operating Revenue Passenger Revenue RPMs ASMs Yield PRASM Domestic $ 12,855 3% —% 2% 3% 1% Latin America 754 —% (1)% 2% —% (2)% Pacific 630 (2)% 8% 8% (9)% (9)% Total Operating Revenue $ 14,239 3% 1% 2% 2% 1% 36 Passenger revenue On a pro forma basis, Passenger revenue increased $333 million, or 3%, as traffic increased by 1% and yield grew by 2%.
Refer to Note 6 to the consolidated financial statements for a detailed discussion of our debt balances, including a schedule outlining future payments. Cash provided by financing activities was $119 million in 2024, compared to cash used in financing activities of $147 million in 2023.
Our primary uses of financing cash flow are payments of our debt service and finance lease obligations, as well as share repurchases. Refer to Note 5 to the consolidated financial statements for a detailed discussion of our debt balances, including a schedule outlining future payments.
The change in medical and other benefits was primarily driven by an increase in the cost of medical services compared to the prior year, as well as higher expenses associated with Alaska's long-term disability plan for its pilots. Increased expense for defined contribution plans was driven by higher wages as well as higher matching contributions for Alaska technicians.
On a pro forma basis, medical and other benefits expense increased $26 million, or 5%, driven by an increase in the cost of medical services and higher costs associated with our pilots long-term disability plan. Defined contribution plan expense increased $32 million, or 10%, driven by higher contribution rates for pilots and flight attendants.
The remaining $40 million increase was primarily driven by increased volume of Regional departures and landed weight. Increases to terminal rents were primarily driven by growth throughout the network, partially offset by favorable settlements received from certain airports in 2024. Contracted services Contracted services expense increased $55 million, or 14%, of which $39 million was attributable to Hawaiian.
Increased volume of departures and landed weight, as well as nonrecurring favorable settlements received from certain airports in 2024 also contributed to the year-over-year increase. Contracted services On a pro forma basis, contracted services expense increased $51 million, or 9%, driven by higher rates charged by vendors as well as increased departures and passengers throughout our combined network.
The primary components of wages and benefits are shown in the following table: Twelve Months Ended December 31, (in millions) 2024 2023 % Change Wages $ 2,701 $ 2,333 16 % Payroll taxes 186 162 15 % Medical and other benefits 417 314 33 % Defined contribution plans 256 203 26 % Pension - Defined benefit plans 28 29 (3) % Total Wages and benefits $ 3,588 $ 3,041 18 % Wages increased $368 million, or 16%, of which $229 million was attributable to Hawaiian.
Wages and benefits The primary components of wages and benefits, including a reconciliation of 2024 on a pro forma basis, are shown in the following table: 38 Twelve Months Ended December 31, (in millions) 2025 2024 As Reported 2024 Hawaiian Airlines (a) 2024 Pro Forma % Change Wages $ 3,617 $ 2,701 $ 555 $ 3,256 11 % Payroll taxes 248 186 39 225 10 % Medical and other benefits 522 417 79 496 5 % Defined contribution plans 347 256 59 315 10 % Pension - Defined benefit plans 29 28 1 29 — % Total Wages and benefits $ 4,763 $ 3,588 $ 733 $ 4,321 10 % (a) The Hawaiian column reflects results prior to the consummation of the merger, comprising the period January 1, 2024 to September 17, 2024.
Debt-to-capitalization, including leases (in millions) December 31, 2024 December 31, 2023 Change Long-term debt, net of current portion $ 4,491 $ 2,182 106% Capitalized operating leases 1,405 1,283 10% Capitalized finance leases 55 64 (14)% Adjusted debt, net of current portion of long-term debt $ 5,951 $ 3,529 69% Shareholders' equity 4,372 4,113 6% Total invested capital $ 10,323 $ 7,642 35% Debt-to-capitalization, including leases 58% 46% Material cash commitments We have various contractual obligations that require material future outlays of cash.
Debt-to-capitalization, including leases (in millions) December 31, 2025 December 31, 2024 Change Long-term debt and finance leases, net of current portion $ 4,834 $ 4,538 7% Capitalized operating leases 1,338 1,405 (5)% Current portion of finance lease liabilities (a) 181 8 NM Adjusted debt, net of current portion of long-term debt $ 6,353 $ 5,951 7% Shareholders' equity 4,118 4,372 (6)% Total invested capital $ 10,471 $ 10,323 1% Debt-to-capitalization, including leases 61% 58% (a) To best reflect our leverage, we included our short-term finance lease liabilities, which are recognized within 'Current portion of long-term debt and finance leases' in our condensed consolidated balance sheets.
The remaining $139 million increase was driven by increased wage rates across multiple labor groups since the prior year, as well as additional impact from irregular operations following the the B737-9 grounding in the first quarter of 2024. Increased expense for payroll taxes is consistent with the change in wages.
On a pro forma basis, wages and benefits increased $442 million, or 10%, driven by increased headcount and higher wage rates across multiple labor groups in 2025. Increases were partially offset by nonrecurring wages from irregular operations following the B737-9 grounding in the first quarter of 2024.
For Hawaiian, this includes B787-9 aircraft contracted for delivery between 2024 and 2026 that have been moved later into the contracted year or into the year following the contracted delivery. Management expects that other Boeing aircraft deliveries could be delayed beyond the contractual delivery. The table below summarizes our fleet plan, reflecting Boeing's communications and management's internal expectations.
Management expects that other Boeing aircraft deliveries could be delayed beyond the contractual delivery. The table below reflects Boeing's communications.
The remaining $68 million increase was primarily due to the addition of 12 owned B737 aircraft and three owned E175 aircraft during the year. Incremental depreciation on ground service and other equipment also contributed to the increase. Food and beverage service Food and beverage service expense increased $46 million, or 19%, of which $28 million was attributable to Hawaiian.
Incremental depreciation on ground service and other equipment also contributed to the increase. 39 Food and beverage service On a pro forma basis, food and beverage service expense increased $28 million, or 8%, primarily driven by a 5% increase in departures and higher costs for food, food service supplies, and transportation.
Twelve Months Ended December 31, (in millions, except unit metrics) 2024 2023 Total operating expenses $ 11,165 $ 10,032 Less the following components: Aircraft fuel, including hedging gains and losses 2,506 2,641 Freighter costs 84 53 Special items - operating 345 443 Total operating expenses, excluding fuel, freighter costs, and special items $ 8,230 $ 6,895 ASMs 76,167 68,524 CASMex 10.80 ¢ 10.06 ¢ 37 OPERATING STATISTICS SUMMARY (unaudited) Below are operating statistics we use to measure performance.
CASMex Reconciliation Twelve Months Ended December 31, (in millions, except unit metrics) 2025 2024 Total operating expenses $ 13,936 $ 11,165 Less the following components: Aircraft fuel, including hedging gains and losses 2,879 2,506 Freighter costs 192 84 Special items - operating 250 345 Total operating expenses, excluding fuel, freighter costs, and special items $ 10,615 $ 8,230 ASMs 92,962 76,167 CASMex 11.42 ¢ 10.80 ¢ Adjusted Capital Expenditures Reconciliation Twelve Months Ended December 31, (in millions) 2025 2024 Aircraft and aircraft purchase deposits $ 1,064 $ 817 Other flight equipment 216 171 Other property and equipment 308 293 Capital expenditures 1,588 1,281 Adjusted for: Financed aircraft acquisition 69 68 Proceeds from sales of aircraft and other equipment (164) (11) Adjusted capital expenditures $ 1,493 $ 1,338 45 CRITICAL ACCOUNTING ESTIMATES The discussion and analysis of our financial position and results of operations in this MD&A are based upon our consolidated financial statements.
A summary of Alaska's WTI positions and Hawaiian's Brent crude positions is provided below: Approximate % of Expected Fuel Requirements Weighted-Average Crude Oil Price per Barrel Average Premium Cost per Barrel Alaska: First Quarter of 2025 10 % $92 $5 Hawaiian: First Quarter of 2025 39 % $94 $2 Second Quarter of 2025 22 % $93 $2 Third Quarter of 2025 6 % $91 $2 41 Non-fuel expenses Twelve Months Ended December 31, (in millions) 2024 2023 % Change Wages and benefits $ 3,588 $ 3,041 18 % Variable incentive pay 358 200 79 % Aircraft maintenance 620 488 27 % Aircraft rent 207 208 — % Landing fees and other rentals 781 680 15 % Contracted services 444 389 14 % Selling expenses 349 303 15 % Depreciation and amortization 583 451 29 % Food and beverage service 287 241 19 % Third-party regional carrier expense 243 218 11 % Other 854 729 17 % Total non-fuel operating expenses, excluding special items $ 8,314 $ 6,948 20 % Wages and benefits Wages and benefits expense increased $547 million, or 18%, of which $299 million was attributable to Hawaiian.
Twelve Months Ended December 31, (in millions) 2025 2024 As Reported 2024 Hawaiian Airlines (a) 2024 Pro Forma % Change Wages and benefits $ 4,763 $ 3,588 $ 733 $ 4,321 10 % Variable incentive pay 268 358 14 372 (28) % Aircraft maintenance 912 620 224 844 8 % Aircraft rent 250 207 45 252 (1) % Landing fees and other rentals 1,109 781 142 923 20 % Contracted services 590 444 95 539 9 % Selling expenses 407 349 90 439 (7) % Depreciation and amortization 795 583 156 739 8 % Food and beverage service 383 287 68 355 8 % Third-party regional carrier expense 272 243 — 243 12 % Other 1,058 854 180 1,034 2 % Total non-fuel operating expenses, excluding special items $ 10,807 $ 8,314 $ 1,747 $ 10,061 7 % (a) As provided on Form 8-K filed with the SEC on January 22, 2025, including certain immaterial reclassification and policy adjustments.
Removed
(b) See reconciliation of this non-GAAP measure to the most directly related GAAP measure in the accompanying pages. (c) Excludes operations under the ATSA with Amazon. (d) Includes aircraft owned and leased by Alaska, Hawaiian, and Horizon as well as aircraft operated by third-party regional carriers under CPAs. Excludes all aircraft removed from operating service.
Added
This overview summarizes the MD&A, which includes the following sections: 33 • Year in Review - highlights from 2025 outlining some of the major events that occurred during the period, as well as forward-looking statements. • Results of Operations - an in-depth analysis of our financial and operational results for 2025. • Liquidity and Capital Resources - an overview of our financial position, analysis of cash flows, and relevant material cash commitments. • GAAP to Non-GAAP Reconciliations and Operating Statistics - reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis, as well as operating statistics we use to measure operating performance.
Removed
(e) Data presented includes information related to flights operated by Horizon and third-party carriers. YEAR IN REVIEW Overview On September 18, 2024, we completed our acquisition of Hawaiian, combining two highly complementary networks and expanding our international reach. Results for the year include Hawaiian activity beginning September 18, 2024.
Added
Dollar amounts in the MD&A are generally rounded to the nearest million. As a result, a manual recalculation of certain figures using these rounded amounts may not agree directly to our actual figures represented in the tables below. This section of the Form 10-K covers discussion of 2025 and 2024 pro forma results, and comparisons between those years.
Removed
In 2024, Air Group reported consolidated pretax income of $545 million compared to $323 million in 2023. For the period September 18, 2024 through December 31, 2024, Hawaiian produced $869 million of revenue and a loss before income tax and special items of $58 million.
Added
Items affecting comparability As Hawaiian Holdings, Inc. was acquired by Air Group on September 18, 2024, its financial results were not reflected in reported figures in the periods preceding the acquisition date. As a result, the reported results for 2025 and 2024 are not comparable.
Removed
See “ Results of Operations ” below for further discussion of changes in revenue and operating expenses as compared to 2023. A glossary of financial terms can be found at the end of Item 1. 38 Labor update In 2024, Alaska technicians, represented by AMFA, ratified a new five-year CBA that includes wage increases and quality of life improvements.
Added
To assist with the discussion of 2025 and 2024 results on a comparable basis and provide more meaningful discussion, certain supplemental unaudited pro forma income statement information is provided for 2024. Pro forma historical results were included with the Form 8-K filed on January 22, 2025.
Removed
Alaska pilots, represented by ALPA, ratified a two-year extension of its existing CBA. In January 2025, Alaska reached a tentative agreement with its flight attendants, represented by AFA, for an updated CBA. Voting on the tentative agreement will be completed in the first quarter of 2025.
Added
This information does not purport to reflect what our financial and operational results would have been had the acquisition been consummated at the beginning of the periods presented. Cybersecurity incident As previously disclosed in a Current Report on Form 8-K filed on June 27, 2025, on June 23, 2025, Hawaiian Airlines identified a cybersecurity incident affecting certain information technology systems.
Removed
Horizon is in negotiations with certain labor groups for updated CBAs, including its pilots, represented by IBT; its flight attendants, represented by AFA; and its technicians, represented by AMFA. Alaska and Hawaiian are working towards JCBAs for workgroups represented by the same unions.
Added
Upon identifying this incident, we followed established response protocols and immediately took steps to safeguard our network by disconnecting impacted Hawaiian systems and applications. Access for all systems was restored. Hawaiian's flights were not interrupted and continued to operate safely throughout our response. We engaged the relevant authorities and experts to assist in our investigation and remediation efforts.
Removed
We expect capacity growth for the year of 2% to 3% as compared to historical Air Group and Hawaiian combined capacity in the prior year. In addition to growth in revenue and expenses due to the the impact of Hawaiian on Air Group results for the full year, 2025 results will be impacted by other factors throughout the year.
Added
Based on the results of the investigation, the incident did not have a material impact on Hawaiian's business, results of operations, or financial condition. For a discussion of our risk factors associated with cybersecurity threats, please refer to Item 1A. "Risk Factors" within this document.
Removed
We expect revenue improvements to be driven by continued strength in leisure and corporate demand, and by network and loyalty synergies as integration work continues.
Added
YEAR IN REVIEW Overview We reported pretax income under GAAP of $146 million in 2025, compared to $545 million in 2024. On a pro forma basis, pretax income in 2024 was $228 million.
Removed
Wage rate increases stemming from new labor agreements and rising costs at airports in which we operate will drive cost pressures during the year, but we anticipate some benefit from synergy capture in the second half of the year.
Added
Refer below for a more detailed discussion of the items impacting these results. 34 Single operating certificate On October 29, 2025, Alaska and Hawaiian obtained a single operating certificate from the FAA, officially recognizing Alaska and Hawaiian as one airline under the Alaska certificate.
Removed
RESULTS OF OPERATIONS Items affecting comparability Results for 2024 are inclusive of Hawaiian's operations from the acquisition date of September 18, 2024 through December 31, 2024, while the prior period does not include combined results. Consolidated revenue and expenses increased compared to the prior period due to the incorporation of Hawaiian's operations into Air Group.
Added
Labor update In 2025, Alaska flight attendants, represented by the Association of Flight Attendants (AFA), ratified a new three-year Collective Bargaining Agreement (CBA). Hawaiian flight attendants, represented by AFA, ratified a three-year extension to their existing CBA. Horizon technicians, represented by the Aircraft Mechanics Fraternal Association (AMFA) ratified a four-year CBA.
Removed
The below discussion of changes to our revenue and expenses compared to the prior year largely focus on material factors independent of the acquisition. 2024 COMPARED WITH 2023 Operating Revenue Total operating revenue increased $1.3 billion, or 13%, of which $869 million was attributable to Hawaiian.
Added
McGee Air Services employees, represented by the International Association of Machinists and Aerospace Workers (IAM) ratified a five-year CBA. Horizon is negotiating with its pilots represented by the International Brotherhood of Teamsters (IBT), flight attendants represented by the Association of Flight Attendants (AFA), and dispatchers represented by the Transport Workers Union of America (TWU) for updated collective bargaining agreements.
Removed
The changes are summarized in the following table: Twelve Months Ended December 31, (in millions) 2024 2023 % Change Passenger revenue $ 10,654 $ 9,526 12 % Loyalty program other revenue 733 648 13 % Cargo and other revenue 348 252 38 % Total Operating Revenue $ 11,735 $ 10,426 13 % 39 The table below presents operating revenue details by principal geographic region (as defined by the U.S.
Added
A mediator from the National Mediation Board is involved in negotiations with AFA and TWU. With one exception discussed below, Alaska has begun negotiations for joint collective bargaining agreements (JCBAs) covering each represented Alaska and Hawaiian workgroup.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−0 removed3 unchanged
Biggest changeSaid another way, a one-cent change in our fuel price per gallon would have impacted our 2024 raw fuel expense by approximately $9 million. Interest rates We have exposure to market risk associated with changes in interest rates related primarily to our debt obligations, which include variable rate instruments, as well as our short-term investment portfolio.
Biggest changeInterest rates We have exposure to market risk associated with changes in interest rates related primarily to our debt obligations, which include variable rate instruments, as well as our short-term investment portfolio.
This exposure is primarily associated with the Japanese Yen, Australian Dollar, Canadian Dollar, and Mexican Peso. To manage exchange rate risk, we transact our international sales and expenditures in the same foreign currency, to the extent practical. Additionally, our Yen denominated debt serves as a natural hedge against the volatility of exchange rates against cash 48 inflows.
This exposure is primarily associated with the Japanese Yen, Australian Dollar, Canadian Dollar, and Mexican Peso. To manage exchange rate risk, we transact our international sales and expenditures in the same foreign currency, to the extent practical. Additionally, our Yen denominated debt serves as a natural hedge against the volatility of exchange rates against cash inflows.
We estimate that a 10% depreciation or appreciation in the U.S. dollar, relative to the Australian Dollar, Canadian Dollar, Japanese Yen, and Mexican Peso would result in a change in annual pretax income (loss) of approximately $35 million.
We estimate that a 10% depreciation or appreciation in the U.S. dollar, relative to the Japanese Yen, Australian Dollar, Canadian Dollar, and Mexican Peso would result in a change in annual pretax income or loss of approximately $35 million. 47
In an effort to manage our exposure to these risks, we may enter into derivative contracts from time to time and may revise our derivative portfolio as market conditions change.
In an effort to manage our exposure to these 46 risks, we may enter into derivative contracts from time to time and may revise our derivative portfolio as market conditions change.
If short-term interest rates were to average one point more than they did in 2024, interest income would increase by approximately $14 million. Foreign currency We have exposure to market risk associated with changes in foreign currency exchange rates because we generate sales, incur expenses, and have certain debt denominated and paid in foreign currencies.
If short-term interest rates were to average one point more than they did in 2025, interest income would increase by approximately $14 million. Foreign currency We have exposure to market risk associated with changes in foreign currency exchange rates because we generate sales, incur expenses, and have certain debt denominated and paid in foreign currencies.
Approximately $567 million of our total variable rate notes payable were effectively fixed via interest rate swaps at December 31, 2024. Our exposure to interest rate variability is further mitigated through our variable rate investment portfolio. We also have investments in marketable securities, which are exposed to market risk associated with changes in interest rates.
Approximately $651 million of our total variable rate notes payable were effectively fixed via interest rate swaps at December 31, 2025. Our exposure to interest rate variability is further mitigated through our variable rate investment portfolio. We also have investments in marketable securities, which are exposed to market risk associated with changes in interest rates.
A hypothetical 10% change in the average interest rates incurred on average variable rate debt held during 2024 would have correspondingly changed our net earnings and cash flows associated with these items by $10 million. Our variable rate debt represents approximately 41% and 39% of our total long-term debt as of December 31, 2024 and December 31, 2023.
A hypothetical 10% change in the average interest rates incurred on average variable rate debt held during 2025 would have correspondingly changed our net earnings and cash flows associated with these items by $13 million. Our variable rate debt represents approximately 48% and 41% of our total long-term debt as of December 31, 2025 and December 31, 2024.
Aircraft fuel Aircraft fuel costs constitute a significant portion of our operating expense and changes in fuel prices could materially impact the results of operations. A $1 per barrel change in the price of oil equates to approximately $22 million of raw fuel expense annually based on 2024 consumption levels.
Aircraft fuel Aircraft fuel costs constitute a significant portion of our operating expense and changes in fuel prices could materially impact the results of operations. Both the price of crude oil and the costs to refine the oil into jet fuel can affect the price we pay for aircraft fuel.
Added
A $1 per barrel change in the price of oil equates to approximately $27 million of raw fuel expense annually based on 2025 consumption levels. Said another way, a one-cent change in our fuel price per gallon would have impacted our 2025 raw fuel expense by approximately $11 million.

Other ALK 10-K year-over-year comparisons