Alaska Air Group reports fourth quarter and full year 2025 results

Achieved single operating certificate for Hawaiian Airlines and Alaska Airlines

Reported earnings per share of $0.18, with adjusted earnings per share of $0.43, ahead of expectations and previous guidance range

Generated $1.2 billion in operating cash flow for the full year

SEATTLE, Jan. 22, 2026 /PRNewswire/ -- Alaska Air Group Inc. (NYSE: ALK) today reported financial results for the fourth quarter and full year ended December 31, 2025.

"We feel momentum accelerating in 2026 as the Alaska-Hawaiian Airlines combination gains full strength," said CEO Ben Minicucci. "The people across our airlines delivered through a transformational year that set us up to win: an expanding global network, premium travel experiences delivered with care, and Atmos Rewards elevating our 11-year streak as the No. 1 airline loyalty program. Our model is positioned for where travelers are headed, and we're ready to compete as one of four global U.S. airlines."

Quarter in Review

Alaska Air Group's (Air Group) Consolidated Statements of Operations, Consolidated Balance Sheets, and Summary Cash Flow Statement include Hawaiian Airlines from September 18, 2024 onward. For comparability of financial and operational results, historical information has also been provided on a pro forma basis for the full year 2024 within the Supplementary Pro Forma Comparative Financial and Operating Information in this filing and in prior 8-K filings. The results presented for the fourth quarter of 2024 in the supplementary section are as reported given the inclusion of Hawaiian Airlines in Air Group for the full quarter.

Air Group reported fourth quarter GAAP pretax margin of 0.8% and net income per share of $0.18. Our fourth quarter adjusted pretax margin was 1.8% and our adjusted earnings per share was $0.43.

Q4 2025 Results

Prior Expectation

Actual Results

Capacity (ASMs) % change versus 2024

Up ~2%

Up 2.2%

RASM % change versus 2024

Up ~1%

Up 0.6%

CASMex % change versus 2024

Up ~3%

Up 1.3%

Adjusted earnings per share

~$0.10

$0.43

We continued to build on key milestones for our Alaska Accelerate strategy during the quarter, including achieving a single operating certificate for Alaska and Hawaiian Airlines. We achieved record credit card acquisitions, with nearly one fourth of all signups being for the new premium credit card that we introduced late in the third quarter. We began selling our new international routes from Seattle to London and Rome during the quarter, with the first flights scheduled to operate in spring 2026. We are also now selling in six foreign currencies and recently unveiled our Japanese, Korean, and Italian-language based websites, helping drive point of sale outside of the United States to support our expanding international service. These achievements represent continued progress in building the infrastructure to support Air Group's future growth and profitability, and deliver on our Alaska Accelerate goal of $10 earnings per share in 2027 enabled by $1 billion in incremental profit.

Fourth quarter revenue was $3.6 billion, resulting in a 0.6% year-over-year RASM increase despite contending with temporary demand pullback from the government shutdown in November. We believe our fourth quarter unit revenue result will be among the highest in the industry. Corporate travel grew 9% year-over-year, while close-in demand remained strong throughout the fourth quarter as bookings and yields continue to rebound from the challenging environment earlier in the year. Our diverse revenue streams continued to deliver with premium revenue increasing 7% year-over-year, cargo revenue increasing 22% year-over-year, and loyalty revenue increasing 12% year-over-year. Commercial initiatives and synergy capture remained on track for the fourth consecutive quarter.

Unit costs, excluding fuel, freighter costs, and special items increased 1.3% year-over-year. This result is better than prior guidance and signals our teams' renewed focus on cost control. Economic fuel price per gallon was $2.57 per gallon in the fourth quarter, reflecting elevated West Coast refining prices during the quarter.

First Quarter & Full Year 2026 Guidance

In the first three weeks of January, bookings have inflected positive relative to last year. We have seen several of the highest booking days in our history since January 1st with managed corporate revenues up 20% year-over-year for the first quarter. We expect first quarter unit revenues to be solidly positive and earnings per share to be approximately flat year-over-year which would mark another sequential improvement towards earnings expansion.

Given the macroeconomic headwinds the industry experienced in 2025 and the positive emergent demand trends, our guidance for 2026 reflects a wide range of potential macroeconomic outcomes. We expect to continue to realize value from Alaska Accelerate initiatives and synergies from the Hawaiian integration, which remain on track or ahead of plan relative to our initial expectations. To hit the higher end of our guidance range we would require sustained macroeconomic recovery in 2026, at or improving on trends seen in the first three weeks of the year, and for fuel prices to stabilize. Given the inherent uncertainty of the macroeconomic environment, we remain as focused as ever on controlling what is within our control, including disciplined cost management, driving strong productivity and delivering on our initiatives.

Q1 2026 Expectation

FY 2026 Expectation

Capacity (ASMs) % change versus 2025

Up 1% to 2%

2% to 3%

Adjusted earnings (loss) per share (a)

($1.50) to ($0.50)

$3.50 to $6.50

Capital Expenditures

n/a

~$1.4 to $1.5B

(a) Q1 adjusted tax rate is estimated to be 29%. Full year adjusted tax rate is estimated to be 26% to 27%

Financial Results and Updates:

Operational Updates:

Network Updates:

Customer Experience:

Other Highlights:

The following table reconciles the company's reported GAAP net income per share (EPS) for the three and twelve months ended December 31, 2025 and 2024 to adjusted amounts.

Three Months Ended December 31,

2025

2024

(in millions, except per share amounts)

Dollars

Per Share

Dollars

Per Share

Net income

$ 21

$ 0.18

$ 71

$ 0.55

Adjusted for:

Mark-to-market fuel hedge adjustments

—

(6)

(0.05)

Gains on foreign debt

(4)

(0.03)

(10)

(0.08)

Special items - operating

0.33

0.71

Special items - net non-operating

—

(17)

(0.13)

Income tax effect (a)

(6)

(0.05)

(4)

(0.03)

Adjusted net income

$ 50

$ 0.43

$ 125

$ 0.97

Twelve Months Ended December 31,

2025

2024

(in millions, except per share amounts)

Dollars

Per Share

Dollars

Per Share

Net income

$ 100

$ 0.83

$ 395

$ 3.08

Adjusted for:

Mark-to-market fuel hedge adjustments

(4)

(0.03)

(28)

(0.22)

Losses (gains) on foreign debt

0.01

(10)

(0.08)

Special items - operating

250

2.08

345

2.69

Special items - net non-operating

—

(16)

(0.12)

Income tax effect (a)

(54)

(0.45)

(61)

(0.48)

Adjusted net income

$ 293

$ 2.44

$ 625

$ 4.87

(a) Includes income tax effect of the adjustments in the tables above as well as one-time effects of the One Big Beautiful Bill Act which was signed into law in the third quarter of 2025.

A conference call regarding the fourth quarter and full year results will be streamed online at 11:30 a.m. EST/ 8:30 a.m. PST on January 23, 2026. It can be accessed at www.alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call.

References in this update to "Air Group," "Company," "we," "us," and "our" refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified.

This news release may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by our forward-looking statements, assumptions or beliefs. For a discussion of risks and uncertainties that may cause our forward-looking statements to differ materially, see Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Some of these risks include competition, labor costs, relations and availability, general economic conditions, increases in operating costs including fuel, uncertainties regarding the ability to successfully integrate operations following the acquisition of Hawaiian Holdings, Inc. and the ability to realize anticipated cost savings, synergies, or growth from the acquisition, inability to meet cost reduction and other strategic goals, seasonal fluctuations in demand and financial results, supply chain risks, events that negatively impact aviation safety and security, cybersecurity risks, and changes in laws and regulations that impact our business. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed in our most recent Form 10-K and in our subsequent SEC filings. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We expressly disclaim any obligation to publicly update or revise any forward-looking statements made today to conform them to actual results. Over time, our actual results, performance or achievements may differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, assumptions or beliefs and such differences might be significant and materially adverse.

Alaska Airlines, Hawaiian Airlines and Horizon Air are subsidiaries of Alaska Air Group, and McGee Air Services is a subsidiary of Alaska Airlines. We are a global airline with hubs in Seattle, Honolulu, Portland, Anchorage, Los Angeles, San Diego and San Francisco. We deliver remarkable care as we fly our guests to more than 140 destinations throughout North America, Latin America, Asia and the Pacific. We'll serve Europe beginning in spring 2026. Guests can book travel at alaskaair.com and hawaiianairlines.com. Alaska is a member of the oneworld alliance, with Hawaiian scheduled to join oneworld in spring 2026. With oneworld and our additional global partners, guests can earn and redeem points for travel to over 1,000 worldwide destinations with Atmos Rewards. Learn more about what's happening at Alaska and Hawaiian at news.alaskaair.com. Alaska Air Group is traded on the New York Stock Exchange (NYSE) as "ALK."

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Alaska Air Group, Inc.

Three Months Ended December

31,

Twelve Months Ended December

31,

(in millions, except per share amounts)

2025

2024

Change

2025

2024

Change

Operating Revenue

Passenger revenue

$ 3,248

$ 3,178

2 %

$ 12,835

$ 10,654

20 %

Loyalty program other revenue

238

224

6 %

855

733

17 %

Cargo and other revenue

146

132

11 %

549

348

58 %

Total Operating Revenue

3,632

3,534

3 %

14,239

11,735

21 %

Operating Expenses

Wages and benefits

1,245

1,119

11 %

4,763

3,588

33 %

Variable incentive pay

161

(54) %

268

358

(25) %

Aircraft fuel, including hedging gains and

losses

737

702

5 %

2,879

2,506

15 %

Aircraft maintenance

214

229

(7) %

912

620

47 %

Aircraft rent

(8) %

250

207

21 %

Landing fees and other rentals

284

249

14 %

1,109

781

42 %

Contracted services

148

133

11 %

590

444

33 %

Selling expenses

106

(10) %

407

349

17 %

Depreciation and amortization

199

190

5 %

795

583

36 %

Food and beverage service

101

9 %

383

287

33 %

Third-party regional carrier expense

8 %

272

243

12 %

Other

294

261

13 %

1,058

854

24 %

Special items - operating

(57) %

250

345

(28) %

Total Operating Expenses

3,557

3,461

3 %

13,936

11,165

25 %

Operating Income

3 %

303

570

(47) %

Non-operating Income (Expense)

Interest income

(28) %

101

(7) %

Interest expense

(70)

(56)

25 %

(272)

(171)

59 %

Interest capitalized

(20) %

28 %

Special items - net non-operating

—

(100) %

—

(100) %

Other - net

(6)

(16)

—

Total Non-operating Income (Expense)

(45)

(157)

(25)

Income Before Income Tax

146

545

Income tax expense

150

Net Income

$ 21

$ 71

$ 100

$ 395

Basic Earnings Per Share

$ 0.18

$ 0.56

$ 0.85

$ 3.13

Diluted Earnings Per Share

$ 0.18

$ 0.55

$ 0.83

$ 3.08

Weighted Average Shares Outstanding used for

computation:

Basic

115.533

126.047

118.171

126.136

Diluted

117.356

128.931

119.926

128.372

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

Alaska Air Group, Inc.

As of December 31 (in millions)

2025

2024

ASSETS

Current Assets

Cash and cash equivalents

$ 627

$ 1,201

Restricted cash

Marketable securities

1,496

1,274

Total cash, restricted cash, and marketable securities

2,151

2,504

Receivables - net

565

558

Inventories and supplies - net

203

199

Prepaid expenses

278

307

Other current assets

192

Total Current Assets

3,266

3,760

Property and Equipment

Aircraft and other flight equipment

13,647

12,273

Other property and equipment

2,424

2,173

Deposits for future flight equipment

731

883

16,802

15,329

Less accumulated depreciation and amortization

(4,945)

(4,548)

Total Property and Equipment - Net

11,857

10,781

Other Assets

Operating lease assets

1,268

1,296

Goodwill

2,723

2,724

Intangible assets - net

815

873

Other noncurrent assets

432

334

Total Other Assets

5,238

5,227

Total Assets

$ 20,361

$ 19,768

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

Alaska Air Group, Inc.

As of December 31 (in millions except share amounts)

2025

2024

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

Accounts payable

$ 324

$ 186

Accrued wages, vacation and payroll taxes

881

1,001

Air traffic liability

1,689

1,712

Other accrued liabilities

1,055

997

Deferred revenue

1,722

1,592

Current portion of long-term debt and finance leases

721

450

Current portion of operating lease liabilities

197

207

Total Current Liabilities

6,589

6,145

Noncurrent Liabilities

Long-term debt and finance leases, net of current portion

4,834

4,538

Operating lease liabilities, net of current portion

1,141

1,198

Deferred income taxes

1,004

934

Deferred revenue

1,711

1,664

Obligation for pension and post-retirement medical benefits

369

460

Other liabilities

595

457

Total Noncurrent Liabilities

9,654

9,251

Commitments and Contingencies

Shareholders' Equity

Preferred stock, $0.01 par value, Authorized: 5,000,000 shares, none

issued or outstanding

—

Common stock, $0.01 par value, Authorized: 400,000,000 shares, Issued:

2025 - 145,115,659 shares; 2024 - 141,449,174 shares, Outstanding: 2025 -

115,530,889 shares; 2024 - 123,119,199 shares

Capital in excess of par value

961

811

Treasury stock (common), at cost: 2025 - 29,584,770 shares; 2024 -

18,329,975 shares

(1,701)

(1,131)

Accumulated other comprehensive loss

(173)

(239)

Retained earnings

5,030

4,930

Total Shareholders' Equity

4,118

4,372

Total Liabilities and Shareholders' Equity

$ 20,361

$ 19,768

SUMMARY CASH FLOW (unaudited)

Alaska Air Group, Inc.

(in millions)

Year Ended

December 31, 2025

Nine Months Ended

September 30, 2025 (a)

Three Months Ended

December 31, 2025 (b)

Cash Flows from Operating Activities:

Net income

$ 100

$ 79

$ 21

Adjustments to reconcile net income to net cash

provided by operating activities

856

639

217

Changes in working capital

293

346

(53)

Net cash provided by operating activities

1,249

1,064

185

Cash Flows from Investing Activities:

Property and equipment additions

(1,588)

(963)

(625)

Other investing activities

(35)

(33)

(2)

Net cash used in investing activities

(1,623)

(996)

(627)

Cash Flows from Financing Activities

(199)

(490)

291

Net decrease in cash and cash equivalents

(573)

(422)

(151)

Cash, cash equivalents, and restricted cash at

beginning of period (c)

1,257

835

Cash, cash equivalents, and restricted cash at end

of period (c)

$ 684

$ 835

$ 684

(a) As reported in Form 10-Q for the third quarter of 2025.

(b) Cash flows for the three months ended December 31, 2025 can be calculated by subtracting cash flows for the nine months ended

September 30, 2025, as reported in Form 10-Q for the third quarter 2025, from the year ended December 31, 2025.

(c) Cash, cash equivalents, and restricted cash shown in the Summary Cash Flow consists of restricted cash presented within Restricted Cash as well as certain restricted cash balances presented within Other noncurrent assets in the condensed consolidated balance sheets.

SPECIAL ITEMS (unaudited)

Air Group has classified certain operating and non-operating activity as special items due to their unusual or infrequently occurring nature. We believe disclosing information about these items separately improves comparable year-over-year analysis and allows stakeholders to better understand our results of operations. A description of the special items is provided below.

Integration costs: Integration costs were associated with the acquisition of Hawaiian Airlines and consist of employee-related, legal and professional fees, technology, and other merger costs.

Labor and other: Labor and other costs in 2025 were primarily for changes to Alaska flight attendants' sick leave benefits pursuant to a new collective bargaining agreement. Costs in 2024 were primarily for retroactive pay for Alaska flight attendants pursuant to a tentative agreement and litigation costs related to the Virgin trademark license agreement.

Net non-operating: The income in 2024 is primarily for gains on Hawaiian debt extinguishment in the fourth quarter.

Three Months Ended December

31,

Twelve Months Ended December

31,

(in millions)

2025

2024

2025

2024

Operating Expenses

Integration costs

193

208

Labor and other

$ —

$ 11

$ 57

$ 137

Special items - operating

$ 39

$ 91

$ 250

$ 345

Non-operating Income (Expense)

Special items - net non-operating

$ —

$ 17

$ —

$ 16

OPERATING STATISTICS SUMMARY (unaudited)

A manual recalculation of certain figures using rounded amounts may not agree directly to the actual figures presented in the

table below. 2024 figures include Hawaiian results September 18, 2024 onward.

Three Months Ended December 31,

Twelve Months Ended December 31,

2025

2024

Change

2025

2024

Change

Consolidated Operating Statistics: (a)

Revenue passengers (000)

14,355

14,339

0.1 %

58,627

49,238

19.1 %

RPMs (000,000) "traffic"

18,935

19,068

(0.7) %

77,110

63,871

20.7 %

ASMs (000,000) "capacity"

23,238

22,744

2.2 %

92,962

76,167

22.1 %

Load factor

81.5 %

83.8 %

(2.3) pts

82.9 %

83.9 %

(1.0) pts

Yield

17.15¢

16.67¢

2.9 %

16.64¢

16.68¢

(0.2) %

PRASM

13.98¢

13.97¢

0.1 %

13.81¢

13.99¢

(1.3) %

RASM

15.63¢

15.54¢

0.6 %

15.32¢

15.41¢

(0.6) %

CASMex (b)

11.72¢

11.57¢

1.3 %

11.42¢

10.80¢

5.7 %

Economic fuel cost per gallon (b)(c)

$2.57

$2.54

1.2 %

$2.52

$2.74

(8.0) %

Fuel gallons (000,000) (c)

287

279

2.9 %

1,146

925

23.9 %

ASMs per gallon

81.1

81.6

(0.6) %

81.1

82.3

(1.4) %

Departures (000)

135

131

3.1 %

543

461

17.8 %

Average full-time equivalent employees

(FTEs)

32,676

30,396

7.5 %

31,585

25,751

22.7 %

Operating fleet (d)

413

392

21 a/c

413

392

21 a/c

Alaska Airlines Operating Statistics:

RPMs (000,000) "traffic"

12,806

13,306

(3.8) %

52,404

53,680

(2.4) %

ASMs (000,000) "capacity"

15,737

15,754

(0.1) %

63,161

63,873

(1.1) %

Economic fuel cost per gallon

$2.57

$2.55

0.8 %

$2.52

$2.74

(8.0) %

Hawaiian Airlines Operating Statistics:

RPMs (000,000) "traffic"

4,850

4,509

7.6 %

19,304

5,143

ASMs (000,000) "capacity"

5,896

5,481

7.6 %

23,208

6,245

Economic fuel cost per gallon (c)

$2.49

2.44

2.0 %

$2.41

2.43

(0.8) %

Regional Operating Statistics: (e)

RPMs (000,000) "traffic"

1,278

1,253

2.0 %

5,401

5,048

7.0 %

ASMs (000,000) "capacity"

1,606

1,509

6.4 %

6,593

6,049

9.0 %

Economic fuel cost per gallon

$2.76

$2.74

0.7 %

$2.71

$2.93

(7.5) %

(a)

Except for FTEs, data includes information related to third-party regional capacity purchase flying arrangements.

(b)

See a reconciliation of this non-GAAP measure and Note A for a discussion of the importance of this measure to investors in the accompanying pages.

(c)

Excludes operations under the Air Transportation Services Agreement (ATSA) with Amazon.

(d)

Includes aircraft owned and leased by Alaska, Hawaiian, and Horizon, as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excludes all aircraft removed from operating service.

(e)

Data presented includes information related to flights operated by Horizon and third-party carriers.

GAAP TO NON-GAAP RECONCILIATIONS (unaudited)

Alaska Air Group, Inc.

We are providing reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. Amounts in the tables below are rounded to the nearest million. As a result, a manual recalculation of certain figures using these rounded amounts may not agree directly to the actual figures presented in the tables below.

Adjusted Income Before Income Tax Reconciliation

Three Months Ended

December 31,

Twelve Months Ended

December 31,

(in millions)

2025

2024

2025

2024

Income before income tax

$ 30

$ 79

$ 146

$ 545

Adjusted for:

Mark-to-market fuel hedge adjustment

—

(6)

(4)

(28)

Losses (gains) on foreign debt

(4)

(10)

Special items - operating

250

345

Special items - net non-operating

—

(17)

—

(16)

Adjusted income before income tax

$ 65

$ 137

$ 393

$ 836

Pretax margin

0.8 %

2.2 %

1.0 %

4.6 %

Adjusted pretax margin

1.8 %

3.9 %

2.8 %

7.1 %

CASMex Reconciliation

Three Months Ended

December 31,

Twelve Months Ended

December 31,

(in millions)

2025

2024

2025

2024

Total operating expenses

$ 3,557

$ 3,461

$ 13,936

$ 11,165

Less the following components:

Aircraft fuel, including hedging gains and losses

737

702

2,879

2,506

Freighter costs

192

Special items - operating

250

345

Total operating expenses, excluding fuel, freighter

costs, and special items

$ 2,725

$ 2,631

$ 10,615

$ 8,230

ASMs

23,238

22,744

92,962

76,167

CASMex

11.72 ¢

11.57 ¢

11.42 ¢

10.80 ¢

Fuel Reconciliation

Three Months Ended December 31,

2025

2024

(in millions, except for per gallon amounts)

Dollars

Cost/Gal

Dollars

Cost/Gal

Raw or "into-plane" fuel cost

$ 737

$ 2.57

$ 701

$ 2.51

Losses on settled hedges

—

0.03

Economic fuel expense

$ 737

$ 2.57

$ 708

$ 2.54

Mark-to-market fuel hedge adjustment

—

(6)

(0.02)

Aircraft fuel, including hedging gains and losses

$ 737

$ 2.57

$ 702

$ 2.52

Fuel gallons

287

279

Twelve Months Ended December 31,

2025

2024

(in millions, except for per gallon amounts)

Dollars

Cost/Gal

Dollars

Cost/Gal

Raw or "into-plane" fuel cost

$ 2,879

$ 2.51

$ 2,496

$ 2.70

Losses on settled hedges

0.01

0.04

Economic fuel expense

$ 2,883

$ 2.52

$ 2,534

$ 2.74

Mark-to-market fuel hedge adjustment

(4)

(0.01)

(28)

(0.03)

Aircraft fuel, including hedging gains and losses

$ 2,879

$ 2.51

$ 2,506

$ 2.71

Fuel gallons

1,146

925

Debt-to-capitalization, including leases

(in millions)

December 31, 2025

December 31, 2024

Long-term debt and finance leases, net of current portion

$ 4,834

$ 4,538

Capitalized operating leases

1,338

1,405

Current portion of finance lease liabilities (a)

181

Adjusted debt, net of current portion of long-term debt

$ 6,353

$ 5,951

Shareholders' equity

4,118

4,372

Total invested capital

$ 10,471

$ 10,323

Debt-to-capitalization ratio, including leases

61 %

58 %

(a) To best reflect our leverage, we included our short-term finance lease liabilities, which are recognized within 'Current portion of long-term debt and finance leases' in our condensed consolidated balance sheets.

Adjusted net debt to earnings before interest, taxes, depreciation, amortization, rent, and special items

(in millions)

December 31, 2025

December 31, 2024

Long-term debt

$ 5,309

$ 4,933

Capitalized operating leases

1,338

1,405

Capitalized finance leases

246

Total adjusted debt

6,893

6,393

Less: Total cash and marketable securities

2,123

2,475

Adjusted net debt

$ 4,770

$ 3,918

(in millions)

Twelve Months Ended

December 31, 2025

Twelve Months Ended

December 31, 2024

Operating Income

$ 303

$ 570

Adjusted for:

Special items - operating

250

345

Mark-to-market fuel hedge adjustments

(4)

(28)

Losses (gains) on foreign debt

(10)

Depreciation and amortization

795

583

Aircraft rent

250

207

EBITDAR

$ 1,595

$ 1,667

Adjusted net debt to EBITDAR

3.0x

2.4x

OPERATING SEGMENTS (unaudited)

Alaska Air Group, Inc.

Three Months Ended December 31, 2025

(in millions)

Alaska

Airlines

Hawaiian

Airlines

Regional

Consolidating

& Other (a)

Air Group

Adjusted (b)

Adjustments (c)

Consolidated

Operating Revenue

Passenger revenue

$ 2,071

$ 728

$ 449

$ —

$ 3,248

$ —

$ 3,248

Loyalty program other revenue

185

—

238

—

238

Cargo and other revenue

—

146

—

146

Total Operating Revenue

2,337

822

468

3,632

—

3,632

Operating Expenses

Operating expenses, excluding

fuel

1,768

654

369

(10)

2,781

2,820

Fuel expense

451

190

—

737

—

737

Total Operating Expenses

2,219

844

465

(10)

3,518

3,557

Non-operating Income

(Expense)

(3)

(38)

—

(8)

(49)

(45)

Income (Loss) Before Income

Tax

$ 115

$ (60)

$ 3

$ 7

$ 65

$ (35)

$ 30

Three Months Ended December 31, 2024

(in millions)

Alaska

Airlines

Hawaiian

Airlines

Regional

Consolidating

& Other (a)

Air Group

Adjusted (b)

Adjustments (c)

Consolidated

Operating Revenue

Passenger revenue

$ 2,073

$ 673

$ 432

$ —

$ 3,178

$ —

$ 3,178

Loyalty program other revenue

161

—

224

—

224

Cargo and other revenue

—

132

—

132

Total Operating Revenue

2,311

774

447

3,534

—

3,534

Operating Expenses

Operating expenses, excluding

fuel

1,725

619

341

(17)

2,668

2,759

Fuel expense

447

172

—

708

(6)

702

Total Operating Expenses

2,172

791

430

(17)

3,376

3,461

Non-operating Income

(Expense)

(27)

—

(8)

(21)

Income (Loss) Before Income

Tax

$ 153

$ (44)

$ 17

$ 11

$ 137

$ (58)

$ 79

OPERATING SEGMENTS (unaudited)

Alaska Air Group, Inc.

Twelve Months Ended December 31, 2025

(in millions)

Alaska

Airlines

Hawaiian

Airlines

Regional

Consolidating

& Other (a)

Air Group

Adjusted (b)

Adjustments (c)

Consolidated

Operating Revenue

Passenger revenue

$ 8,132

$ 2,918

$ 1,785

$ —

$ 12,835

$ —

$ 12,835

Loyalty program other revenue

653

134

—

855

—

855

Cargo and other revenue

305

231

—

549

—

549

Total Operating Revenue

9,090

3,283

1,853

14,239

—

14,239

Operating Expenses

Operating expenses, excluding

fuel

6,772

2,640

1,471

(76)

10,807

250

11,057

Fuel expense

1,777

723

383

—

2,883

(4)

2,879

Total Operating Expenses

8,549

3,363

1,854

(76)

13,690

246

13,936

Non-operating Income

(Expense)

(15)

(109)

—

(32)

(156)

(1)

(157)

Income (Loss) Before Income

Tax

$ 526

$ (189)

$ (1)

$ 57

$ 393

$ (247)

$ 146

Twelve Months Ended December 31, 2024

(in millions)

Alaska

Airlines

Hawaiian

Airlines

Regional

Consolidating

& Other (a)

Air Group

Adjusted (b)

Adjustments (c)

Consolidated

Operating Revenue

Passenger revenue

$ 8,151

$ 757

$ 1,746

$ —

$ 10,654

$ —

$ 10,654

Loyalty program other revenue

621

—

733

—

733

Cargo and other revenue

279

—

348

—

348

Total Operating Revenue

9,051

869

1,805

11,735

—

11,735

Operating Expenses

Operating expenses, excluding

fuel

6,365

701

1,317

(69)

8,314

345

8,659

Fuel expense

1,962

195

377

—

2,534

(28)

2,506

Total Operating Expenses

8,327

896

1,694

(69)

10,848

317

11,165

Non-operating Income

(Expense)

(31)

—

(40)

(51)

(25)

Income (Loss) Before Income

Tax

$ 744

$ (58)

$ 111

$ 39

$ 836

$ (291)

$ 545

(a)

Includes consolidating entries, Air Group parent company, Horizon, McGee Air Services, and other immaterial business units.

(b)

The Air Group Adjusted column represents the financial information that is reviewed by management to assess performance of operations and determine capital allocation and excludes certain charges.

(c)

Includes special items, mark-to-market fuel hedge accounting adjustments, and gains/losses on foreign debt.

SUPPLEMENTARY PRO FORMA COMPARATIVE FINANCIAL AND OPERATING INFORMATION (unaudited)

We believe that analysis of specific results on a pro forma basis provides more meaningful year-over-year comparisons. The

table below compares the three and twelve months ended December 31, 2025 to the reported three months ended December 31,

2024, which included Hawaiian results for the full quarter, and the pro forma twelve months ended December 31, 2024.

Hawaiian's financial information has been conformed to reflect Air Group's historical financial statement presentation. 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.

Three Months Ended December 31,

Twelve Months Ended December 31,

(in millions)

2025

2024

Change

2025

2024 Pro

Forma (a)

Change

Operating Revenue

Passenger revenue

$ 3,248

$ 3,178

2 %

$ 12,835

$ 12,502

3 %

Loyalty program other revenue

238

224

6 %

855

817

5 %

Cargo and other revenue

146

132

11 %

549

460

19 %

Total Operating Revenue

3,632

3,534

3 %

14,239

13,779

3 %

Operating expenses, excluding fuel

2,820

2,759

2 %

11,057

10,424

6 %

Aircraft fuel, including hedging gains and losses

737

702

5 %

2,879

3,045

(5) %

Total Operating Expenses

3,557

3,461

3 %

13,936

13,469

3 %

Operating Income

3 %

303

310

(2) %

Non-operating income (expense)

(45)

(157)

(82)

91 %

Income Before Tax

(62) %

146

228

(36) %

Special items - operating

(57) %

250

363

(31) %

Special items - net non-operating

—

(17)

(100) %

—

(24)

(100) %

Mark-to-market fuel hedge adjustments

—

(6)

(100) %

(4)

(30)

(87) %

Unrealized (gain)/loss on foreign debt

(4)

(10)

(60) %

(13)

(108) %

Adjusted Income Before Tax

$ 65

$ 137

(52) %

$ 393

$ 524

(25) %

Pretax Margin

0.8 %

2.2 %

-1.4 pts

1.0 %

1.7 %

-0.7 pts

Adjusted Pretax Margin

1.8 %

3.9 %

-2.1 pts

2.8 %

3.8 %

-1.0 pts

Pro Forma Comparative Operating Statistics

Revenue passengers (000)

14,355

14,339

0.1 %

58,627

57,134

2.6 %

RPMs (000,000) "traffic"

18,935

19,068

(0.7) %

77,110

76,566

0.7 %

ASMs (000,000) "capacity"

23,238

22,744

2.2 %

92,962

91,208

1.9 %

Load factor

81.5 %

83.8 %

(2.3) pt

82.9 %

83.9 %

(1.0) pt

Yield

17.15¢

16.67¢

2.9 %

16.64¢

16.33¢

1.9 %

RASM

15.63¢

15.54¢

0.6 %

15.32¢

15.11¢

1.4 %

CASMex

11.72¢

11.57¢

1.3 %

11.42¢

10.91¢

4.7 %

Pro Forma Comparative CASMex Reconciliation

Total operating expenses

$ 3,557

$ 3,461

2.8 %

$ 13,936

$ 13,469

3.5 %

Less the following components:

Aircraft fuel, including hedging gains and losses

737

702

5.0 %

2,879

3,045

(5.5) %

Freighter costs

51.4 %

192

111

73.0 %

Special items - operating

(57.1) %

250

363

(31.1) %

Total operating expenses, excluding fuel, freighter

costs, and special items

$ 2,725

$ 2,631

3.6 %

$ 10,615

$ 9,950

6.7 %

ASMs

23,238

22,744

2.2 %

92,962

91,208

1.9 %

CASMex

11.72¢

11.57¢

1.3 %

11.42¢

10.91¢

4.7 %

(a) As provided on Form 8-K filed with the SEC on January 22, 2025, including certain immaterial reclassification and policy adjustments.

Note A: Pursuant to Regulation G, we are providing reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. We believe that consideration of these non-GAAP financial measures may be important to investors for the following reasons:

GLOSSARY OF TERMS

Adjusted net debt - long-term debt, including current portion, plus capitalized operating and finance leases, less cash, restricted cash, and marketable securities

Adjusted net debt to EBITDAR - represents net adjusted debt divided by EBITDAR (trailing twelve months earnings before interest, taxes, depreciation, amortization, special items and rent)

ASMs - available seat miles, or "capacity"; represents total seats available across the fleet multiplied by the number of miles flown

CASMex - operating costs excluding fuel, freighter costs, and special items per ASM, or "unit cost". Beginning in 2026, CASMex will also exclude Performance-Based Pay expense.

Debt-to-capitalization ratio - represents adjusted debt (long-term debt plus capitalized operating and finance lease liabilities) divided by total equity plus adjusted debt

Diluted Earnings per Share - represents earnings per share (EPS) using fully diluted shares outstanding

Diluted Shares - represents the total number of shares that would be outstanding if all possible sources of conversion, such as stock options, were exercised

Economic Fuel - best estimate of the cash cost of fuel, net of the impact of our fuel-hedging program and excluding operations under the Air Transportation Service Agreement (ATSA) with Amazon

Freighter Costs - operating expenses directly attributable to the operation of Alaska's B737 freighter aircraft and Hawaiian's A330-300 freighter aircraft exclusively performing cargo missions

Load Factor - RPMs as a percentage of ASMs; represents the number of available seats that were filled with paying passengers

PRASM - passenger revenue per ASM, or "passenger unit revenue"

RASM - operating revenue per ASMs, or "unit revenue"; operating revenue includes all passenger revenue, freight & mail, loyalty program revenue, and other ancillary revenue; represents the average total revenue for flying one seat one mile

RPMs - revenue passenger miles, or "traffic"; represents the number of seats that were filled with paying passengers; one passenger traveling one mile is one RPM

Yield - passenger revenue per RPM; represents the average passenger revenue for flying one passenger one mile

SOURCE Alaska Air Group