Alaska Air Group reports first quarter 2025 results

Led the industry in domestic unit revenue performance

Ratified two agreements with Alaska and Hawaiian flight attendants represented by AFA

Generated operating cash flow of $459 million

Repurchased $149 million in shares year-to-date¹

SEATTLE, April 23, 2025 /PRNewswire/ -- Alaska Air Group (NYSE:ALK) today reported financial results for the first quarter ending March 31, 2025.

Our team is executing well on integration milestones, cost performance, synergy capture and the initiatives that underpin the Alaska Accelerate plan. Our efforts to deliver $1 billion in incremental profit by 2027 are off to a strong start.

"Alaska is built for times like these with our relentless focus on safety, care and performance," said CEO Ben Minicucci. "Amid the economic uncertainty, our teams controlled what they can control and delivered results that strengthen our foundation for the long term. We're growing scale, relevance and loyalty in our hubs, we're already recognizing synergies from the combination with Hawaiian Airlines, and our employees have never been more engaged and excited about our future. Between the progress on our Alaska Accelerate strategic plan and the resilient business model we've built over decades, Alaska is well positioned to thrive in the years ahead."

Quarter in Review:

Air Group's Consolidated Statement of Operations, Consolidated Balance Sheets, and Summary Cash Flow 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 within the Supplementary Combined Comparative Operating Information in this filing and in prior 8-K filings. The pro forma information provided assumes Hawaiian is included in both 2024 and 2025.

 

Our Generally Accepted Accounting Principles (GAAP) pretax margin for the first quarter was (7.4)%, with a GAAP net loss per share of $1.35. On an adjusted basis, our pretax margin was (4.5)%, with a net loss per share of $0.77. While macroeconomic factors and a softening demand environment began to negatively impact our results in February, we still delivered a 7 point year-over-year improvement to our adjusted pretax margin on a pro forma basis.

Air Group capacity grew 3.9% during the quarter, approximately 1 point higher than expected, reflecting lower than expected flight cancellation rates. Total revenue grew 9.0% year-over-year, with unit revenue up 5.0% year-over-year — a result we believe will lead the industry, despite a 3 point impact from softening demand. Premium revenue remains resilient, up 10% year-over-year, and our loyalty program cash remuneration grew 12% year-over-year. Our revenue results reflect progress on key initiatives, such as network changes and synergies which are tracking in line with expectations.

Unit costs increased 2.1% year-over-year. This cost performance is in line with our expectations, and inclusive of the new Alaska flight attendant contract, which was ratified in February. Economic fuel price per gallon was $2.61 in the first quarter, reflecting moderating crude oil prices offset by elevated West Coast refining margins. 

Our consolidated results reflect strong initial progress on the integration of Hawaiian Airlines, and the synergies it unlocks. We are realizing benefits from our combined network, improved asset utilization and greater connectivity for our guests. In the first quarter, Hawaiian unit revenue increased 8.8% year-over-year, and Hawaiian's adjusted pretax margin improved 14 points.

Second Quarter and Full Year Forecast Information:

For the second quarter of 2025, we expect the following results. Although overall bookings have stabilized as we look forward, our guidance reflects approximately 6 points of revenue impact to the second quarter due to recent demand softness. Consistent with prior commentary and expectations, Q2 2025 faces the most cost pressure while unit costs are expected to improve sequentially through the second half of the year.

Given recent economic uncertainty and volatility, we are not providing an update to our full year 2025 guidance. We are assessing a variety of scenarios, and expect to be solidly profitable in 2025 even if revenue remains pressured throughout the second half of the year. Absent the softer macroeconomic outlook, areas of our business within our control are performing well and in line with our prior expectations. We will provide further updates to full year guidance later this year.

Financial Results and Updates:

• Reported GAAP net loss for the first quarter of 2025 of $166 million, or $1.35 per share, which includes Hawaiian results, compared to net loss of $132 million, or $1.05 per share, for the first quarter of 2024, which does not include Hawaiian results.
• Reported net loss for the first quarter of 2025, excluding special items and other adjustments, of $95 million, or $0.77 per share, which includes Hawaiian results, compared to net loss of $116 million, or $0.92 per share, for the first quarter of 2024, which does not include Hawaiian results.
• On a pro forma basis, adjusted pretax loss improved $190 million from $330 million in the first quarter of 2024 to $140 million in the first quarter of 2025.
• Repurchased 1.8 million shares of common stock for approximately $107 million in the first quarter, with year-to-date repurchases totaling $149 million as of April 22, 2025.
• Generated $459 million in operating cash flow for the first quarter.
• Held $2.5 billion in unrestricted cash and marketable securities as of March 31, 2025.

Operational Updates: 

• Ratified a three-year collective bargaining agreement (CBA) with Alaska's more than 6,900 AFA-represented flight attendants, recognizing them for their contributions to the company's success.
• Ratified a three-year extension of the existing CBA with Hawaiian's more than 2,100 AFA-represented flight attendants. The extension includes Hawaiian flight attendants in the company's Performance-Based Pay and Operational Performance Rewards programs, as well as other improved benefits.
• Reached a Tentative Agreement for an updated CBA with Horizon technicians, represented by AMFA.
• Expanded our combined fleet by eight aircraft during the quarter, adding four 737-9s, one 787-9, one E175, and two A330-300 freighters.
• Announced growth at our San Diego hub with three new nonstop routes to Phoenix, Chicago O'Hare, and Denver, as well as increased flight frequencies to Las Vegas, Sacramento, Salt Lake City, and San Jose to begin later this year.

Integration Updates:

• Enhanced loyalty program benefits by offering status matching and reciprocal mileage earn between our Mileage Plan and HawaiianMiles programs.
• Continued to bring our operations closer together by co-locating Alaska and Hawaiian stations in Los Angeles, New York JFK, Phoenix, and San Francisco in order to provide a more seamless travel experience for our guests.
• Completed co-location of Alaska and Hawaiian Air Cargo operations in four Hawaiian locations — Honolulu, Maui, Kona, and Līhuʻe.
• Unified cargo booking systems, allowing customers to book shipments across both networks more easily.

Other Updates:

• Introduced the Horizon Air Pilot Development Program in Hawai'i, the first of its kind in the state, providing students with a path to join Horizon Air while easing the financial burden of training costs.
• Announced investment in Loft Dynamics to develop the first hyper-realistic, full-motion Boeing 737 VR simulator, aiming to enhance pilot training and inform future training solutions across the industry.
• Named the best airline of 2025 by NerdWallet based on loyalty program value, elite status benefits, operational strength, and more.
• Named to Newsweek Reader's Choice list of top 10 best airport lounges in the U.S., a recognition of our continued investment in the lounge experience for guests traveling through our hubs.

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

A conference call regarding the first quarter results will be streamed online at 8:30 a.m. PDT on April 24, 2025. 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 the operations of the recently completed 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, 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, with McGee Air Services a subsidiary of Alaska Airlines. 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. Alaska is a member of the oneworld Alliance with Hawaiian scheduled to join in 2026. With oneworld and our additional global partners, guests can earn and redeem miles for travel to over 1,000 worldwide destinations. Guests can book travel at alaskaair.com and hawaiianairlines.com. Learn more about what's happening at Alaska and Hawaiian. Alaska Air Group is traded on the New York Stock Exchange (NYSE) as "ALK."

 

 

 

SPECIAL ITEMS (unaudited)

Air Group has classified certain 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.

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 ratified in the first quarter. Costs in 2024 were primarily associated with the retirement of Alaska's Airbus and Horizon's Q400 aircraft.

Integration costs: Integration costs are associated with the acquisition of Hawaiian Airlines and primarily consist of employee-related and other merger costs.

 

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.

 

  

 

 

 

 

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:

• By excluding certain costs from our unit metrics, we believe that we have better visibility into the results of operations. Our industry is highly competitive and is characterized by high fixed costs, so even a small reduction in non-fuel operating costs can result in a significant improvement in operating results. We believe that all U.S. carriers are similarly impacted by changes in jet fuel costs over the long run, so it is important for management and investors to understand the impact of company-specific cost drivers which are more controllable by management. We adjust for expenses related directly to our freighter aircraft operations, including those costs incurred under the ATSA with Amazon, to allow for better comparability to other carriers that do not operate freighter aircraft. We also exclude certain special charges as they are unusual or nonrecurring in nature and adjusting for these expenses allows management and investors to better understand our cost performance.
  
  
  
  
• CASMex is one of the most important measures used by management and by the Air Group Board of Directors in assessing quarterly and annual cost performance. 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. The measure is also the subject of frequent questions from investors.
  
  
  
  
• Adjusted pretax income is an important metric for the employee incentive plan, which covers the majority of Air Group employees.
  
  
  
  
• Disclosure of the individual impact of certain noted items provides investors the ability to measure and monitor performance both with and without these special items. We believe that disclosing the impact of these items as noted above is important because it provides information on significant items that are not necessarily indicative of future performance. Industry analysts and investors consistently measure our performance without these items for better comparability between periods and among other airlines.
  
  
  
  
• Although we disclose our unit revenue, we do not, nor are we able to, evaluate unit revenue excluding the impact that changes in fuel costs have had on ticket prices. Fuel expense represents a large percentage of our total operating expenses. Fluctuations in fuel prices often drive changes in unit revenue in the mid-to-long term. 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.

GLOSSARY OF TERMS

Adjusted net debt - long-term debt, including current portion, plus capitalized operating and finance leases, less 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, rent, and special items)

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"

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 programs 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 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

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SOURCE Alaska Air Group