Airlines

Alaska Air Group reports fourth quarter and full year 2023 results

Alaska Air Group Inc. today reported financial results for the fourth quarter and full year ended December 31, 2023.

Ben Minicucci, CEO, said, “Air Group’s 2023 accomplishments were significant.

“I want to thank our people for delivering a reliable operation, industry-leading cost performance, and a strong 7.5% adjusted pretax margin.

“As we navigate early 2024, we remain steadfast in our commitment to safety, providing a premium experience for our guests, and delivering durable financial performance.

“I am also grateful for how the team has rallied together to demonstrate tremendous professionalism and care in the midst of a challenging start to 2024 for them and our guests.

“Alaska is a resilient company with a track record of operational excellence, and we are confident in the plans we have laid out to ensure that success moving forward.”

Financial Results:

  • Reported net loss for the fourth quarter and net income for the full year 2023 under Generally Accepted Accounting Principles (GAAP) of $2 million, or $0.02 per share, and $235 million, or $1.83 per diluted share. These results compare to net income for the fourth quarter and full year 2022 of $22 million, or $0.17 per diluted share, and $58 million, or $0.45 per diluted share.
  • Reported net income for the fourth quarter and full year 2023, excluding special items and mark-to-market fuel hedge accounting adjustments, of $38 million, or $0.30 per diluted share, and $583 million, or $4.53 per diluted share. These results compare to net income for the fourth quarter and full year 2022, excluding special items and mark-to-market fuel hedge accounting adjustments, of $118 million, or $0.92 per diluted share, and $556 million, or $4.35 per diluted share.
  • Generated an adjusted pretax margin of 7.5% for the full year 2023, among the highest in the industry.
  • Recorded $2.6 billion in operating revenue for the fourth quarter, and a record $10.4 billion for the full year 2023.
  • Reduced CASM excluding fuel and special items by 6.6% in the fourth quarter and 2.6% in the full year compared to 2022.
  • Generated $1.1 billion in operating cash flow for the full year 2023.
  • Repurchased approximately 2 million shares of common stock for $75 million in the fourth quarter, bringing total repurchases to approximately 3.5 million shares for $145 million for the full year 2023.
  • Recognized more than $400 million in bank card partner commissions in the fourth quarter and $1.6 billion for the full year 2023, representing a 13% year-over-year increase compared to the full year 2022.
  • Air Group employees earned $200 million of incentive pay in 2023 by achieving profitability, sustainability, operational, and safety targets. The payout represents more than three weeks of pay for most employees.
  • Received an investment grade credit rating of “Baa3” from Moody’s Investors Service, citing the Company’s “strong business profile and conservative financial policy.”

Balance Sheet and Liquidity:

  • Ended the year with a debt-to-capitalization ratio of 46%, within the target range of 40% to 50%.
  • Repaid $40 million in debt in the fourth quarter, bringing total debt payments to $282 million for the full year 2023.

Operational Updates:

  • Agreed to purchase Hawaiian Airlines for $18 per share in cash. The proposed combined airline will preserve both the Alaska and Hawaiian brands and provide guests with an expanded network across the Pacific.
  • Placed our first 737-800 freighter into operating service, with a second 737-800 freighter expected to be delivered in the first quarter of 2024.
  • Announced Alaska’s 30th global airline partner, Porter Airlines, opening new opportunities for guests to travel to Canada from the West Coast.
  • Announced new routes beginning in 2024, including: SeattleToronto, Anchorage-New York JFK, Anchorage-San Diego, and PortlandNashville.
  • Enhanced partnership with Condor Airlines with a bilateral codeshare agreement that enables Alaska and Condor to sell each other’s flights.
  • Completed sale of ten Airbus A321neos to American Airlines, with eight transactions occurring in the fourth quarter and two in January.
  • Introduced inflight contactless payment Tap to Pay, an industry first, providing customers with an easier option to make purchases while flying.

737-9 MAX Grounding:

  • Preparing to complete the final inspections on all of our 737-9 MAX aircraft. Each aircraft will be returned to service after the inspection has been completed and any findings resolved.
  • Completed requested inspections of all 737-900ER aircraft with only one minor finding which was immediately corrected.
  • Initiated a thorough review of Boeing’s production quality and control systems, including Boeing’s production vendor oversight to enhance quality control on new aircraft.
  • Began enhanced quality oversight program at the Boeing production facility, expanding our team to validate work and quality of our aircraft as they progress through the manufacturing process.

Environmental, Social, and Governance Updates:

  • Partnered with climate-tech company CHOOOSE to offer guests the ability to purchase sustainable aviation fuel credits or support nature-based climate projects upon check-out.
  • Through Alaska’s Care Miles program, Mileage Plan members donated over 100 million miles to 22 different charities in 2023.

Awards and Recognition:

  • Named Worldwide Airline of the Year by the Centre for Aviation at the World Aviation Summit in Abu Dhabi.
  • Achieved a score of 100 on the Human Rights Foundation’s 2023-2024 Corporate Equity Index in recognition of Alaska’s policies and practices supporting LGBTQ+ workplace equality.

Three Months Ended December 31,

2023

2022

(in millions, except per share amounts)

Dollars

Diluted EPS

Dollars

Diluted EPS

GAAP net income (loss) per share

$                 (2)

$           (0.02)

$                 22

$             0.17

Mark-to-market fuel hedge adjustments

12

0.09

12

0.09

Special items – fleet transition and other(a)

37

0.29

120

0.93

Special items – labor and related(b)

(6)

(0.04)

Special items – net non-operating(c)

4

0.03

Income tax effect of reconciling items above

(13)

(0.09)

(30)

(0.23)

Non-GAAP adjusted net income per share

$                 38

$             0.30

$              118

$             0.92

Twelve Months Ended December 31,

2023

2022

(in millions, except per share amounts)

Dollars

Diluted EPS

Dollars

Diluted EPS

GAAP net income per share

$              235

$             1.83

$                 58

$             0.45

Mark-to-market fuel hedge adjustments

(2)

(0.02)

76

0.60

Special items – fleet transition and other(a)

392

3.05

496

3.88

Special items – labor and related(b)

51

0.40

84

0.66

Special items – net non-operating(c)

18

0.14

Income tax effect of reconciling items above

(111)

(0.87)

(158)

(1.24)

Non-GAAP adjusted net income per share

$              583

$             4.53

$              556

$             4.35

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