Alaska Air Group delivers strong fourth quarter 2022 and full-year results

Delivered industry-leading full-year adjusted pretax margin of 7.6%;
Record annual revenue of $9.6 billion, up 10% versus 2019;
Employees hard work recognized with performance-based bonuses totaling 10.5% of annual pay

Alaska Air Group Inc. (NYSE: ALK) today reported financial results for the fourth quarter and full year ended Dec. 31, 2022, and provided an outlook for the first quarter ending March 31, 2023.

Financial Results:

• Reported net income for the fourth quarter and full year 2022 under Generally Accepted Accounting Principles (GAAP) of$22 million, or $0.17 per diluted share, and $58 million, or $0.45 per diluted share. These results compare to net income for the fourth quarter and full year 2021 of $18 million, or $0.14 per diluted share, and $478 million, or $3.77 per diluted share.
• Reported 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. These results compare to net income for the fourth quarter and net loss for the full year 2021, excluding special items and mark-to-market fuel hedge accounting adjustments, of $31 million, or $0.24 per diluted share, and $256 million, or $2.03 per share.
• Recorded $257 million of incentive pay in 2022 earned by employees for meeting or exceeding profitability, safety and emissions targets. The payout is the richest in the 20-year history of the plan, representing nearly six weeks of pay for most employees.
• Recorded $2.5 billion in operating revenue for the fourth quarter, resulting in $9.6 billion in operating revenue for the full year 2022, the highest annual total in company history.
• Received nearly $1.5 billion in annual cash remuneration under the renewed co-brand credit card arrangement with Bank of America, the highest level in the program's history.

Balance Sheet and Liquidity:

• Announced plans to resume share repurchases in early 2023 to offset annual dilution. Repurchases are expected to range from $75 million to $100 million in 2023.
• Ended the quarter with a debt-to-capitalization ratio of 49%, within our target range of 40% to 50%.
• Repaid $52 million in debt in the fourth quarter, bringing total debt payments to $385 million for the full year 2022.
• Held $2.4 billion in unrestricted cash and marketable securities as of Dec. 31, 2022.

Fleet Updates:

• Retired ten Airbus A320 aircraft and nine Q400 aircraft during the fourth quarter. All remaining A320 aircraft have since been retired and all remaining Q400 aircraft will be retired by the end of January 2023.
• Amended a previously existing aircraft purchase agreement with Boeing to convert 52 737 MAX aircraft options to firm purchases for delivery between 2024 and 2027. Alaska also added an incremental 105 delivery positions to purchase 737 MAX aircraft between 2026 and 2030.
• Received four 737-9 aircraft during the quarter, bringing the total 737-9 fleet to 37.
• Received three E175 aircraft during the quarter, bringing Horizon's total E175 fleet to 33.

Other Operational Updates:

• Partnered with Lyft to offer Mileage Plan members one mile for every $1 spent on all Lyft rides in the U.S. and Canada.
• Added a new Mileage Plan partner, Mokulele Airlines, to offer guests more convenient connections within the Hawaiian Islands, starting in early 2023.
• Launched the first U.S. electronic bag tag program, enabling guests to tag their luggage through the airline's mobile app before they reach the airport.
• Opened the renovated C Concourse Lounge in Seattle, the first of several investments that will improve the lounge experience with more seating and food and beverage choices for guests in Seattle, Portland, San Francisco and Los Angeles.

Environmental, Social and Governance Updates:

• Donated a retired Q400 to the Portland Community College Foundation, providing students of the Aviation Maintenance Technology and Aviation Science programs the opportunity to gain hands-on experience working on a commercial aircraft.
• Completed the transition to paper cups for inflight beverages, which will replace more than 55 million plastic cups each year with a more sustainable alternative.
• Donated 55 million miles to 20 different charities through Alaska's Care Miles program in 2022.
• Created a new Diversity, Equity and Inclusion Disability Office dedicated to ensuring Alaska becomes a leader in disability inclusion.

Tune in:

A conference call regarding the fourth quarter results will be streamed online at 8:30 a.m. PDT on January 26, 2022. 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.

Full earnings financial data:

Statistical data, reconciliations of the reported non-GAAP financial measures, further details regarding results and a glossary of financial terms can be found in our Earnings Release as filed with the SEC.

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