Alaska Air Group reports second quarter 2024 results

• Expected to lead the industry with an adjusted pretax margin of 15.8%
• Achieved a completion rate of 99.5%, among the highest in the industry
  
• Reached tentative agreement with Alaska flight attendants represented by AFA
  

Alaska Air Group (NYSE: ALK) today reported financial results for the second quarter ending June 30, 2024, and provided outlook for the third quarter ending September 30, 2024 and full year 2024.

"It's clear that premium airlines are rising above the rest of the industry, and Alaska's product and performance put us in that top tier, with a strong long-term outlook to grow and compete," said CEO Ben Minicucci. "That's how we brought in record quarterly revenue and achieved a 15.8% adjusted pretax margin that should lead the industry. Thank you to our 23,000 employees for being safe, operating well, and taking care of our guests through our biggest summer travel season ever."

Financial Results:

• Reported net income for the second quarter of 2024 under Generally Accepted Accounting Principles (GAAP) of $220 million, or $1.71 per share, compared to net income of $240 million, or $1.86 per share, for the second quarter of 2023.
• Reported net income for the second quarter of 2024, excluding special items and mark-to-market fuel hedge accounting adjustments, of $327 million, or $2.55 per share, compared to net income of $387 million, or $3.00 per share, for the second quarter of 2023.
• Reported adjusted pretax margin of 15.8% for the second quarter.
• Repurchased 663,177 shares of common stock for approximately $28 million in the second quarter, bringing total repurchases to $49 million for the six months ended June 30, 2024.
• Generated $580 million in operating cash flow for the second quarter.
• Held $2.5 billion in unrestricted cash and marketable securities as of June 30, 2024.
• Ended the quarter with a debt-to-capitalization ratio of 45%, within the target range of 40% to 50%.

Operational Updates:

• Reached a tentative agreement with mainline flight attendants that recognizes their outstanding contributions. Voting on the agreement is expected to conclude by mid-August.
• Certified substantial compliance with the U.S. Department of Justice's second request for information regarding our proposed acquisition of Hawaiian Airlines, maintaining open communication with the DOJ during its review process.
• Finished the second quarter with a completion rate of 99.5%, among the highest in the industry.
• Received six 737-9 aircraft and three 737-8 aircraft during the quarter, bringing the totals within the Alaska fleet to 70 737-9s and four 737-8s.
• Received one E175 aircraft during the quarter, bringing the total in the Horizon fleet to 44.
• Added a second 737-800 freighter to Alaska Air Cargo's fleet and expanded the freighter network with twice-weekly service to Los Angeles.
• Purchased a 600,000 square-foot facility in Renton, Washington to serve as the new home for Alaska's training programs and operational teams following completion of renovations in 2025.
• Moved Air Group operations at San Francisco International Airport to Harvey Milk Terminal 1, which will improve guests' travel experience with advanced technology in the lobby and convenient proximity to our partners.
• Enhanced onboard offerings with the return of hot meals to the inflight menu within the Main Cabin.
• Began expansion of our lounge at Ted Stevens Anchorage International Airport to offer more than double the seating and improved amenities.

Network and Commercial Updates:

• Announced 20 nonstop routes to provide guests with more winter travel options, including new service to Vail, Colorado as well as La Paz and Monterrey, Mexico.
• Announced seasonal daily service from Portland to New Orleans beginning January 2025, our 55^th nonstop destination from Portland.
• Expanded partnership with British Airways to offer guests the ability to book nonstop flights between London and multiple U.S. cities directly at alaskaair.com or via the Alaska Airlines app.

Sustainability Updates:

• Released our 2023 Sustainability Report, sharing the company's progress on its goals for sustainability, safety, and our people, as well as highlighting accomplishments and ongoing initiatives.
• Launched option for guests to reduce their environmental impact by purchasing sustainable aviation fuel credits in the flight booking path, while also providing Mileage Plan members the ability to earn up to 5,000 elite-qualifying miles annually for their contributions.

Awards and Recognition:

• Alaska Airlines Mileage Plan named best U.S. airline frequent flier program by WalletHub for 2024.
• Named to Forbes' Best Employers for Diversity list, receiving the highest ranking of all U.S. airlines.
• Received the highest satisfaction score for 2024 among all U.S. airlines from the American Customer Satisfaction Index.
• As recently released by the U.S. Department of Transportation, Alaska generated the fewest customer complaints per 100,000 guests of any U.S. airline in 2023, finishing 75% better than the industry average and 35% better than the second-ranked airline.

The following table reconciles the company's reported GAAP net income per share (EPS) for the three and six months ended June 30, 2024 and 2023 to adjusted amounts.

Statistical data, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables. A glossary of financial terms can be found on the last page of this release.

Alaska will hold its quarterly conference call to discuss second quarter results at 8:30 a.m. PDT on July 18, 2024. A webcast of the call is available to the public at www.investor.alaskaair.com. For those unable to listen to the live broadcast, a replay will be available after 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 comprehensive discussion of potential risk factors, see Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Some of these risks include competition, labor costs, relations and availability, general economic conditions including those associated with pandemic recovery, increases in operating costs including fuel, inability to meet cost reduction, ESG 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 and our regional partners serve more than 120 destinations across the United States, the Bahamas, Belize, Canada, Costa Rica, Guatemala and Mexico. We offer our guests a premium flying experience with award-winning customer service and an industry-leading loyalty program, Mileage Plan. With our fellow oneworld Alliance members and additional Global Partners, our guests have more choices than ever to purchase, earn or redeem on alaskaair.com across 30 airlines and more than 1,000 worldwide destinations. Learn more about Alaska at news.alaskaair.com and follow @alaskaairnews for news and stories. Alaska Airlines and Horizon Air are subsidiaries of Alaska Air Group.

SUMMARY CASH FLOW (unaudited)
	Six Months Ended June 30, 2024		Three Months Ended March 31, 2024(a)		Three Months Ended June 30, 2024(b)
Cash Flows from Operating Activities:
Net Income (Loss)	$ 88		$ (132)		$ 220
Adjustments to reconcile net income to net cash provided by operating activities	291		168		123
Changes in working capital	493		256		237
Net cash provided by operating activities	872		292		580
Cash Flows from Investing Activities:
Property and equipment additions	(587)		(57)		(530)
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