Alaska Air(ALK) - 2025 Q1 - Quarterly Report

Financial Performance - The company reported a loss before income tax of $233 million for Q1 2025, compared to a loss of$ 178 million in Q1 2024, with a pro forma pretax loss of $343 million for Q1 2024 [90]. - Adjusted loss before income tax for Q1 2025 was$ 140 million, an improvement from a loss of $157 million in Q1 2024 [139]. - Alaska Airlines reported a pretax loss of$ 55 million in Q1 2025, an improvement of $107 million compared to a loss of$ 162 million in Q1 2024 [121]. - Hawaiian Airlines reported a pretax loss of $88 million in Q1 2025, improved from a pro forma loss of$ 173 million in Q1 2024 [122]. Revenue and Growth - Total operating revenue increased by $260 million, or 9%, to$ 3,137 million in Q1 2025, driven by a $223 million increase in passenger revenue, which rose by 9% [98][101]. - Revenue passengers increased by 34.6% to 13,159,000 in Q1 2025 compared to 9,774,000 in Q1 2024 [143]. - RPMs (revenue passenger miles) grew by 37.8% to 17,257 million in Q1 2025 from 12,524 million in Q1 2024 [143]. - Loyalty program other revenue increased by$ 14 million, or 7%, due to higher commission revenue from bank card and third-party partners [102]. - Cargo and other revenue rose by $23 million, or 23%, attributed to the addition of aircraft in Alaska's and Hawaiian's cargo fleets [103]. Operating Expenses - Pro forma operating expenses increased by$ 132 million, or 4%, totaling $3,334 million in Q1 2025, with aircraft fuel expenses decreasing by$ 78 million, or 10% [104][108]. - Total non-fuel operating expenses increased by $161 million, or 7%, to$ 2,562 million in the first quarter of 2025 compared to the same period in 2024 [111]. - Wages and benefits rose by $66 million, or 6%, to$ 1,127 million, driven by higher wage rates across multiple labor groups [112]. - Variable incentive pay increased by $13 million, or 27%, due to the inclusion of Hawaiian employees in the Performance-Based Pay program [113]. - Aircraft maintenance costs grew by$ 22 million, or 11%, attributed to higher rates for outside maintenance work and additional maintenance projects [114]. - Landing fees and rentals increased by $30 million, or 14%, due to a higher volume of departures and landed weight [115]. Capacity and Fleet - Capacity growth is anticipated to be between 2% to 3% in Q2 2025, with unit revenue expected to be flat to down low single digits and unit cost projected to rise mid to high single digits [95]. - The total operating fleet increased by 84 aircraft to 399 in Q1 2025 compared to 315 in Q1 2024 [143]. - Total Air Group Fleet is expected to grow from 414 aircraft in 2025 to 448 aircraft by the end of 2027, reflecting a net increase of 34 aircraft [136]. - The company plans to operate ten A330-300 freighters under the ATSA with Amazon, with options to expand the fleet [136]. Fuel Costs - Economic fuel cost per gallon decreased by 13.6% to$ 2.61 in Q1 2025, compared to $3.02 in Q1 2024 [97][108]. - Economic fuel cost per gallon decreased by 15.3% to$ 2.61 in Q1 2025 from $3.08 in Q1 2024 [143]. Cash Flow and Capital Expenditures - Cash and marketable securities stood at$ 2.5 billion as of March 31, 2025, with an $850 million bank line-of-credit facility available [124]. - Operating cash flows were$ 459 million during the first three months of 2025, primarily from advance ticket sales and co-branded credit card agreements [125]. - Capital expenditures for 2025 are projected to be between $1.4 billion and$ 1.6 billion [126]. Employee Metrics - The average full-time equivalent employees (FTEs) increased slightly to 29,773 in Q1 2025, compared to 29,718 in Q1 2024 [97].