Alaska Air Group reports second quarter 2023 results

Delivered industry-leading adjusted pre-tax margins of 18.3% on record quarterly revenue

Adjusted pre-tax margin exceeds 2019 second quarter results despite higher fuel costs

Achieved industry's best on-time performance and completion rate in June

SEATTLE, July 25, 2023 /PRNewswire/ -- Alaska Air Group (NYSE: ALK) today reported financial results for the second quarter ending June 30, 2023, and provided outlook for the third quarter ending September 30, 2023.

"People are hungry to travel and our frontline employees are delivering the safe, reliable and caring experience that people expect when they fly with us," said CEO Ben Minicucci. "I'm so proud of our team for knocking it out of the park and delivering industry-leading operational and financial outcomes. We chose to prioritize reliability, which is imperative to restoring stability, improving predictability for our guests and employees, capturing record revenue, and serving as the foundation for our long-term profitable growth."

Financial Highlights:

• Reported net income for the second quarter of 2023 under Generally Accepted Accounting Principles (GAAP) of $240 million, or $1.86 per share, compared to a net income of $139 million, or $1.09 per share, for the second quarter of 2022.
• Reported net income for the second quarter of 2023, excluding special items and mark-to-market fuel hedge accounting adjustments, of $387 million, or $3.00 per share, compared to $280 million, or $2.19 per share, for the second quarter of 2022. This quarter's adjusted results exceed the First Call analyst consensus estimate of $2.70 per share.
• Generated adjusted pre-tax margins of 18.3%, a 250-basis point increase over the same period in 2019.
• Recorded $2.8 billion in operating revenue for the second quarter, the highest quarterly total in company history.
• Received $435 million in bank card partner commissions driven by increased consumer spending.
• Repurchased 871,987 shares of common stock for approximately $39 million in the second quarter, bringing total repurchases to $57 million for the six months ended June 30, 2023. The company continues to expect share repurchases of at least $100 million in 2023.
• Generated $610 million in operating cash flow for the second quarter.
• Held $2.4 billion in unrestricted cash and marketable securities as of June 30, 2023.
• Ended the quarter with a debt-to-capitalization ratio of 48%, within the target range of 40% to 50%.

Operational Updates:

• Received eight 737-9 aircraft and six E175 aircraft during the quarter, bringing the totals in the Alaska and Horizon fleets to 51 and 39, respectively.
• Announced new routes to Nassau, Bahamas from Seattle and Los Angeles and Guatemala City, Guatemala from Los Angeles, marking six countries that Alaska will fly to and from its West Coast hubs.
• Launched partnership with STARLUX Airlines, whose flights between Los Angeles and Taipei allow Mileage Plan members to connect to 16 destinations across Asia.
• Reopened the renovated D Concourse Lounge in Seattle, offering 50% more seating and improved amenities.
• Completed Intelsat satellite Wi-Fi installation across the Mainline fleet.

Environmental, Social and Governance Updates:

• Released the 2022 Care Report, sharing the company's progress towards its environmental, social and governance goals, as well as highlighting accomplishments and ongoing initiatives.
• Contributed a retired Q400 aircraft to ZeroAvia to support its development of a hydrogen-electric powertrain system, showcasing Alaska's commitment to creating a sustainable future for aviation.

Awards and Recognition:

• Mileage Plan named Best Airline Reward program for 2023-2024 by U.S. News & World Report for the 9^th consecutive year.
• Presented with the award for "Executive Leadership - North America" at the Airline Strategy Awards in recognition of Alaska's strong financial performance and operational excellence.
• Named to Forbes' Best Employers for Diversity list, receiving the highest ranking of all airlines.
• Scored 100% for the second year in a row in Disability:IN's Disability Equality Index, which benchmarks companies on their disability inclusion and equality.
• Rated by KAYAK users as the #1 overall airline in North America, earning the top scores for crew, comfort, food and boarding.

The following table reconciles the company's reported GAAP net income (loss) per share (EPS) for the three and six months ended June 30, 2023 and 2022 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 25, 2023. A webcast of the call is available to the public at www.alaskaair.com/investors. 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, 2022. 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, Belize, Canada, Costa Rica and Mexico. We strive to be the most caring airline with award-winning customer service and an industry-leading loyalty program. As a member of the oneworld alliance, and with our additional global partners, our guests can travel to more than 1,000 destinations on more than 25 airlines while earning and redeeming miles on flights to locations around the world. 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.

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