DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 31, 2017 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | ALASKA AIR GROUP, INC. | |
Entity Central Index Key | 766,421 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 123,525,463 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 198 | $ 328 |
Marketable securities | 1,724 | 1,252 |
Total cash and marketable securities | 1,922 | 1,580 |
Receivables—net | 326 | 302 |
Inventories and supplies—net | 52 | 47 |
Prepaid expenses and other current assets | 125 | 121 |
Total Current Assets | 2,425 | 2,050 |
Property and Equipment | ||
Aircraft and other flight equipment | 7,377 | 6,947 |
Other property and equipment | 1,158 | 1,103 |
Deposits for future flight equipment | 526 | 545 |
Property and Equipment Total | 9,061 | 8,595 |
Less accumulated depreciation and amortization | 3,059 | 2,929 |
Total Property and Equipment—Net | 6,002 | 5,666 |
Goodwill | 1,940 | 1,934 |
Intangible assets | 137 | 143 |
Other noncurrent assets | 216 | 169 |
Other Assets | 2,293 | 2,246 |
Total Assets | 10,720 | 9,962 |
Current Liabilities | ||
Accounts payable | 95 | 92 |
Accrued wages, vacation and payroll taxes | 308 | 397 |
Air traffic liability | 1,255 | 849 |
Other accrued liabilities | 979 | 878 |
Current portion of long-term debt | 337 | 319 |
Total Current Liabilities | 2,974 | 2,535 |
Long-Term Debt, Net of Current Portion | 2,469 | 2,645 |
Other Liabilities and Credits | ||
Deferred income taxes | 598 | 463 |
Deferred revenue | 652 | 640 |
Obligation for pension and postretirement medical benefits | 336 | 331 |
Other liabilities | 427 | 417 |
Other Liabilities and Credits Totals | 2,013 | 1,851 |
Commitments and Contingencies | ||
Shareholders' Equity | ||
Preferred stock, $0.01 par value, Authorized: 5,000,000 shares, none issued or outstanding | 0 | 0 |
Common stock, $0.01 par value, Authorized: 400,000,000 shares, Issued: 2017 - 129,638,780 shares; 2016 - 129,189,634 shares, Outstanding: 2017 - 123,520,517 shares; 2016 - 123,328,051 shares | 1 | 1 |
Capital in excess of par value | 135 | 110 |
Treasury stock (common), at cost: 2017 - 6,118,263 shares; 2016 - 5,861,583 shares | (466) | (443) |
Accumulated other comprehensive loss | (294) | (305) |
Retained earnings | 3,888 | 3,568 |
Total Shareholders' Equity | 3,264 | 2,931 |
Total Liabilities and Shareholders' Equity | $ 10,720 | $ 9,962 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICALS) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Stockholders' Equity: | ||
Preferred Stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 400,000,000 | 200,000,000 |
Common stock, shares issued (shares) | 129,638,780 | 129,189,634 |
Common stock, shares outstanding (shares) | 123,520,517 | 123,328,051 |
Treasury Stock, Shares (shares) | 6,118,263 | 5,861,583 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Operating Revenues | ||||
Passenger, Mainline | $ 1,556 | $ 1,036 | $ 2,828 | $ 1,963 |
Passenger, Regional | 251 | 227 | 463 | 433 |
Total passenger revenue | 1,807 | 1,263 | 3,291 | 2,396 |
Freight and mail | 32 | 27 | 56 | 51 |
Other—net | 263 | 204 | 504 | 394 |
Total Operating Revenues | 2,102 | 1,494 | 3,851 | 2,841 |
Operating Expenses | ||||
Wages and benefits | 469 | 332 | 917 | 668 |
Variable incentive pay | 27 | 32 | 58 | 64 |
Aircraft fuel, including hedging gains and losses | 344 | 201 | 683 | 368 |
Aircraft maintenance | 96 | 65 | 183 | 133 |
Aircraft rent | 69 | 26 | 134 | 55 |
Landing fees and other rentals | 99 | 63 | 214 | 143 |
Contracted services | 77 | 60 | 158 | 120 |
Selling expenses | 97 | 55 | 178 | 104 |
Depreciation and amortization | 90 | 92 | 180 | 180 |
Food and beverage service | 50 | 31 | 95 | 62 |
Third-party regional carrier expense | 27 | 24 | 54 | 47 |
Special items—merger-related costs | 24 | 14 | 64 | 14 |
Other | 140 | 81 | 274 | 175 |
Total Operating Expenses | 1,609 | 1,076 | 3,192 | 2,133 |
Operating Income | 493 | 418 | 659 | 708 |
Nonoperating Income (Expense) | ||||
Interest income | 9 | 7 | 16 | 13 |
Interest expense | (26) | (9) | (51) | (22) |
Interest capitalized | 4 | 7 | 8 | 15 |
Other—net | (1) | (3) | (1) | (2) |
Nonoperating Income (Expense) Total | (14) | 2 | (28) | 4 |
Income before income tax | 479 | 420 | 631 | 712 |
Income tax expense | 183 | 160 | 236 | 268 |
Net Income | $ 296 | $ 260 | $ 395 | $ 444 |
Basic Earnings Per Share (usd per share) | $ 2.40 | $ 2.11 | $ 3.19 | $ 3.58 |
Diluted Earnings Per Share (usd per share) | $ 2.38 | $ 2.10 | $ 3.17 | $ 3.56 |
Shares used for computation: | ||||
Basic shares (shares) | 123,573 | 123,250 | 123,534 | 123,900 |
Diluted shares (shares) | 124,332 | 123,988 | 124,374 | 124,715 |
Cash dividend declared per share (usd per share) | $ 0.30 | $ 0.275 | $ 0.6 | $ 0.550 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 296 | $ 260 | $ 395 | $ 444 |
Related to marketable securities: | ||||
Unrealized holding gains arising during the period | 1 | 7 | 4 | 19 |
Reclassification of (gains) losses into Other—net nonoperating income (expense) | 1 | (1) | 1 | (1) |
Income tax effect | (1) | (2) | (2) | (6) |
Total | 1 | 4 | 3 | 12 |
Related to employee benefit plans: | ||||
Reclassification of net pension expense into Wages and benefits | 5 | 5 | 11 | 10 |
Income tax effect | (1) | (2) | (3) | (4) |
Total | 4 | 3 | 8 | 6 |
Related to interest rate derivative instruments: | ||||
Unrealized holding losses arising during the period | (3) | (2) | (2) | (7) |
Reclassification of losses into Aircraft rent | 2 | 2 | 2 | 3 |
Income tax effect | 1 | 0 | 0 | 2 |
Total | 0 | 0 | 0 | (2) |
Other Comprehensive Income | 5 | 7 | 11 | 16 |
Comprehensive Income | $ 301 | $ 267 | $ 406 | $ 460 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Net Income | $ 395 | $ 444 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 180 | 180 |
Stock-based compensation and other | 25 | 13 |
Changes in certain assets and liabilities: | ||
Changes in deferred tax provision | 132 | 41 |
Increase in air traffic liability | 406 | 201 |
Increase in deferred revenue | 15 | 48 |
Other—net | (69) | (28) |
Net cash provided by operating activities | 1,084 | 899 |
Property and equipment additions: | ||
Aircraft and aircraft purchase deposits | (404) | (268) |
Other flight equipment | (45) | (31) |
Other property and equipment | (63) | (41) |
Total property and equipment additions, including capitalized interest | (512) | (340) |
Purchases of marketable securities | (1,010) | (610) |
Sales and maturities of marketable securities | 541 | 357 |
Other investing activities | 10 | 3 |
Net cash used in investing activities | (971) | (590) |
Cash flows from financing activities: | ||
Long-term debt payments | (159) | (57) |
Common stock repurchases | (22) | (193) |
Dividends paid | (74) | (68) |
Other financing activities | 12 | 17 |
Net cash used in financing activities | (243) | (301) |
Net increase (decrease) in cash and cash equivalents | (130) | 8 |
Cash and cash equivalents at beginning of year | 328 | 73 |
Cash and cash equivalents at end of the period | 198 | 81 |
Cash paid during the period for: | ||
Interest (net of amount capitalized) | 42 | 8 |
Income taxes | $ 14 | $ 182 |
GENERAL AND SUMMARY OF SIGNIFIC
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Basis of Presentation The condensed consolidated financial statements include the accounts of Air Group, and its primary subsidiaries, Alaska, Horizon and, starting December 14, 2016, Virgin America. The Company conducts substantially all of its operations through these subsidiaries. All significant intercompany balances and transactions have been eliminated. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information. Consistent with these requirements, this Form 10-Q does not include all the information required by GAAP for complete financial statements. It should be read in conjunction with the consolidated financial statements and accompanying notes in the Form 10-K for the year ended December 31, 2016 . In the opinion of management, all adjustments have been made that are necessary to fairly present the Company’s financial position as of June 30, 2017 and the results of operations for the three and six months ended June 30, 2017 and 2016 . Such adjustments were of a normal recurring nature. In preparing these statements, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities, as well as the reported amounts of revenues and expenses. Due to seasonal variations in the demand for air travel, the volatility of aircraft fuel prices, changes in global economic conditions, changes in the competitive environment and other factors, operating results for the three and six months ended June 30, 2017 are not necessarily indicative of operating results for the entire year. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers"(Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This comprehensive new standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In March 2016, the FASB issued ASU 2016-08, "Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations" to clarify the guidance on determining whether the Company is considered the principal or the agent in a revenue transaction where a third party is providing goods or services to a customer. Entities are permitted to use either a full retrospective or cumulative effect transition method, and are required to adopt all parts of the new revenue standard using the same transition method. The new standard is effective for the Company on January 1, 2018. At this time, the Company believes the most significant impact to the financial statements will be to Mileage Plan™ revenues and liabilities. The Company currently uses the incremental cost approach for miles earned through travel. As this approach will be eliminated with the standard, the Company will be required to allocate a portion of the ticket price through a relative selling price model and defer revenue recognition until the ticket is flown or unused mileage credits expire. The Company estimates an increase to the liability for earned miles of approximately $350 million to $450 million at the time of adoption. The allocated value to miles earned through travel will offset passenger revenue during the period they are issued, rather than recorded using the incremental cost approach. The adoption of the new standard is also expected to result in a change in income statement classification of the majority of ancillary revenues from Other revenue to Passenger revenue. This will affect common industry metrics, such as PRASM and RASM. Certain commission revenue from interline arrangements that was previously offset against related expense will now be classified as Other revenue, which will impact RASM and CASM. Unused ticket revenue that was previously recorded at the time of expiration will now be recorded at the original departure date if that ticket has not been changed or refunded prior to that date, based on estimates of expected expiration. This concept is referred to as ticket breakage. The Company estimates the change in ticket breakage methodology will not have a significant impact on the statements of operations, but will decrease air traffic liability by approximately $80 million to $90 million . The Company continues to evaluate and model the full impact of the standard and will apply the full retrospective transition method. The overall impact to equity as of the beginning of the retroactive reporting period, including the changes discussed above as well as other less material changes, is expected to be between $170 million and $250 million . In February 2016, the FASB issued ASU 2016-02, "Leases" (Topic 842), which requires lessees to recognize assets and liabilities for leases currently classified as operating leases. Under the new standard, a lessee will recognize a liability on the balance sheet representing the lease payments owed, and a right-of-use-asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities. At this time, the Company believes the most significant impact to the financial statements will relate to the recording of a right-of-use asset associated with leased aircraft. Other leases, including airports and real estate, equipment, software and other miscellaneous leases continue to be assessed for impact of the ASU. The new standard is effective for the Company on January 1, 2019. Early adoption of the standard is permitted. The Company has determined that it will not early adopt the standard. In March 2016, the FASB issued ASU 2016-09, "Compensation—Stock Compensation" (Topic 718), which simplifies several aspects of accounting for employee share-based payment awards, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The ASU was adopted prospectively as of January 1, 2017. Prior periods have not been adjusted. The adoption of the standard did not have a material impact on the Company's statements of operations or financial position. In January 2017, the FASB issued ASU 2017-04, "Intangibles—Goodwill and Other" (Topic 350), which eliminates step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The ASU is effective for the Company beginning January 1, 2019. Early adoption of the standard is permitted. Beginning in fiscal 2017, the Company will be required to perform an impairment test for goodwill arising from its acquisition of Virgin America and has adopted the standard effective January 1, 2017. In March 2017, the FASB issued ASU 2017-07, "Compensation—Retirement Benefits" (Topic 715), which will require the Company to separate service cost component from other components of net periodic benefit cost and report it in Wages and benefits in the statements of operations. The other components of net periodic benefit cost will be required to be presented in Nonoperating income (expense) in the statements of operations. These components will not be eligible for capitalization in assets. The Company will be required to disclose the line(s) used to present these other components if not presented separately in the income statement. The ASU is effective for the Company beginning January 1, 2018. The Company is currently evaluating the impact. |
ACQUISITION OF VIRGIN AMERICA I
ACQUISITION OF VIRGIN AMERICA INC. | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
ACQUISITION OF VIRGIN AMERICA INC. | ACQUISITION OF VIRGIN AMERICA Virgin America On December 14, 2016, the Company acquired 100% of the outstanding common shares and voting interest of Virgin America for $57 per share, or total cash consideration of $2.6 billion . Virgin America offers scheduled air transportation throughout the United States and Mexico primarily from its hub cities of Los Angeles, San Francisco and, to a lesser extent, Dallas Love Field, to other major business and leisure destinations in North America. The Company believes the acquisition of Virgin America will provide broader national reach and position it to better serve people living on the West Coast. The combined airline has approximately 1,200 daily departures and leverages Alaska's strength in the Pacific Northwest with Virgin America's strength in California. The Company believes that combining loyalty programs and networks will provide greater benefits for its guests and expand its international partner portfolio, giving guests an even more expansive global reach. Merger-related costs The Company incurred pretax merger-related costs of $24 million and $14 million for the three months ended June 30, 2017 and 2016 and of $64 million and $14 million for the six months ended June 30, 2017 and 2016 . Costs classified as merger-related are directly attributable to merger activities and are recorded as "Special items—merger-related costs" within the statements of operations. The Company expects to continue to incur merger-related costs in the future as the integration continues. Fair values of the assets acquired and the liabilities assumed The transaction has been accounted for as a business combination using the acquisition method of accounting, which requires, among other things, assets acquired and liabilities assumed to be recognized on the balance sheet at their fair values as of the acquisition date. As of June 30, 2017 the fair values of property and equipment and certain liabilities, included in Other accrued liabilities and Other liabilities, goodwill, intangible assets and deferred income taxes have been prepared on a preliminary basis and are subject to further adjustments as the Company completes its analysis. There were no significant fair value adjustments made during the three and six months ended June 30, 2017 . The Company will finalize the amounts recognized by December 14, 2017. Fair values of the assets acquired and the liabilities assumed as of the acquisition date of December 14, 2016, at June 30, 2017 and December 31, 2016 were as follows (in millions): June 30, 2017 December 31, 2016 Cash and cash equivalents $ 645 $ 645 Receivables 44 44 Prepaid expenses and other current assets 16 16 Property and equipment—provisional 561 560 Intangible assets—provisional 141 143 Goodwill—provisional 1,940 1,934 Other assets 84 84 Total assets 3,431 3,426 Accounts payable 22 22 Accrued wages, vacation and payroll taxes 50 51 Air traffic liabilities 172 172 Other accrued liabilities—provisional 195 196 Current portion of long-term debt 125 125 Long-term debt, net of current portion 360 360 Deferred income taxes—provisional (307 ) (304 ) Deferred revenue 126 126 Other liabilities—provisional 92 82 Total liabilities 835 830 Total purchase price $ 2,596 $ 2,596 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS In determining fair value, there is a three-level hierarchy based on the reliability of the inputs used. Level 1 refers to fair values based on quoted prices in active markets for identical assets or liabilities. Level 2 refers to fair values estimated using significant other observable inputs and Level 3 refers to fair values estimated using significant unobservable inputs. Fair Value of Financial Instruments on a Recurring Basis As of June 30, 2017 , total cost basis for all marketable securities was $1.7 billion . There were no significant differences between the cost basis and fair value of any individual class of marketable securities. Fair values of financial instruments on the consolidated balance sheet (in millions): June 30, 2017 Level 1 Level 2 Total Assets Marketable securities U.S. government and agency securities $ 448 $ — $ 448 Foreign government bonds — 39 39 Asset-backed securities — 222 222 Mortgage-backed securities — 113 113 Corporate notes and bonds — 889 889 Municipal securities — 13 13 Total Marketable securities 448 1,276 1,724 Derivative instruments Fuel hedge call options — 8 8 Interest rate swap agreements — 8 8 Total Assets 448 1,292 1,740 Liabilities Derivative instruments Interest rate swap agreements — (12 ) (12 ) Total Liabilities — (12 ) (12 ) December 31, 2016 Level 1 Level 2 Total Assets Marketable securities U.S. government and agency securities $ 287 $ — $ 287 Foreign government bonds — 36 36 Asset-backed securities — 138 138 Mortgage-backed securities — 89 89 Corporate notes and bonds — 691 691 Municipal securities — 11 11 Total Marketable securities 287 965 1,252 Derivative instruments Fuel hedge call options — 20 20 Total Assets 287 985 1,272 Liabilities Derivative instruments Interest rate swap agreements — (5 ) (5 ) Total Liabilities — (5 ) (5 ) The Company uses the market and income approach to determine the fair value of marketable securities. U.S. government securities are Level 1 as the fair value is based on quoted prices in active markets. Foreign government bonds, asset-backed securities, mortgage-backed securities, corporate notes and bonds, and municipal securities are Level 2 as the fair value is based on standard valuation models that are calculated based on observable inputs such as quoted interest rates, yield curves, credit ratings of the security and other observable market information. The Company uses the market approach and the income approach to determine the fair value of derivative instruments. The fair value for fuel hedge call options is determined utilizing an option pricing model based on inputs that are readily available in active markets or can be derived from information available in active markets. In addition, the fair value considers the exposure to credit losses in the event of non-performance by counterparties. Interest rate swap agreements are Level 2 as the fair value of these contracts is determined based on the difference between the fixed interest rate in the agreements and the observable LIBOR-based interest forward rates at period end multiplied by the total notional value. Activity and Maturities for Marketable Securities Activity for marketable securities (in millions): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Proceeds from sales and maturities $ 256 $ 217 $ 541 $ 357 Gross realized gains — 2 1 2 Gross realized losses (1 ) (1 ) (2 ) (1 ) Unrealized gains and losses (in millions): June 30, 2017 December 31, 2016 Unrealized gains 4 2 Unrealized losses (5 ) (7 ) Maturities for marketable securities (in millions): June 30, 2017 Cost Basis Fair Value Due in one year or less $ 253 $ 252 Due after one year through five years 1,453 1,453 Due after five years through 10 years 19 19 Due after 10 years — — Total $ 1,725 $ 1,724 Management does not believe any remaining unrealized losses represent other-than-temporary impairments based on its evaluation of available information as of June 30, 2017 . Fair Value of Other Financial Instruments The Company uses the following methods and assumptions to determine the fair value of financial instruments that are not recognized at fair value as described below. Cash and Cash Equivalents : Carried at amortized cost, which approximates fair value. Debt : The carrying amount of the Company's variable-rate debt approximates fair value. For fixed-rate debt, the Company uses the income approach to determine the estimated fair value, calculated as the sum of future cash flows discounted at borrowing rates for comparable debt over the weighted life of the outstanding debt. The estimated fair value of the fixed-rate debt is Level 3 as certain inputs used are unobservable. Fixed-rate debt that is not carried at fair value on the consolidated balance sheet and the estimated fair value of long-term fixed-rate debt is as follows (in millions): June 30, 2017 December 31, 2016 Carrying amount $ 1,090 $ 1,179 Fair value 1,105 1,199 Assets and Liabilities Measured at Fair Value on Nonrecurring Basis Certain assets and liabilities are recognized or disclosed at fair value on a nonrecurring basis, including property, plant and equipment, goodwill, and intangible assets. These assets are subject to fair valuation when there is evidence of impairment. No impairment was recognized in the three and six months ended June 30, 2017 or June 30, 2016 . |
FREQUENT FLYER PROGRAMS
FREQUENT FLYER PROGRAMS | 6 Months Ended |
Jun. 30, 2017 | |
FREQUENT FLYER PROGRAMS [Abstract] | |
FREQUENT FLYER PROGRAMS | FREQUENT FLYER PROGRAMS Frequent flyer program deferred revenue and liabilities included in the consolidated balance sheets (in millions): June 30, 2017 December 31, 2016 Current Liabilities: Other accrued liabilities $ 499 $ 484 Other Liabilities and Credits: Deferred revenue 652 638 Other liabilities 23 21 Total $ 1,174 $ 1,143 Frequent flyer program revenue included in the consolidated statements of operations (in millions): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Passenger revenues $ 94 $ 73 $ 180 $ 143 Other—net revenues 128 108 248 211 Total $ 222 $ 181 $ 428 $ 354 |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Long-term debt obligations on the consolidated balance sheet (in millions): June 30, 2017 December 31, 2016 Fixed-rate notes payable due through 2028 $ 1,090 $ 1,179 Variable-rate notes payable due through 2028 1,732 1,803 Less debt issuance costs (16 ) (18 ) Total debt 2,806 2,964 Less current portion 337 319 Long-term debt, less current portion $ 2,469 $ 2,645 Weighted-average fixed-interest rate 4.3 % 4.4 % Weighted-average variable-interest rate 2.6 % 2.4 % During the six months ended June 30, 2017 , the Company made debt payments of $159 million . At June 30, 2017 , long-term debt principal payments for the next five years and thereafter are as follows (in millions): Total Remainder of 2017 $ 161 2018 350 2019 422 2020 449 2021 422 Thereafter 1,015 Total $ 2,819 Bank Lines of Credit The Company has three credit facilities with availability totaling $452 million . All three facilities have variable interest rates based on LIBOR plus a specified margin. One credit facility increased from $100 million to $250 million in June 2017. It expires in June 2021 and is secured by aircraft. The second credit facility is for $52 million , expires in October 2017 with a mechanism for annual renewal and is secured by aircraft. The third credit facility increased from $100 million to $150 million in March 2017. It expires in March 2022 and is secured by certain accounts receivable, spare engines, spare parts and ground service equipment. The Company has secured letters of credit against the $52 million facility, but has no plans to borrow using either of the two other facilities. All three credit facilities have a requirement to maintain a minimum unrestricted cash and marketable securities balance of $500 million . The Company is in compliance with this covenant at June 30, 2017 . |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 6 Months Ended |
Jun. 30, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Net periodic benefit costs for the qualified defined-benefit plans included the following components (in millions): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Service cost $ 10 $ 9 $ 20 $ 18 Interest cost 18 19 36 37 Expected return on assets (26 ) (27 ) (53 ) (54 ) Recognized actuarial loss 6 6 13 12 Total $ 8 $ 7 $ 16 $ 13 |
COMMITMENTS
COMMITMENTS | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS | COMMITMENTS AND CONTINGENCIES Future minimum payments for commitments as of June 30, 2017 (in millions): Aircraft Leases Facility Leases Aircraft Purchase Commitments Capacity Purchase Agreements (a) Aircraft Maintenance Deposits Aircraft Maintenance and Parts Management Remainder of 2017 $ 152 $ 60 $ 463 $ 38 $ 29 $ 15 2018 318 73 836 80 61 32 2019 306 64 758 85 65 35 2020 280 58 338 90 68 37 2021 243 51 260 94 63 40 Thereafter 954 178 362 676 90 — Total $ 2,253 $ 484 $ 3,017 $ 1,063 $ 376 $ 159 (a) Includes all non-aircraft lease costs associated with capacity purchase agreements. Lease Commitments Aircraft lease commitments include future obligations for all of the Company's operating airlines—Alaska, Virgin America and Horizon, as well as aircraft leases operated by third-parties. At June 30, 2017 , the Company had lease contracts for 14 Boeing 737 ("B737") aircraft, 55 Airbus aircraft ( two of which were delivered during the second quarter of 2017 ), 15 Bombardier Q400 aircraft and 20 Embraer 175 ("E175") with SkyWest Airlines, Inc. ("SkyWest"). The Company has an additional eight scheduled lease deliveries of A321neo aircraft through 2018 . All lease contracts have remaining non-cancelable lease terms ranging from 2017 to 2030 . The Company has the option to increase capacity flown by SkyWest with eight additional E175 aircraft deliveries in 2020 . Options to lease are not reflected in the commitments table above. Facility lease commitments primarily include airport and terminal facilities and building leases. Total rent expense for aircraft and facility leases was $123 million and $63 million for the three months ended June 30, 2017 and 2016 , and $261 million and $144 million for the six months ended June 30, 2017 and 2016 . Aircraft Purchase Commitments Aircraft purchase commitments include non-cancelable contractual commitments for aircraft and engines. As of June 30, 2017 , the Company had commitments to purchase 48 B737 aircraft ( 16 B737 NextGen aircraft and 32 B737 MAX aircraft, with deliveries in the remainder of 2017 through 2023 ) and 27 E175 aircraft with deliveries in 2017 through 2019 . The Company also has cancelable purchase commitments for 30 Airbus A320neo aircraft with deliveries from 2020 through 2022 . In addition, the Company has options to purchase 41 B737 aircraft and 30 E175 aircraft. The cancelable purchase commitments and option payments are not reflected in the table above. Capacity Purchase Agreements ("CPAs") At June 30, 2017 , Alaska had CPAs with three carriers, including the Company's wholly-owned subsidiary, Horizon. Horizon sells 100% of its capacity to Alaska under a CPA with Alaska. In addition, Alaska has CPAs with SkyWest to fly certain routes in the Lower 48 and Canada and with Peninsula Airways, Inc. ("PenAir") to fly certain routes in the state of Alaska. Under these agreements, Alaska pays the carriers an amount which is based on a determination of their cost of operating those flights and other factors intended to approximate market rates for those services. Future payments (excluding Horizon) are based on minimum levels of flying by the third-party carriers, which could differ materially due to variable payments based on actual levels of flying and certain costs associated with operating flights such as fuel. Aircraft Maintenance Deposits Through its acquisition of Virgin America, the Company is contractually required to make maintenance deposit payments to aircraft lessors, which represent maintenance reserves made solely to collateralize the lessor for future maintenance events should the Company not perform required maintenance. Most lease agreements provide that maintenance reserves are reimbursable upon completion of the major maintenance event in an amount equal to the lesser of (i) the amount qualified for reimbursement from maintenance reserves held by the lessor associated with the specific major maintenance event or (ii) the qualifying costs related to the specific major maintenance event. Aircraft Maintenance and Parts Management Through its acquisition of Virgin America, the Company has a separate maintenance-cost-per-hour contract for management and repair of certain rotable parts to support airframe and engine maintenance and repair. This agreement requires monthly payments based upon utilization, such as flight hours, cycles and age of the aircraft, and, in turn, the agreement transfers certain risks to the third-party service provider. There are minimum payments under this agreement, which are reflected in the table above. Accordingly, payments could differ materially based on actual aircraft utilization. Contingencies The Company is a party to routine litigation matters incidental to its business and with respect to which no material liability is expected. Liabilities for litigation related contingencies are recorded when a loss is determined to be probable and estimable. In 2015, three flight attendants filed a class action lawsuit seeking to represent all Virgin America flight attendants for damages based on alleged violations of California and City of San Francisco wage and hour laws. Plaintiffs received class certification in November 2016. Virgin America filed a motion for summary judgment seeking to dismiss all claims on various federal preemption grounds. In January 2017, the Court denied in part and granted in part Virgin America’s motion. The Company believes the claims in this case are without factual and legal merit and intends to defend this lawsuit. Management believes the ultimate disposition of these matters is not likely to materially affect the Company's financial position or results of operations. This forward-looking statement is based on management's current understanding of the relevant law and facts, and it is subject to various contingencies, including the potential costs and risks associated with litigation and the actions of arbitrators, judges and juries. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS' EQUITY Dividends During the three months ended June 30, 2017 , the Company declared and paid cash dividends of $0.30 per share, or $37 million . During the six months ended June 30, 2017 , the Company declared and paid cash dividends of $0.60 per share, or $74 million . Common Stock Repurchase In August 2015 , the Board of Directors authorized a $1 billion share repurchase program. The program was paused in the second quarter of 2016 in anticipation of the acquisition of Virgin America. The Company resumed the share repurchase program in the current quarter. As of June 30, 2017 , the Company has repurchased 4.4 million shares for $335 million under this program. Share repurchase activity (in millions, except share amounts): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Shares Amount Shares Amount Shares Amount Shares Amount 2015 Repurchase Program—$1 billion 256,680 $ 22 873,396 $ 67 256,680 $ 22 2,594,809 $ 193 Accumulated Other Comprehensive Loss Components of accumulated other comprehensive loss, net of tax (in millions): June 30, 2017 December 31, 2016 Marketable securities $ — $ (3 ) Employee benefit plans (291 ) (299 ) Interest rate derivatives (3 ) (3 ) Total $ (294 ) $ (305 ) Earnings Per Share ("EPS") Diluted EPS is calculated by dividing net income by the average number of common shares outstanding plus the number of additional common shares that would have been outstanding assuming the exercise of in-the-money stock options and restricted stock units, using the treasury-stock method. For the three and six months ended June 30, 2017 and 2016 , anti-dilutive shares excluded from the calculation of EPS were not material. |
OPERATING SEGMENT INFORMATION
OPERATING SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
OPERATING SEGMENT INFORMATION | OPERATING SEGMENT INFORMATION Alaska Air Group has three operating airlines—Alaska, Virgin America and Horizon. Each is regulated by the U.S. Department of Transportation’s Federal Aviation Administration. Alaska has CPAs for regional capacity with Horizon, as well as with third-party carriers SkyWest and PenAir, under which Alaska receives all passenger revenues. Under U.S. GAAP, operating segments are defined as components of a business for which there is discrete financial information that is regularly assessed by the Chief Operating Decision Maker ("CODM") in making resource allocation decisions. Financial performance for the operating airlines and CPAs is managed and reviewed by the Company's CODM as part of three reportable operating segments: • Mainline - includes Alaska's and Virgin America’s scheduled air transportation for passengers and cargo throughout the U.S., and in parts of Canada, Mexico, Costa Rica and Cuba. • Regional - includes Horizon's and other third-party carriers’ scheduled air transportation for passengers across a shorter distance network within the U.S. under CPAs. This segment includes the actual revenues and expenses associated with regional flying, as well as an allocation of corporate overhead incurred by Air Group on behalf of the regional operations. • Horizon - includes the capacity sold to Alaska under CPA. Expenses include those typically borne by regional airlines such as crew costs, ownership costs and maintenance costs. The CODM makes resource allocation decisions for these reporting segments based on flight profitability data, aircraft type, route economics and other financial information. The "Consolidating and Other" column reflects parent company activity, consolidating entries and other immaterial business units of the company. The “Air Group Adjusted” column represents a non-GAAP measure that is used by the Company CODM to evaluate performance and allocate resources. Adjustments are further explained below in reconciling to consolidated GAAP results. Operating segment information is as follows (in millions): Three Months Ended June 30, 2017 Mainline Regional Horizon Consolidating & Other (a) Air Group Adjusted (b) Special Items (c) Consolidated Operating revenues Passenger Mainline $ 1,556 $ — $ — $ — $ 1,556 $ — $ 1,556 Regional — 251 — — 251 — 251 Total passenger revenues 1,556 251 — — 1,807 — 1,807 CPA revenues — — 108 (108 ) — — — Freight and mail 31 1 — — 32 — 32 Other—net 244 19 1 (1 ) 263 — 263 Total operating revenues 1,831 271 109 (109 ) 2,102 — 2,102 Operating expenses Operating expenses, excluding fuel 1,026 206 116 (107 ) 1,241 24 1,265 Economic fuel 304 39 — (1 ) 342 2 344 Total operating expenses 1,330 245 116 (108 ) 1,583 26 1,609 Nonoperating income (expense) Interest income 9 — — — 9 — 9 Interest expense (23 ) — (3 ) — (26 ) — (26 ) Other 3 — 1 (1 ) 3 — 3 Total Nonoperating income (expense) (11 ) — (2 ) (1 ) (14 ) — (14 ) Income (loss) before income tax $ 490 $ 26 $ (9 ) $ (2 ) $ 505 $ (26 ) $ 479 Three Months Ended June 30, 2016 Mainline Regional Horizon Consolidating & Other (a) Air Group Adjusted (b) Special Items (c) Consolidated Operating revenues Passenger Mainline $ 1,036 $ — $ — $ — $ 1,036 $ — $ 1,036 Regional — 227 — — 227 — 227 Total passenger revenues 1,036 227 — — 1,263 — 1,263 CPA revenues — — 110 (110 ) — — — Freight and mail 26 1 — — 27 — 27 Other—net 184 19 1 — 204 — 204 Total operating revenues 1,246 247 111 (110 ) 1,494 — 1,494 Operating expenses Operating expenses, excluding fuel 679 192 101 (111 ) 861 14 875 Economic fuel 180 31 — — 211 (10 ) 201 Total operating expenses 859 223 101 (111 ) 1,072 4 1,076 Nonoperating income (expense) Interest income 6 — 1 — 7 — 7 Interest expense (4 ) — (4 ) (1 ) (9 ) — (9 ) Other 3 — — 1 4 — 4 Total Nonoperating income (expense) 5 — (3 ) — 2 — 2 Income (loss) before income tax $ 392 $ 24 $ 7 $ 1 $ 424 $ (4 ) $ 420 Six Months Ended June 30, 2017 Mainline Regional Horizon Consolidating & Other (a) Air Group Adjusted (b) Special Items (c) Consolidated Operating revenues Passenger Mainline $ 2,828 $ — $ — $ — $ 2,828 $ — $ 2,828 Regional — 463 — — 463 — 463 Total passenger revenues 2,828 463 — — 3,291 — 3,291 CPA revenues — — 205 (205 ) — — — Freight and mail 54 2 — — 56 — 56 Other—net 466 36 2 — 504 — 504 Total operating revenues 3,348 501 207 (205 ) 3,851 — 3,851 Operating expenses Operating expenses, excluding fuel 2,024 406 219 (204 ) 2,445 64 2,509 Economic fuel 596 75 — — 671 12 683 Total operating expenses 2,620 481 219 (204 ) 3,116 76 3,192 Nonoperating income (expense) Interest income 16 — — — 16 — 16 Interest expense (45 ) — (5 ) (1 ) (51 ) — (51 ) Other 6 — 1 — 7 — 7 Total Nonoperating income (expense) (23 ) — (4 ) (1 ) (28 ) — (28 ) Income (loss) before income tax 705 20 (16 ) (2 ) 707 (76 ) 631 Six Months Ended June 30, 2016 Mainline Regional Horizon Consolidating & Other (a) Air Group Adjusted (b) Special Items (c) Consolidated Operating revenues Passenger Mainline $ 1,963 $ — $ — $ — $ 1,963 $ — $ 1,963 Regional — 433 — — 433 — 433 Total passenger revenues 1,963 433 — — 2,396 — 2,396 CPA revenues — — 213 (213 ) — — — Freight and mail 49 2 — — 51 — 51 Other—net 356 36 2 — 394 — 394 Total operating revenues 2,368 471 215 (213 ) 2,841 — 2,841 Operating expenses Operating expenses, excluding fuel 1,380 378 206 (213 ) 1,751 14 1,765 Economic fuel 324 56 — — 380 (12 ) 368 Total operating expenses 1,704 434 206 (213 ) 2,131 2 2,133 Nonoperating income (expense) Interest income 12 — 1 — 13 — 13 Interest expense (16 ) — (5 ) (1 ) (22 ) — (22 ) Other 10 — — 3 13 — 13 Total Nonoperating income (expense) 6 — (4 ) 2 4 — 4 Income (loss) before income tax 670 37 5 2 714 (2 ) 712 (a) Includes consolidating entries, Parent Company and other immaterial business units. (b) The Air Group Adjusted column represents the financial information that is reviewed by management to assess performance of operations and determine capital allocations and does not include certain income and charges. (c) Includes merger-related costs and mark-to-market fuel-hedge accounting charges. Total assets were as follows (in millions): June 30, 2017 December 31, 2016 Mainline $ 16,272 $ 15,260 Horizon 834 690 Consolidating & Other (6,386 ) (5,988 ) Consolidated $ 10,720 $ 9,962 |
GENERAL AND SUMMARY OF SIGNIF16
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation The condensed consolidated financial statements include the accounts of Air Group, and its primary subsidiaries, Alaska, Horizon and, starting December 14, 2016, Virgin America. The Company conducts substantially all of its operations through these subsidiaries. All significant intercompany balances and transactions have been eliminated. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information. Consistent with these requirements, this Form 10-Q does not include all the information required by GAAP for complete financial statements. It should be read in conjunction with the consolidated financial statements and accompanying notes in the Form 10-K for the year ended December 31, 2016 . In the opinion of management, all adjustments have been made that are necessary to fairly present the Company’s financial position as of June 30, 2017 and the results of operations for the three and six months ended June 30, 2017 and 2016 . Such adjustments were of a normal recurring nature. In preparing these statements, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities, as well as the reported amounts of revenues and expenses. Due to seasonal variations in the demand for air travel, the volatility of aircraft fuel prices, changes in global economic conditions, changes in the competitive environment and other factors, operating results for the three and six months ended June 30, 2017 are not necessarily indicative of operating results for the entire year. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers"(Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This comprehensive new standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In March 2016, the FASB issued ASU 2016-08, "Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations" to clarify the guidance on determining whether the Company is considered the principal or the agent in a revenue transaction where a third party is providing goods or services to a customer. Entities are permitted to use either a full retrospective or cumulative effect transition method, and are required to adopt all parts of the new revenue standard using the same transition method. The new standard is effective for the Company on January 1, 2018. At this time, the Company believes the most significant impact to the financial statements will be to Mileage Plan™ revenues and liabilities. The Company currently uses the incremental cost approach for miles earned through travel. As this approach will be eliminated with the standard, the Company will be required to allocate a portion of the ticket price through a relative selling price model and defer revenue recognition until the ticket is flown or unused mileage credits expire. The Company estimates an increase to the liability for earned miles of approximately $350 million to $450 million at the time of adoption. The allocated value to miles earned through travel will offset passenger revenue during the period they are issued, rather than recorded using the incremental cost approach. The adoption of the new standard is also expected to result in a change in income statement classification of the majority of ancillary revenues from Other revenue to Passenger revenue. This will affect common industry metrics, such as PRASM and RASM. Certain commission revenue from interline arrangements that was previously offset against related expense will now be classified as Other revenue, which will impact RASM and CASM. Unused ticket revenue that was previously recorded at the time of expiration will now be recorded at the original departure date if that ticket has not been changed or refunded prior to that date, based on estimates of expected expiration. This concept is referred to as ticket breakage. The Company estimates the change in ticket breakage methodology will not have a significant impact on the statements of operations, but will decrease air traffic liability by approximately $80 million to $90 million . The Company continues to evaluate and model the full impact of the standard and will apply the full retrospective transition method. The overall impact to equity as of the beginning of the retroactive reporting period, including the changes discussed above as well as other less material changes, is expected to be between $170 million and $250 million . In February 2016, the FASB issued ASU 2016-02, "Leases" (Topic 842), which requires lessees to recognize assets and liabilities for leases currently classified as operating leases. Under the new standard, a lessee will recognize a liability on the balance sheet representing the lease payments owed, and a right-of-use-asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities. At this time, the Company believes the most significant impact to the financial statements will relate to the recording of a right-of-use asset associated with leased aircraft. Other leases, including airports and real estate, equipment, software and other miscellaneous leases continue to be assessed for impact of the ASU. The new standard is effective for the Company on January 1, 2019. Early adoption of the standard is permitted. The Company has determined that it will not early adopt the standard. In March 2016, the FASB issued ASU 2016-09, "Compensation—Stock Compensation" (Topic 718), which simplifies several aspects of accounting for employee share-based payment awards, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The ASU was adopted prospectively as of January 1, 2017. Prior periods have not been adjusted. The adoption of the standard did not have a material impact on the Company's statements of operations or financial position. In January 2017, the FASB issued ASU 2017-04, "Intangibles—Goodwill and Other" (Topic 350), which eliminates step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The ASU is effective for the Company beginning January 1, 2019. Early adoption of the standard is permitted. Beginning in fiscal 2017, the Company will be required to perform an impairment test for goodwill arising from its acquisition of Virgin America and has adopted the standard effective January 1, 2017. In March 2017, the FASB issued ASU 2017-07, "Compensation—Retirement Benefits" (Topic 715), which will require the Company to separate service cost component from other components of net periodic benefit cost and report it in Wages and benefits in the statements of operations. The other components of net periodic benefit cost will be required to be presented in Nonoperating income (expense) in the statements of operations. These components will not be eligible for capitalization in assets. The Company will be required to disclose the line(s) used to present these other components if not presented separately in the income statement. The ASU is effective for the Company beginning January 1, 2018. The Company is currently evaluating the impact. |
ACQUISITION OF VIRGIN AMERICA17
ACQUISITION OF VIRGIN AMERICA INC. (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Business Acquisition [Line Items] | |
Fair Value of Assets Acquired and Liabilities Assumed | Fair values of the assets acquired and the liabilities assumed as of the acquisition date of December 14, 2016, at June 30, 2017 and December 31, 2016 were as follows (in millions): June 30, 2017 December 31, 2016 Cash and cash equivalents $ 645 $ 645 Receivables 44 44 Prepaid expenses and other current assets 16 16 Property and equipment—provisional 561 560 Intangible assets—provisional 141 143 Goodwill—provisional 1,940 1,934 Other assets 84 84 Total assets 3,431 3,426 Accounts payable 22 22 Accrued wages, vacation and payroll taxes 50 51 Air traffic liabilities 172 172 Other accrued liabilities—provisional 195 196 Current portion of long-term debt 125 125 Long-term debt, net of current portion 360 360 Deferred income taxes—provisional (307 ) (304 ) Deferred revenue 126 126 Other liabilities—provisional 92 82 Total liabilities 835 830 Total purchase price $ 2,596 $ 2,596 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets Measured on Recurring Basis | Fair values of financial instruments on the consolidated balance sheet (in millions): June 30, 2017 Level 1 Level 2 Total Assets Marketable securities U.S. government and agency securities $ 448 $ — $ 448 Foreign government bonds — 39 39 Asset-backed securities — 222 222 Mortgage-backed securities — 113 113 Corporate notes and bonds — 889 889 Municipal securities — 13 13 Total Marketable securities 448 1,276 1,724 Derivative instruments Fuel hedge call options — 8 8 Interest rate swap agreements — 8 8 Total Assets 448 1,292 1,740 Liabilities Derivative instruments Interest rate swap agreements — (12 ) (12 ) Total Liabilities — (12 ) (12 ) December 31, 2016 Level 1 Level 2 Total Assets Marketable securities U.S. government and agency securities $ 287 $ — $ 287 Foreign government bonds — 36 36 Asset-backed securities — 138 138 Mortgage-backed securities — 89 89 Corporate notes and bonds — 691 691 Municipal securities — 11 11 Total Marketable securities 287 965 1,252 Derivative instruments Fuel hedge call options — 20 20 Total Assets 287 985 1,272 Liabilities Derivative instruments Interest rate swap agreements — (5 ) (5 ) Total Liabilities — (5 ) (5 ) |
Fair Value, Liabilities Measured on Recurring Basis | Fair values of financial instruments on the consolidated balance sheet (in millions): June 30, 2017 Level 1 Level 2 Total Assets Marketable securities U.S. government and agency securities $ 448 $ — $ 448 Foreign government bonds — 39 39 Asset-backed securities — 222 222 Mortgage-backed securities — 113 113 Corporate notes and bonds — 889 889 Municipal securities — 13 13 Total Marketable securities 448 1,276 1,724 Derivative instruments Fuel hedge call options — 8 8 Interest rate swap agreements — 8 8 Total Assets 448 1,292 1,740 Liabilities Derivative instruments Interest rate swap agreements — (12 ) (12 ) Total Liabilities — (12 ) (12 ) December 31, 2016 Level 1 Level 2 Total Assets Marketable securities U.S. government and agency securities $ 287 $ — $ 287 Foreign government bonds — 36 36 Asset-backed securities — 138 138 Mortgage-backed securities — 89 89 Corporate notes and bonds — 691 691 Municipal securities — 11 11 Total Marketable securities 287 965 1,252 Derivative instruments Fuel hedge call options — 20 20 Total Assets 287 985 1,272 Liabilities Derivative instruments Interest rate swap agreements — (5 ) (5 ) Total Liabilities — (5 ) (5 ) |
Activity for Marketable Securities | Activity for marketable securities (in millions): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Proceeds from sales and maturities $ 256 $ 217 $ 541 $ 357 Gross realized gains — 2 1 2 Gross realized losses (1 ) (1 ) (2 ) (1 ) Unrealized gains and losses (in millions): June 30, 2017 December 31, 2016 Unrealized gains 4 2 Unrealized losses (5 ) (7 ) |
Investments Classified by Contractual Maturity Date | Maturities for marketable securities (in millions): June 30, 2017 Cost Basis Fair Value Due in one year or less $ 253 $ 252 Due after one year through five years 1,453 1,453 Due after five years through 10 years 19 19 Due after 10 years — — Total $ 1,725 $ 1,724 |
Fair Value, by Balance Sheet Grouping | Fixed-rate debt that is not carried at fair value on the consolidated balance sheet and the estimated fair value of long-term fixed-rate debt is as follows (in millions): June 30, 2017 December 31, 2016 Carrying amount $ 1,090 $ 1,179 Fair value 1,105 1,199 |
FREQUENT FLYER PROGRAMS FREQUEN
FREQUENT FLYER PROGRAMS FREQUENT FLYER PROGRAMS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
FREQUENT FLYER PROGRAMS [Abstract] | |
FREQUENT FLYER PROGRAMS LIABILITIES | Frequent flyer program deferred revenue and liabilities included in the consolidated balance sheets (in millions): June 30, 2017 December 31, 2016 Current Liabilities: Other accrued liabilities $ 499 $ 484 Other Liabilities and Credits: Deferred revenue 652 638 Other liabilities 23 21 Total $ 1,174 $ 1,143 |
FREQUENT FLYER PROGRAMS REVENUE | Frequent flyer program revenue included in the consolidated statements of operations (in millions): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Passenger revenues $ 94 $ 73 $ 180 $ 143 Other—net revenues 128 108 248 211 Total $ 222 $ 181 $ 428 $ 354 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt obligations on the consolidated balance sheet (in millions): June 30, 2017 December 31, 2016 Fixed-rate notes payable due through 2028 $ 1,090 $ 1,179 Variable-rate notes payable due through 2028 1,732 1,803 Less debt issuance costs (16 ) (18 ) Total debt 2,806 2,964 Less current portion 337 319 Long-term debt, less current portion $ 2,469 $ 2,645 Weighted-average fixed-interest rate 4.3 % 4.4 % Weighted-average variable-interest rate 2.6 % 2.4 % |
Schedule of Maturities of Long-term Debt | At June 30, 2017 , long-term debt principal payments for the next five years and thereafter are as follows (in millions): Total Remainder of 2017 $ 161 2018 350 2019 422 2020 449 2021 422 Thereafter 1,015 Total $ 2,819 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of Net Benefit Costs | Net periodic benefit costs for the qualified defined-benefit plans included the following components (in millions): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Service cost $ 10 $ 9 $ 20 $ 18 Interest cost 18 19 36 37 Expected return on assets (26 ) (27 ) (53 ) (54 ) Recognized actuarial loss 6 6 13 12 Total $ 8 $ 7 $ 16 $ 13 |
COMMITMENTS (Tables)
COMMITMENTS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases and Unrecorded Unconditional Purchase Obligtaions | Future minimum payments for commitments as of June 30, 2017 (in millions): Aircraft Leases Facility Leases Aircraft Purchase Commitments Capacity Purchase Agreements (a) Aircraft Maintenance Deposits Aircraft Maintenance and Parts Management Remainder of 2017 $ 152 $ 60 $ 463 $ 38 $ 29 $ 15 2018 318 73 836 80 61 32 2019 306 64 758 85 65 35 2020 280 58 338 90 68 37 2021 243 51 260 94 63 40 Thereafter 954 178 362 676 90 — Total $ 2,253 $ 484 $ 3,017 $ 1,063 $ 376 $ 159 (a) Includes all non-aircraft lease costs associated with capacity purchase agreements. |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Schedule of Treasury Stock by Class | Share repurchase activity (in millions, except share amounts): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Shares Amount Shares Amount Shares Amount Shares Amount 2015 Repurchase Program—$1 billion 256,680 $ 22 873,396 $ 67 256,680 $ 22 2,594,809 $ 193 |
Schedule of Accumulated Other Comprehensive Income (Loss) | Components of accumulated other comprehensive loss, net of tax (in millions): June 30, 2017 December 31, 2016 Marketable securities $ — $ (3 ) Employee benefit plans (291 ) (299 ) Interest rate derivatives (3 ) (3 ) Total $ (294 ) $ (305 ) |
OPERATING SEGMENT INFORMATION (
OPERATING SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Operating segment information is as follows (in millions): Three Months Ended June 30, 2017 Mainline Regional Horizon Consolidating & Other (a) Air Group Adjusted (b) Special Items (c) Consolidated Operating revenues Passenger Mainline $ 1,556 $ — $ — $ — $ 1,556 $ — $ 1,556 Regional — 251 — — 251 — 251 Total passenger revenues 1,556 251 — — 1,807 — 1,807 CPA revenues — — 108 (108 ) — — — Freight and mail 31 1 — — 32 — 32 Other—net 244 19 1 (1 ) 263 — 263 Total operating revenues 1,831 271 109 (109 ) 2,102 — 2,102 Operating expenses Operating expenses, excluding fuel 1,026 206 116 (107 ) 1,241 24 1,265 Economic fuel 304 39 — (1 ) 342 2 344 Total operating expenses 1,330 245 116 (108 ) 1,583 26 1,609 Nonoperating income (expense) Interest income 9 — — — 9 — 9 Interest expense (23 ) — (3 ) — (26 ) — (26 ) Other 3 — 1 (1 ) 3 — 3 Total Nonoperating income (expense) (11 ) — (2 ) (1 ) (14 ) — (14 ) Income (loss) before income tax $ 490 $ 26 $ (9 ) $ (2 ) $ 505 $ (26 ) $ 479 Three Months Ended June 30, 2016 Mainline Regional Horizon Consolidating & Other (a) Air Group Adjusted (b) Special Items (c) Consolidated Operating revenues Passenger Mainline $ 1,036 $ — $ — $ — $ 1,036 $ — $ 1,036 Regional — 227 — — 227 — 227 Total passenger revenues 1,036 227 — — 1,263 — 1,263 CPA revenues — — 110 (110 ) — — — Freight and mail 26 1 — — 27 — 27 Other—net 184 19 1 — 204 — 204 Total operating revenues 1,246 247 111 (110 ) 1,494 — 1,494 Operating expenses Operating expenses, excluding fuel 679 192 101 (111 ) 861 14 875 Economic fuel 180 31 — — 211 (10 ) 201 Total operating expenses 859 223 101 (111 ) 1,072 4 1,076 Nonoperating income (expense) Interest income 6 — 1 — 7 — 7 Interest expense (4 ) — (4 ) (1 ) (9 ) — (9 ) Other 3 — — 1 4 — 4 Total Nonoperating income (expense) 5 — (3 ) — 2 — 2 Income (loss) before income tax $ 392 $ 24 $ 7 $ 1 $ 424 $ (4 ) $ 420 Six Months Ended June 30, 2017 Mainline Regional Horizon Consolidating & Other (a) Air Group Adjusted (b) Special Items (c) Consolidated Operating revenues Passenger Mainline $ 2,828 $ — $ — $ — $ 2,828 $ — $ 2,828 Regional — 463 — — 463 — 463 Total passenger revenues 2,828 463 — — 3,291 — 3,291 CPA revenues — — 205 (205 ) — — — Freight and mail 54 2 — — 56 — 56 Other—net 466 36 2 — 504 — 504 Total operating revenues 3,348 501 207 (205 ) 3,851 — 3,851 Operating expenses Operating expenses, excluding fuel 2,024 406 219 (204 ) 2,445 64 2,509 Economic fuel 596 75 — — 671 12 683 Total operating expenses 2,620 481 219 (204 ) 3,116 76 3,192 Nonoperating income (expense) Interest income 16 — — — 16 — 16 Interest expense (45 ) — (5 ) (1 ) (51 ) — (51 ) Other 6 — 1 — 7 — 7 Total Nonoperating income (expense) (23 ) — (4 ) (1 ) (28 ) — (28 ) Income (loss) before income tax 705 20 (16 ) (2 ) 707 (76 ) 631 Six Months Ended June 30, 2016 Mainline Regional Horizon Consolidating & Other (a) Air Group Adjusted (b) Special Items (c) Consolidated Operating revenues Passenger Mainline $ 1,963 $ — $ — $ — $ 1,963 $ — $ 1,963 Regional — 433 — — 433 — 433 Total passenger revenues 1,963 433 — — 2,396 — 2,396 CPA revenues — — 213 (213 ) — — — Freight and mail 49 2 — — 51 — 51 Other—net 356 36 2 — 394 — 394 Total operating revenues 2,368 471 215 (213 ) 2,841 — 2,841 Operating expenses Operating expenses, excluding fuel 1,380 378 206 (213 ) 1,751 14 1,765 Economic fuel 324 56 — — 380 (12 ) 368 Total operating expenses 1,704 434 206 (213 ) 2,131 2 2,133 Nonoperating income (expense) Interest income 12 — 1 — 13 — 13 Interest expense (16 ) — (5 ) (1 ) (22 ) — (22 ) Other 10 — — 3 13 — 13 Total Nonoperating income (expense) 6 — (4 ) 2 4 — 4 Income (loss) before income tax 670 37 5 2 714 (2 ) 712 (a) Includes consolidating entries, Parent Company and other immaterial business units. (b) The Air Group Adjusted column represents the financial information that is reviewed by management to assess performance of operations and determine capital allocations and does not include certain income and charges. (c) Includes merger-related costs and mark-to-market fuel-hedge accounting charges. Total assets were as follows (in millions): June 30, 2017 December 31, 2016 Mainline $ 16,272 $ 15,260 Horizon 834 690 Consolidating & Other (6,386 ) (5,988 ) Consolidated $ 10,720 $ 9,962 |
GENERAL AND SUMMARY OF SIGNIF25
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NARRATIVE (Details) - Accounting Standards Update 2014-09 [Member] - Scenario, Forecast [Member] $ in Millions | Jan. 01, 2018USD ($) |
Minimum [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Amount of increase to the liability for earned miles | $ 350 |
Amount of decrease to air traffic liability | 80 |
Overall impact on equity | 170 |
Maximum [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Amount of increase to the liability for earned miles | 450 |
Amount of decrease to air traffic liability | 90 |
Overall impact on equity | $ 250 |
ACQUISITION OF VIRGIN AMERICA26
ACQUISITION OF VIRGIN AMERICA INC. - NARRATIVE (Details) $ / shares in Units, $ in Millions | Dec. 14, 2016USD ($)departures$ / shares | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) |
Business Acquisition [Line Items] | |||||
Number of daily departures | departures | 1,200 | ||||
Merger-related costs | $ 24 | $ 14 | $ 64 | $ 14 | |
Virgin America Inc. | |||||
Business Acquisition [Line Items] | |||||
Percentage of common shares and voting interest acquired | 100.00% | ||||
Consideration paid (usd per share) | $ / shares | $ 57 | ||||
Cash consideration | $ 2,600 | ||||
Merger-related costs | $ 24 | $ 14 | $ 64 | $ 14 |
ACQUISITION OF VIRGIN AMERICA27
ACQUISITION OF VIRGIN AMERICA INC. - ASSETS ACQUIRED AND LIABILITIES ASSUMED (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | ||
Goodwill | $ 1,940 | $ 1,934 |
Virgin America Inc. | ||
Business Acquisition [Line Items] | ||
Cash and cash equivalents | 645 | 645 |
Receivables | 44 | 44 |
Prepaid expenses and other current assets | 16 | 16 |
Property and equipment | 561 | 560 |
Intangible assets | 141 | 143 |
Goodwill | 1,940 | 1,934 |
Other assets | 84 | 84 |
Total assets | 3,431 | 3,426 |
Accounts payable | 22 | 22 |
Accrued wages, vacation and payroll taxes | 50 | 51 |
Air traffic liabilities | 172 | 172 |
Other accrued liabilities | 195 | 196 |
Current portion of long-term debt | 125 | 125 |
Long-term debt, net of current portion | 360 | 360 |
Deferred income taxes | (307) | (304) |
Deferred revenue | 126 | 126 |
Other liabilities | 92 | 82 |
Total liabilities | 835 | 830 |
Total purchase price | $ 2,596 | $ 2,596 |
FAIR VALUE MEASUREMENTS - FAIR
FAIR VALUE MEASUREMENTS - FAIR VALUE OF ASSETS AND LIABILITIES (Details) - Recurring [Member] - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | $ 1,724 | $ 1,252 |
Derivative instruments, assets | 1,740 | 1,272 |
Derivative instruments, liabilities | (12) | (5) |
Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 448 | 287 |
Derivative instruments, assets | 448 | 287 |
Derivative instruments, liabilities | 0 | 0 |
Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 1,276 | 965 |
Derivative instruments, assets | 1,292 | 985 |
Derivative instruments, liabilities | (12) | (5) |
Fuel hedge contracts [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative instruments, assets | 8 | 20 |
Fuel hedge contracts [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative instruments, assets | 0 | 0 |
Fuel hedge contracts [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative instruments, assets | 8 | 20 |
Interest rate swaps agreements [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative instruments, assets | 8 | |
Derivative instruments, liabilities | (12) | (5) |
Interest rate swaps agreements [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative instruments, assets | 0 | |
Derivative instruments, liabilities | 0 | 0 |
Interest rate swaps agreements [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative instruments, assets | 8 | |
Derivative instruments, liabilities | (12) | (5) |
U.S. government and agency securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 448 | 287 |
U.S. government and agency securities [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 448 | 287 |
U.S. government and agency securities [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Foreign government bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 39 | 36 |
Foreign government bonds [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Foreign government bonds [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 39 | 36 |
Asset-backed securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 222 | 138 |
Asset-backed securities [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Asset-backed securities [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 222 | 138 |
Mortgage-backed securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 113 | 89 |
Mortgage-backed securities [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Mortgage-backed securities [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 113 | 89 |
Corporate notes and bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 889 | 691 |
Corporate notes and bonds [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Corporate notes and bonds [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 889 | 691 |
Municipal securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 13 | 11 |
Municipal securities [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Municipal securities [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | $ 13 | $ 11 |
FAIR VALUE MEASUREMENTS - ACTI
FAIR VALUE MEASUREMENTS - ACTIVITY FOR MARKETABLE SECURITIES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |||||
Proceeds from sales and maturities | $ 256 | $ 217 | $ 541 | $ 357 | |
Gross realized gains | 0 | 2 | 1 | 2 | |
Gross realized losses | $ (1) | $ (1) | (2) | $ (1) | |
Unrealized gains | 4 | $ 2 | |||
Unrealized losses | $ (5) | $ (7) |
FAIR VALUE MEASUREMENTS - MATU
FAIR VALUE MEASUREMENTS - MATURITIES FOR MARKETABLE SECURITIES (Details) $ in Millions | Jun. 30, 2017USD ($) |
Cost Basis | |
Due in one year or less | $ 253 |
Due after one year through five years | 1,453 |
Due after five years through 10 years | 19 |
Due after 10 years | 0 |
Total | 1,725 |
Fair Value | |
Due in one year or less | 252 |
Due after one year through five years | 1,453 |
Due after five years through 10 years | 19 |
Due after 10 years | 0 |
Total | $ 1,724 |
FAIR VALUE MEASUREMENTS - LONG-
FAIR VALUE MEASUREMENTS - LONG-TERM DEBT (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Carrying amount [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 1,090 | $ 1,179 |
Fair value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 1,105 | $ 1,199 |
FREQUENT FLYER PROGRAMS FREQU32
FREQUENT FLYER PROGRAMS FREQUENT FLYER PROGRAMS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Frequent Flyer Program [Line Items] | |||||
Other accrued liabilities | $ 979 | $ 979 | $ 878 | ||
Deferred revenue | 652 | 652 | 640 | ||
Other liabilities | 427 | 427 | 417 | ||
Passenger revenues | 1,807 | $ 1,263 | 3,291 | $ 2,396 | |
Other—net revenues | 263 | 204 | 504 | 394 | |
Frequent Flyer Program Revenue [Member] | |||||
Frequent Flyer Program [Line Items] | |||||
Passenger revenues | 94 | 73 | 180 | 143 | |
Other—net revenues | 128 | 108 | 248 | 211 | |
Frequent Flyer Program Revenue | 222 | $ 181 | 428 | $ 354 | |
Frequent Flyer Program Liabilities [Member] | |||||
Frequent Flyer Program [Line Items] | |||||
Other accrued liabilities | 499 | 499 | 484 | ||
Deferred revenue | 652 | 652 | 638 | ||
Other liabilities | 23 | 23 | 21 | ||
Total | $ 1,174 | $ 1,174 | $ 1,143 |
LONG-TERM DEBT - SCHEDULE OF LO
LONG-TERM DEBT - SCHEDULE OF LONG-TERM DEBT (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | |||
Repayments of Long-term Debt | $ 159 | $ 57 | |
Total | 2,806 | $ 2,964 | |
Debt Issuance Costs, Net | (16) | (18) | |
Less current portion | 337 | 319 | |
Long-term debt, less current portion | $ 2,469 | $ 2,645 | |
Weighted-average fixed-interest rate | 4.30% | 4.40% | |
Weighted-average variable-interest rate | 2.60% | 2.40% | |
Fixed rate notes payable due through 2028 [Member] | |||
Debt Instrument [Line Items] | |||
Total | $ 1,090 | $ 1,179 | |
Variable rate notes payable due through 2028 [Member] | |||
Debt Instrument [Line Items] | |||
Total | $ 1,732 | $ 1,803 |
LONG-TERM DEBT LONG-TERM DEBT -
LONG-TERM DEBT LONG-TERM DEBT - FUTURE PAYMENTS (Details) $ in Millions | Jun. 30, 2017USD ($) |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Remainder of 2017 | $ 161 |
2,018 | 350 |
2,019 | 422 |
2,020 | 449 |
2,021 | 422 |
Thereafter | 1,015 |
Total | $ 2,819 |
LONG-TERM DEBT - LINE OF CREDIT
LONG-TERM DEBT - LINE OF CREDIT (Details) | 3 Months Ended | 6 Months Ended |
Mar. 31, 2017USD ($)credit_facility | Jun. 30, 2017USD ($)credit_facility | |
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Number of Credit Facilities | credit_facility | 3 | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 452,000,000 | |
Line of Credit Facility, Asset Restrictions | 500,000,000 | |
Credit Facility 1 [Member] | Secured by aircraft [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 100,000,000 | $ 250,000,000 |
Line of Credit Facility, Expiration Date | Jun. 30, 2021 | |
Credit Facility 2 [Member] | Secured by aircraft [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 52,000,000 | |
Line of Credit Facility, Expiration Date | Oct. 31, 2017 | |
Credit Facility 3 [Member] | Secured by certain accounts receivable, spare engines, spare parts and ground service equipment [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 100,000,000 | $ 150,000,000 |
Line of Credit Facility, Expiration Date | Mar. 31, 2022 | |
Credit Facilities 1 and 2 [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Number of Credit Facilities | credit_facility | 2 |
EMPLOYEE BENEFIT PLANS - NET PE
EMPLOYEE BENEFIT PLANS - NET PENSION EXPENSE (Details) - Qualified Defined Benefit [Member] - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||||
Service cost | $ 10 | $ 9 | $ 20 | $ 18 |
Interest cost | 18 | 19 | 36 | 37 |
Expected return on assets | (26) | (27) | (53) | (54) |
Recognized actuarial loss | 6 | 6 | 13 | 12 |
Net pension expense | $ 8 | $ 7 | $ 16 | $ 13 |
COMMITMENTS (Details)
COMMITMENTS (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($)aircraftcarriers | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)aircraftcarriers | Jun. 30, 2016USD ($) | |
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract] | ||||
Rent Expense | $ 123 | $ 63 | $ 261 | $ 144 |
Capacity purchase arrangements (carriers) | carriers | 3 | 3 | ||
Capacity purchase arrangements | 100.00% | 100.00% | ||
Aircraft Commitments [Member] | ||||
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract] | ||||
Remainder of 2017 | $ 463 | $ 463 | ||
2,018 | 836 | 836 | ||
2,019 | 758 | 758 | ||
2,020 | 338 | 338 | ||
2,021 | 260 | 260 | ||
Thereafter | 362 | 362 | ||
Total | 3,017 | 3,017 | ||
Capacity Purchase Agreements [Member] | ||||
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract] | ||||
Remainder of 2017 | 38 | 38 | ||
2,018 | 80 | 80 | ||
2,019 | 85 | 85 | ||
2,020 | 90 | 90 | ||
2,021 | 94 | 94 | ||
Thereafter | 676 | 676 | ||
Total | 1,063 | 1,063 | ||
Aircraft Leases [Member] | ||||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||
Remainder of 2017 | 152 | 152 | ||
2,018 | 318 | 318 | ||
2,019 | 306 | 306 | ||
2,020 | 280 | 280 | ||
2,021 | 243 | 243 | ||
Thereafter | 954 | 954 | ||
Total | 2,253 | 2,253 | ||
Facility Leases [Member] | ||||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||
Remainder of 2017 | 60 | 60 | ||
2,018 | 73 | 73 | ||
2,019 | 64 | 64 | ||
2,020 | 58 | 58 | ||
2,021 | 51 | 51 | ||
Thereafter | 178 | 178 | ||
Total | $ 484 | $ 484 | ||
B-737 [Member] | ||||
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract] | ||||
Committed to Purchase (in Aircraft) | aircraft | 48 | 48 | ||
Options to Purchase Additional (in Aircraft) | aircraft | 41 | 41 | ||
B737-900ER [Member] | ||||
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract] | ||||
Committed to Purchase (in Aircraft) | aircraft | 16 | 16 | ||
B737 MAX [Member] | ||||
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract] | ||||
Committed to Purchase (in Aircraft) | aircraft | 32 | 32 | ||
E-175 [Domain] | ||||
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract] | ||||
Committed to Purchase (in Aircraft) | aircraft | 27 | 27 | ||
Options to Purchase Additional (in Aircraft) | aircraft | 30 | 30 | ||
A-320-Neo [Member] | ||||
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract] | ||||
Unrecorded Unconditional Purchase Obligation, Option to Cancel | aircraft | 30 | 30 | ||
Property Subject to Operating Lease [Member] | B-737 [Member] | ||||
Unrecorded Unconditional Purchase Obligation [Line Items] | ||||
Number of units involved in lease contracts | aircraft | 14 | 14 | ||
Property Subject to Operating Lease [Member] | Airbus [Member] | ||||
Unrecorded Unconditional Purchase Obligation [Line Items] | ||||
Number of units involved in lease contracts | aircraft | 55 | 55 | ||
Number of aircraft delivered | aircraft | 2 | 2 | ||
Property Subject to Operating Lease [Member] | Q400 [Member] | ||||
Unrecorded Unconditional Purchase Obligation [Line Items] | ||||
Number of units involved in lease contracts | aircraft | 15 | 15 | ||
Property Subject to Operating Lease [Member] | E-175 [Domain] | ||||
Unrecorded Unconditional Purchase Obligation [Line Items] | ||||
Number of units involved in lease contracts | aircraft | 20 | 20 | ||
Property Available for Operating Lease [Member] | A321neo [Member] | ||||
Unrecorded Unconditional Purchase Obligation [Line Items] | ||||
Number of optional additional units | aircraft | 8 | 8 | ||
Capacity Purchase Agreement with SkyWest [Member] | E175 [Member] | ||||
Unrecorded Unconditional Purchase Obligation [Line Items] | ||||
Number of optional additional units | aircraft | 8 | 8 | ||
Aircraft Maintenance Deposits [Member] | ||||
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract] | ||||
Remainder of 2017 | $ 29 | $ 29 | ||
2,018 | 61 | 61 | ||
2,019 | 65 | 65 | ||
2,020 | 68 | 68 | ||
2,021 | 63 | 63 | ||
Thereafter | 90 | 90 | ||
Total | 376 | 376 | ||
Aircraft Maintenance and Parts Management [Member] | ||||
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract] | ||||
Remainder of 2017 | 15 | 15 | ||
2,018 | 32 | 32 | ||
2,019 | 35 | 35 | ||
2,020 | 37 | 37 | ||
2,021 | 40 | 40 | ||
Thereafter | 0 | 0 | ||
Total | $ 159 | $ 159 |
SHAREHOLDERS' EQUITY, CASH DIVI
SHAREHOLDERS' EQUITY, CASH DIVIDEND (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Equity [Abstract] | ||||
Cash dividend declared per share (usd per share) | $ 0.30 | $ 0.275 | $ 0.6 | $ 0.550 |
Payments of Dividends | $ 37 | $ 74 | $ 68 |
SHAREHOLDERS' EQUITY, COMMON ST
SHAREHOLDERS' EQUITY, COMMON STOCK REPURCHASE (Details) - 2015 1 Billion Repurchase Program [Member] - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 22 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Aug. 31, 2015 | |
Class of Stock [Line Items] | ||||||
Stock repurchase program, authorized amount (shares) | $ 1,000 | |||||
Stock repurchased during period (shares) | 4,400,000 | |||||
Value of stock repurchased during period | $ 335 | |||||
Shares | 256,680 | 873,396 | 256,680 | 2,594,809 | ||
Amount | $ 22 | $ 67 | $ 22 | $ 193 |
SHAREHOLDERS' EQUITY, ACCUMULAT
SHAREHOLDERS' EQUITY, ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Equity [Abstract] | ||
Marketable securities | $ 0 | $ (3) |
Employee benefit plans | (291) | (299) |
Interest rate derivatives | (3) | (3) |
Total | $ (294) | $ (305) |
OPERATING SEGMENT INFORMATION41
OPERATING SEGMENT INFORMATION (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)segment | Jun. 30, 2016USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of Operating Segments | segment | 3 | |||
Capacity purchase arrangements | 100.00% | 100.00% | ||
Operating revenues | ||||
Passenger, Mainline | $ 1,556 | $ 1,036 | $ 2,828 | $ 1,963 |
Passenger, Regional | 251 | 227 | 463 | 433 |
Total passenger revenue | 1,807 | 1,263 | 3,291 | 2,396 |
CPA revenues | 0 | 0 | 0 | 0 |
Freight and mail | 32 | 27 | 56 | 51 |
Other - net revenue | 263 | 204 | 504 | 394 |
Total Operating Revenues | 2,102 | 1,494 | 3,851 | 2,841 |
Operating expenses | ||||
Operating Expenses, Excluding Fuel | 1,265 | 875 | 2,509 | 1,765 |
Economic fuel | 344 | 201 | 683 | 368 |
Total Operating Expenses | 1,609 | 1,076 | 3,192 | 2,133 |
Nonoperating Income (Expense) | ||||
Interest income | 9 | 7 | 16 | 13 |
Interest expense | (26) | (9) | (51) | (22) |
Other | 3 | 4 | 7 | 13 |
Nonoperating Income (Expense) Total | (14) | 2 | (28) | 4 |
Income (loss) before income tax | 479 | 420 | 631 | 712 |
Air Group Adjusted [Member] | ||||
Operating revenues | ||||
Passenger, Mainline | 1,556 | 1,036 | 2,828 | 1,963 |
Passenger, Regional | 251 | 227 | 463 | 433 |
Total passenger revenue | 1,807 | 1,263 | 3,291 | 2,396 |
CPA revenues | 0 | 0 | 0 | 0 |
Freight and mail | 32 | 27 | 56 | 51 |
Other - net revenue | 263 | 204 | 504 | 394 |
Total Operating Revenues | 2,102 | 1,494 | 3,851 | 2,841 |
Operating expenses | ||||
Operating Expenses, Excluding Fuel | 1,241 | 861 | 2,445 | 1,751 |
Economic fuel | 342 | 211 | 671 | 380 |
Total Operating Expenses | 1,583 | 1,072 | 3,116 | 2,131 |
Nonoperating Income (Expense) | ||||
Interest income | 9 | 7 | 16 | 13 |
Interest expense | (26) | (9) | (51) | (22) |
Other | 3 | 4 | 7 | 13 |
Nonoperating Income (Expense) Total | (14) | 2 | (28) | 4 |
Income (loss) before income tax | 505 | 424 | 707 | 714 |
Alaska Mainline [Member] | ||||
Operating revenues | ||||
Passenger, Mainline | 1,556 | 1,036 | 2,828 | 1,963 |
Passenger, Regional | 0 | 0 | 0 | 0 |
Total passenger revenue | 1,556 | 1,036 | 2,828 | 1,963 |
CPA revenues | 0 | 0 | 0 | 0 |
Freight and mail | 31 | 26 | 54 | 49 |
Other - net revenue | 244 | 184 | 466 | 356 |
Total Operating Revenues | 1,831 | 1,246 | 3,348 | 2,368 |
Operating expenses | ||||
Operating Expenses, Excluding Fuel | 1,026 | 679 | 2,024 | 1,380 |
Economic fuel | 304 | 180 | 596 | 324 |
Total Operating Expenses | 1,330 | 859 | 2,620 | 1,704 |
Nonoperating Income (Expense) | ||||
Interest income | 9 | 6 | 16 | 12 |
Interest expense | (23) | (4) | (45) | (16) |
Other | 3 | 3 | 6 | 10 |
Nonoperating Income (Expense) Total | (11) | 5 | (23) | 6 |
Income (loss) before income tax | 490 | 392 | 705 | 670 |
Alaska Regional [Member] | ||||
Operating revenues | ||||
Passenger, Mainline | 0 | 0 | 0 | 0 |
Passenger, Regional | 251 | 227 | 463 | 433 |
Total passenger revenue | 251 | 227 | 463 | 433 |
CPA revenues | 0 | 0 | 0 | 0 |
Freight and mail | 1 | 1 | 2 | 2 |
Other - net revenue | 19 | 19 | 36 | 36 |
Total Operating Revenues | 271 | 247 | 501 | 471 |
Operating expenses | ||||
Operating Expenses, Excluding Fuel | 206 | 192 | 406 | 378 |
Economic fuel | 39 | 31 | 75 | 56 |
Total Operating Expenses | 245 | 223 | 481 | 434 |
Nonoperating Income (Expense) | ||||
Interest income | 0 | 0 | 0 | 0 |
Interest expense | 0 | 0 | 0 | 0 |
Other | 0 | 0 | 0 | 0 |
Nonoperating Income (Expense) Total | 0 | 0 | 0 | 0 |
Income (loss) before income tax | 26 | 24 | 20 | 37 |
Horizon [Member] | ||||
Operating revenues | ||||
Passenger, Mainline | 0 | 0 | 0 | 0 |
Passenger, Regional | 0 | 0 | 0 | 0 |
Total passenger revenue | 0 | 0 | 0 | 0 |
CPA revenues | 108 | 110 | 205 | 213 |
Freight and mail | 0 | 0 | 0 | 0 |
Other - net revenue | 1 | 1 | 2 | 2 |
Total Operating Revenues | 109 | 111 | 207 | 215 |
Operating expenses | ||||
Operating Expenses, Excluding Fuel | 116 | 101 | 219 | 206 |
Economic fuel | 0 | 0 | 0 | 0 |
Total Operating Expenses | 116 | 101 | 219 | 206 |
Nonoperating Income (Expense) | ||||
Interest income | 0 | 1 | 0 | 1 |
Interest expense | (3) | (4) | (5) | (5) |
Other | 1 | 0 | 1 | 0 |
Nonoperating Income (Expense) Total | (2) | (3) | (4) | (4) |
Income (loss) before income tax | (9) | 7 | (16) | 5 |
Intersegment Elimination [Member] | ||||
Operating revenues | ||||
Passenger, Mainline | 0 | 0 | 0 | 0 |
Passenger, Regional | 0 | 0 | 0 | 0 |
Total passenger revenue | 0 | 0 | 0 | 0 |
CPA revenues | (108) | (110) | (205) | (213) |
Freight and mail | 0 | 0 | 0 | 0 |
Other - net revenue | (1) | 0 | 0 | 0 |
Total Operating Revenues | (109) | (110) | (205) | (213) |
Operating expenses | ||||
Operating Expenses, Excluding Fuel | (107) | (111) | (204) | (213) |
Economic fuel | (1) | 0 | 0 | 0 |
Total Operating Expenses | (108) | (111) | (204) | (213) |
Nonoperating Income (Expense) | ||||
Interest income | 0 | 0 | 0 | 0 |
Interest expense | 0 | (1) | (1) | (1) |
Other | (1) | 1 | 0 | 3 |
Nonoperating Income (Expense) Total | (1) | 0 | (1) | 2 |
Income (loss) before income tax | (2) | 1 | (2) | 2 |
Special Revenue and Charges [Member] | ||||
Operating revenues | ||||
Passenger, Mainline | 0 | 0 | 0 | 0 |
Passenger, Regional | 0 | 0 | 0 | 0 |
Total passenger revenue | 0 | 0 | 0 | 0 |
CPA revenues | 0 | 0 | 0 | 0 |
Freight and mail | 0 | 0 | 0 | 0 |
Other - net revenue | 0 | 0 | 0 | 0 |
Total Operating Revenues | 0 | 0 | 0 | 0 |
Operating expenses | ||||
Operating Expenses, Excluding Fuel | 24 | 14 | 64 | 14 |
Economic fuel | 2 | (10) | 12 | (12) |
Total Operating Expenses | 26 | 4 | 76 | 2 |
Nonoperating Income (Expense) | ||||
Interest income | 0 | 0 | 0 | 0 |
Interest expense | 0 | 0 | 0 | 0 |
Other | 0 | 0 | 0 | 0 |
Nonoperating Income (Expense) Total | 0 | 0 | 0 | 0 |
Income (loss) before income tax | $ (26) | $ (4) | $ (76) | $ (2) |
OPERATING SEGMENT INFORMATION,
OPERATING SEGMENT INFORMATION, ASSETS (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Total assets | $ 10,720 | $ 9,962 |
Alaska Airlines [Member] | ||
Total assets | 16,272 | 15,260 |
Horizon [Member] | ||
Total assets | 834 | 690 |
Parent [Member] | ||
Total assets | $ (6,386) | $ (5,988) |