OPERATING SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Operating Segment Information

NOTE 12. OPERATING SEGMENT INFORMATION

Air Group has two operating airlines - Alaska Airlines and Horizon Air. Each is a regulated airline with separate management teams. To manage the two operating airlines and the revenues and expenses associated with the CPAs, management views the business in three operating segments.

Alaska Mainline - The Boeing 737 part of Alaska's business.

Alaska Regional - Alaska's shorter distance network. In this segment, Alaska Regional records actual on board passenger revenue, less costs such as fuel, distribution costs, and payments made to Horizon, SkyWest and PenAir under CPAs. Additionally, Alaska Regional includes a small allocation of corporate overhead such as IT, finance and other administrative costs incurred by Alaska and on behalf of the regional operations.

Horizon - Horizon operates regional aircraft. All of Horizon's capacity is sold to Alaska under a CPA.   Expenses included those typically borne by regional airlines such as crew costs, ownership costs, and maintenance costs.

Additionally, the following table reports “Air Group Adjusted,” which is not a measure determined in accordance with GAAP. The Company's chief operating decision-makers and others in management use this measure to evaluate operational performance and determine resource allocations. Adjustments are further explained below in reconciling to consolidated GAAP results.

Operating segment information is as follows (in millions):

	Alaska
Year Ended December 31, 2015	Mainline			Regional		Horizon			Consolidating			Air Group Adjusted(a)			Special Items(b)			Consolidated
Operating revenues
Passenger
Mainline	$	3,939		$	—	$	—		$	—		$	3,939		$	—		$	3,939
Regional	—			854		—			—			854			—			854
Total passenger revenues	3,939			854		—			—			4,793			—			4,793
CPA revenues	—			—		408			(408		)	—			—			—
Freight and mail	103			5		—			—			108			—			108
Other-net	621			72		4			—			697			—			697
Total operating revenues	4,663			931		412			(408		)	5,598			—			5,598
Operating expenses
Operating expenses, excluding fuel	2,653			695		375			(409		)	3,314			32			3,346
Economic fuel	823			131		—			—			954			—			954
Total operating expenses	3,476			826		375			(409		)	4,268			32			4,300
Nonoperating income (expense)
Interest income	19			—		—			2			21			—			21
Interest expense	(28		)	—		(10		)	(4		)	(42		)	—			(42		)
Other	28			—		1			6			35			—			35
	19			—		(9		)	4			14			—			14
Income (loss) before income tax	$	1,206		$	105	$	28		$	5		$	1,344		$	(32	)	$	1,312

	Alaska
Year Ended December 31, 2014	Mainline			Regional			Horizon			Consolidating			Air Group Adjusted(a)			Special Items(b)			Consolidated
Operating revenues
Passenger
Mainline	$	3,774		$	—		$	—		$	—		$	3,774		$	—		$	3,774
Regional	—			805			—			—			805			—			805
Total passenger revenues	3,774			805			—			—			4,579			—			4,579
CPA revenues	—			—			371			(371		)	—			—			—
Freight and mail	109			5			—						114			—			114
Other-net	592			78			5						675			—			675
Total operating revenues	4,475			888			376			(371		)	5,368			—			5,368
Operating expenses
Operating expenses, excluding fuel	2,417			623			349			(371		)	3,018			(30		)	2,988
Economic fuel	1,251			190			—			—			1,441			(23		)	1,418
Total operating expenses	3,668			813			349			(371		)	4,459			(53		)	4,406
Nonoperating income (expense)
Interest income	20			—			—			1			21			—			21
Interest expense	(32		)	—			(12		)	(4		)	(48		)	—			(48		)
Other	39			(1		)	2			—			40			—			40
	27			(1		)	(10		)	(3		)	13			—			13
Income (loss) before income tax	$	834		$	74		$	17		$	(3	)	$	922		$	53		$	975

	Alaska
Year Ended December 31, 2013	Mainline			Regional			Horizon			Consolidating			Air Group Adjusted(a)			Special Items(b)			Consolidated
Operating revenues
Passenger
Mainline	$	3,490		$	—		$	—		$	—		$	3,490		$	—		$	3,490
Regional	—			777			—			—			777			—			777
Total passenger revenues	3,490			777			—			—			4,267			—			4,267
CPA revenues	—			—			368			(368		)	—			—			—
Freight and mail	109			4			—			—			113			—			113
Other-net	513			66			5			—			584			192			776
Total operating revenues	4,112			847			373			(368		)	4,964			192			5,156
Operating expenses
Operating expenses, excluding fuel	2,293			585			341			(368		)	2,851			—			2,851
Economic fuel	1,294			181			—			—			1,475			(8		)	1,467
Total operating expenses	3,587			766			341			(368		)	4,326			(8		)	4,318
Nonoperating income (expense)
Interest income	18			—			—			—			18			—			18
Interest expense	(38		)	—			(14		)	(4		)	(56		)	—			(56		)
Other	25			(12		)	2			1			16			—			16
	5			(12		)	(12		)	(3		)	(22		)	—			(22		)
Income (loss) before income tax	$	530		$	69		$	20		$	(3	)	$	616		$	200		$	816

^(a)  The 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.

^(b)  Includes accounting adjustments related to mark-to-market fuel-hedge accounting charges (all years), pension settlement charge (2015), litigation-related matter (2015), non-cash curtailment gain (2014), a gain related to a legal matter (2014), and Special mileage plan revenue (2013).

	2015			2014			2013
Depreciation:
Alaska(a)	$	268		243			$	223
Horizon	52			51			47
Parent company	—			—			—
Consolidated	$	320		$	294		$	270
Capital expenditures:
Alaska(a)	$	821		$	659		$	494
Horizon	10			35			72
Consolidated	$	831		$	694		$	566
Total assets at end of period:
Alaska(a)	$	8,129		$	6,665
Horizon	718			809
Parent company	4,734			3,551
Elimination of inter-company accounts	(7,048		)	(4,961		)
Consolidated	$	6,533		$	6,064

^(a)  There are no depreciation expenses, capital expenditures or assets associated with purchased capacity flying at Alaska Regional.