ALASKA AIR GROUP, INC.
For the period ended Jun 30, 2025. Filed Aug 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 7, 2025
ALK$38.94+0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0000766421-25-000017
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0000766421-25-000036
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 123 previous paragraphs and 182 current paragraphs.
83 unchanged; 32 reworded; 56 added; 8 removed; 0 previous and 11 current paragraphs rearranged.
Tables are not compared: 15 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (56)
Current report
Cybersecurity incident
Current report
As previously disclosed in a Current Report on Form 8-K filed on June 27, 2025, on June 23, 2025, Hawaiian Airlines identified a cybersecurity incident affecting certain information technology systems. Upon identifying this incident, we followed our response protocols and immediately took steps to safeguard our network by disconnecting impacted Hawaiian systems and applications. Hawaiian's flights were not interrupted and continued to operate safely throughout our response. We have engaged the relevant authorities and experts to assist in our investigation and ongoing remediation efforts.
Current report
Based on information currently available, we do not believe the incident had, or is expected to have, a material impact on Hawaiian's business, results of operations, or financial condition. Subsequent to quarter end, access for all systems has been restored. The investigation remains active and therefore we are unable to determine the full impact of the incident at this time.
Current report
For a discussion of our risk factors associated with cybersecurity threats, please refer to Part I Item 1A. "Risk Factors" within our Form 10-K for the year ended December 31, 2024.
Current report
SECOND QUARTER REVIEW
Current report
Subsequent to quarter-end, McGee Air Services reached a tentative agreement with employees represented by the International Association of Machinists and Aerospace Workers (IAM) for a new five-year agreement. Voting is expected to take place mid-August.
Current report
We have seen a recent improvement in traffic, yield, and revenue intake for both Alaska and Hawaiian Airlines' bookings. In line with evolving changes to the demand environment and our continued delivery on synergy and commercial initiative commitments, on a pro forma basis we expect full year 2025 capacity to be up 2% year-over-year, with unit revenue flat to up low single digits and unit cost up mid single digits.
Current report
Irregular operations resulting from an IT outage in July are expected to have a modest impact on third quarter performance. On a pro forma basis, we expect third quarter capacity to decrease by 1%, with unit revenues flat to up low single digits and unit costs up mid to high single digits. Our costs remain in line with our expectations, and reflect strategic investments as well as elevated real estate costs, maintenance costs, and new labor agreements.
Current report
COMPARISON OF THREE MONTHS ENDED JUNE 30, 2025 TO PRO FORMA THREE MONTHS ENDED JUNE 30, 2024
Current report
On a pro forma basis, Passenger revenue increased $40 million, or 1%, on a 2% increase in traffic, partially offset by a 1% decrease in yield as a result of macroeconomic uncertainty. Hawaiian passenger revenue has improved meaningfully, driven by the combination of the Alaska and Hawaiian networks, as well as synergy and commercial initiatives announced in 2024. Increased premium revenue and loyalty program award redemptions on our airlines have also contributed to improved results.
Current report
Medical and other benefits expense increased $20 million, or 19%, driven by higher value claims and increased obligations under Alaska's pilots long-term disability plan.
Current report
On a pro forma basis, aircraft maintenance increased $36 million, or 18%, driven by increased utilization of aircraft resulting in increased heavy checks and engine events since the second quarter of 2024. Higher rates on engine maintenance also contributed to the increase.
Current report
Landing fees and rentals
Current report
Selling expenses
Current report
On a pro forma basis, selling expenses decreased $10 million, or 9%, primarily driven by improved rates on credit card vendor rebates. Lower marketing costs also contributed to this decrease.
Current report
Other
Current report
On a pro forma basis, other expenses were flat. Higher professional services and software costs were offset by a gain on sale of four B737-900 aircraft.
Current report
On a pro forma basis, special items decreased $96 million, or 63%, driven by nonrecurring costs in 2024 associated with Alaska flight attendant retroactive pay, the retirement of Alaska's Airbus and Horizon Q400 aircraft, and certain litigation matters. Increased integration costs associated with the acquisition of Hawaiian Airlines partially offset this decrease. Refer to Note 12 to the unaudited condensed consolidated financial statements for details.
Current report
Alaska Airlines reported a pretax profit, excluding special items and other adjustments, of $267 million in the second quarter of 2025, compared to a profit of $394 million in the same period in 2024. The $127 million decrease was primarily driven by $154 million in increased non-fuel operating expenses, due largely to higher wages and increased variable costs, and $44 million in reduced revenue, due to a weaker yield environment. Lower fuel costs of $83 million, driven by lower per gallon costs, partially offset the decrease in profit.
Current report
Hawaiian Airlines reported a pretax profit, excluding special items and other adjustments, of $1 million in the second quarter of 2025, compared to a loss on a pro forma basis of $83 million in the same period in 2024. The $84 million increase was primarily driven by $125 million in increased revenue, driven by higher traffic and yield due to the optimization of Hawaiian assets in Air Group's combined network, as well as continued recovery following the 2023 Maui wildfires. Lower fuel costs of $15 million, driven by lower per gallon costs, also contributed to the improvement. These amounts were partially offset by increased non-fuel operating expenses of $50 million associated with increased capacity.
Current report
Regional reported a pretax profit, excluding special items and other adjustments, of $7 million in the second quarter of 2025, compared to a profit of $48 million in the same period in 2024. The $41 million decrease was primarily due to $42 million in increased non-fuel operating expenses associated with increased capacity, and $6 million in reduced revenue due to a weaker yield environment. Lower fuel costs of $7 million, driven by lower per gallon costs, partially offset the decrease in profit.
Current report
COMPARISON OF SIX MONTHS ENDED JUNE 30, 2025 TO PRO FORMA SIX MONTHS ENDED JUNE 30, 2024
Current report
PRO FORMA OPERATING STATISTICS
Current report
PRO FORMA OPERATING REVENUE
Current report
On a pro forma basis, total operating revenue increased $335 million or 5%. The changes, including the reconciliation of the impact of Hawaiian on the combined results, are summarized in the following table:
Current report
(a) Pro forma six months ended June 30, 2024 can be calculated by adding the three months ended March 31, 2024 and June 30, 2024 as provided on Form 8-K filed with the SEC on January 22, 2025, including certain immaterial reclassification and policy adjustments.
Current report
Passenger revenue
Current report
Loyalty program other revenue
Current report
Cargo and other revenue
Current report
On a pro forma basis, Cargo and other revenue increased $51 million, or 24%, driven by operations from one of Alaska's B737-800F aircraft that was out of service in the second quarter of 2024 and seven additional A330-300F aircraft in Hawaiian's cargo fleet, utilized under the ATSA with Amazon, since the second quarter of 2024.
Current report
PRO FORMA OPERATING EXPENSES
Current report
(a) Pro forma six months ended June 30, 2024 can be calculated by adding the three months ended March 31, 2024 and June 30, 2024 as provided on Form 8-K filed with the SEC on January 22, 2025, including certain immaterial reclassification and policy adjustments.
Current report
Fuel expense
Current report
Non-fuel expense
Current report
(a) Pro forma six months ended June 30, 2024 can be calculated by adding the three months ended March 31, 2024 and June 30, 2024 as provided on Form 8-K filed with the SEC on January 22, 2025, including certain immaterial reclassification and policy adjustments.
Current report
Wages and benefits
Current report
Medical and other benefits expense increased $27 million, or 12%, driven by an increase in the cost of medical services and higher obligations under our pilots long-term disability plan.
Current report
Aircraft maintenance
Current report
On a pro forma basis, aircraft maintenance increased $58 million, or 14%, driven by increased utilization of aircraft resulting in increased heavy checks and engine events since the second quarter of 2024. Higher rates on engine maintenance and additional materials on cabin refresh projects also contributed to the increase.
Current report
On a pro forma basis, landing fees and other rentals increased $86 million, or 20%, driven primarily by nonrecurring favorable settlements received from certain airports in 2024. Increased terminal rents driven by higher rates and growth throughout the combined network, as well as increased volume of departures and landed weight also contributed to the increase.
Showing the first 40 of 56 passages. Open the source sections for the rest.
Removed paragraphs (8)
Previous report
FIRST QUARTER REVIEW
Previous report
In the first quarter, Alaska flight attendants, represented by the Association of Flight Attendants (AFA), ratified a new three-year Collective Bargaining Agreement (CBA) that includes wage increases and other improvements to benefits. Horizon is in negotiations with its pilots, represented by International Brotherhood of Teamsters (IBT), and its flight attendants, represented by AFA, for updated CBAs.
Previous report
We remain focused on the successful integration of Hawaiian into Air Group. Looking ahead to the second quarter, on a pro forma basis, we anticipate capacity growth of 2% to 3%. We anticipate the percent change in unit revenue to be flat to down low single digits and the percent change in unit cost to be up mid to high single digits. Given recent economic uncertainty and volatility, we are not providing an update to our full year 2025 guidance. We are assessing a variety of scenarios, and expect to be profitable in 2025 even if revenue remains pressured throughout the second half of the year. Despite the softer macroeconomic outlook, areas of our business within our control are performing well and in line with our prior expectations.
Previous report
A summary of Hawaiian's Brent crude positions is provided below:
Previous report
On a pro forma basis, aircraft maintenance increased $22 million, or 11%, driven by higher rates for outside maintenance work, additional maintenance projects, and the addition of certain E175 engines to Horizon's power-by-the-hour contract since the first quarter of 2024.
Previous report
Alaska Airlines reported a pretax loss, excluding special items and other adjustments, of $55 million in the first quarter of 2025, compared to a loss of $162 million in the same period in 2024. The $107 million improvement was primarily due to lost revenue and additional operational costs resulting from the B737-9 grounding in the first quarter of 2024. Growth in departures and revenue passengers also contributed to the increase. The improvement was partially offset by an increase in non-fuel operating expenses, driven largely by higher wages and variable costs associated with increased capacity.
Previous report
Hawaiian Airlines reported a pretax loss, excluding special items and other adjustments, of $88 million in the first quarter of 2025, compared to a loss on a pro forma basis of $173 million in the first quarter of 2024. Improved results were primarily driven by incorporating Hawaiian into Air Group's combined network, improved asset utilization, and lower fuel costs per gallon.
Previous report
Regional reported a pretax loss of $10 million, excluding special items and other adjustments, in the first quarter of 2025, compared to a loss of $2 million in the same period in 2024. Higher operating expenses associated with increased capacity were partially offset by higher passenger revenue consistent with the increase in traffic.
Reworded paragraphs (32)
Previous wording
•First Quarter Review - highlights from the first quarter of 2025 outlining some of the major events that occurred during the period, as well as forward-looking statements.
Current wording
•Second Quarter Review - highlights from the second quarter of 2025 outlining some of the major events that occurred during the period, as well as forward-looking statements.
Previous wording
•Results of Operations - an in-depth analysis of our financial and operational results for the three months ended March 31, 2025.
Current wording
•Results of Operations - an in-depth analysis of our financial and operational results for the three and six months ended June 30, 2025.
Previous wording
As Hawaiian Holdings, Inc. was acquired by Air Group on September 18, 2024, its financial results were not reflected in reported figures in the periods preceding the acquisition date. Due to the size of the two companies prior to the acquisition, the reported results for 2025 and 2024 are not comparable. To assist with the discussion of 2025 and 2024 results on a comparable basis and provide more meaningful discussion, certain supplemental unaudited pro forma income statement information is provided for the first quarter of 2024. Pro forma historical results were included with the Form 8-K filed on January 22, 2025. This information does not purport to reflect what our financial and operational results would have been had the acquisition been consummated at the beginning of the periods presented.
Current wording
As Hawaiian Holdings, Inc. was acquired by Air Group on September 18, 2024, its financial results were not reflected in reported figures in the periods preceding the acquisition date. Due to the size of the two companies prior to the acquisition, the reported results for 2025 and 2024 are not comparable. To assist with the discussion of 2025 and 2024 results on a comparable basis and provide more meaningful discussion, certain supplemental unaudited pro forma income statement information is provided for the three and six months ended June 30, 2024. Pro forma historical results were included with the Form 8-K filed on January 22, 2025. This information does not purport to reflect what our financial and operational results would have been had the acquisition been consummated at the beginning of the periods presented.
Previous wording
We reported a loss before income tax under GAAP for the first quarter of 2025 of $233 million, compared to $178 million for the first quarter of 2024. On a pro forma basis, the pretax loss for the first quarter of 2024 was $343 million. Refer below for a more detailed discussion of the items impacting these results.
Current wording
We reported income before income tax under GAAP for the second quarter of 2025 of $238 million, compared to $316 million for the second quarter of 2024. On a pro forma basis, the pretax income for the second quarter of 2024 was $237 million. Refer below for a more detailed discussion of the items impacting these results.
Previous wording
Subsequent to quarter end, Horizon technicians, represented by the Aircraft Mechanics Fraternal Association (AMFA) ratified a four-year CBA and Hawaiian flight attendants, represented by AFA, ratified a three-year extension of their existing CBA.
Current wording
In the second quarter, Hawaiian flight attendants, represented by the Association of Flight Attendants (AFA), ratified a three-year extension of their existing Collective Bargaining Agreement (CBA). Horizon technicians, represented by the Aircraft Mechanics Fraternal Association (AMFA) ratified a four-year CBA.
Previous wording
On a pro forma basis, total operating revenue increased $260 million or 9%. The changes, including the reconciliation of the impact of Hawaiian on the combined results, are summarized in the following table:
Current wording
On a pro forma basis, total operating revenue increased $75 million or 2%. The changes, including the reconciliation of the impact of Hawaiian on the combined results, are summarized in the following table:
Previous wording
On a pro forma basis, Cargo and other revenue increased $23 million, or 23%, driven by an additional B737-800F aircraft in Alaska's cargo fleet and six additional A330-300F aircraft in Hawaiian's cargo fleet, utilized under the ATSA with Amazon, since the first quarter of 2024.
Current wording
On a pro forma basis, Cargo and other revenue increased $28 million, or 25%, driven by operations from one of Alaska's B737-800F aircraft that was out of service in the second quarter of 2024 and seven additional A330-300F aircraft in Hawaiian's cargo fleet, utilized under the ATSA with Amazon, since the second quarter of 2024.
Previous wording
On a pro forma basis, total operating expenses increased $132 million, or 4%. The changes, including the reconciliation of the impact of Hawaiian on the combined results, are summarized below. We believe it is useful to summarize operating expenses as follows, which is consistent with the way expenses are reported internally and evaluated by management:
Current wording
On a pro forma basis, total operating expenses increased $54 million, or 2%. The changes, including the reconciliation of the impact of Hawaiian on the combined results, are summarized below. We believe it is useful to summarize operating expenses as follows, which is consistent with the way expenses are reported internally and evaluated by management:
Previous wording
Alaska's fuel hedge program was suspended in 2023 and all remaining positions were settled as of March 31, 2025. Hawaiian's fuel hedge program, which uses crude oil call options, was suspended in the first quarter of 2025, and has open positions, based in Brent crude oil, that will settle through the third quarter of 2025. The call options are designed to effectively cap the cost of the crude oil component of our jet fuel purchases. With call options, we are hedged against volatile crude oil price increases and, during a period of decline in crude oil prices, we only forfeit cash previously paid for hedge premiums.
Current wording
Alaska and Hawaiian used to actively hedge fuel using crude oil call options. With call options, we are hedged against volatile crude oil price increases and, during a period of decline in crude oil prices, we only forfeit cash previously paid for hedge premiums. Alaska's fuel hedge program was suspended in 2023 and all remaining positions were settled in the first quarter of 2025. Hawaiian's fuel hedge program was suspended in the first quarter of 2025. Its open positions, based in Brent crude oil, will settle by the end of the third quarter of 2025. The open positions hedge approximately 5% of Hawaiian's expected third-quarter fuel consumption at a weighted-average crude oil price per barrel of $91, with an average premium cost per barrel of $2.
Previous wording
Losses recognized for hedges that settled during the first quarter were $3 million in 2025, compared to losses of $15 million in 2024. These amounts represent cash paid for premium expense, offset by any cash received from those hedges at settlement.
Current wording
Losses recognized for hedges that settled during the second quarter were $1 million in 2025, compared to losses of $12 million in 2024. These amounts represent cash paid for premium expense, offset by any cash received from those hedges at settlement.
Previous wording
On a pro forma basis, landing fees and other rentals increased $30 million, or 14%, driven by increased volume of departures and landed weight. Increases to terminal rents were driven by higher rates and growth throughout the combined network.
Current wording
On a pro forma basis, landing fees and other rentals increased $56 million, or 25%, driven primarily by nonrecurring favorable settlements received from certain airports in 2024. Increased terminal rents driven by higher rates and growth throughout the combined network, as well as increased volume of departures and landed weight also contributed to the increase.
Previous wording
On a pro forma basis, depreciation and amortization increased $15 million, or 8%, primarily due to the addition of 20 owned aircraft to our airlines' fleets since the first quarter of 2024. Incremental depreciation on ground service and other equipment also contributed to the increase.
Current wording
On a pro forma basis, depreciation and amortization increased $16 million, or 9%, primarily due to the addition of 19 owned aircraft to our airlines' fleets since the second quarter of 2024. Incremental depreciation on ground service and other equipment also contributed to the increase.
Previous wording
Refer to Note 11 to the unaudited condensed consolidated financial statements for a detailed description of each segment and a reconciliation of segment results to consolidated Air Group results. Below is a summary of each segment's results for the first quarter of 2025.
Current wording
Refer to Note 11 to the unaudited condensed consolidated financial statements for a detailed description of each segment and a reconciliation of segment results to consolidated Air Group results. Below is a summary of each segment's results for the second quarter of 2025.
Previous wording
On a pro forma basis, Passenger revenue increased $223 million, or 9%, as traffic increased by 4% and yield grew by 5%. Hawaiian passenger revenue has improved meaningfully compared to 2024, driven by the integration of its operations into Air Group's combined network and increased asset utilization. Prior year results were negatively impacted by $150 million due to the B737-9 grounding in the first quarter of 2024.
Current wording
On a pro forma basis, Passenger revenue increased $263 million, or 4%, as traffic increased by 3% and yield grew by 2%. Hawaiian passenger revenue has improved meaningfully, driven by the combination of the Alaska and Hawaiian networks, as well as synergy and commercial initiatives announced in 2024. Increased premium revenue and loyalty program award redemption on our airlines contributed to higher yield. Additionally, prior year results were negatively impacted by $150 million due to the B737-9 grounding in the first quarter of 2024.
Previous wording
On a pro forma basis, Loyalty program other revenue increased $14 million, or 7%, due to higher commission revenue from bank card and third party partners driven by increased consumer spend. Incremental credit card acquisitions of the Alaska Airlines Visa Signature and Hawaiian Airlines World Elite Mastercard co-branded credit cards also contributed to the increase.
Current wording
On a pro forma basis, Loyalty program other revenue increased $21 million, or 5%, due to higher commission revenue from bank card and third party partners driven by increased consumer spend. Incremental credit card acquisitions of the Alaska Airlines Visa Signature and Hawaiian Airlines World Elite Mastercard co-branded credit cards also contributed to the increase.
Previous wording
On a pro forma basis, aircraft fuel expense decreased $78 million, or 10%. Raw fuel expense decreased by 10%, primarily driven by lower refining margins associated with the conversion of crude oil to jet fuel, as well as lower per gallon costs on crude oil. Decreases were partially offset by higher fuel consumption consistent with increased capacity.
Current wording
On a pro forma basis, aircraft fuel expense decreased $179 million, or 11%. Raw fuel expense decreased by 11%, driven by lower per gallon costs on crude oil and lower refining margins associated with the conversion of crude oil to jet fuel. Decreases were partially offset by higher fuel consumption consistent with increased capacity.
Previous wording
On a pro forma basis, wages and benefits increased by $66 million, or 6%, driven by higher wage rates across multiple labor groups since the first quarter of 2024. Increases were partially offset by nonrecurring wages from irregular operations following the B737-9 grounding in the first quarter of 2024.
Current wording
On a pro forma basis, wages and benefits increased by $189 million, or 9%, driven by increased headcount and higher wage rates across multiple labor groups since the second quarter of 2024. Increases were partially offset by nonrecurring wages from irregular operations following the B737-9 grounding in the first quarter of 2024.
Previous wording
On a pro forma basis, variable incentive pay increased $13 million, or 27%, due to the inclusion of Hawaiian employees in the Company's Performance-Based Pay program in 2025, as well as an increased wage base.
Current wording
On a pro forma basis, variable incentive pay increased $20 million, or 19%, due to the inclusion of Hawaiian employees in the Company's Performance-Based Pay program in 2025, as well as an increased wage base.
Previous wording
On a pro forma basis, contracted services increased $16 million, or 12%, driven by higher rates charged by vendors as well as increased passengers throughout our combined network.
Current wording
On a pro forma basis, contracted services increased $23 million, or 9%, driven by higher rates charged by vendors as well as increased passengers throughout our combined network.
Previous wording
Third-party regional carrier expense, which represents payments made to SkyWest under the CPA with Alaska, increased $10 million, or 19%, driven by incremental departures and block hours operated by SkyWest.
Current wording
Third-party regional carrier expense, which represents payments made to SkyWest under the CPA with Alaska, increased $15 million, or 13%, driven by incremental departures and block hours operated by SkyWest.
Previous wording
On a pro forma basis, special items increased $49 million, or 117%, driven by contractual changes to Alaska flight attendants' sick leave benefits and additional integration costs associated with the acquisition of Hawaiian Airlines. Fleet transition costs in the first quarter of 2024 did not recur in 2025.
Current wording
On a pro forma basis, special items decreased $47 million, or 24%, driven by nonrecurring costs in 2024 associated with Alaska flight attendant retroactive pay, the retirement of Alaska's Airbus and Horizon Q400 aircraft, and certain litigation matters. Contractual changes to Alaska flight attendants' sick leave benefits in the first quarter of 2025 and increased integration costs associated with the acquisition of Hawaiian Airlines partially offset this decrease. Refer to Note 12 to the consolidated financial statements for details.
Previous wording
As of March 31, 2025, we had cash and marketable securities of $2.5 billion. Our airlines have 113 unencumbered aircraft, which can be financed if necessary, and an $850 million bank line-of-credit facility with no outstanding borrowings. We expect our current cash and marketable securities balance, combined with our available sources of liquidity, are sufficient to fund our liquidity needs for the next 12 months. We expect to meet our liquidity needs for the foreseeable future using cash flows from our operations, our available sources of liquidity, and future financing arrangements. We discuss our sources and uses of cash in more detail below.
Current wording
As of June 30, 2025, we had cash and marketable securities of $2.2 billion. Our airlines have 115 unencumbered aircraft, which can be financed if necessary, and an $850 million bank line-of-credit facility with no outstanding borrowings. We expect our current cash and marketable securities balance, combined with our available sources of liquidity, to be sufficient to fund our liquidity needs for the next 12 months. We expect to meet our liquidity needs for the foreseeable future using cash flows from our operations, our available sources of liquidity, and future financing arrangements. We discuss our sources and uses of cash in more detail below.
Previous wording
Cash provided by operating activities was $459 million during the first three months of 2025. Advance ticket sales and our co-branded credit card agreements are the primary sources of our operating cash flow. Our primary use of operating cash flow is for operating expenses, including payments for employee wages and benefits, aircraft fuel, payments to suppliers for goods and services, payments to lessors and airport authorities for leased aircraft, rents, and landing fees, and interest expense for our debt obligations. Additionally, we paid more than $300 million to employees in recognition of their 2024 Performance-Based Pay program achievements.
Current wording
Cash provided by operating activities was $835 million during the first six months of 2025. Advance ticket sales and our co-branded credit card agreements are the primary sources of our operating cash flow. Our primary use of operating cash flow is for operating expenses, including payments for employee wages and benefits, aircraft fuel, payments to suppliers for goods and services, payments to lessors and airport authorities for leased aircraft, rents, and landing fees, and interest expense for our debt obligations. Additionally, we paid more than $300 million to employees in recognition of their 2024 Performance-Based Pay program achievements.
Previous wording
Cash used in investing activities was $381 million during the first three months of 2025. Property and equipment expenditures were $238 million, driven by the addition of one B787-9 aircraft as well as other flight equipment and ground equipment purchases. Net purchases of marketable securities were $134 million in 2025.
Current wording
Cash used in investing activities was $747 million during the first six months of 2025. Property and equipment expenditures were $741 million, driven by the addition of new aircraft as well as other equipment purchases. Net purchases of marketable securities were $79 million in 2025. These amounts were partially offset by other investing cash inflows of $73 million, including proceeds from the sale of four B737-900 aircraft.
Previous wording
Cash used in financing activities was $236 million during the first three months of 2025. Debt payments in the quarter were $156 million and cash paid for share repurchases was $105 million.
Current wording
Cash used in financing activities was $544 million during the first six months of 2025. Cash used for share repurchases was $535 million, and debt payments were $236 million. These outflows were partially offset by proceeds from new financing arrangements, net of debt issuance costs, of $168 million.
Previous wording
We have various contractual obligations that require material future outlays of cash. These obligations include the purchase of aircraft and other flight equipment, payments for Alaska's CPA with SkyWest, debt service payments, lease payments for aircraft and other property and equipment, costs for aircraft and engine maintenance, sponsorship and license agreements, and other miscellaneous agreements for services associated with operating and marketing our airlines. We also anticipate we may have material cash outlays associated with new technologies for the future of the business. Currently, Alaska and Hawaiian have agreements to purchase sustainable aviation fuel (SAF) to be delivered in the coming years. These agreements are dependent on suppliers' ability to obtain all required governmental and regulatory approvals, achieve commercial operation, and produce sufficient quantities of SAF.
Current wording
We have various contractual obligations that require material future outlays of cash. These obligations include the purchase of aircraft and other flight equipment, payments for Alaska's CPA with SkyWest, debt service payments, lease payments for aircraft and other property and equipment, costs for aircraft and engine maintenance, sponsorship and license agreements, and other miscellaneous agreements for services associated with operating and marketing our airlines. We also anticipate we may have material cash outlays associated with new technologies for the future of the business. Currently, Alaska and Hawaiian have agreements to purchase sustainable aviation fuel (SAF) to be delivered in the coming years. These agreements are dependent on suppliers' ability to obtain all required governmental and regulatory approvals, achieve commercial operation, and produce sufficient quantities of SAF. We expect to satisfy these obligations using cash flows from our operations, our available sources of liquidity, and future financing arrangements.
Previous wording
We expect to satisfy these obligations using cash flows from our operations, our available sources of liquidity, and future financing arrangements. Within the notes accompanying our unaudited condensed consolidated financial statements, refer to Note 5 for discussion of scheduled debt obligations and Note 7 for discussion of aircraft-related purchase commitments and CPA obligations.
Current wording
Within the notes accompanying our unaudited condensed consolidated financial statements, refer to Note 5 for discussion of scheduled debt obligations and Note 7 for discussion of aircraft-related purchase commitments and CPA obligations.
Previous wording
As of March 31, 2025, Alaska had firm orders to purchase 70 B737 aircraft with deliveries expected between 2025 and 2029. Alaska also had rights for 100 additional B737 aircraft through 2030. Hawaiian had firm orders to purchase 9 B787-9 aircraft with deliveries expected between 2025 and 2028. Horizon had firm orders to purchase 5 E175 aircraft with deliveries between 2025 and 2026.
Current wording
As of June 30, 2025, Alaska had firm orders to purchase 75 B737 aircraft with deliveries expected between 2025 and 2029. Hawaiian had firm orders to purchase 8 B787-9 aircraft with deliveries expected between 2025 and 2027. Horizon had firm orders to purchase 3 E175 aircraft with deliveries expected in 2026.
Previous wording
Boeing has communicated that certain B737 and B787-9 aircraft are expected to be delivered later than the contracted delivery timing. For Alaska, this includes certain B737-9 aircraft contracted for delivery in 2024 that have moved to 2025, certain B737-8 aircraft contracted for delivery in 2024 and 2025 that have moved later in the contracted year or into the year following the contracted delivery, and certain B737-10 aircraft contracted for delivery in 2025 and 2026 that have moved to 2026 or 2027, pending certification of the aircraft type. For Hawaiian, this includes certain B787-9 aircraft contracted for delivery between 2024 and 2026 that have been moved later into the contracted year or into the year following the contracted delivery. Management expects that other Boeing aircraft deliveries could be delayed beyond the contractual delivery. The table below summarizes our fleet plan, reflecting Boeing's communications and management's internal expectations.
Current wording
Boeing has communicated that certain B737 and B787-9 aircraft are expected to be delivered later than the contracted delivery timing. For Alaska, this includes certain B737-8 aircraft contracted for delivery in 2025 that have moved later in the contracted year or into 2026, and B737-10 aircraft contracted for delivery between 2025 and 2027 that have moved to between 2027 and 2029, pending certification of the aircraft type. For Hawaiian, this includes certain B787-9 aircraft contracted for delivery between 2025 and 2026 that have moved to between later in 2025 and 2027. Management expects that other Boeing aircraft deliveries could be delayed beyond the contractual delivery. The tables below reflect Boeing's communications and management's internal expectations.
Previous wording
(a) A330-300 freighter aircraft to be utilized under the ATSA with Amazon. The ATSA provides for the operation of ten aircraft with customer options to expand the fleet.
Current wording
(a) A330-300 freighter aircraft to be utilized under the ATSA with Amazon.
Previous wording
Below are operating statistics we use to measure operating performance. Figures for the three months ended March 31, 2024 are as previously reported and do not include Hawaiian operations.
Current wording
Below are operating statistics we use to measure operating performance. Figures for the three and six months ended June 30, 2024 are as previously reported and do not include Hawaiian operations.
Previous wording
There have been no material changes to our critical accounting estimates during the three months ended March 31, 2025. For information regarding our critical accounting estimates, see Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024.
Current wording
There have been no material changes to our critical accounting estimates during the three and six months ended June 30, 2025. For information regarding our critical accounting estimates, see Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
On a pro forma basis, Loyalty program other revenue increased $7 million, or 3%, due to higher commission revenue from bank card and third party partners driven by increased consumer spend.
Current report — wording carried from elsewhere
On a pro forma basis, aircraft fuel expense decreased $101 million, or 13%. Raw fuel expense decreased by 12%, primarily driven by lower per gallon costs on crude oil. Decreases were partially offset by higher fuel consumption consistent with increased capacity.
Current report — wording carried from elsewhere
On a pro forma basis, wages and benefits increased by $123 million, or 12%, driven by increased headcount and higher wage rates across multiple labor groups since the second quarter of 2024.
Current report — wording carried from elsewhere
Below are operating statistics presented on a pro forma basis, which assumes Hawaiian is included in both 2024 and 2025.
Current report — wording carried from elsewhere
The table below presents total operating revenue by principal geographic region (as defined by the U.S. Department of Transportation) and the percentage of change of certain operational results on a pro forma basis for the six months ended June 30, 2025.
Current report — wording carried from elsewhere
On a pro forma basis, total operating expenses increased $186 million, or 3%. The changes, including the reconciliation of the impact of Hawaiian on the combined results, are summarized below. We believe it is useful to summarize operating expenses as follows, which is consistent with the way expenses are reported internally and evaluated by management:
Current report — wording carried from elsewhere
Losses recognized for hedges that settled during the six months ended were $4 million in 2025, compared to losses of $27 million in 2024. These amounts represent cash paid for premium expense, offset by any cash received from those hedges at settlement.
Current report — wording carried from elsewhere
The table below summarizes our operating expense line items, excluding fuel and other special items, on a pro forma basis. Generally, increases to these expenses are driven by capacity increases and growth of the Company's operations. Significant or unusual changes compared to 2024 on a pro forma basis are more fully described below.
Current report — wording carried from elsewhere
The primary components of wages and benefits, including a reconciliation of 2024 on a pro forma basis, are shown in the following table:
Current report — wording carried from elsewhere
On a pro forma basis, depreciation and amortization increased $31 million, or 9%, primarily due to the addition of 19 owned aircraft to our airlines' fleets since the second quarter of 2024. Incremental depreciation on ground service and other equipment also contributed to the increase.
Current report — wording carried from elsewhere
Refer to Note 11 to the unaudited condensed consolidated financial statements for a detailed description of each segment and a reconciliation of segment results to consolidated Air Group results. Below is a summary of each segment's results for the six months ended June 30, 2025.