XML 24 R10.htm IDEA: XBRL DOCUMENT
v3.20.1

COVID-19 Pandemic | 3 Months Ended
--- | ---
Mar. 31, 2020
Risks and Uncertainties [Abstract] |
Impacts of COVID-19 | COVID-19 PANDEMIC The public health and economic crises resulting from the outbreak of the novel coronavirus (COVID-19) in the first quarter of 2020 has had an unprecedented impact on the Company. Travel restrictions, event cancellations and social distancing guidelines implemented throughout the country drove significant declines in demand beginning in February, and adversely impacted March revenues. It is likely that the financial impact to the second quarter will be more significant than the first quarter, and it is uncertain when, and at what rate, demand for air travel will return. In response to the COVID-19 pandemic, the Company implemented a "Peace-of-Mind" waiver, which allows travelers to book tickets for travel for a specified period of time that can be changed or canceled without incurring change fees. Cancellations and postponement of travel exceeded new bookings in March, and had a material impact on passenger revenues, air traffic liability, and cash position. Refer to Note 3 for further discussion. The Company has also taken decisive action to reduce costs and preserve cash and liquidity. During the quarter, the Company implemented a company-wide hiring freeze, reduced salaries of senior management, suspended annual pay increases and solicited voluntary leaves of absence. In addition to these payroll saving measures, the Company has actively negotiated with vendor partners to reduce contractual minimums and spending in line with the reduction in demand. With demand dramatically depressed, the Company has significantly reduced its planned flying capacity through at least June 2020. As a result, many aircraft have been parked or removed from service. As of March 31, 2020, the Company had decided to park 146 Mainline aircraft and 13 Horizon aircraft, and suspend flying for eight SkyWest aircraft. Of these aircraft, 12 Airbus aircraft were deemed permanently parked and have been removed from the operating fleet. An additional ten Mainline aircraft were identified for parking subsequent to March 31, 2020. Valuation of long-lived assets The Company reviews its long-lived assets for impairment whenever events or changes indicate that the total carrying amount of an asset or asset group may not be recoverable. Given the temporary and permanent parking described above, the Company performed impairment tests on certain long-lived assets as of March 31, 2020. The Company determined there were no indicators of impairment on long-lived assets outside of flight equipment. To determine if impairment exists, a recoverability test is performed comparing the sum of estimated undiscounted future cash flows expected to be directly generated by the assets to the asset carrying value. Assets are grouped at the individual fleet level, which is the lowest level for which identifiable cash flows are available. The Company developed estimates of future cash flows utilizing historical results, adjusted for the current operating environment, including the impact of parked aircraft. All individual fleets passed the recoverability test, except for the Q400 fleet and the permanently parked Airbus aircraft. The Company recorded an impairment charge of $83 million for the 12 permanently parked Airbus aircraft, comprised of operating lease right of use assets, estimable return costs, and related leasehold improvements. To determine the total impairment charge for the Q400 fleet, the Company obtained fair market values from published pricing guides and evaluated recent sales. As a result of the analysis, the Company recorded an impairment charge of $58 million reflecting the amount for which carrying value exceeded fair value of the Q400 fleet. The Company also recorded an additional impairment of $4 million relating to two Q400 aircraft which are parked and held-for-sale. A summary of the impairment charges recorded for aircraft and other flight equipment in the condensed consolidated statement of operations for the three months ended March 31, 2020 is as follows (in millions):
|  | Airbus Aircraft |  | Q400 Aircraft |  | Total Impairment
Aircraft and other flight equipment, net |  | $ | 11 |  |  | $ | 58 |  |  | $ | 69 |
Operating lease assets |  | 62 |  |  | — |  |  | 62 |
Inventory and supplies - net |  | 2 |  |  | — |  |  | 2 |
Prepaid expenses and other current assets |  | — |  |  | 4 |  |  | 4 |
Other accrued liabilities |  | 8 |  |  | — |  |  | 8 |
Total impairment charges - Long-lived assets |  | $ | 83 |  |  | $ | 62 |  |  | $ | 145 |
As the Company continues to evaluate future demand and evolving market conditions, additional aircraft may be permanently parked resulting in incremental impairment charges. Valuation of intangible assets and goodwill The Company reviews definite- and indefinite-lived intangible assets and goodwill for impairment on an annual basis in the fourth quarter, or more frequently should events or circumstances indicate that an impairment may exist. Given the current environment and significant decline in Alaska Air Group market capitalization as of March 31, 2020, there are indicators that an impairment loss may exist. The Company performed impairment analyses over all three asset types, considering market capitalization, future operating cash flows, future utilization and changes to the regulatory environment. As a result of this analysis, indefinite-lived intangible assets and goodwill were deemed recoverable, and no impairment charges were recorded. The Company observed the potential for impairment relating to definite-lived intangibles, which consist of customer relationships and leased gates at Dallas-Love Field (DAL gates) acquired from Virgin America. A recoverability test was performed for these intangible assets, and only the DAL gates were deemed not recoverable. As a result, an impairment charge of $10 million was recorded as of March 31, 2020. Other considerations The Company also evaluated outstanding receivable balances as of March 31, 2020 for risk of non-payment. The Company identified a $5 million receivable from a vendor that filed for bankruptcy during the first quarter. The Company fully expects to file a bankruptcy claim but, as the note is unsecured, management determined that collectability is not probable as of March 31, 2020. Therefore, the full $5 million was reserved and charged to Special charges - impairment charges and other in the condensed consolidated statement of operations. For the three months ended March 31, 2020, the Company concluded that the use of a year-to-date effective tax rate estimate was more appropriate than the annual effective tax rate method as estimates of the Company's full-year loss is not reliable at this time given the uncertainty of the travel demand environment. Although it is not certain when the impacts of COVID-19 will subside and demand for air travel will return, the Company has implemented meaningful plans to reduce expenses, access liquidity and preserve cash. At March 31, 2020, given the balance of cash, cash equivalents and marketable securities, as well as anticipated access to liquidity and cash flows from future operations, the Company expects it will meet all cash obligations, as well as remain in compliance with the debt covenants in its existing financing arrangements, for the next 12 months. Refer to Note 5. Long-Term Debt and Note 10. Subsequent Events for further information regarding liquidity obtained in response to the COVID-19 crisis.

X
- Definition Impacts of COVID-19 + References No definition available. + Details
Name: | alk_ImpactsOfCOVID19TextBlock
Namespace Prefix: | alk_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_RisksAndUncertaintiesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration