Exhibit 99.1

January 26, 2023

Media contact:						Investor/analyst contact:
Media Relations						Emily Halverson
(206) 304-0008						VP Finance and Controller
						(206) 392-5908

Alaska Air Group delivers strong fourth quarter 2022 and full-year results

Delivered industry-leading full-year adjusted pretax margin of 7.6%;

Record annual revenue of $9.6 billion, up 10% versus 2019;

Employees hard work recognized with performance-based bonuses totaling 10.5% of annual pay

SEATTLE — Alaska Air Group Inc. (NYSE: ALK) today reported financial results for the fourth quarter and full year ended December 31, 2022, and provided an outlook for the first quarter ending March 31, 2023.

"2022 was a year of significant recovery and accomplishment for Alaska Airlines," said Alaska Airlines CEO Ben Minicucci. "Despite many challenges during the year, we ran one of the best operations, signed five new labor deals, and executed the majority of our single fleet transition. The results we posted today signal how well our teams are navigating this recovery. I want to thank our employees for their commitment to our success, and for the work they do every day to take great care of our guests. I am confident that we are well positioned to grow, compete and out-perform in 2023."

Financial Results:

•Reported net income for the fourth quarter and full year 2022 under Generally Accepted Accounting Principles (GAAP) of $22 million, or $0.17 per diluted share, and $58 million, or $0.45 per diluted share. These results compare to net income for the fourth quarter and full year 2021 of $18 million, or $0.14 per diluted share, and $478 million, or $3.77 per diluted share.

•Reported net income for the fourth quarter and full year 2022, excluding special items and mark-to-market fuel hedge accounting adjustments, of $118 million, or $0.92 per diluted share, and $556 million, or $4.35 per diluted share. These results compare to net income for the fourth quarter and net loss for the full year 2021, excluding special items and mark-to-market fuel hedge accounting adjustments, of $31 million, or $0.24 per diluted share, and $256 million, or $2.03 per share.

•Recorded $257 million of incentive pay in 2022 earned by employees for meeting or exceeding profitability, safety and emissions targets. The payout is the richest in the 20-year history of the plan, representing nearly six weeks of pay for most employees.

•Recorded $2.5 billion in operating revenue for the fourth quarter, resulting in $9.6 billion in operating revenue for the full year 2022, the highest annual total in company history.

•Received nearly $1.5 billion in annual cash remuneration under the renewed co-brand credit card arrangement with Bank of America, the highest level in the program's history.

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Balance Sheet and Liquidity:

•Announced plans to resume share repurchases in early 2023 to offset annual dilution. Repurchases are expected to range from $75 million to $100 million in 2023.

•Ended the quarter with a debt-to-capitalization ratio of 49%, within our target range of 40% to 50%.

•Repaid $52 million in debt in the fourth quarter, bringing total debt payments to $385 million for the full year 2022.

•Held $2.4 billion in unrestricted cash and marketable securities as of December 31, 2022.

Fleet Updates:

•Retired ten Airbus A320 aircraft and nine Q400 aircraft during the fourth quarter. All remaining A320 aircraft have since been retired and all remaining Q400 aircraft will be retired by the end of January 2023.

•Amended a previously existing aircraft purchase agreement with Boeing to convert 52 737 MAX aircraft options to firm purchases for delivery between 2024 and 2027. Alaska also added an incremental 105 delivery positions to purchase 737 MAX aircraft between 2026 and 2030.

•Received four 737-9 aircraft during the quarter, bringing the total 737-9 fleet to 37.

•Received three E175 aircraft during the quarter, bringing Horizon's total E175 fleet to 33.

Other Operational Updates:

•Partnered with Lyft to offer Mileage Plan members one mile for every $1 spent on all Lyft rides in the U.S. and Canada.

•Added a new Mileage Plan partner, Mokulele Airlines, to offer guests more convenient connections within the Hawaiian Islands, starting in early 2023.

•Launched the first U.S. electronic bag tag program, enabling guests to tag their luggage through the airline's mobile app before they reach the airport.

•Opened the renovated C Concourse Lounge in Seattle, the first of several investments that will improve the lounge experience with more seating and food and beverage choices for guests in Seattle, Portland, San Francisco and Los Angeles.

Environmental, Social and Governance Updates:

•Donated a retired Q400 to the Portland Community College Foundation, providing students of the Aviation Maintenance Technology and Aviation Science programs the opportunity to gain hands-on experience working on a commercial aircraft.

•Completed the transition to paper cups for inflight beverages, which will replace more than 55 million plastic cups each year with a more sustainable alternative.

•Donated 55 million miles to 20 different charities through Alaska's Care Miles program in 2022.

•Created a new Diversity, Equity and Inclusion Disability Office dedicated to ensuring Alaska becomes a leader in disability inclusion.

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The following table reconciles the company's reported GAAP net income per share (EPS) for the three and twelve months ended December 31, 2022 and 2021 to adjusted amounts.

			Three Months Ended December 31,
			2022												2021
(in millions, except per-share amounts)			Dollars						Diluted EPS						Dollars						Diluted EPS
GAAP net income per share			$	22					$	0.17					$	18					$	0.14
Mark-to-market fuel hedge adjustments			12						0.09						21						0.16
Special items - fleet transition and other(a)			120						0.93						(6)						(0.05)
Special items - labor and related(b)			(6)						(0.04)						2						0.02
Income tax effect of reconciling items above			(30)						(0.23)						(4)						(0.03)
Non-GAAP adjusted net income (loss) per share			$	118					$	0.92					$	31					$	0.24

			Twelve Months Ended December 31,
			2022												2021
(in millions, except per-share amounts)			Dollars						Diluted EPS						Dollars						Diluted EPS
GAAP net income per share			$	58					$	0.45					$	478					$	3.77
Payroll Support Program grant wage offset			—						—						(914)						(7.21)
Mark-to-market fuel hedge adjustments			76						0.60						(47)						(0.37)
Special items - fleet transition and other(a)			496						3.88						(1)						(0.01)
Special items - labor and related(b)			84						0.66						(10)						(0.08)
Income tax effect of reconciling items above			(158)						(1.24)						238						1.87
Non-GAAP adjusted net income (loss) per share			$	556					$	4.35					$	(256)					$	(2.03)

(a) Special items - fleet transition and other in the three and twelve months ended December 31, 2022 is primarily impairment charges and accelerated costs associated with the retirement of the A320 and Q400 fleets.

(b) Special items - labor and related in the three and twelve months ended December 31, 2022 is primarily a one-time payment to Alaska pilots following ratification of a new collective bargaining agreement.

Statistical data, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables. A glossary of financial terms can be found on the last page of this release.

A conference call regarding the fourth quarter and full year results will be streamed online at 8:30 a.m. PST on January 26, 2023. It can be accessed at www.alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call.

References in this update to “Air Group,” “Company,” “we,” “us,” and “our” refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified.

This news release may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by our forward-looking statements, assumptions or beliefs. For a comprehensive discussion of potential risk factors, see Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2021. Some of these risks include competition, labor costs, relations and availability, general economic conditions including those associated with pandemic recovery, increases in operating costs including fuel, inability to meet cost reduction, ESG and other strategic goals, seasonal fluctuations in demand and financial results, supply chain risks, events that negatively impact aviation safety and security, and changes in laws and regulations that impact our business. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed in our most recent Form 10-K and in our subsequent SEC filings. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We expressly disclaim any obligation to publicly update or revise any forward-looking statements made today to conform them to actual results. Over time, our actual results, performance or achievements may differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, assumptions or beliefs and such differences might be significant and materially adverse.

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Alaska Airlines and our regional partners serve more than 120 destinations across the United States, Belize, Canada, Costa Rica and Mexico. We emphasize low fares and award-winning customer service. Alaska is a member of the oneworld global alliance. With the alliance and our additional airline partners, our guests can travel to more than 900 destinations on more than 20 airlines while earning and redeeming miles on flights to locations around the world. Learn more about Alaska at news.alaskaair.com. Alaska Airlines and Horizon Air are subsidiaries of Alaska Air Group. (NYSE: ALK).

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Alaska Air Group, Inc.
			Three Months Ended December 31,																		Twelve Months Ended December 31,
(in millions, except per-share amounts)			2022						2021						Change						2022						2021						Change
Operating Revenue
Passenger revenue			$	2,264					$	1,715					32		%				$	8,808					$	5,499					60		%
Mileage Plan other revenue			157						129						22		%				590						461						28		%
Cargo and other revenue			58						55						5		%				248						216						15		%
Total Operating Revenue			2,479						1,899						31		%				9,646						6,176						56		%
Operating Expenses
Wages and benefits			709						637						11		%				2,640						2,218						19		%
Variable incentive pay			117						42						179		%				257						151						70		%
Payroll Support Program grant wage offset			—						—						—		%				—						(914)						NM
Aircraft fuel, including hedging gains and losses			668						426						57		%				2,668						1,279						109		%
Aircraft maintenance			93						92						1		%				424						364						16		%
Aircraft rent			69						66						5		%				291						254						15		%
Landing fees and other rentals			146						141						4		%				581						555						5		%
Contracted services			86						68						26		%				329						235						40		%
Selling expenses			77						50						54		%				295						173						71		%
Depreciation and amortization			105						100						5		%				415						394						5		%
Food and beverage service			54						42						29		%				197						139						42		%
Third-party regional carrier expense			37						41						(10)		%				182						147						24		%
Other			181						159						14		%				717						507						41		%
Special items - fleet transition and other			120						(6)						NM						496						(1)						NM
Special items - labor and related			(6)						2						NM						84						(10)						NM
Total Operating Expenses			2,456						1,860						32		%				9,576						5,491						74		%
Operating Income			23						39						(41)		%				70						685						(90)		%
Non-operating Income (Expense)
Interest income			18						6						200		%				53						25						112		%
Interest expense			(24)						(27)						(11)		%				(108)						(128)						(16)		%
Interest capitalized			6						2						200		%				14						11						27		%
Other - net			12						9						33		%				50						36						39		%
Total Non-operating Income (Expense)			12						(10)						NM						9						(56)						116		%
Income Before Income Tax			35						29												79						629
Income tax expense			13						11												21						151
Net Income			$	22					$	18											$	58					$	478
Basic Earnings Per Share			$	0.17					$	0.14											$	0.46					$	3.82
Diluted Earnings Per Share			$	0.17					$	0.14											$	0.45					$	3.77
Shares used for computation:
Basic			127.303						125.708												126.657						125.063
Diluted			128.470						127.284												127.899						126.775

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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
Alaska Air Group, Inc.
As of December 31 (in millions)			2022						2021
ASSETS
Current Assets
Cash and cash equivalents			$	338					$	470
Marketable securities			2,079						2,646
Total cash and marketable securities			2,417						3,116
Receivables - net			296						546
Inventories and supplies - net			104						62
Prepaid expenses and other current assets			223						196
Total Current Assets			3,040						3,920
Property and Equipment
Aircraft and other flight equipment			9,053						8,127
Other property and equipment			1,661						1,489
Deposits for future flight equipment			670						384
			11,384						10,000
Less accumulated depreciation and amortization			4,127						3,862
Total Property and Equipment - Net			7,257						6,138
Other Assets
Operating lease assets			1,566						1,453
Goodwill and intangible assets			2,038						2,044
Other noncurrent assets			380						396
Total Other Assets			3,984						3,893
Total Assets			$	14,281					$	13,951

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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
Alaska Air Group, Inc.
As of December 31 (in millions except share amounts)			2022						2021
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable			$	221					$	200
Accrued wages, vacation and payroll taxes			619						457
Air traffic liability			1,180						1,163
Other accrued liabilities			846						625
Deferred revenue			1,123						912
Current portion of operating lease liabilities			247						268
Current portion of long-term debt			276						366
Total Current Liabilities			4,512						3,991
Long-Term Debt, Net of Current Portion			1,883						2,173
Noncurrent Liabilities
Long-term operating lease liabilities, net of current portion			1,469						1,279
Deferred income taxes			574						578
Deferred revenue			1,374						1,446
Obligation for pension and post-retirement medical benefits			348						305
Other liabilities			305						378
Total Noncurrent Liabilities			4,070						3,986
Commitments and Contingencies
Shareholders' Equity
Preferred stock, $0.01 par value, Authorized: 5,000,000 shares, none issued or outstanding			—						—
Common stock, $0.01 par value, Authorized: 400,000,000 shares, Issued: 2022 - 136,883,042 shares; 2021 - 135,255,808 shares, Outstanding: 2022 - 127,533,098 shares; 2021 - 125,905,864 shares			1						1
Capital in excess of par value			577						494
Treasury stock (common), at cost: 2022 - 9,349,944 shares; 2021 - 9,349,944 shares			(674)						(674)
Accumulated other comprehensive loss			(388)						(262)
Retained earnings			4,300						4,242
			3,816						3,801
Total Liabilities and Shareholders' Equity			$	14,281					$	13,951

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SUMMARY CASH FLOW (unaudited)
Alaska Air Group, Inc.
(in millions)			Year Ended December 31, 2022						Nine Months Ended September 30, 2022(a)						Three Months Ended December 31, 2022(b)
Cash Flows from Operating Activities:
Net income			$	58					$	36					$	22
Non-cash reconciling items			953						719						234
Changes in working capital			407						654						(247)
Net cash provided by operating activities			1,418						1,409						9
Cash Flows from Investing Activities:
Property and equipment additions			(1,671)						(947)						(724)
Other investing activities			453						59						394
Net cash used in investing activities			(1,218)						(888)						(330)
Net cash used in financing activities			(325)						(296)						(29)
Net increase (decrease) in cash and cash equivalents			(125)						225						(350)
Cash, cash equivalents, and restricted cash at beginning of year			494						494						719
Cash, cash equivalents, and restricted cash at end of year			$	369					$	719					$	369

(a) As reported in Form 10-Q for the third quarter of 2022.

(b) Cash flows for the three months ended December 31, 2022 can be calculated by subtracting cash flows for the nine months ended

September 30, 2022, as reported in Form 10-Q for the third quarter 2022, from the year ended December 31, 2022.

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OPERATING STATISTICS SUMMARY (unaudited)
Alaska Air Group, Inc.
			Three Months Ended December 31,																		Twelve Months Ended December 31,
			2022						2021						Change						2022						2021						Change
Consolidated Operating Statistics:(a)
Revenue passengers (000)			10,331						9,196						12.3%						41,468						32,407						28.0%
RPMs (000,000) "traffic"			12,855						11,279						14.0%						51,330						38,598						33.0%
ASMs (000,000) "capacity"			15,030						14,207						5.8%						60,773						52,445						15.9%
Load factor			85.5%						79.4%						6.1 pts						84.5%						73.6%						10.9 pts
Yield			17.61¢						15.20¢						15.9%						17.16¢						14.25¢						20.4%
RASM			16.49¢						13.36¢						23.4%						15.87¢						11.78¢						34.8%
CASMex(b)			11.14¢						10.12¢						10.1%						10.41¢						9.80¢						6.3%
Economic fuel cost per gallon(b)			$3.55						$2.26						57.1%						$3.42						$2.02						69.3%
Fuel gallons (000,000)			185						179						3.4%						758						656						15.5%
ASMs per gallon			81.2						79.4						2.3%						80.2						79.9						0.3%
Departures (000)			95						94						1.1%						404						377						7.2%
Average full-time equivalent employees (FTEs)			23,195						21,043						10.2%						22,564						19,375						16.5%
Mainline Operating Statistics:
Revenue passengers (000)			8,237						6,900						19.4%						31,795						23,268						36.6%
RPMs (000,000) "traffic"			11,994						10,078						19.0%						46,812						33,755						38.7%
ASMs (000,000) "capacity"			14,004						12,737						9.9%						55,224						45,741						20.7%
Load factor			85.6%						79.1%						6.5 pts						84.8%						73.8%						11.0 pts
Yield			16.39¢						13.97¢						17.3%						15.92¢						13.07¢						21.8%
RASM			15.49¢						12.39¢						25.0%						14.91¢						10.99¢						35.7%
CASMex(b)			10.05¢						9.14¢						10.0%						9.45¢						8.96¢						5.5%
Economic fuel cost per gallon(b)			$3.52						$2.25						56.4%						$3.40						$2.01						69.2%
Fuel gallons (000,000)			163						150						8.7%						646						530						21.9%
ASMs per gallon			85.9						84.8						1.3%						85.5						86.2						(0.8)%
Departures (000)			62						56						10.7%						244						207						17.9%
Average full-time equivalent employees (FTEs)			17,792						15,855						12.2%						17,224						14,366						19.9%
Aircraft utilization			9.9						10.0						(1.0)%						9.9						9.7						2.1%
Average aircraft stage length			1,341						1,356						(1.1)%						1,347						1,324						1.7%
Operating fleet(d)			225						217						8 a/c						225						217						8 a/c
Regional Operating Statistics:(c)
Revenue passengers (000)			2,094						2,296						(8.8)%						9,673						9,139						5.8%
RPMs (000,000) "traffic"			861						1,201						(28.3)%						4,518						4,842						(6.7)%
ASMs (000,000) "capacity"			1,027						1,469						(30.1)%						5,549						6,704						(17.2)%
Load factor			83.9%						81.7%						2.2 pts						81.4%						72.2%						9.2 pts
Yield			34.66¢						25.57¢						35.5%						29.97¢						22.49¢						33.3%
RASM			30.08¢						21.82¢						37.9%						25.34¢						17.12¢						48.0%
Departures (000)			33						38						(13.2)%						160						170						(5.9)%
Operating fleet(d)			86						94						(8) a/c						86						94						(8) a/c

(a)Except for FTEs, data includes information related to third-party regional capacity purchase flying arrangements.

(b)See a reconciliation of this non-GAAP measure and Note A for a discussion of potential importance of this measure to investors in the accompanying pages.

(c)Data presented includes information related to flights operated by Horizon and third-party carriers.

(d)Excludes all aircraft removed from operating service.

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Given the unusual nature of 2021 and 2020, we believe that some analysis of specific financial and operational results compared to 2019 provides meaningful insight. The table below includes comparative results from 2022 to 2019.

FINANCIAL INFORMATION AND OPERATING STATISTICS - 2022 Compared with 2019 (unaudited)
Alaska Air Group, Inc.
			Three Months Ended December 31,																		Year Ended December 31,
			2022						2019						Change						2022						2019						Change
Passenger revenue			$	2,264					$	2,057					10%						$	8,808					$	8,095					9%
Mileage Plan other revenue			157						119						32%						590						465						27%
Cargo and other revenue			58						52						12%						248						221						12%
Total Operating Revenue			$	2,479					$	2,228					11%						$	9,646					$	8,781					10%
Operating expense, excluding fuel and special items			$	1,674					$	1,500					12%						$	6,328					$	5,796					9%
Aircraft fuel, including hedging gains and losses			668						476						40%						2,668						1,884						42%
Special items			114						—						NM						580						38						NM
Total Operating Expenses			$	2,456					$	1,976					24%						$	9,576					$	7,718					24%
Total Non-operating Income (Expense)			$	12					$	(9)					NM						$	9					$	(47)					119%
Income Before Income Tax			$	35					$	243					(86)%						$	79					$	1,016					(92)%
Consolidated Operating Statistics:
Revenue passengers (000)			10,331						11,715						(12)%						41,468						46,733						(11)%
RPMs (000,000) "traffic"			12,855						13,928						(8)%						51,330						56,040						(8)%
ASMs (000,000) "capacity"			15,030						16,648						(10)%						60,773						66,654						(9)%
Load Factor			85.5%						83.7%						1.8 pts						84.5%						84.1%						0.4 pts
Yield			17.61¢						14.77¢						19%						17.16¢						14.45¢						19%
RASM			16.49¢						13.38¢						23%						15.87¢						13.17¢						21%
CASMex			11.14¢						9.01¢						24%						10.41¢						8.70¢						20%
FTEs			23,195						22,506						3%						22,564						22,126						2%

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OPERATING SEGMENTS (unaudited)
Alaska Air Group, Inc.
			Three Months Ended December 31, 2022
(in millions)			Mainline						Regional						Horizon						Consolidating & Other(a)						Air Group Adjusted(b)						Special Items(c)						Consolidated
Operating Revenue
Passenger revenue			$	1,966					$	298					$	—					$	—					$	2,264					$	—					$	2,264
CPA revenue			—						—						71						(71)						—						—						—
Mileage Plan other revenue			146						11						—						—						157						—						157
Cargo and other revenue			58						—						—						—						58						—						58
Total Operating Revenue			2,170						309						71						(71)						2,479						—						2,479
Operating Expenses
Operating expenses, excluding fuel			1,408						243						92						(69)						1,674						114						1,788
Fuel expense			572						84						—						—						656						12						668
Total Operating Expenses			1,980						327						92						(69)						2,330						126						2,456
Non-operating Income (Expense)			18						—						(7)						1						12						—						12
Income (Loss) Before Income Tax			$	208					$	(18)					$	(28)					$	(1)					$	161					$	(126)					$	35
Pretax Margin																											6.5		%										1.4		%
			Three Months Ended December 31, 2021
(in millions)			Mainline						Regional						Horizon						Consolidating & Other(a)						Air Group Adjusted(b)						Special Items(c)						Consolidated
Operating Revenue
Passenger revenue			$	1,408					$	307					$	—					$	—					$	1,715					$	—					$	1,715
CPA revenue			—						—						84						(84)						—						—						—
Mileage Plan other revenue			115						14						—						—						129						—						129
Cargo and other revenue			55						—						—						—						55						—						55
Total Operating Revenue			1,578						321						84						(84)						1,899						—						1,899
Operating Expenses
Operating expenses, excluding fuel			1,164						258						101						(85)						1,438						(4)						1,434
Fuel expense			339						66						—						—						405						21						426
Total Operating Expenses			1,503						324						101						(85)						1,843						17						1,860
Non-operating Income (Expense)			(7)						—						(5)						2						(10)						—						(10)
Income (Loss) Before Income Tax			$	68					$	(3)					$	(22)					$	3					$	46					$	(17)					$	29
Pretax Margin																											2.4		%										1.5		%

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OPERATING SEGMENTS (unaudited)
Alaska Air Group, Inc.
			Twelve Months Ended December 31, 2022
(in millions)			Mainline						Regional						Horizon						Consolidating & Other(a)						Air Group Adjusted(b)						Special Items(c)						Consolidated
Operating Revenue
Passenger revenue			$	7,454					$	1,354					$	—					$	—					$	8,808					$	—					$	8,808
CPA revenue			—						—						359						(359)						—						—						—
Mileage Plan other revenue			538						52						—						—						590						—						590
Cargo and other revenue			244						—						—						4						248						—						248
Total Operating Revenue			8,236						1,406						359						(355)						9,646						—						9,646
Operating Expenses
Operating expenses, excluding fuel			5,216						1,085						383						(356)						6,328						580						6,908
Fuel expense			2,195						397						—						—						2,592						76						2,668
Total Operating Expenses			7,411						1,482						383						(356)						8,920						656						9,576
Non-operating Income (Expense)			30						—						(22)						1						9						—						9
Income (Loss) Before Income Tax			$	855					$	(76)					$	(46)					$	2					$	735					$	(656)					$	79
Pretax Margin																											7.6		%										0.8		%
			Twelve Months Ended December 31, 2021
(in millions)			Mainline						Regional						Horizon						Consolidating & Other(a)						Air Group Adjusted(b)						Special Items(c)						Consolidated
Operating Revenue
Passenger revenue			$	4,411					$	1,088					$	—					$	—					$	5,499					$	—					$	5,499
CPA revenue			—						—						406						(406)						—						—						—
Mileage Plan other revenue			402						59						—						—						461						—						461
Cargo and other revenue			212						—						—						4						216						—						216
Total Operating Revenue			5,025						1,147						406						(402)						6,176						—						6,176
Operating Expenses
Operating expenses, excluding fuel			4,101						1,096						373						(433)						5,137						(925)						4,212
Fuel expense			1,065						261						—						—						1,326						(47)						1,279
Total Operating Expenses			5,166						1,357						373						(433)						6,463						(972)						5,491
Non-operating Income (Expense)			(38)						—						(21)						3						(56)						—						(56)
Income (Loss) Before Income Tax			$	(179)					$	(210)					$	12					$	34					$	(343)					$	972					$	629
Pretax Margin																											(5.6)		%										10.2		%

(a)Includes consolidating entries, Air Group parent company, McGee Air Services, 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 allocation and excludes certain charges. See Note A in the accompanying pages for further information.

(c)Includes Payroll Support Program grant wage offsets, special items and mark-to-market fuel hedge accounting adjustments.

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GAAP TO NON-GAAP RECONCILIATIONS (unaudited)

Alaska Air Group, Inc.

CASM Excluding Fuel and Special Items Reconciliation
			Three Months Ended December 31,												Twelve Months Ended December 31,
(in cents)			2022						2021						2022						2021
Consolidated:
CASM			16.34		¢				13.09		¢				15.76		¢				10.47		¢
Less the following components:
Payroll Support Program grant wage offset			—						—						—						(1.75)
Aircraft fuel, including hedging gains and losses			4.44						3.00						4.39						2.44
Special items - fleet transition and other(a)			0.80						(0.04)						0.82						—
Special items - labor and related(b)			(0.04)						0.01						0.14						(0.02)
CASM excluding fuel and special items			11.14		¢				10.12		¢				10.41		¢				9.80		¢
Mainline:
CASM			14.95		¢				11.77		¢				14.42		¢				9.52		¢
Less the following components:
Payroll support program grant wage offset			—						—						—						(1.75)
Aircraft fuel, including hedging gains and losses			4.17						2.66						4.11						2.33
Special items - fleet transition and other(a)			0.77						(0.05)						0.71						—
Special items - labor and related(b)			(0.04)						0.02						0.15						(0.02)
CASM excluding fuel and special items			10.05		¢				9.14		¢				9.45		¢				8.96		¢

(a) Special items - fleet transition and other in the three and twelve months ended December 31, 2022 is primarily impairment charges and accelerated costs associated with the retirement of the A320 and Q400 fleets.

(b) Special items - labor and related in the three and twelve months ended December 31, 2022 is primarily a one-time payment to Alaska pilots following ratification of a new collective bargaining agreement.

Fuel Reconciliation
			Three Months Ended December 31,
			2022												2021
(in millions, except for per-gallon amounts)			Dollars						Cost/Gal						Dollars						Cost/Gal
Raw or "into-plane" fuel cost			$	657					$	3.55					$	434					$	2.42
Losses (gains) on settled hedges			(1)						—						(29)						(0.16)
Consolidated economic fuel expense			$	656					$	3.55					$	405					$	2.26
Mark-to-market fuel hedge adjustment			12						0.06						21						0.12
GAAP fuel expense			$	668					$	3.61					$	426					$	2.38
Fuel gallons									185												179
			Twelve Months Ended December 31,
			2022												2021
(in millions, except for per-gallon amounts)			Dollars						Cost/Gal						Dollars						Cost/Gal
Raw or "into-plane" fuel cost			$	2,761					$	3.64					$	1,383					$	2.11
Losses (gains) on settled hedges			(169)						(0.22)						(57)						(0.09)
Consolidated economic fuel expense			$	2,592					$	3.42					$	1,326					$	2.02
Mark-to-market fuel hedge adjustment			76						0.10						(47)						(0.07)
GAAP fuel expense			$	2,668					$	3.52					$	1,279					$	1.95
Fuel gallons									758												656

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Debt-to-capitalization, including operating leases
(in millions)			December 31, 2022						December 31, 2021
Long-term debt, net of current portion			$	1,883					$	2,173
Long-term and current capitalized operating leases			1,716						1,547
Adjusted debt, net of current portion of long-term debt			$	3,599					$	3,720
Shareholders' equity			3,816						3,801
Total Invested Capital			$	7,415					$	7,521
Debt-to-capitalization ratio, including operating leases			49%						49%

Adjusted net debt to earnings before interest, taxes, depreciation, amortization, rent, and special items
(in millions)			December 31, 2022						December 31, 2021
Current portion of long-term debt			$	276					$	366
Current portion of operating lease liabilities			247						268
Long-term debt			1,883						2,173
Long-term operating lease liabilities, net of current portion			1,469						1,279
Total adjusted debt			3,875						4,086
Less: Total cash and marketable securities			(2,417)						(3,116)
Adjusted net debt			$	1,458					$	970
(in millions)			Year Ended December 31, 2022						Year Ended December 31, 2021
GAAP Operating Income			$	70					$	685
Adjusted for:
Special items and Payroll Support Program grant wage offset			580						(925)
Mark-to-market fuel hedge adjustments			76						(47)
Depreciation and amortization			415						394
Aircraft rent			291						254
EBITDAR			$	1,432					$	361
Adjusted net debt to EBITDAR			1.0x						2.7x

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Note A: Pursuant to Regulation G, we are providing reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. We believe that consideration of these non-GAAP financial measures may be important to investors for the following reasons:

•By excluding fuel expense and certain other items, such as the Payroll Support Program grant wage offset and other special items, from our unit metrics, we believe that we have better visibility into the results of operations. Our industry is highly competitive and is characterized by high fixed costs, so even a small reduction in non-fuel operating costs can result in a significant improvement in operating results. In addition, we believe that all domestic carriers are similarly impacted by changes in jet fuel costs over the long run, so it is important for management (and thus investors) to understand the impact of (and trends in) company-specific cost drivers such as labor rates and productivity, airport costs, maintenance costs, etc., which are more controllable by management.

•Cost per ASM (CASM) excluding fuel and certain other items, such as the Payroll Support Program grant wage offset and other special items, is one of the most important measures used by management and by the Air Group Board of Directors in assessing quarterly and annual cost performance.

•Adjusted income before income tax (and other items as specified in our plan documents) is an important metric for the employee incentive plan, which covers the majority of Air Group employees.

•CASM excluding fuel and certain special items is a measure commonly used by industry analysts, and we believe it is the basis by which they have historically compared our airline to others in the industry. The measure is also the subject of frequent questions from investors.

•Disclosure of the individual impact of certain noted items provides investors the ability to measure and monitor performance both with and without these special items. We believe that disclosing the impact of these items as noted above. Industry analysts and investors consistently measure our performance without these items for better comparability between periods and among other airlines.

•Although we disclose our unit revenue, we do not, nor are we able to, evaluate unit revenue excluding the impact that changes in fuel costs have had on ticket prices. Fuel expense represents a large percentage of our total operating expenses. Fluctuations in fuel prices often drive changes in unit revenue in the mid-to-long term. Although we believe it is useful to evaluate non-fuel unit costs for the reasons noted above, we would caution readers of these financial statements not to place undue reliance on unit costs excluding fuel as a measure or predictor of future profitability because of the significant impact of fuel costs on our business.

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GLOSSARY OF TERMS

Adjusted net debt - long-term debt, including current portion, plus capitalized operating leases, less cash and marketable securities

Adjusted net debt to EBITDAR - represents net adjusted debt divided by EBITDAR (trailing twelve months earnings before interest, taxes, depreciation, amortization, special items and rent)

Aircraft Utilization - block hours per day; this represents the average number of hours per day our aircraft are in transit

Aircraft Stage Length - represents the average miles flown per aircraft departure

ASMs - available seat miles, or “capacity”; represents total seats available across the fleet multiplied by the number of miles flown

CASM - operating costs per ASM, or "unit cost"; represents all operating expenses including fuel and special items

CASMex - operating costs excluding fuel and special items per ASM; this metric is used to help track progress toward reduction of non-fuel operating costs since fuel is largely out of our control

Debt-to-capitalization ratio - represents adjusted debt (long-term debt plus capitalized operating lease liabilities) divided by total equity plus adjusted debt

Diluted Earnings per Share - represents earnings per share (EPS) using fully diluted shares outstanding

Diluted Shares - represents the total number of shares that would be outstanding if all possible sources of conversion, such as stock options, were exercised

Economic Fuel - best estimate of the cash cost of fuel, net of the impact of our fuel-hedging program

Load Factor - RPMs as a percentage of ASMs; represents the number of available seats that were filled with paying passengers

Mainline - represents flying Boeing 737, Airbus 320 and Airbus 321neo family jets and all associated revenue and costs

Productivity - number of revenue passengers per full-time equivalent employee

RASM - operating revenue per ASMs, or "unit revenue"; operating revenue includes all passenger revenue, freight & mail, Mileage Plan and other ancillary revenue; represents the average total revenue for flying one seat one mile

Regional - represents capacity purchased by Alaska from Horizon and SkyWest. In this segment, Regional records actual on-board passenger revenue, less costs such as fuel, distribution costs, and payments made to Horizon and SkyWest under the respective capacity purchased arrangement (CPAs). Additionally, Regional includes an allocation of corporate overhead such as IT, finance, other administrative costs incurred by Alaska and on behalf of Horizon.

RPMs - revenue passenger miles, or "traffic"; represents the number of seats that were filled with paying passengers; one passenger traveling one mile is one RPM

Yield - passenger revenue per RPM; represents the average revenue for flying one passenger one mile

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