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LEASES | 12 Months Ended
--- | ---
Dec. 31, 2024
Leases [Abstract] |
LEASES | LEASES The Company leases property and equipment in the normal course of business under operating and finance leases. Leased assets are categorized into four asset classes: aircraft, capacity purchase arrangements for aircraft operated by third-party carriers (CPA aircraft), airport and terminal facilities, and corporate real estate and other equipment. Operating rent expense is recognized on a straight-line basis over the term of the lease. As most leases do not provide a readily determinable implicit interest rate, the Company typically utilizes the incremental borrowing rate (IBR) based on information available at the commencement date of the lease to determine the present value of lease payments. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rate. Aircraft and engines At December 31, 2024, Alaska had leases for 10 B737-800 aircraft, 2 B737-800 freighter aircraft, and 14 B737-9 aircraft. Hawaiian had leases for 12 A330-200 aircraft and 4 A321-200neo aircraft. Of these leases, 2 are accounted for as finance leases, while the others are accounted for as operating leases. Alaska and Hawaiian lease 4 aircraft engines that are accounted for as operating leases. Hawaiian also leases 6 A330-300 freighter aircraft under the ATSA, but because Hawaiian does not have the right to control the use of the aircraft, the aircraft are not accounted for as leases in the consolidated financial statements. Remaining lease terms for Alaska's and Hawaiian's aircraft and engines range from 1 to 11 years. Some leases have options to extend, subject to negotiation at the end of the term. As extension is not certain, and rates are highly likely to be renegotiated, the extended term is only capitalized when it is reasonably determinable. While aircraft rent is primarily fixed, certain leases contain rental adjustments throughout the lease term which would be recognized as variable expense as incurred. Capacity purchase agreements with aircraft (CPA aircraft) At December 31, 2024, Alaska had a CPA with SkyWest covering 42 E175 aircraft. Under this agreement, Alaska pays the carrier an amount which is based on a determination of their cost of operating those flights and other factors intended to approximate market rates for those services. Alaska's CPA with Horizon, a wholly owned subsidiary, does not involve any leased aircraft. The CPA aircraft have remaining lease terms ranging from 5 years to 10 years. Financial arrangements of the CPA include a fixed component, representing the costs to operate each aircraft which is capitalized. The CPA also includes variable rent based on actual levels of flying, which is expensed as incurred. Airport and terminal facilities The Company leases ticket counters, gates, cargo and baggage space, lounge space, office space and other support areas at numerous airports. For this asset class, the Company has elected to combine lease and non-lease components. The majority of airport and terminal facility leases are not capitalized because they do not meet the definition of controlled assets under the standard, or because the lease payments are entirely variable. For airports where leased assets are identified, and where the contract includes fixed lease payments, operating lease assets and lease liabilities have been recorded. The Company is also commonly responsible for maintenance, insurance and other facility-related expenses and services under these agreements. These costs are recognized as variable expense in the period incurred. The Company leases twelve airport slots at LaGuardia Airport, eight airport slots at Reagan National Airport, and one airport gate at Dallas Love Field to third parties. Corporate real estate and other leases Leased corporate real estate is primarily for office space in hub cities, training centers, land leases, and reservation centers. For this asset class, the Company has elected to combine lease and non-lease components under the standard. Other leased assets are comprised of other ancillary contracts and items including leased data center space and ground equipment. Lease position Lease-related assets and liabilities recorded on the consolidated balance sheet was as follows:
(in millions) | Balance Sheet Presentation | 2024 |  | 2023
Assets |  |  |  |
Operating lease assets | Operating lease assets | $ | 1,296 |  |  | $ | 1,195 |
Finance lease assets | Property and equipment, net | 53 |  |  | — |
Total lease assets |  | $ | 1,349 |  |  | $ | 1,195 |
Liabilities |  |  |  |
Current |  |  |  |
Operating | Current portion of operating lease liabilities | $ | 207 |  |  | $ | 158 |
Finance | Current portion of finance lease liabilities | 8 |  |  | 64 |
Noncurrent |  |  |  |
Operating | Operating lease liabilities, net of current portion | 1,198 |  |  | 1,125 |
Finance | Finance lease liabilities, net of current portion | 47 |  |  | — |
Total lease liabilities |  | $ | 1,460 |  |  | $ | 1,347 |
Weighted-average remaining lease term (in years) |  |  |  |
Operating leases |  | 8.9 |  | 9.6
Finance leases |  | 6.5 |  | 0
Weighted-average discount rate |  |  |  |
Operating leases |  | 6.4 | % |  | 6.2 | %
Finance leases |  | 6.3 | % |  | — | %
Components of lease expense The components of lease expense for operating and finance leases were as follows:
(in millions) |  | 2024 |  | 2023 |  | 2022
Expense |  |  |  |  |  |
Operating lease cost(a) |  | $ | 217 |  |  | $ | 218 |  |  | $ | 290 |
Amortization of finance lease assets |  | 2 |  |  | — |  |  | — |
Interest on finance lease liabilities |  | 1 |  |  | — |  |  | — |
Variable and short-term lease costs(a) |  | 557 |  |  | 472 |  |  | 418 |
Total lease expense |  | 777 |  |  | 690 |  |  | 708 |
Revenue |  |  |  |  |  |
Lease revenue(b) |  | (15) |  |  | (15) |  |  | (15) |
Net lease impact |  | $ | 762 |  |  | $ | 675 |  |  | $ | 693 |
(a) Presented within Aircraft rent and Landing fees and other rentals in the consolidated statements of operations (b) Presented within Cargo and other revenue in the consolidated statements of operations Supplemental cash flow information The cash paid for leases was as follows:
(in millions) | 2024 |  | 2023 |  | 2022
Operating cash flows for operating leases | 241 |  |  | 348 |  |  | 354 |
Financing cash flows for finance leases(a) | 31 |  |  | 211 |  |  | — |
(a) Primarily consists of payments made for A321neo finance leases, with associated expenses recognized within Special items - operating in the consolidated statements of operations. Maturities of lease liabilities Future minimum lease payments under non-cancellable leases as of December 31, 2024:
| Operating Leases |  | Finance Leases
(in millions) | Aircraft(a) |  | Other |  | Aircraft(a) |  | Other
2025 | $ | 258 |  |  | $ | 28 |  |  | $ | 11 |  |  | $ | — |
2026 | 248 |  |  | 26 |  |  | 11 |  |  | — |
2027 | 219 |  |  | 20 |  |  | 11 |  |  | — |
2028 | 199 |  |  | 18 |  |  | 11 |  |  | — |
2029 | 183 |  |  | 15 |  |  | 11 |  |  | — |
Thereafter | 449 |  |  | 215 |  |  | 6 |  |  | 7 |
Total Lease Payments(a) | 1,556 |  |  | 322 |  |  | 61 |  |  | 7 |
Less: Imputed interest | (301) |  |  | (154) |  |  | (9) |  |  | (4) |
Total | $ | 1,255 |  |  | $ | 168 |  |  | $ | 52 |  |  | $ | 3 |
(a) Future minimum lease payments in the table reflect incentive credits related to leased B737-9 aircraft. As a result, the operating lease liabilities presented on the consolidated balance sheet will not agree to this table. As of December 31, 2024, there are no material leases that have been entered into but have yet to commence.
LEASES | LEASES The Company leases property and equipment in the normal course of business under operating and finance leases. Leased assets are categorized into four asset classes: aircraft, capacity purchase arrangements for aircraft operated by third-party carriers (CPA aircraft), airport and terminal facilities, and corporate real estate and other equipment. Operating rent expense is recognized on a straight-line basis over the term of the lease. As most leases do not provide a readily determinable implicit interest rate, the Company typically utilizes the incremental borrowing rate (IBR) based on information available at the commencement date of the lease to determine the present value of lease payments. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rate. Aircraft and engines At December 31, 2024, Alaska had leases for 10 B737-800 aircraft, 2 B737-800 freighter aircraft, and 14 B737-9 aircraft. Hawaiian had leases for 12 A330-200 aircraft and 4 A321-200neo aircraft. Of these leases, 2 are accounted for as finance leases, while the others are accounted for as operating leases. Alaska and Hawaiian lease 4 aircraft engines that are accounted for as operating leases. Hawaiian also leases 6 A330-300 freighter aircraft under the ATSA, but because Hawaiian does not have the right to control the use of the aircraft, the aircraft are not accounted for as leases in the consolidated financial statements. Remaining lease terms for Alaska's and Hawaiian's aircraft and engines range from 1 to 11 years. Some leases have options to extend, subject to negotiation at the end of the term. As extension is not certain, and rates are highly likely to be renegotiated, the extended term is only capitalized when it is reasonably determinable. While aircraft rent is primarily fixed, certain leases contain rental adjustments throughout the lease term which would be recognized as variable expense as incurred. Capacity purchase agreements with aircraft (CPA aircraft) At December 31, 2024, Alaska had a CPA with SkyWest covering 42 E175 aircraft. Under this agreement, Alaska pays the carrier an amount which is based on a determination of their cost of operating those flights and other factors intended to approximate market rates for those services. Alaska's CPA with Horizon, a wholly owned subsidiary, does not involve any leased aircraft. The CPA aircraft have remaining lease terms ranging from 5 years to 10 years. Financial arrangements of the CPA include a fixed component, representing the costs to operate each aircraft which is capitalized. The CPA also includes variable rent based on actual levels of flying, which is expensed as incurred. Airport and terminal facilities The Company leases ticket counters, gates, cargo and baggage space, lounge space, office space and other support areas at numerous airports. For this asset class, the Company has elected to combine lease and non-lease components. The majority of airport and terminal facility leases are not capitalized because they do not meet the definition of controlled assets under the standard, or because the lease payments are entirely variable. For airports where leased assets are identified, and where the contract includes fixed lease payments, operating lease assets and lease liabilities have been recorded. The Company is also commonly responsible for maintenance, insurance and other facility-related expenses and services under these agreements. These costs are recognized as variable expense in the period incurred. The Company leases twelve airport slots at LaGuardia Airport, eight airport slots at Reagan National Airport, and one airport gate at Dallas Love Field to third parties. Corporate real estate and other leases Leased corporate real estate is primarily for office space in hub cities, training centers, land leases, and reservation centers. For this asset class, the Company has elected to combine lease and non-lease components under the standard. Other leased assets are comprised of other ancillary contracts and items including leased data center space and ground equipment. Lease position Lease-related assets and liabilities recorded on the consolidated balance sheet was as follows:
(in millions) | Balance Sheet Presentation | 2024 |  | 2023
Assets |  |  |  |
Operating lease assets | Operating lease assets | $ | 1,296 |  |  | $ | 1,195 |
Finance lease assets | Property and equipment, net | 53 |  |  | — |
Total lease assets |  | $ | 1,349 |  |  | $ | 1,195 |
Liabilities |  |  |  |
Current |  |  |  |
Operating | Current portion of operating lease liabilities | $ | 207 |  |  | $ | 158 |
Finance | Current portion of finance lease liabilities | 8 |  |  | 64 |
Noncurrent |  |  |  |
Operating | Operating lease liabilities, net of current portion | 1,198 |  |  | 1,125 |
Finance | Finance lease liabilities, net of current portion | 47 |  |  | — |
Total lease liabilities |  | $ | 1,460 |  |  | $ | 1,347 |
Weighted-average remaining lease term (in years) |  |  |  |
Operating leases |  | 8.9 |  | 9.6
Finance leases |  | 6.5 |  | 0
Weighted-average discount rate |  |  |  |
Operating leases |  | 6.4 | % |  | 6.2 | %
Finance leases |  | 6.3 | % |  | — | %
Components of lease expense The components of lease expense for operating and finance leases were as follows:
(in millions) |  | 2024 |  | 2023 |  | 2022
Expense |  |  |  |  |  |
Operating lease cost(a) |  | $ | 217 |  |  | $ | 218 |  |  | $ | 290 |
Amortization of finance lease assets |  | 2 |  |  | — |  |  | — |
Interest on finance lease liabilities |  | 1 |  |  | — |  |  | — |
Variable and short-term lease costs(a) |  | 557 |  |  | 472 |  |  | 418 |
Total lease expense |  | 777 |  |  | 690 |  |  | 708 |
Revenue |  |  |  |  |  |
Lease revenue(b) |  | (15) |  |  | (15) |  |  | (15) |
Net lease impact |  | $ | 762 |  |  | $ | 675 |  |  | $ | 693 |
(a) Presented within Aircraft rent and Landing fees and other rentals in the consolidated statements of operations (b) Presented within Cargo and other revenue in the consolidated statements of operations Supplemental cash flow information The cash paid for leases was as follows:
(in millions) | 2024 |  | 2023 |  | 2022
Operating cash flows for operating leases | 241 |  |  | 348 |  |  | 354 |
Financing cash flows for finance leases(a) | 31 |  |  | 211 |  |  | — |
(a) Primarily consists of payments made for A321neo finance leases, with associated expenses recognized within Special items - operating in the consolidated statements of operations. Maturities of lease liabilities Future minimum lease payments under non-cancellable leases as of December 31, 2024:
| Operating Leases |  | Finance Leases
(in millions) | Aircraft(a) |  | Other |  | Aircraft(a) |  | Other
2025 | $ | 258 |  |  | $ | 28 |  |  | $ | 11 |  |  | $ | — |
2026 | 248 |  |  | 26 |  |  | 11 |  |  | — |
2027 | 219 |  |  | 20 |  |  | 11 |  |  | — |
2028 | 199 |  |  | 18 |  |  | 11 |  |  | — |
2029 | 183 |  |  | 15 |  |  | 11 |  |  | — |
Thereafter | 449 |  |  | 215 |  |  | 6 |  |  | 7 |
Total Lease Payments(a) | 1,556 |  |  | 322 |  |  | 61 |  |  | 7 |
Less: Imputed interest | (301) |  |  | (154) |  |  | (9) |  |  | (4) |
Total | $ | 1,255 |  |  | $ | 168 |  |  | $ | 52 |  |  | $ | 3 |
(a) Future minimum lease payments in the table reflect incentive credits related to leased B737-9 aircraft. As a result, the operating lease liabilities presented on the consolidated balance sheet will not agree to this table. As of December 31, 2024, there are no material leases that have been entered into but have yet to commence.

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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