ALASKA AIR GROUP, INC.ALK

ALASKA AIR GROUP, INC. Revenue Disclosure

10-KFiled Feb 12, 20263 min read
REVENUE
Ticket revenue is recorded as Passenger revenue, and represents the primary source of the Company's revenue. Also included in Passenger revenue is passenger ancillary revenue such as bag fees, on-board food and beverage, and certain revenue from the Atmos Rewards program. Loyalty program other revenue includes brand and marketing revenue from the Atmos Rewards co-branded credit cards and other partners, and certain interline loyalty program revenue, net of commissions. Cargo and other revenue comprises freight and mail revenue, including services provided to Amazon under the ATSA, and to a lesser extent, other ancillary revenue products such as lounge membership and certain commissions.

The level of detail within the Company’s consolidated statements of operations and in this note depict the nature, amount, timing, and uncertainty of revenue and how cash flows are affected by economic and other factors.
Certain prior period amounts in this note have been revised by an immaterial amount to reflect the appropriate classification of receivables.

Passenger Revenue

Passenger revenue recognized in the consolidated statements of operations:
Twelve Months Ended December 31,
(in millions)
202520242023
Passenger ticket revenue, net of taxes and fees$10,762 $8,926 $8,016 
Passenger ancillary revenue646 548 476 
Loyalty program passenger revenue
1,427 1,180 1,034 
Total Passenger revenue$12,835 $10,654 $9,526 

Domestic passenger revenue includes operations in the U.S., including Neighbor Island routes, and Canada. Latin America passenger revenue includes operations in Mexico, Costa Rica, Guatemala, Belize, and Bahamas. Pacific passenger revenue includes operations in the South Pacific, Australia, New Zealand, and Asia. The table below presents the Company's passenger revenue by principal geographic region (as defined by the U.S. Department of Transportation):
Twelve Months Ended December 31,
(in millions)
202520242023
Domestic
$11,631 $9,831 $8,938 
Latin America
674 677 588 
Pacific
530 146 — 
Total Passenger revenue$12,835 $10,654 $9,526 

Loyalty Program Revenue

Loyalty Program revenue included in the consolidated statements of operations:
Twelve Months Ended December 31,
(in millions)
202520242023
Loyalty program passenger revenue
$1,427 $1,180 $1,034 
Loyalty program other revenue
855 733 648 
Total Loyalty program revenue
$2,282 $1,913 $1,682 

Cargo and Other Revenue

Cargo and other revenue included in the consolidated statements of operations:
Twelve Months Ended December 31,
(in millions)
202520242023
Cargo revenue$257 $169 $128 
Other revenue292 179 124 
Total Cargo and other revenue$549 $348 $252 

Air Traffic Liability and Deferred Revenue

Passenger ticket and ancillary services liabilities

The Company recognized Passenger revenue of $1.2 billion in 2025 that was in air traffic liability at December 31, 2024 and $766 million in 2024 that was in air traffic liability at December 31, 2023. The amount recognized in 2024 from the prior year-end air traffic liability balance does not include Hawaiian passenger revenue as the $513 million in air traffic liability assumed from Hawaiian on September 18, 2024 was not included within the Company's balance as of December 31, 2023.
Loyalty program assets and liabilities

The Company records a receivable for amounts due from the affinity card partners and from other partners as points are sold until the payments are collected. The Company had $154 million and $176 million of such receivables as of December 31, 2025 and December 31, 2024.

The table below presents a roll forward of the total loyalty program liability:
Twelve Months Ended December 31,
(in millions)
20252024
Total Deferred Revenue balance at January 1$3,256 $2,603 
Deferred revenue acquired from Hawaiian as of September 18, 2024— 537 
Loyalty points and companion certificate redemption - Passenger revenue(1,347)(1,124)
Loyalty points redeemed on partner airlines - Loyalty program other revenue(255)(160)
Increase in liability for loyalty points issued1,779 1,400 
Total Deferred Revenue balance at December 31$3,433 $3,256 

About Revenue Disclosures

Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.

Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.

Other Available Disclosures

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