Alaska Air : Report of unscheduled material events or corporate event

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

September 17, 2018

(Date of earliest event reported)

ALASKA AIR GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

1-8957		91-1292054
(Commission File Number)		(IRS Employer Identification No.)

19300 International Boulevard, Seattle, Washington		98188
(Address of Principal Executive Offices)		(Zip Code)

[phone]

(Registrant's Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

oEmerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

ITEM 7.01.Regulation FD Disclosure

On September 17, 2018, Alaska Air Group, Inc. (Air Group) provided an investor update related to its financial and operational outlook. The investor update is furnished herein as Exhibit 99.1.

Also on September 17, 2018, Air Group issued a press release announcing its August 2018 operational results. The press release is furnished herein as Exhibit 99.2.

In accordance with General Instruction B.2 of Form 8-K, the information under this item Exhibit 99.1 and Exhibit 99.2 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. This report will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.

ITEM 9.01 Financial Statements and Other Exhibits

Exhibit99.1		Investor Update dated September 17, 2018
Exhibit99.2		August 2018 Traffic Press Release dated September 17, 2018

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ALASKA AIR GROUP, INC.

Registrant

Date: September 17, 2018

/s/ Brandon S. Pedersen

Brandon S. Pedersen

Executive Vice President/Finance and Chief Financial Officer

Exhibit 99.1

Investor Update - September 17, 2018

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 update includes forecasted operational and financial information for our consolidated operations. Our disclosure of operating cost per available seat mile, excluding fuel and other items, provides us (and may provide investors) with the ability to measure and monitor our performance without these items. The most directly comparable GAAP measure is total operating expenses per available seat mile. However, due to the large fluctuations in fuel prices, we are unable to predict total operating expenses for any future period with any degree of certainty. In addition, we believe the disclosure of fuel expense on an economic basis is useful to investors in evaluating our ongoing operational performance. Please see the cautionary statement under "Forward-Looking Information."

We are providing information about estimated fuel prices and our hedging program. Management believes it is useful to compare results between periods on an "economic basis." Economic fuel expense is defined as the raw or "into-plane" fuel cost less any cash we receive from hedge counterparties for hedges that settle during the period, offset by the recognition of premiums originally paid for those hedges that settle during the period. Economic fuel expense more closely approximates the net cash outflow associated with purchasing fuel for our operation.

Forward-Looking Information

This update contains forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, 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 any forward-looking statements. 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, 2017, as well as in other documents filed by the Company with the SEC after the date thereof. Some of these risks include general economic conditions, increases in operating costs including fuel, competition, labor costs and relations, our indebtedness, inability to meet cost reduction goals, seasonal fluctuations in our financial results, an aircraft accident, changes in laws and regulations, and risks inherent in the achievement of anticipated synergies and the timing thereof in connection with the acquisition of Virgin America. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. 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 after the date of this report to conform them to actual results. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse.

AIR GROUP - CONSOLIDATED

Operating and Financial Statistics

	August 2018		August 2017		% Change
Revenue passengers (in thousands)	4,195		4,024		4.2%
Traffic (RPMs in millions)	4,964		4,784		3.8%
Capacity (ASMs in millions)	5,791		5,552		4.3%
Load factor	85.7%		86.2%		(0.5) pts
Economic fuel cost per gallon	$2.33		$1.80		29.4%

Forecast Information

	Forecast Full Year 2018		Full Year 2017 As Adjusted (a)		% Change		Prior Guidance August 14, 2018
Capacity (ASMs in millions)	65,510 - 65,660		62,072		~ 5.7%		65,780 - 65,930
Cost per ASM excluding fuel and special items (cents)(a)	8.50¢ - 8.53¢		8.25¢		~ 3.2%		8.50¢ - 8.53¢
Fuel gallons (000,000)	840		797		~ 5.4%		843

			Forecast Q3 2018		Q3 2017 As Adjusted (a)		% Change		Prior Guidance August 14, 2018
Capacity (ASMs in millions)			16,920 - 16,970		16,164		~ 4.8%		17,095 - 17,145
Revenue per ASM (cents)(a)(c)			12.76¢ - 13.06¢		13.06¢		~ (2.0)% - 0.0%		12.66¢ - 13.06¢
Cost per ASM excluding fuel and special items (cents)(a)			8.30¢ - 8.35¢		8.00¢		~ 4.1%		8.36¢ - 8.41¢
Fuel gallons (000,000)			218		207		~ 5.3%		218
Economic fuel cost per gallon(b)			$2.32		$1.80		~ 28.9%		$2.30
(a)		RASM and CASMex in the preceding forecast information reflect the impacts of the updated accounting standards, effective for the Company January 1, 2018. Information not impacted by the updated accounting standards (Fuel Gallons and Economic fuel cost per gallon) has not been restated. Additionally, certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year.
(b)		Our economic fuel cost per gallon estimate for the third quarter includes the following per-gallon assumptions: crude oil cost - $1.64 ($69 per barrel); refining margin - 52 cents; benefit of settled hedges - 5 cents; with the remaining difference due to taxes and other into-plane costs.
(c)	We have raised the low end of our guidance range primarily due to an improved close-in pricing environment during the quarter.

We do not anticipate any material financial impact from the theft and loss of one of Horizon Air's Q400 aircraft on August 10th, as we expect insurance recoveries to offset the related costs.

Nonoperating Expense

We expect that our consolidated nonoperating expense will be approximately $11 million in the third quarter of 2018.

Cash and Share Count

(in millions)	August 31, 2018				June 30, 2018
Cash and marketable securities	$	1,696			$	1,568
Common shares outstanding	123.398				123.204

Share Repurchase

Through August 31, 2018, Air Group had repurchased a total of 527,431 shares of its common stock for approximately $34 million.

Exhibit 99.2

September 17, 2018

Contact:		Investor contact:
Media Relations		Matt Grady
[phone]		Director, Investor Relations
[e-mail]		[phone]

Alaska Air Group reports August 2018 operational results

SEATTLE - Alaska Air Group, Inc. (NYSE: ALK) today reported August and year-to-date operational results on a consolidated basis, for its mainline operations operated by subsidiary Alaska Airlines, Inc. (Alaska) and for its regional flying operated by subsidiary Horizon Air Industries, Inc. (Horizon) and third-party regional carriers SkyWest Airlines and Peninsula Airlines.

On January 11, 2018, Alaska and Virgin America consolidated their operations onto a Single Operating Certificate (SOC). Results for Alaska and Virgin America have been combined into a single mainline operation.

AIR GROUP

On a combined basis for all operations, Air Group reported a 3.8 percent increase in traffic on a 4.3 percent increase in capacity compared to August 2017. Load factor decreased 0.5 points to 85.7 percent.

The following table shows the operational results for August and year-to-date compared to the prior-year periods:

	August						Year-to-Date
	2018		2017		Change		2018		2017		Change
Revenue passengers (000)	4,195		4,024		4.2%		31,107		29,496		5.5%
Revenue passenger miles RPM (000,000) "traffic"	4,964		4,784		3.8%		37,086		34,910		6.2%
Available seat miles ASM (000,000) "capacity"	5,791		5,552		4.3%		44,072		41,148		7.1%
Passenger load factor	85.7%		86.2%		(0.5) pts		84.1%		84.8%		(0.7) pts

MAINLINE

Mainline reported a 2.6 percent increase in traffic on a 2.9 percent increase in capacity compared to August 2017. Load factor decreased 0.2 points to 86.2 percent. Mainline also reported 75 percent of its flights arrived on time in August 2018, compared to 78.5 percent reported in August 2017.

Mainline operational results reflect both Alaska and Virgin America combined. The following table shows mainline operational results for August and year-to-date compared to the prior-year periods:

	August						Year-to-Date
	2018		2017		Change		2018		2017		Change
Revenue passengers (000)	3,264		3,174		2.8%		24,352		23,094		5.4%
RPMs (000,000)	4,523		4,408		2.6%		33,888		32,245		5.1%
ASMs (000,000)	5,247		5,101		2.9%		40,054		37,831		5.9%
Passenger load factor	86.2%		86.4%		(0.2) pts		84.6%		85.2%		(0.6) pts
On-time arrivals as reported to U.S. DOT	75.0%		78.5%		(3.5) pts		82.2%		77.3%		4.9 pts

REGIONAL

Regional traffic increased 17.3 percent on a 20.6 percent increase in capacity compared to August 2017. Load factor decreased 2.2 points to 81.2 percent. Alaska's regional partners also reported 74.2 percent of its flights arrived on time in August 2018, compared to 76.3 percent in August 2017.

The following table shows regional operational results for August and year-to-date compared to the prior-year periods:

	August						Year-to-Date
	2018		2017		Change		2018		2017		Change
Revenue passengers (000)	931		850		9.5%		6,755		6,402		5.5%
RPMs (000,000)	441		376		17.3%		3,198		2,665		20.0%
ASMs (000,000)	544		451		20.6%		4,018		3,317		21.1%
Passenger load factor	81.2%		83.4%		(2.2) pts		79.6%		80.3%		(0.7) pts
On-time arrivals as reported to U.S. DOT	74.2%		76.3%		(2.1) pts		84.6%		78.9%		5.7 pts

Alaska Airlines and its regional partners fly 44 million guests a year to more than 115 destinations with an average of 1,200 daily flights across the United States and to Mexico, Canada and Costa Rica. With Alaska and Alaska Global Partners, guests can earn and redeem miles on flights to more than 900 destinations worldwide. Alaska Airlines ranked "Highest in Customer Satisfaction Among Traditional Carriers in North America" in the J.D. Power North America Airline Satisfaction Study for 11 consecutive years from 2008 to 2018. Learn about Alaska's award-winning service at newsroom.alaskaair.com and blog.alaskaair.com. Alaska Airlines and Horizon Air are subsidiaries of Alaska Air Group (NYSE: ALK).

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