Alaska Airlines and Horizon Air 2014 Annual Report Download - page 129
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We expect food and beverage expenses to outpace passenger growth in 2015, as we invest more in our
onboard product.
Other Operating Expenses
Other operating expenses increased $30 million, or 11%, compared to 2013. The increase is primarily
driven by IT project costs, higher professional fees, and flight crew hotel costs.
We expect other operating expenses to be higher in 2015 due to additional training costs, and other
personnel expenses.
Special Items
In the fourth quarter of 2014, we recorded special items for $30 million. This is primarily due to a $20
million non-cash curtailment gain related to certain post-retirement benefits that were reduced in 2014.
The remaining gain is related to a one-time cash settlement related to a legal matter.
Consolidated Nonoperating Income (Expense)
During 2014, we recorded nonoperating income of $13 million, compared to an expense of $22 million
in 2013. The $35 million favorable change is due to gains recorded in the current year related to the
sale of certain equity securities and reduced interest expense due to lower average debt levels.
Additionally, in the prior year, we incurred costs of $12 million to overhaul and repair three aircraft that
were previously subleased to another carrier.
Operating Costs per Available Seat Mile
We are presenting our line-item expenses below both in absolute dollars and on an ASM basis to
highlight areas in which costs have increased or decreased either more or less than capacity.
Twelve Months Ended December 31,
2014 2013 2014 2013 % Change
(in millions, except CASM) Amount Amount CASM CASM CASM
Wages and benefits $ 1,136 $ 1,086 3.16¢ 3.23¢ (2.2)%
Variable incentive pay 116 105 0.32 0.31 3.2%
Aircraft maintenance 229 247 0.63 0.73 (13.7)%
Aircraft rent 110 119 0.30 0.35 (14.3)%
Landing fees and other rentals 279 262 0.77 0.78 (1.3)%
Contracted services 254 221 0.70 0.66 6.1%
Selling expenses 199 179 0.55 0.53 3.8%
Depreciation and amortization 294 270 0.81 0.80 1.3%
Food and beverage service 93 84 0.26 0.25 4.0%
Other 308 278 0.86 0.83 3.6%
Non-fuel Expenses(a) $ 3,018 $ 2,851 8.36¢ 8.47¢ (1.3)%
(a) Excludes special items recorded in 2014.
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ŠForm 10-K