Shane Tackett
Executive Vice President Finance and Chief Financial Officer at Alaska Air Group
Thanks, Andrew, and good morning, everyone. As you heard from Ben, our full year 7.6% adjusted pre-tax margin led the industry, and is a great result for us given how the year started and the challenges we experienced rescaling our company in the face of incredible demand for travel.
We are especially proud that all of our people will receive significant performance-based bonuses in February, given their achievements this year. We are looking forward to further building towards our long-term financial goals in 2023 by remaining focused on running a reliable operation, driving unit cost and productivity improvements and delivering on our commercial road-map.
Turning to Q4 results and an update on our balance sheet, we ended the year with debt to cap of 49% within our target range of 40% to 50% and still among the strongest in the industry. Debt payments during the fourth quarter were approximately $50 million, for full year 2023, debt repayments are modest, totaling approximately $280 million with $100 million in the first quarter.
Cash flow from operations totaled $1.4 billion for full year 2022, in total liquidity inclusive of on-hand cash and undrawn lines of credit, ended the year at $2.8 billion. A great result given that we continue to pay cash for our capex in 2022, which was one of the highest capex years in our history. In addition to top of industry margins and our balance sheet strength, our trailing 12 months return on invested capital reached 9% in 2022, above our cost of capital and approaching our long-term target range. Our balance sheet strength, our cash position and our margin and return on capital results allowed us to take two other important steps towards the end of 2022.
First, we announced in December, our plan to restart share repurchases in the first quarter of 2023, initially focused on offsetting dilution. And second, we secured and expanded order book with Boeing, now having firm in Option Aircraft positions through the rest of this decade. Given overall aircraft and engine demand in ongoing supply-chain challenges, having access to positions for the next seven plus years will, we believe prove to be beneficial strategically as it provides us maximum fleet flexibility on great terms.
Turning to costs. In Q4 CASMex increased 24% versus 2019, approximately 1 point above our guide, driven entirely by lost capacity and incremental costs as a result of the severe winter weather in November and December. Absent this impact, our Q4 CASMex would have slightly beat our guide. Our full year CASMex and capacity ended the year within our guided ranges end up 20% and down 9% respectively versus 2019.
And as a reminder, we do continue to include the cost of our performance-based bonus and incentive pay programs in our unit costs. For the full year, this represented approximately 2 points of unit cost pressure versus 2019 and was materially more impactful on our unit costs than at other airlines. Our beliefs about what will drive long-term success and value in the airline industry remain largely intact and consistent with what we believed pre-pandemic.
We firmly believe a strong balance sheet and low relative costs will be the ultimate drivers of business stability and success. We remain focused on and confident in both of these areas. Our balance sheet is strong and based on 2023 guides, Alaska is positioned to achieve the best unit cost result within the industry this year, helping us maintain or improve our pre-pandemic relative cost position.
Looking ahead to 2023, our current schedule has us returning to pre-pandemic levels of capacity during the first half of the year. Maintaining operational safety and reliability remains our top priority, and we will have continued modest cost headwinds as we complete the transition training related to our fleet transitions.
However, we are planning for solid improvements to our overall fleet utilization and levels of productivity during 2023, and are focused on reducing unit costs on a year-over-year basis. For the first quarter, we expect capacity to be up 11% to 14% with CASMex down 0% to 2% year-over-year. And for the full year, we continue to expect capacity to be up 8% to 10% with CASMex down 1% to 3% on a year-over-year basis.
Touching on fuel. Oil prices have moderated from 2022 levels but remain elevated. Refining spreads also remain volatile. We currently expect fuel price per gallon to be $3.15 to $3.35 for the first quarter and $3.10 to $3.30 for the full year. Our significant 2022 benefit from hedging, which was approximately $170 million will likely turn to a net cost in 2023.
As a reminder, our hedging program uses 20% out of the money call options only, and our strike prices are above what we anticipate oil prices will be during the year. Taken all together, as Ben mentioned, we expect margins to improve this year with our full year adjusted pre-tax margin guide of 9% to 12%. This incorporates the full structural impact of our ratified labor contracts, contributing approximately 3 points to our full year CASMex. And while we are optimistic about demand for travel this year, we are also cognizant of the uncertain economic backdrop we are operating in, and we'll adjust capacity accordingly this year if we need to. One of our primary strengths over the years has been to execute our plans.
In 2022, we certainly experienced volatility and some setbacks. But overall, we executed on the major components of our recovery plan and have a strong foundation to work from in 2023. We have most of our labor deals completed. We are through the majority of our fleet transition. We were one of the most reliable airlines in the industry. We've got a solid balance sheet and a great aircraft order book. And we are now focused on improving utilization, productivity and delivering on more of our commercial road map as we attempt to lead the industry again in financial performance in 2023.
And with that, let's go to your questions.
