ALK - Earnings call transcript Q3 2020

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Operator

Good morning. My name is Sia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Alaska Air Group Third Quarter Earnings Release Conference Call. Today's call is being recorded and will be accessible for future playback at alaskaair.com. All lines have been placed on mute to prevent any background noise. there a remarks, analyst. session speakers’ the will question-and-answer be for After Instructions] you. [Operator Thank time, to Emily At over would I this like Air Director, to turn Group's Investor Relations, Halverson. Alaska call the Please go ahead.

Emily Halverson

third The Q&A and from on of morning, our to and and management members third today's global Alaska for for call. answer call. Thanks, Sia. during the and quarter hear Shane. thank earnings of significantly updates health Good business net the $XXX crises our portion Air XXXX you'll your outlook. to of continue also loss a quarter GAAP line Ben economic the joining team you questions us million. are our Brad, morning, Group call, other On Several impact reported This

and $XXX Group $XXX related impairment quarter of this parked, adjusted special reported to Special $XXX being million aircraft separations, Act wage mark-to-market include charges the and of of offset. were Excluding as Air a permanently employee program benefit an million million. $XXX with adjustments, a loss net result triggered certain items owned that CARES asset million associated items

daily cash million. the quarter burn was approximately $X for average Our

opening And most turn we've measures comparable adjusted future call non-GAAP will earnings non-GAAP now risk a actual GAAP our such as costs, filings. release. the certain for today's performance, reminder, statements found to fuel. our Brad affect the be today's as financial from in to that As unit directly earnings a I'll call, refer which SEC our in his over provided On materially measures, include could results. forward-looking remarks. differ comments excluding factors today may And reconciliation between we'll and on regarding our Information usual, business and can

Brad Tilden

on our our These workforce; cost overhead areas government always halt. reduction I'd guests; and bookings do, direction months fleet, travel they a eight moments ground virtually Emily. Alaska of and including we of the rapidly. plans saw were and management; efforts to this and of coordinated executing got to the people team achieved Alaska, meet identified to management included to the and challenge. demonstrate well throughout all streams the safety Act. that by change Horizon been our project initial under host of like We for the and activities morning, It's work the business people today. built airlines these everyone. streams with And people by progress commercial off our points data work and of as whole as fall company. streams, sharply. The each with areas sizing crisis, CARES rose of the Thanks, have were the you some of Stelling, to communications, individual work needed the employee working when covering since remarkable share Sandy plans. as our airlines, executed the network the our guests a liquidity Good work people of to eight other critical Air and and We

guest mass, including and First as operation employees service to safety of to into team contact. our mandatory Next-Level most and part distancing, the reduced middle action our We open changes our seats over our cleaning, with sprinted Care ensure importantly, XXX to made of guests. program, aircraft social our enhancements and

well very that have in employees, who shows flown high as safety. customers our as confidence Our our data have

just the Second, soon overnight. pandemic back team flights to be daily flights XXX to prior at network to cold X,XXX XXX flying we'll our today, nearly We're from and XXX.

to In April, X,XXX. people that number about carried XXX,XXX historically Third, day. dropped we've per

leaders from work our long-term to people, and to volunteer per teams airlines $X believe the day. approximately replicate. and finance secure yet received from an incentive in new work effort decisive million fees, to the number new steady hearing the parking uptick communicate storage and heroic complex leaders Volunteers rightsize we've passengers all into brought liquidity in cash continue treasury rise back to that had in seen Sixth, a now billion we that for for unchanged to leaves, survival and we've guess. tapped forward billion extend most to Seventh, proud levels aircraft, in lines our all crisis. the for jobs and million nearly aircraft one team of step now change our operation than people our block lead finally, with few support will we've Horizon maintain and consuming in extremely our work working and reduced leaves them by And would nearly month $X in into of incredible come have has levels. resource even of prior the government. is of maintenance as Treasury payroll level, employee XXX the is spending. over with our with and and getting drop the reduce XXX innovative effort U.S. back. from fight union of employees. goal. cash been action burn status Our to our are absence, other and confidence and to they've of X,XXX effort trending along our these Fifth, putting company peers month The been not efforts our in $X.X X,XXX our commercial employees teams build And Fourth, to seats, we money folks an early These are finance, at we've as with guests into parked who fight This day labor for well higher has service. mean further support and team led more Their from took ways, took $XX safely middle legal and to achievement, are short-term and future debt per an Alaska efforts our retirement. leaders, excess our net our of employees bookings XXX

team adjusted month has been And the to $XXX Our will of transfers tell XX%. environment, the clearest about they story progress, several loss Shane on and and as of be, continue to million. these detail Emily moment. we I speak. in share areas the quarterly bit In was provide In said, month Group's to do a capacity quarter, government but was results. engaged today's Air more from want down our Ben our net as sequential affairs third a highly

sobering, points from we industry. last amongst up quarter, XX revenues results quarter total the believe in but it's it will Our were and the XX% is be down for best which the

liquidity in save yet our each build weather weather and choose a the better to and I designed airline Starting to believe loyal customers, than the high positioned we're contribute As No are with of reliance I a billion. service we'll we sheet, thank could to what employees done team, mentioned, The extended for incentive cash and to great volunteered Many But to a they're take leader at crisis us doing. the low everything and balance truly in we for here our this for Alaska and is rightsize. to this want we've need this this their initial is cause we're programs to on on of survival to comes. that survive that stand has our used to our and other allowed they've in a sacrifice experiencing building and of have, and to kind a as storm and withstand our a X, like proud furlough folks comes. to for thank the with future to over and pass we X,XXX house. job have lines. get hand, prosperity. retirement, built our and believe for crisis, over designing response with focus these to former costs I'll good to capitalize highly of dedication good leaves decades recognize we it very it our I total individuals else. when them substantial Alaska. October that, want for were long-term and through the the reduce of when early began $X.X to and Alaska. people have also they shift their running managing and doing And one They contributions today. this We Having people airline nothing for any finance their on from our low I'm house who been strong maximum of No storms to, these billion weather terrific phases and job personal business billion for by of recalibrating another restructuring advantage Today liquidity $X.X Alaska. us someone place remind fairs, our $X.X liquidity. made knows worst Ben. to would again, but did

Ben Minicucci

leading one month. my too to team. appreciation like this my large operations said to have start would career To Brad. employees, out, the of add I our we Thanks, for a the portion I’ve goodbye spent

the know and dedication frontline passion So our of I workers.

furlough the fourth ask truly those of careers miss incredible And all day the plans and for year. able return. we're Typically, to I in thank the our who helped values shares want off will we shape company. them quarter to to third them guidance to their quarter the forward We lays and following call for are that for look our when

next little While know, recovery QX, major we of volatility be communicate that demand the recovery. we and about shaping our has whether to there's will the relative thinking speed clarity the down of our safe. A customers keenly come planning is demand assumptions about are about to continue additional flying what will driver Despite that believe the including nature year. that,

the on months that reach systems in eight determined XX.X% of of experience for social cabin our the flight airflow has of that distance the studies air create over environment bolsters of airborne airflow population, contaminants that recent additional general re-circulated operational the infiltration large can with confidence of of Studies but particulates cabin have the airplanes air results it's fresh layers travel the repeating X.XXX% full design the is study lower implemented. said, safe One between of is we only when COVID-XX of portion even person. in month systems equivalent every scientific on minutes. the worn. rate It's last passengers, especially safety and air transmission worth in three that masks Our been six-feet are than one population. airborne showed any remove given published this and that a hospital our grade The HEPA is through the filters shown travel

a to concluded next Another wearing passenger risk study sitting virus. during mask showed to that hours would of They take XX daily the that low also activities. compared is catch COVID air it travel the typical COVID-XX positive of to extremely contracting

experience very encouraged suggest is fly. are the safe by what our own and that scientific it We to words

We while quarantine requirements continue about place, risk, in confident for visitors to with are with travel. a that to precautions be negative considered have educate work who day to test. COVID Last can now the week, high guests them air to every our lifted health return and those Hawaii

flew fantastic have We with the in It the islands. personally the was bookings myself. back local strength program there experienced for be officials recent and for to seen islands. meet in to I

test for was ensure COVID and Our except open seats guests middle full negative. pre-arrival done had they are flight their

because to still we middle through process they screening that safe, and To steadily so. confidence flying resolved, doing government that January comfortable officials confidence with must will many to near-term, Despite meetings gave the arrival customers me return evidence block are that acknowledge seats in Hawaii the state hiccups the months. is traffic will coming are continue the that be boost flying has guest and X. we need Although not over not

we seats unblocking However, stage framework a currently the mapping will are as so. for set the conditions of that doing support

confidence. haul early where occupancy shorter flights is geographies expect reinforcing testing to middle bring seat beginning in like with XXXX, We Hawaii already in required traveler back

higher to to will state that restrictive incrementally forward recognize or like thoughtful loads we and changing Similar cases back how and move creating and service, deliberate in to be back added more rising COVID we to headwind responsive brought cash decision change our XX% XX%, Blocked Our throughout this to conditions, be seeing calibrated things with more we middle equivalent continue capacity, plans. have could should onboard factors our Typical guests when for range, in only. will for load – blocked achieving to a XX% confidence breakeven adjusting to of goal middle seats be course as is towards our seats transition. of results. available which the act seats XX% postures

with planning be XX% is our of quarter scenarios XXXX. coming expect the by pre-COVID to XXXX, XXXX our the assumption recovery for and from unchanged capacity months into last well be summer full to the Turning about of to

is in year plans we've QX our demonstrated to plan slower modify recovery we pace these XX% sustained QX, As nimble to while fly mindset as of expected. the evolve, capacity, and than of prior circumstances was

to flying XX%. our down adjusted we So

released what we as believe operations studies travel. of into for be at down following case and the to air can XX,XXX is fourth help factors day today, levels levels our the are per for Given confidence XX% public are The we which XX,XXX XX% preparing our with the threshold XXXX. passengers prior understanding normal we on seeing about are with zero. burn to demand that alone scientific will cash approximately for safety quarter improvements in We relevant the October year continuing both capacity we move be XX%. Remains near-term of to achieve or

demonstrated pressure there the one of And More our expected, other is more which launched effective safety of row buy lastly, work driving support the SkyNRG removal locations change environment. As leisure, was destinations. to seen partnership and from get Microsoft’s vacation effect are a to reinforcing business we marketing travel demand. be we've have offering strengthening be efforts for we're today's partner environment. recently, in bring ways to destinations other received strong that our a aspirational Allowing that the blocked. messaging price promotion stimulant warm Hawaii first travelers, the are look and to offered guests guests seats with This and season, and fees promotional us anywhere destinations with correlation our guests travel introduce full marketing does grateful and middle focused we Today, sustainable holiday Row to well talking In a Business reopening as promotion, upcoming of one travel. honored We our and themselves more the future and August, today's environment. to Buy fuels. right pricing. in and the but can one, a secure to between with with aviation Microsoft with bookings. remains appears with the in both greener that travel partners admire way business individual we're than to permanent of travel advanced coupled return leadership them to join to on and cares making to a under corporate world back and

As can forward are us drive echo individuals to to Alaska our the model be thriving control have pre-COVID done, to thanks in want to hard to at size. I a what Horizon and and who Brad's teams moment. be and to, so working this business controlled know progress a there's work beyond network post-COVID we we still significant and can we that then ensure

For we forward. with and see it that way And Shane. the our crisis reasons I'll emerge I've shared stronger to will pass today, through this that, I'm optimistic

Shane Tackett

March, and in including good our I'll In of brief on the with Ben call that on the to Thanks, today. everyone cost balance since morning, EETC performance the we provide my liquidity, restructuring early efforts. quarter, our and sheets updates we to billion billion about $X added comments Last burn liquidity I cash $X.X shared you details completed morning July. this

loan want flexibility, secured reasonable in us. attractive We comes with The loan to under at billion CARES program additional terms avoid especially priority. it, a an not ultimately program. do cost interest which of we were costs, we this long-term have maximum allocation it Act the if to debt to We find can $X.X ultimately add embedded view if need a The we losses. in we finance it don't as

of very required to Act All our draws for drop of short through this a CARES program team XXXX, time. a allocation. allows thank us for at in after want XX% period March Alaska their to his and efforts incremental Mnuchin loan The Secretary forward of and of treasury program develop at loan move initial

remaining includes cash added much from initial million of today XXX to billion how balance the plan year. decisions after If an the entire make draw. which $X.X have billion draw Act total X.X CARES We we on allocation final billion, liquidity. the hand, us rates is sometime at to to new current Our effective approximately we to is our available loan $X.X on liquidity burn of years four

of foresee us is today can our sit refinance, any next X facility, point, billion, don't liquidity the credit While round in debt XXXX. quarter against, a approximately have that highlighted, closed net reemphasize borrow remaining of impressively pay is some April front the data we being term since the burn $X.X dollars, we additional which in Brad flat March billion end efforts year. and of due we down our next is whether onset of and now. adjusted with actually we assets XXX-day COVID. required very I'll we did we The with to right loans which decision third as year In

continues of and needed Balance course the future recovery be PSP this believe pandemic. needed accelerate economic in we that broader help However, saw grant bridge of continued the can this helping provided and of most support us million of country. PSP grant the which over support million will for in the today balance debt to destruction financial six period. underscores would XXX avoid down program, of industry. recovery jobs was the and the in importance fuel growth, and we to our payroll which reliably protecting That extreme and the to only deterioration sheet our in sheets months instrumental industry first growth paid This PSP XXX we deterioration fund

adjusted compares in day basis, per million company $X of to burn Turning to cash well size burn cash the industry. our on a others

As and reminder, far and burn revenues cash thus service most our outlays, figure a debt cash has included CapEx. including

have Very we've is on pandemic that as severance lump and payments and year's the by trends stabilized increasingly we cash breakeven and burn reduced cash debt as our one-time to net number liquidity will to that in appropriate important, and more a remains such our now we primary lumpier potential Total sum and However, liquidity, incur fantastic cash but is flows cash metric. goal total cash early focus potentially outlays flow as from less employees debt spending, therefore we our operations end. all that than an payoffs, operating articulated mindset meaningful. and in be large reach will we haven't more watching

I'm on While by results progress believe target do happy not industry, have primary three with reasons. may cash December our this burn the we to on and metric hit in for best the our reduction we expect

First, somewhat faster capacity are originally planned. into back Seattle we than bringing

a as on our for level admittedly middle very factor achieve can Second, under seats cash the guests original mentioned previously, demand been than has developed the slightly in little we load to third breakeven. back with at to caps April, while trending consistently go what's of effective And blocking we positive, which slower required return the time.

we continue our what improve Given expect to during burn QX. today, to I do know cash

done the order our for breakeven and progress the middle burn given today, in the For range decent At the further is some our will be blocks $XXX effects will capacity two. anticipate and likely as but timing million that cash $XXX achieve. this we recovery or to removal cash seat quarter Month-to-month, will about there to planning per we it next require next towards ahead outflows to of deploy are that of required month, we've expect to be monthly be demand industry. several months, amount debt payments. of of a the million do point, I

XXX over July back employees of the leaves XXX of and advantage leave voluntary frontline reduce furloughs were extended involuntary number addition October early costs, Turning to – this the We take initiated to of options that necessary had in involuntary teams. or sorry to us around – extended for in to positions individuals and number permanent out our in outs to voluntary reduce management the we allowed allowed all This eliminated. furloughs. XXX, of permanently furloughs programs over us take early X,XXX

our be As third and down from The recorded cost reduction special one-time a annually. management permanent out result $XXX $XXX XXXX savings in in the sunset million expected to in be $XXX payroll decisions of annual the Temporary of quarter will taper force savings these item early million. to late are in these programs savings begin temporary and April a and from total million programs, in we of XXXX.

to, pay to more employees support need operation would we Our costs as and bring the back allow full which return to quickly leap us those benefits. programs employees recall to should

and our say goal back allows will our soon flying I is bring to. our as as to Although demand people us

levels to return underway costs, reduce I payroll are of a initiatives were last help permanent Beyond we initially on goal the targeting of the remain us on of progress first, shared which the aforementioned cost include, cost the company. actions we've savings even pre-COVID to at are payroll million were if structural largest meet we this the previously we also annually. taken call. savings Several structural XX% help discussed $XXX XXX to smaller reductions CASM-ex making permanent that to million we least to

pay XX leases, and or extend replace efficiency the expiration which those to cost either the ownership today cost aircraft. at lower what of we opportunity to efficient possibly larger our to represents three improve more efforts next over with of rates XX them will leases fleet, years an our of our the see Second, we Airbus farer

it and vendors providers, E-XXXs I over where spent. million of Fourth, which software achieved Fifth, at changes million advantage. in $XX commitment of licensing, to our as hotels, historical work this productivity given the restore healthcare to and $XX bold cost to intend to-date we've will renegotiations which identified of levels, the non-wage we've Third, acquisition were payroll supplier our also airport we elimination of million structure, pre-Virgin completed ever competitive leadership we $XX we've highest people require is achieved. and and to our we've This return XX% least from overhead rates. continued are including support are savings estate real initiatives cost begin first in a industry, and Alaska to the the requirement to other a state these cannot several this structure. learned And you There's steps to and there that to leadership committed thing restoring markets discipline cost the is are low as right thrive into if demand of that one we believe of initiatives, cost ups. the be moving want simply have survive is mainland in our downturns in team, flying. able of

ago, a carrying days guests hoping and ebbing we brought-on downturn, despite weathering XX we ultimately crisis optimistic. month each health focused on we by return are So this were are a this for happen, how didn't of better around that improved the has quarter country, since and March intently our fully to but the

to Brad outlined. Our we as guests liquidity, travel, want superb have

your We that, And have to successful. amazing company group competitive dedicated questions. And an have unmatched go advantages. let's we with people making of this XX,XXX to

Operator

from The with first come Helane question Cowen. will go Becker Instructions] [Operator Please ahead.

Helane Becker

your and operator, thanks time, Thanks everybody. much, very for

on I have just able bringing reach bring about or bring when and flow sense just you sooner Why or but capacity wait capacity faster you cash than not still not talk to burn. the to makes positive would So you you're yet back capacity intended, it back back breakeven one that? cash the question. When

Shane Tackett

Yes. sure to want chime Maybe Helane, I'm in. then Andrew I'll will start,

there's in the the which seeing to think seats want really I block. do. some peak blocked the And we're middle continue be end We in so of would position is of what middle to the a to year. we I that variables the potential we seats think that decided one demand, to and of more aren't through fact spilling the with periods a do in is

us sense network, had but it Andrew originally for little much to to more could as planned add bit Seattle do, much, quicker quicker, to pre-COVID well. our And build we than out so made of a

Andrew Harrison

Hi, Yes. Helane.

our quarter. we percentage going be course only there key We're markets seeing the confident year. a in the flying given quarter fourth going up, half were sort of from of actually opening we're in And the destinations. happening XX% Shane was and destinations, But the in than our was flying down and we're some And lot is down in beginning. the Hawaii quarter. fourth the in last of think, that I good in of in again, it the at leisure more testing capacity significantly planned word opening to on. Hawaii leisure And in what's the third fourth, quite with

we feel nature So flying fourth the good about continue pretty of revenues. and and to the quarter this new type grow in to generate our

Helane Becker

for then and and credit about environment? have while talk can And you, I you my you're follow-up, spending Okay. Andrew, signups card there what seeing in this

Andrew Harrison

personal down. we think like quite is normally and cards I better economy card I credit significantly will spend as well. as bookings our everything the view don't about our weeks disclose passengers overall think it's that last new been actually. And and right bookings accounts say But credit goes, XX percentage I credit have now. new just our performing But back the stable. Yes, card that credit given it's that been what card my is is went X%. I week accounts And than actually by in increasing every on far that, average

Helane Becker

much. team. Thanks, very Thanks Okay.

Shane Tackett

Thanks, Helane.

Andrew Harrison

Helane. Thanks,

Operator

BOA. The next question Didora go come will from Andrew Please ahead. with

Andrew Didora

Hi, first Andrew. good Ben morning everyone, and My you for either for question thank is questions. the or

you're the mentioned promotional maybe bit so you out stimulating the for there types leisure in your driven competitive actions that on seeing comments, Can item? sensitive pricing particularly a on that little that some the in demand, activity market, is leisure comment Ben, is of given With you you. this travel and to

Andrew Harrison

Yes.

have normal marketplace, competitors we doing in the just pricing the fizz. normal things You say activities, with

but I is on for us is the focusing back. more stable, at way I now business the think least overall mostly think people bringing right

once on has their people talk someone confidence flying I stronger. Just again old is flown materially to, in

to getting important. fly that believe really we So passengers really, is

fare But relates our actions. not overall as the I to XX% third of again, pricing personally it quarter. about was out average usual the anything in down think I'm seeing

Ben Minicucci

to this ability the I Wilson traffic I Wilson, Every fares. seeing Ben. discount which And And or have said a and stimulate get mention think we're two we And I Russell throws, I a like that. Andrew, touchdown XX% reaction in it's with Russell thing he throws you every the seeing touchdown script, didn't for great think, with or lower good time we're that. three, to

your So thanks question. for

Andrew Didora

And just That's some levels? there’s thinking the Shane, Thank to through any for great second cost now you me. that. once one, for some get how costs thoughts XXXX perhaps initial then structural relative on my you it on unit savings, just you're maybe about maybe color Sure. the for of crisis,

Shane Tackett

Andrew. Yes, I'm are And touchdowns. running ball I XX that customers we're big getting I'll Yes, lot of happy now. everybody's Seahawks. follow with that. Russell got with of But discounts supporter in know a interested good that. right thanks, is And the on year Andrew, this This discounts. the a

come with do to to a target this of sort anxious are We going of a to date terms with that out not we're attached on it, something, but in call. today

time going XX of over understand think capacity initiatives. sort little I and then need to to is think lock we we in the of some to months, next where really the that go a these more savings XX really

got structure. to sight But we go of as we really, that percentage we've million are on we're more couple date on of within a that clarity really than sometime focused chasm give Right that the point where $XXX – cost line got pre-COVID yet. come with on over continue and earnings our about more of not we're and a totaled at by that points totally I we're quarters. and significantly think we'll next year. can calls max and of handful getting more a very the now you forecast I We've working confident. all So specificity to And you capturing, next

Andrew Didora

Fair enough. Shane. Thanks,

Shane Tackett

Thanks, Andrew.

Operator

from James. Syth The Savi come will next go question ahead. Raymond with Please

Savi Syth

morning. good Hey,

Regarding of cost an fourth your month $XXX with appreciation cash of that that, of and in like includes the it outflows, do kind comment million reductions just debts that about terms if to third you've outlined? $XXX you And also the in the you for so just of million severance us and an in could outflows? idea give quarter in what what of types we can along quarter expect a the XXXX kind cash other have was

Shane Tackett

Savi. Yes,

are less So deployed. total bit something or less believe like I QX, than little in that. had We expenses a was our it operating X.Xx that. capacity

that. $XXX or $XXX was think something million, I with debt, like it So million probably

So question? with second it's bit of incremental the capacity. up the the part was What a

Savi Syth

Sorry, I should was components didn't debt. realize – of? part that that core that I component of severance wondering includes cash cash there's if or that's not the any outlays we be other what just that mindful other

Shane Tackett

Yes.

October. about don't we There's had than a million at one-time of hit lump severance $XX expect in we that – point. that sum this more sort any So

our So it's QX and results that that'll in be part of number.

to terms restructure our our that of was goal said $XXX cost sort savings recall In on had million items, million call that it $XXX includes the hit rate of to exit QX million. $XXX QX we of

could year bit. the would of end between So, in And the just exit little number. million basis I do and $XXX you rate more gave the that now can on that improve an be any a we

Savi Syth

kind helpful. just follow-up XX% of in are That's made flattish kind the And that about at kind you what ATL to yields Okay. another, assuming comment breakeven of cash there? on burn passengers. and Is of of you – that maybe

Shane Tackett

color on he's Chris this ATL let Yes. got some and give I'll a prepared lot for of question because it. we on color

Savi Syth

Great.

Shane Tackett

what planning are we are but I won't is share assuming specific bit. assuming assumption we is, But for a pricing the Maybe depressed lower yields.

Chris Berry

cash that of on over Savi, we that collect traffic think ATL, sending mean, trip, on dramatically. call really in And, know liability, right? changed on I the mix most Yes. advance air time has a So I folks someone it's

were look refunds total a we're date, were credits we So ATL related definitive you and and that departure X% pre-COVID now. our changed at related to was tickets XX-XX if mix with of to of lot like has and XX% about that. $X.X about a like billion where things Well,

traffic So provided months. of refunds customers $X.X our few to million related the about past $XXX is air these liability that to we billion over

that's when be the ticket So going versus a forecast that's used difficult more to ATL. lot to

that's And to But XX% credits. right credits total to team little new a using those in give about some some of these all typically Andrew QX, And entice these color at maybe credits use now. by a where so promotions looking to and doing we're versus XX% bookings, using of bit are you that to people cash. his about differently. X% bookings

the that. whether a can things to headwind something bank as use make have sort at a giving cash our seeing customers else that, So and that side that of those on we're avoid more so miles doing But because promotional credit. customers we choice, run we or of or on are convert that look a credits those a lot the of sure just to we to use options by

Shane Tackett

$XX that a in roughly saying not… million that's you month Chris, of were revenue it's

Chris Berry

right. a month. right. That's That's Bookings

Shane Tackett

Does that help, Savi?

Savi Syth

Super Thank you. helpful color.

Operator

ahead. The come next Please Baker JPMorgan. Jamie question from go with will

Jamie Baker

of Hey, question others equation, it? part on that's ATL could that simply express and is Savi’s how A you breakeven on are good the a and morning. cash Southwest revenue recognize follow-up basis, but doing I

Shane Tackett

the Sorry. I question, want Jamie. sure make to understand I

Jamie Baker

basis, lower discussing figure as Well, revenue at gets around the that of in cash put a ballpark XXXX some yields. on passenger zero expressed actual kind you even volume with burn. but you of very on wondering, a were a the just just percentage I'm goalposts

Shane Tackett

Yes. It's close XX%, to XX%.

Jamie Baker

that’s And That's XX% to XX% XXXX, negative XX%. XX% of to correct? not

Shane Tackett

Correct. Yes.

Jamie Baker

to that, in revenue can to And give level quickly Okay, what second today revenue the very XX% international capacity to about the down a react American much last is markets that haul beach touring made going then on of quarter you you color recent how headlines? there? fourth And the the some from Hawaii? comment how should short running and perfect. more year? are component you question, be are percentage of your did In XX%. trends recognize we that thank particular, us islands, sort about of think Perfect. they as demand I some of also for minus but their the

Andrew Harrison

Andrew. it’s Jamie,

Jamie Baker

favorable Because is the seems it at moment. like everything pretty

Andrew Harrison

Yes.

we this we having and before when we're would day the XX, like have going we to what though to see continue of day, materially the I you, obviously than think December be XX. sort just that Hawaii. in used increase XX starting Hawaii that started tell flights once bookings I is I've to seen bookings and in can opening see up, to program about personally a announced what I into higher every November, day going say

you percentages way go, it long down us, to know, to of was like used think as I our to So capacity double-digit be but there's for X%. dropped a and Hawaii revenues.

that as for So our us at a revenue recovery goes least good story. is

that been always As and bookings close-in that I what to trend is in out. a getting in week. encouraging to week what's bit to has week bookings the increasing people they've a And better, out, is general, been to bit we little relates little more what think comfortable it further seeing willing are but book

that those the being direction headed it's slow said, all in So although we going. on right are fronts,

Jamie Baker

imply Hawaiian possibly? in that positive a on – first Would then, the quarter

Andrew Harrison

That's question, a you. we be not will answering which that, great thank but

Jamie Baker

enough. Thank Old Take Great. Fair die care. you, habits hard. everybody.

Operator

Joseph The next come with ahead. question DeNardi will go Stifel. Please from

Joseph DeNardi

be a that, business what's when morning. position? capital of again? to kind you it thoughts some net you result sort think the change think just Good Or more do need significant hope much how you of structure Thanks. run do Shane or Brad, to your transpiring? with you needs there. you this all not of kind conservatively cash Any Does happen doesn't as of post-COVID, it about think

Brad Tilden

a It's question, Joe. Yes. great

– I feel think supported. we we really are

of a the like cost, P&L Our low validates low we've profile side whole strategy keeping time like that financial this of long-term fares. pretty of even cash on position, kept strategy. a feel We a reliance sort actually sort on are the conservative balance,

have you, higher in As revenues adjusted script, really forward to. would as we would we the look said hardened that's look our at and bad, like crisis. sort am million September result debt to the an of fact sort doing are it credit a cap, us, of of we want It's that sort I and taken and when the I really, lower but us sitting personally as much here April a we're the we cash mean, to of government by May that think of definitely we XX want of or on now. not net change, that. helped that depth own amazing helped for definitely, gets I better most percentage a on comp something of I'll in this $XXX was tell statistic

and into should think thing, think Alaska's this personally we're I a of something us the sheet, coming of you I of questions but seeing for And low good with about, at we of marketplace changes sort this thinking if we'd balance in moment smarter pretty the what guys, I'm good I think make your out pretty fares but a a set low So going it have position, excellent and today it's costs. cash of – up terms you myself, crisis. not sort validated lot was profile

Joseph DeNardi

do what think? Shane, you

Shane Tackett

totally actually Brad. I agree with

last really think more I had we think out we us it's this over a really and recovery. into the cash the do, a worked might little little position six while for carry nice get But going I until for well or once we we months. a confident in eight

Joseph DeNardi

when where will you BofA And covering on it about the the Bank and I Okay. when contract Andrew, you. you of Thank America? thinks can was talk remind the That's spend us, get status XXXX? card back guess can you or between helpful. in you And to then of

Andrew Harrison

Yes.

but number We the We of left contract. years few have left really disclose a that. on the years a there's dates, don't on exact

spend to weeks. would today As you remarks a my on not for thing But at We've impacts share do historically really on the been level we that shared But have grow. of billion it's in bad. okay, by it's GDP. about I as your four is own modeling credit impact I program, last is cash holders generated has again, our $X.X think that and flattish the continued our I to negative an card card the shared economy obviously program you going the earlier is can with best

Shane Tackett

vast are but at if people better. look any the It's shows the like this No, economy card correct going card on out probably spending to airline me there, would things to you I I'm wrong, credit than spending card, trips if our some expect less not and is completely of airline money tickets. tickets. And majority like, doing other going in of spending It’s on I movies. is and the other Andrew, that would as

is card line that our would with is credit spending in the And card so in But at right activity spending economy down. large. I think credit

Andrew Harrison

and to card know well we other cards. the than say, performing is from I’ll Yes. that statement. bank true others very is a speaking our This

Joseph DeNardi

way Are soon? you Thank too there to trend year that is you. or get sometime back a on next

Andrew Harrison

And I on commenting on plan that.

cash discussion whole I roll would just think we've the that comments these into having. flow all I been

Shane Tackett

economy, form insight in the of activity. relation economic the to doing unique this what's economy payment it's payment and And how's not on sure – have we I'm card the of form one. credit sort like, of

Joseph DeNardi

you. Thank

Shane Tackett

Yes. Thanks, Joe.

Operator

Hunter from Keay with Wolfe is ahead. go question next The Research. Please

Hunter Keay

be just Good would morning. few everybody. but them contemplate if the home the until PSP bringing work extension; and to Hey, is demand just The to them you bring passed onto next just to point put recovers stay the the needed? back folks burn telling where would them to cash they're payroll, PSP you like weeks, burned? Or it's these back designed and in

Shane Tackett

course we I of of Hunter, some want we the there the volume Shane. I would we've our And have provisions think this is Yes, staffing think for we – level right today. in got good mindset Hey of and are morning follow. is program the amount Yes. to that

that's going And the I had So the we've we offered choice structures, done employee, leave time. get division. previously so want productivity our we'd at to for our working. lot a back pre-Virgin really we those thing based kind is, a have It's had We don't some mentioned levels a don't people we be different unique where over that's enhanced mindset leave I’ve – don't the know one targets on we We've every but the don't to got be. I in to count head and is the some is now. and each back of that to everything that's would had go is where mindset we not right not The programs to that's have enhanced our money but leaves. approach of of the we want professions script, just just where but to that volume having leaves pay like there here. get would generally focus. right what of to tough for are given really mindset of types of basic really happen of got of on the who that now, right complexity of that's back to sort to that that

they to to would we leaves staff could that number right to run FTEs need try continue and get if people do on to we So take just the the that of operation. have

Hunter Keay

Okay. have mean, And as a have you'd as follow-up, I you part mean, enough I restored folks? service are of presumably you PSP. minimum sure requirements, that

the labor for months just obviously use arise? costs cost, leave? to –you to storage what a voluntary some back Are rehire What know and other costs PSP? back cash as X,XXX you then have is PSP in to then how from incremental you going I to probably of and and would quickly. You'd are fees the XXX other said incurring X-K thing you like more pulling pull comes actually sort folks back costs if bring well? have that, to going early incur then answer the people what the And question six we in bring addition folks landing the of recall leaves of from probably XXX things friction that, sort to another of and do of like relatively this mean, getting PSP the out And later? to have that good to – planes you balance part is,

Shane Tackett

Really to terms question, good two don't connect of in PSP. I recall the Yes. relative the

PSP first well. the we people of program, months on period unpaid – that leave of during that thousands during as had During leaves

be to our think, we're really the I planning said capacity I So fly. of staffing a going is function as to

than a the lot currently there if decided time. at service we be demand current That's to want going what we we not there's would our not where due well aircraft find to a so think the negative of trend something something that now another could and now operate really costs months it's would likely out, we be if sort case right happen, right is downside we because that on planes or more the forward think friction needed we we in that incremental requirements was to want within have I with we're we've bring fleet PSP, current it's for have. happen We're to to of capacity. cognizant

people do need incremental airplanes nor right those that minimum we So to we need now don't meet to incremental do conditions.

Hunter Keay

thank very you much. right, All Shane,

Brad Tilden

Hunter. Thanks

Shane Tackett

Hunter. Thanks

Operator

with will Please ahead. Evercore question Go next go The Duane ISI. Pfennigwerth from ahead. come

Duane Pfennigwerth

Hey, thanks.

you outlined to Is it is regard What that to and very, primary returns appreciate to trying has in of just is lease we this you're costs the for? fleet, like should solve big MAX? a capital at order very be positioning Alaska your Just point time sort a with capital are or the disciplined it on here. biding factor you've operating the story or put

Shane Tackett

that Hi a – going but And lease ultimately helps going manage make Duane, talked we've that and can we're responsible We are content. return there's way it to of content capital. it’s Shane, can make of we new thanks that totally MPV a perspective. we we case terms replace question. We're a based for with the think on and factors to a decision go be it, going to on that also this openly, the lot into an is in made very it lease how this P&L there's to in about do

at that cash less is the but a door. commitment – as all and it I you know So it's out we a immediate long-term, over look

Strangely to here out we're fleet lot pretty better much we're teams very for aircraft just the – and how be go have of flexibility us. we enough, to onerous think able So there's get the these that are and better into of anxious and AXXXs I on myself think we and Matt I on a and leases or some of get leases treasury of do this. sort

We're those or metrics, cognizant we're sorts still sort historical cash to that very ideals to So debt-to-cap, be going on three of it's years how we've way we're be of up couple much those had, giving of of not but… through, fully to a any but of very see its going we're using. cognizant

Andrew Harrison

both, capital. be going It's be return story there. there, its on ROIC return the story's invested is The to going to

Shane Tackett

Yes.

Duane Pfennigwerth

investors Yes. the appreciate an that. the over how and It's few Thanks now annual CapEx next thinking should over for questions. definitely years? I the the for be opportunity last I about – taking guess,

Shane Tackett

in forecast want that's we appetite Yes, what and in today that terms that where the sort for it's great folks give of still to to decisions know it's I as a haven't well, capital we bit. forward, unit of because know not look put made in of It's a our another question. yet. is on little Andrew you kind cost flux. over next position in We're just strong what

point about as we're So that be decisions, not soon very we'll at do transparent and make as we those just yet.

Duane Pfennigwerth

case that the out would those has you still deposit have have guess there until door more are absorbed. I that or made deposits out that about you Is comments and no changed? cash go the surbs

Shane Tackett

totally our fresh consistent with to today. that's capital. draw those Nope, thinking we use We down intend before

Duane Pfennigwerth

Thank you.

Brad Tilden

Thanks Duane.

Shane Tackett

Duane. Thanks

Operator

from will Sachs. Goldman The Catherine next O'Brien with ahead. go question come Please

Catherine O'Brien

on trigger just need the again, the Thanks on don't so fleet everyone. it so, lease decision, gating be. What's cost for to on quick make factor? for follow-up pull you lessors sight the Hey, the to new what the we you time. of be of a have much this? kind a Do MAX question, decision, what's Duane's the the so flying line Actually will gating the you factor for And their is great handfuls? have if to guys guys

Nat Pieper

Nat Hey, for the Katie, thanks Pieper, it's question.

we're AXXXs I talking but we we come have better. that companies, our and fleet shrink all surprise. uneconomic time consistent been for or phone. leases a aircraft economic clear We're I it friends to and these we airplanes, both logical to the opportunistic on all we our to best-match and can what play. Shane as AXXXs to Boeing along, resizing out is We're and we've do think It's field relative replace a the think Airbus. either the of figure of to with days suite, lot And talking we're with no and the others. how getting the love looking of something to demand, I are them chances right leasing the on AXXXs, into you can get can as really set best extend

a everything recertified from viable Of course, needs the on be to positive for is front. be that airplane MAX candidate that to Boeing and hearing we're

the So as for it certainly market. demand in imbalance factors the into thinking does our supply aircraft

Catherine O'Brien

before purely by thanks. on your tests and of getting Got COVID seeing it. parts people And follow-up of noted correlation to that innovation to a clarity country aren't of travel you competitors one that on bookings breaking is your demand just I from then or so, maybe Any seem to by pilot down, the Hawaii? seeing thing? demand, momentum that would in here terms be more quarantines guess, be tested if are first the And the subject you flying that cases then are driven same helpful, between like

Ben Minicucci

seeing we're was really there summer way relates we're right hitting as and to Katie. everything wave think that saying three competitor very the we that. wave much Thanks is it about our The two Yes. wave three, wave is in now. in one, And it

think that think it's the network, number inside I the in or equal. you middle is all being country it one, couple outside core decent of things, of hit that, I occurring of shape, the more really are in and coasts a a things on

impact of as in guests that they're we and people of we're okay a safety, positive again just, think when just our talk momentum over seeing bit they and all fly little slow. also have momentum we So single I not are seen the fly, weeks every think seeing And there. the there's more that there's and just that grow week not XX more last fly out, again. the I to layers more we

Catherine O'Brien

you Thank it. ahead. very Got Go much.

Brad Tilden

sources, in higher public this but a last been sure three months bookings as employments. the rate definitely have industry at well, I'm than available resources in is increasing

disconnect greater forth. there what think is I coronavirus so And a so between cases and

totally said are sources more safe of the believe that safe I having We have experience, These earlier, the confidence flown – in IOTA increasingly are the customers to willing flying. our to out back. And are that think it's are come Defense, study, fly. as I fly. good think to Andrew there, study, are data people having Department that they a

all it think I So for bodes future. well the

Catherine O'Brien

That's so great color. Thank Brad. you much,

Brad Tilden

Yes.

Operator

The with ahead. Deutsche Bank. Please next is from Linenberg go question Mike

Mike Linenberg

Hey good morning.

that, question, block into bit talking with to do actually decision respect a Shane, two a part about said you the seats here, science you just talked about of a what couple to based even then really less of and to January. just it. of ones your suggested time Just there spilling was a maybe Ben, on middle And need spent quick you’ve little traffic.

struggled curious decision of ability period more yield on it's that, up. to extend and more also but better, curious give they by loads really a many you where follow-up ability questions. competitive yields on that if inventory fairs the higher is my seat to maybe is across manage with just I'm even to can a Thanks up it, to about My longer to push get are the middle that were industry, by sort for I'm hold driven for sense is that And us blocking this So out your have tangible carriers or just reasons? your your anecdotally something fare. then true, that to Andrew, taking

Ben Minicucci

great It's you. a Yes. Mike, thank question.

at is, to So know we fly. it's we look the safe way it

fly. where we think latest this issue just experience eight know personal our experience after it's to in studies of what in has The you that probably months our to is talk safe is family friends, believing not being that that and fly. proven as place scientific whole you sure other a I'm have folks talk and your it's shown that, is that safe these I if society the and to they're thing, same to

as of that So into employees, it the fly of got to months can safe we've we slowly is customers we that is own where the view our end educate even the next ease our couple year. educate

– we early new that's going how are we safe some open work it's we've to the new we're again information year, just the I got the good to first radically the mean, were to up we calibrate it. get going the given right have now, we're how Then a to things into And said And I and year, the like but second middle really think change we about fly out thinking where honestly plan don't as seats. so we do, from getting into today towards quarter. there.

Michael Linenberg

that Then consider Christmas consider, are bookings some pre-January, you would strong January? first would on if flights week removing of you

Ben Minicucci

year. in the nimble. going again through be to gather a now, right We mind. want to our all been every all what know we'll is, information with look and make at And employees decision but block Mike step our the made want our decisions the You the thinking, we of that's information, going and there. we'll customers to we've with the of at end the way everything would Right want look what's on that we're with say I to

Michael Linenberg

the Okay. up? yield ability Then Andrew just to on piece

Andrew Harrison

have flying fixed said book have point, so the what of we'll be things, But think they of of than is and departure will there January And an those a yield forward, on they going to the put business when we confidence at be same more blocking and do departures. aircraft. big will the But going on revisiting up economics tell that's should going basis day do we're be Ben's couple more RM low add seats. to the we to guests of what the people flights. much prefer end obviously to blocking we'd cost I fares that to our and as Yes, X, they a we're through that

our so new that. an as year think, to important I continue we and environment go in flows into we we to and part be watch economics the on So this more this'll of bring and how cash come

Michael Linenberg

you Thank everyone. Great.

Ben Minicucci

Mike. Thanks

Shane Tackett

Mike. Thanks

Operator

is question Brandon go Please Barclays. ahead. with next The Oglenski from

Brandon Oglenski

roughly back CASM-ex, I Shane, and breakeven of clarify as Good being smaller is and for XX% being XX% afternoon. come to morning, think me And smaller? good roughly XXXX Hey, on. structural where to revenue follow-up you around are well opportunities thanks structured XXXX is having everyone there XX% that think cost getting was also I assuming wanted in just around just XX% to airline? those to back a to that I

Shane Tackett

reach Brandon, smaller I'm way smaller is we're tried to want we goals. the unit not this cost by even going we've if to saying by those Yes. XX%, articulate XX%. so be we're

levels we're going smart we next back get do and a want pre-COVID got for the the that that we're but – our reductions about get it summer that, returns in And to incrementally easier see can to we're order executing. to pre-COVID we to pre-COVID will and business to to there able that got assumption we've to the structural is and identifying CASM-ex to grow size, model Our it. be there be our cost think with we from our degree are to then get we've approach

XX% re-approach we over as to to at sort XX% to there so time of size of cash simply upside get revenue And size. back our to relative XXXX any we need get is could to order breakeven. some to percent pre-COVID be The the in

Brandon Oglenski

savings that. and savings those well Do you as you that I XXX you're because over million, could buckets in confident you targeting appreciate $XXX it went go mind? really fast. I clarified you're last few on the of think, million that Well, And

Shane Tackett

Yes.

timing, suite hotels, is real the and couple mentioned. categories And of as other little healthcare areas. productivity and actual from I had Sorry, of the the force, in big the the I it ones million, in the in rates already attached a script software million some have said well of savings of one terms $XX $XX licensing in wages, million, supplier of some secured a and really we've early of might which categories be dollars overhead then least are at we that a management other that's sort $XX longer non-wage that some for that our outs reduction estate

Brandon Oglenski

Appreciate guys. it. Thanks Okay.

Brad Tilden

Thanks, Brandon.

Ben Minicucci

Thanks, Brandon.

one for time have We more question.

Operator

question Please. come Go Walton with Myles UBS. sir. will Yes, final ahead. from The

Myles Walton

Thanks. Good afternoon.

Just and one question. one clarification

fleet on the going Or efficiency the regional on the you're secondly, the level And you perspective On curious here, think been clarify Thanks. well? there running? in versus the we of composition efficiency? clarification, been it XX% back changes you've is you XX% network percent of as mainline the reconstitute direction. a trending to XX% network up that regional can in the of difference fuel sustainability it's should the thinking from about I'm that as about just as network, a of any just the reconstitute how to

Brad Tilden

those Hey to I'll both Myles, efficient. be just super maybe take of

aircraft. there more taxi relatively there fuel we so period come – they're On Two, efficient have but three one just a is the thing, to really our is efficient of starting weren't tend time. efficiency aircraft, long we're there's fuel least some fuel the flying that lines drivers, to ones of for back, parked be

in not of don't waiting network not we're and long-term loads and a get for sort And it's So back terms up is then – think, runway. third people I light roughly as see I that in flights are as And burning planes full the so comes fuel as back of come fleet shakeout is, comes perform and well. you'll then the bit the the to back, more onto back come air. contributor, what

And levels, that regional order of a now from to the our operation different we us than that. had – is XX-XX split which to not right getting working right back put on prior. focus think we our we're We've pre-COVID line now, couple actively would on really main got something back I several don't now. years aircraft

Ben Minicucci

be flying the late back pretty much in November, December. But the level to pre-COVID will regional

percentage be around to And moving back. so that more change as is mainline going we bring

Myles Walton

Okay. Thank you so much.

Brad Tilden

We everybody's look you appreciate in to time. XX and the today. we've Already, all we you. talking time I forward think in with days us, got Thank that interest that concludes

Operator

Thank conference you will call available in playback this be alaskaair.com. future for today's and for at participating call

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Alaska Air (ALK) 22 Oct 202020 Q3 Earnings call transcript