ALK - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Thea, and I will be your conference operator today. At this time, I would like to welcome everyone to the Alaska Air Group 2021 First 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 now the Emily I Alaska to like would turn Managing of Air call Director Investor Relations, Halverson. Group's to over Please go ahead, ma’am.

Emily Halverson

morning. good XXXX for his hear release, joined updates call, as quarter also financial commercial This which call. CEO answer and Shane Thea and the Andrew available call. role the you, Thanks joining investor.alaskaair.com. our our on earnings our us are portion issued we in you'll at from new for during morning, Q&A is Ben to and be Several team by of first will line for earnings others your update. today's Thank questions of and he management On the

marks have in in attention this cash to to first last day million in a among be loss, definition. and Air impacted and under industry special and a In outlook global health our are to we the $X approximately approximately recovery same the that net crises to quarter, $X enables to generation We It mark-to-market the day the point went of of first million. business milestone. million adjusted the believe excluding continue economic an And by that quarter we underway. $XXX from a items turn March burning critical adjustments are achieved us reported significantly the Group Our future.

found will SEC from affect risk could today in comments statements factors future on our be materially filings. business Our forward-looking Information differ our can our about results. which performance, include actual may that

today's provided costs, and release. as we directly usual, fuel. such also GAAP the measures refer will to We between reconciliation And measures, in non-GAAP non-GAAP financial and excluding a comparable most earnings as earnings adjusted unit certain have

Ben Minicucci

and for I update you good today morning, appreciate business. an us Emily our everyone. of joining all on Thanks,

where thinking I some for with know energy time, Alaska will I'd next call is and CEO, XX As I the spend all focus been and to first my I've this is I've of our thought over my what years, share as my years. company about. several love and come

our and our our record. and safety discipline service for financial our excellence, and reputation track customer operational and people Our on culture, focus

Alaska the truly that for all look of in And other approach profitable to I developing, need Over to approach pre-COVID feels is to managed unlocking build to they In business everyone primary forward balanced on to years, do the will and have we to we growth. that nurture But we however, embraced the on that continue legacy. and our delivering how rebuilding and reduce stakeholders. I our grow focus a climate this ensuring also areas better that levels and is to place impact, belonged where power our our brand. short-term, returning

While in point this normal QX and has touch I'll we are several on pandemic, that far corner results levels. key during it below It marked have areas in a an that the turned moment. inflection appears

Officer Operating want in leader. results, her know the Chief Beck. I typical that future Today's has will leisure with enplanements into passenger succeeding, has up recap, Constance to I XX been Muehlen vaccines in of have and demand. quarter seen We've welcome January April. in for von role Alaska XX% she of moved roughly travel XX% picked has and are for XX% there momentum dive sustained return a in been a pre-COVID to with down being down I role. Constance as fantastic incredible an from years strong levels. bookings the Onto restrictions as Airlines eased, job do is Before Gary company this

the get for keep our labor to to business PSP only a Horizon financial guests. helping of in also I'd ready of $XXX the the a of On against PSP cost to our long of because like inclusive an They've us handled possible positive the flow employees for downturn impact quarter We positive efforts cash leadership. under employees plan. Full cash March, management and solid this and Alaska incredible million. funding. the posted of has return bookings point. health with our collaborative was this Protecting take and operating received employees been of and the and guests company our determination to and protecting moving health safety strong strength of of moment excluding our these flow, while increased at the funds the thank

teams our shaping that the strategic had our quarter, several efforts future. to vested During are important

First, teams a year our e-commerce of to I was we've our changes XXX It over XX, other who navigate culmination thank this celebrated company. teams guests entry crews we are Many official helping well, of incredible on possible. for as the oneworld. And the the their want spend place. put and to across on teams including our March efforts make by months specifically frontline this and people in IT work into working

we four have received retired expect we temporary aircraft placed our These that into Second, XX and week Airbus them year. AXXXs the XXX-X were had last very service which another operating aircraft, to By Xs resolved be or and from by crews. end the have grounding, MAX XXXX, two. well will we received our replacing the AXXXs been in and guests the MAX service. Despite next of

us climate know, efficiency, has lower opportunity XX% reduce MAX maintenance The better As efficiency gauge. revenue emissions. particularly fuel or it's to higher and costs racial our XXXX. also the yesterday, new commitment long-term On impact climate, and when And our MAX significant focused of fuel sustainability equity. lower you the will made net and we've we impact that commitments, emissions carbon roadmap climate announced by recently on zero help note, on

in system GSE for February, part announced continuing near-term goals on U.S. inclusion, a and underscore not the area their In And culture this we place in the and XXXX element which goals, they our and years know following committed specific ahead of ensuring our pay set continuing in electrify done employee education program last the equity. to efficiency participates being fuel leadership commitments not our of in. are efficient our on can to feels of every airline we're our also we've and to performance and tied of but everyone commitments, XX executive have lot it be focused achieve climate-related goals including of of our portion we that based support frontline work inclusive most diversity best. belong We critical goals in for of equity reflected DEI the and building a in importance as a of to truly and of diverse culture to at-risk pay representation every as team, we We a our climate have making Alaska senior the that diversity, us, still cultivating part fleet.

of areas. look beyond, to the we and we As the on several remainder year important are focused

balance maintaining sheet First, strength.

debt $X.X end XXXX. billion from net at $X.X is adjusted down of the billion, Our today

balance recovery we year. will half and sheet we of As we levels know a foundational strong bring the extent, capacity having the debt decelerates, costs back the in choppy provide will or strength. is the reducing also To online, back prioritize

deliberate at responsible on returning rate. are and a capacity we focused Second,

all summer. consistent allows laid summer than XXX% We higher is than fleet. today factors no transition plan preference levels to a make to seeing mostly training out will return Boeing year, with fly our later This As progress we're to to we and XX% load we last with trajectory to of XXXX. of this seek pilot XXXX us

Third, we are profitability. developing a roadmap back to

Our this fleet plan and program are restructure cost roadmap. pieces essential of

In basis. touch our in forecast and QX. our Seeing turning a approaching worth instrumental, sharing be for to will enabler remains breakeven to will size. it's you powerful And P&L QX a is path be commercial oneworld traffic profitability state will contribution on California today. revenues we pre-COVID know, into and back. as entry and XX% largely return it look nearly then we for recent a closed reminding as of the reopen today, near-term California anticipate And pre-COVID the framework Our forward into bring our our that

three these that may plans. of we our As we're aspects business, faced be our to manage modify important with reasons we cognizant

and the and do merit. to will hand unequivocally structure Let me on state cost sheet, conditions that our trajectory balance capacity we if so adjust have cash

an if team I we're we true, we For robust the of network into more to I see adapt. today you have that, earnings experiencing over that last is is the results speak if example, believe management future. quarter's momentum are or business turning hearing And focused know in or demand acceleration competitive our few the growth. recovery, saw The whole saying well to from long-term truly and same I'll in direction. quarters. threats the work it we on, The will future are right Alaska the and with we know I steps I this Andrew. pass the for is the positioned missed imperative. for

Andrew Harrison

good Thanks, of great morning, commercial business. about And the our with side is you Ben, and be to back it everyone. speaking

past Although, we've really we've exciting return. The months demand a the see still long few to ahead. in we've got momentum seen is climb as that started

First $XXX over two. down at quarter from million, revenues came in XX.X% year the

down of also with a We January similar enplanements XX%. down, in down the XX% each sequential trend. quarter XX%, month Passenger improvement March revenues and a saw followed February

drivers. high system performed down tide March, better resulting factors which phase was Our the XX% average, main XX revenues for well than first-class cabin with in points with load particularly low

results nearly XX% quarter provide non-California seriously Our amongst To the overall times California industry, California to were has first impaired. despite two on remaining looked that be this, the reduction perspective down in revenue average. of noted, in strongest the during bookings the system XXXX demand versus been the

by President's a XX% We points when winter was a Northwest has XXXX levels, open than step is economy. targeted we'd worse This severe expect the governor storm expected. was California across California's in Capacity Day fully Pacific to three performance holiday. experience which primarily was by from cancellations which over change caused the to below mid-June,

quarter, April, to XX,XXX XX% in and factor. seats XX% up over mainline move we carried the This to April May March. beginning departures in at is in look at what from demand building to momentum daily as returns. load blocks factor middle in which helpful close has XX%, January. is load a time seven Notwithstanding, to get quarter, compared March above remained factor our where than at a caps month. place. added right have to seat also March, been a if this would load really and a In middle January. to by higher have the unblock our nine Taking continued factor more our last seats XX% XX% load expect aided from in into points This allowed, XX% in of For and points accelerated February January capacity we was QX more was has

trends enplanement average up a into ratings enplanements continued Listens We to and began and two to improvement indicates seats, Alaska data we're January survey XX% want opening The continued for or of passenger about With April. over show on XX,XXX in Recent around that quarter should an continue excellent do highlight with then as in and has over XX% year us give bookings. much very February, an I XXXX Booking XXXX trends of quarter stepped our as or middle bookings good to demand of XX% seeing to of safety. to health guests Turning in the first year sequential of and levels improve. in the bookings approximately March. levels. XX% day,

weakest of were February, use efforts year, In XXXX an so. we the part Price in our the making pre-pandemic. this block I'd Touching briefly thank have cabin. Additionally, ensuring volatility even which we to this in quarter. pricing, months for will stimulate middle our customer for were XX% and January our and traditionally them below our no to like are remained issue likely feel recovery. comfortable, this satisfaction safe to on they especially levels that and and pandemic guests making we seats been main continue the personally demand scores is because yields loads the of though promotional than increasing happen frontline and longer face higher crews

to are our is seeing demand, program. surpassed brought end revenues yields earned cash size. Total XX% the to in by the our we year March. down to our full us also has flying from towards modest in card bright the increasing we increase loyalty were holders about card for bank mileage compensate showed and pre-COVID towards plan of the just clear-eyed about we point. as summer, look improving yields planes, need A miles XXXX, As quarter, bias levels are the X.X back while our during growth on spot XXXX since last navigate we with being during of Credit

focus opportunities teams we to acutely As front see return, the us. demand on started of in commercial more our have

off if up opportunities put for been you we We will. beyond in already in have left where from XXXX immediate are picking Three XXXX and place.

into the depth our a the oneworld increased level, next that network unique American can value offer Firstly; alliances; tapping and we and the creating perspective. revenue of breadth loyalty benefits revenue both from is guest and

with that with a greater partners our a much us with benefits. selling seamless Secondly, the And implementation of system, affords and now additional RM including American long as provide now our program global cabin. place. corporate a align time guests partnership and partners classes to managed oneworld access accounts, fare greater new premium thirdly, then classes oneworld in issue We we for global in with finally utility our our domestic by having corporate loyalty resolved

this XX% the begins normal look our forward, severely our remains business in down our to in strongest improvement our back during our of will as belief and Consistent the quarter. capacity Business managed to quarter, XX% of said, in end seen that point with total the customers XX% expected supports GAAP two we approximately about versus levels ramp are of of share to year. Northwest travel plans be restrictions. California corporate believe corporate at fly remain over we return the it months this of surveys by the hubs to a relax continuation the Alaska, the in two shared, for demand down all That to year I've then ultimately reinforced second of of As in to first XX% year X.X depressed XXXX travel quarterly we've and the revenues accounts. committed XXXX. in levels And add Pacific we

quarter, between second factor we and XX%. the be to load For expect XX%

way, resulted in by our vaccines a impacted case I has and sight to have counts that of demand – guests we pandemic rebuilding believe roll being of less this do thrown our litany to While challenges continue as which has out, me, excuse less line business.

network, all pass to Our in. care stronger are Shane. went than phase, over with bring this guest to us out to and even I’ll program commitment configured and of loyalty we it product, service And that,

Shane Tackett

sheet, Thanks, Andrew; expectations as everyone. on quarter. morning, our as flows, will costs and good our Today, well the cash touch for I and and second liquidity balance

a survive purely a business, much to profits our and bringing and This turning toward like quarter flying from people felt back rebuilding and to very growth. point to in away trying beginning chart path back

quarter to While flows this and adjusted we quarter, support of net reported in were March, for flows adjusted CARES million, GAAP $XXX even positive an excluding positive we generate cash payroll the program. loss able cash operating

XXXX which end. ATL, adjusted down the was by liability currently $XXX year represent step-change million or result, at reflecting is the credits We exited Travel from X to seeing. that cap debt industry the Our an increased $X.X for XX%, believe demand of reduce under And point improvement be now XX% $X.X our billion. to billion and air which cap it improved the watermark increased from just net at with to from metrics, traffic debt only here. quarter will XX% will down to we we the our debt XX%, our end see high of

liquidity. hold in We on-hand to also $X.X continue billion

of from cash begin balance also Given by in year, heard the the liquidity anticipate towards in. several non-fuel we capacity to billion. to half booking Adjusted some drive or to moving health, million commercial of good saw $X.XX during of the We progress were about X%. $XX second that X.X% billion operating turn the versus $X.X increase performance we and $X billion, an sheet debt while our our improvement Andrew increased quarter, performance. range cost will the in more QX trends on-hand reducing and of balance we retiring expenses Having areas sequentially need let had me XXXX, ultimately

progress structural of performance of cost airport flat for several beat solid savings mechanic with especially our divisions. the our we long-term Horizon. particular a As cost in out aircraft were strong mentioned, cost two saw set costs, we spend, regional ramp the and areas further year flying cost as we unit nearly in included strength at over groups, business, for against which plan overhead quarter Areas and the performance productivity

on As relative schedule. pre-COVID we to crew fleet need capacity work our which flying by bring base now not back to challenged is our crew is training, balanced improving further, by we productivity, transition and our recall that

the done pay provided XXXX. cost that colleagues second, the now, to they've concession of expenses. other X.X%, lease to to year right employees million given anxious to our most want maintenance additional Plan of costs on in sunsetting of under the use them our appreciate as a XXXX, additional headwind to agreement able quarter. volume. recalls in we these not were area some costs with departure downturn. a share their are we to uncertain we they lease this costs, unique employees Airport Speaking Seattle, cost In they again were with on periods in down QX, variable and have QX. in I excited primary of $XX context headwind sharing the the XXXX. leaders In pressure also of welcome continue X,XXX volumes, were the variable these We're from American offset two funds the fewer a support see to to Rescue to what part related work costs of were able for back specifically, expense for manage a of company to worst to XXXX, are partnering received airport that back leave previously have have to during industry material additional and versus this these costs with share as Act, costs airport provision area revenues agreed and we carriers and and as in great categories, just last down funds A XX%

on utilize Regarding regional we operating costs backlog and our relatively as on fleets, we the success. as are we maintenance, we with we payout our longstanding anything, employees entire believe accrued PBP be maintenance under we such, and And incentive airline to million smooth for our fleet. performance-based I maintenance deferring only and potential and have the than are forward, $XX.X through plan key a lastly, our and may the going pent-up right long-term we more Due early next operating program align entire today, pay not short continue program quarter in to expect are a won't goals accruals. the annual pay continued to maintenance that reminder And our this, now our year. Boeing the year. actively operational goals a to monthly in

with Looking an to of ahead, continued sequential QX versus in we increase improvement XXXX. cost expect XX% unit XX%

to pay also airport point forecast costs. our And includes an that Seattle’s just the I it specific program. As mentioned, headwind under with employees includes the that assumption X to cost earn performance-based will continue

improvement in XXXX expect or quarters. return the make to in at calls. several point pre-COVID expect to structural and throughout the versus We unit costs next back continue better previous We outlined sequential capacity towards gain as we've we the initiatives comes the as some do cost year more to

$XXX balanced and the focus our pandemic this we worst margin Alaska completely rebuilding now million approximately business. operating QX guidance, of of did will to CARES the on then crisis, you network $XXX here growing close, manage teams and depths solely that can the with the of are I To million to $XXX be allocation. which our act the guidance the grant Horizon past third we recovery proud improvement year million million, on forward This induced of an cash GAAP inclusive to from expect hopeful of to versus program. PSP are we returning associated is to of work our profiles the Lastly portion and through and reflects $XXX flow capital

fortunate to of well-positioned recovery. initial coming part We are the into be

year. the We that to have improve throughout continue a strong balance should sheet

your welcome to that competitive We our work we year, ready in have all get improve back are will structure path a on flying next. as that and get again. folks cost continue turn to they let's With to to this questions. over advantage to guests the we of And our

Operator

[Operator our go Andrew ahead. of Instructions] from with And Please come question will Didora first Bank America.

Andrew Didora

everyone, for morning and good thanks questions. the Hi,

for first Andrew. As question

on market pre-pandemic? worse, you leisure. better, touch is all to opening. clearly it the compared will wanted It it's have What do your the same will system as ASMs Just in to It's here relative percentage margins be And or Hawaii. of to XXXX? think

Andrew Harrison

that is I all I'm for fairly going Hawaii gets what comment a that And to seen margins, to bit not same Hey, smoothly. seem testing with capacity. of here the Mexico next Andrew, have is be the we our XX% little but on the have requirements about the little working bit and and

So, demand in Hawaii solid. is

Andrew Didora

the see those on you do competitive Hawaii how response And routes?

Andrew Harrison

I'm not, as far specifically, you what as referring competitive to? are response

Andrew Didora

Is competitive capacity?

Andrew Harrison

thinking I from tell our loyalty by well. and we where up be we'll We our you our I it's day, pre-pandemic very about given flying XX can performing summer good is see. sit about frequencies what we very and to the a of seats good. that feel this we've focus where been Well, we and

Ben Minicucci

is Andrew, Hi, this Ben.

compete. got product. We perfect have we strong I product Hawaii first-class think a to for the

premium to our we're cabin back. product great with product a starting people generous have that We main service a love, bring and

we the product on our compete routes. Hawaii to So have perfect

Andrew Didora

more Okay. hedges as using now? And Shane. have Do options hedged And that I are bit secondly insurance. any a on back has maybe just has there Alaska gone? internal on from stepping Thanks. given for as the fuel in more past, up any today fuel call discussions know you right

Shane Tackett

did actually we the Yes, pandemic. our anything with talk hedging never Andrew, throughout good to program different to you.

put on over lot year, capacity came had for obviously, positions a way year. of So already last and we as we hedged last were down

of past of or ask for start our about to I we quarter. several expected layering hedges something what the years. money. Strangely out done to normal cadence, XX change on think ourselves did differently. back enough, XX% right our now program do months should we the We the XX% in we've about That's up consumption, we're of advance

at Just in that it forward. the plan don't suggests the past it and from here is our we like looked data change that really several weeks to we program, and how all of we

Andrew Didora

That's great. Thank you.

Shane Tackett

Thanks, Andrew.

Operator

question Walton come will The from next UBS. ahead. with Myles go Please

Myles Walton

morning. good Thanks,

population the I could only reopening? you going you know are of quarter. And on the and that seeing bit the as bookings touch it's considering the on to in with hoping hands a just what trends California it advance of does capture moving But June what for to waiting you're going you XQ? little So in imply to final look reads July network August confirmation? moreover, about And early just the the into do

Ben Minicucci

Yes, Myles. thanks,

slowly XX% We're of the capacity. be coming down I California our improvement bookings. in going second structured think our pretty in ASMs in quarter you way But about be we're About the we've And in network. good know an we California. obviously to still fifth feel a seeing back. will

is. of increasing have And but the telltale room June how airplanes. we're about that the will So seeing real change plenty step come think we trends, just on I big be

Myles Walton

And one quick –

Ben Minicucci

ahead. Go

Myles Walton

one on maybe loyalty. one quick And

Thanks. economic oneworld, a seed, how an or directly I'll given that the contribution of framework through the you little. framework at that on will but or you mentioned Can be comment future to indirectly you You to you're layout framework economic network? much water a date, a ask versus contribution through loyalty planted going

Ben Minicucci

on basically both just and us. to passengers with that course international, but to network and international strong area Corporate we travel side, nothing the date. to incremental that's going – as later American and joint domestic next Obviously, loyalty little another of us. we're then I comment for partnership domestic think be a very international very, going area you're very on a from overall, And business Yes, course is the of for strong well. certainly our

So there. good things

Operator

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

Savi Syth

morning good everyone. Hey,

Ben Minicucci

Savi. Hey,

Savi Syth

ability there Prior getting demand kind provide XXXX? your, and fully to to eventually working going on pre-tax margins if especially levels get XXXX to you to recover wonder I of or the on an XX% crisis, in you XX%. business pre-crisis to to were isn't update could

Shane Tackett

Thanks, of Savi. that These about get future sort to questions talk reflect level. profit some margins are to pre-COVID

We in and a the industry. back expect sort script XX% To back about the a as we to economic And roadmap to do to is have margin one industry, think talked certainly the the mentioned get as sort threshold we've in normal the levels that the helps XX% Ben we long range. players to we said ago, of you XX% know, degree as of into level it, time minimum a a a backdrop and lot that those support in appropriate that be of want we profitability. top

should I a We to I industry better see think point. we'll that business I to kind it's like can travel from all. the shapes amongst think back through thinking up a leaders be about at the we ultimately happen. out, and of this It's of talk where shake into should keep year a of where get little to going the place the think And pent-up it's perspective. margin like if when could picture and we'd that And early to but sort could, clearly half happen, your initial demand a goal to be, we're not of and may abandoning have margins then long-term. surge

Savi Syth

That's, that which behind helpful to logic about billion back is of else? a versus liquidity level maybe on can getting of But to I $X where billion I a little just comment the like getting follow something wondering kind target. that. kind $X.X up just your if bit Shane. And to

Shane Tackett

no, we don't to a Yes, judgment look, another and little it's big want be it's, instinct step scrambling. bit and back, if unexpected there was

to continues cash ourselves So on business generation If going about talking advanced comes end are QX we've see good, and the some been flow a could we that. this. back, lot of in improve lower QX travel bookings

billion internally right out is coming $X of this than to committed no we've now what think I year. lower

that's We have sort want year above right of six normal as or big capital for X.X, that don't ultimately that something next But next I thinking in commitment need we be of Savi. know of about cash well to to a well, sort will now. about decisions making so. the X.X think and we're our mindful months, so go to back and I be

Savi Syth

you. good. Thank Sounds,

Ben Minicucci

Thanks, Savi.

Operator

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

Joseph DeNardi

Hello, all the thanks, airplane? with of the think America. customers Alaska you morning. partnership? the beyond opportunity how Bank is pretty outside are guys. I'm curious Good effective what monetizing obviously is at of You effective co-brand Andrew,

Andrew Harrison

you're about merchandising that Yes, type and going of to? really thing talking up-selling we're

Joseph DeNardi

your data credit other other just market loyalty yeah Sure, outside the use to, finding card? kind of partnerships to ways customers of

Andrew Harrison

work the doing been very sophisticated digital that last doing is of promotions the experts on do months a we getting is.com. lot side programs We We've that. how on become on Yes. and about team the the go six over on we

We other like first-class like cabin going become we opportunity to a class there. also and is just see premium things have

which shared in ticket we it lot revenue have have first-class this going benefits year, deeper we're working to of I are now into coupon access. of as script, Our move we'll is number a out this the that the upside but of we on outside we working a lay what Class call as customers greater And more core on. things think product outside J we're historically was and corporate

Joseph DeNardi

the of maximizing is value one brand. Ben And strategic the the Okay. then, mentioned of you priorities

I what shockingly. said you that think piqued interest my is

Thank that? by mean you did what So, you.

Ben Minicucci

believer the just you loyalty potential Alaska Yes, unlocking think in than in of have we huge is look in appreciate Pacific this across there and the Joe. I a our and more at Northwest brand, if Look the we California have love the it, big and no, the and for strength brand I And countries. I'm state Alaska. in

when they done it, love us, day. who just powerful a people is they to us, people people know brand when fly every our wonderful job this So love get

brand just to get people And there lot this offer it I a once so think of can is know more.

Joseph DeNardi

Thank you.

Ben Minicucci

Joe. Thanks,

Operator

next with ISI. is Duane The Please from question Pfennigwerth Evercore go ahead

Duane Pfennigwerth

Hey, share. year? accruals, profit Shane, thanks. for well under circumstances be which I some as next talked your about you target think maybe as for What would the you sharing operations are paying some hitting profit early

Shane Tackett

under that from particular target max. expect to that is, plan Hey, pay components We to largest profit Duane. always and the threshold we under don't multiple Good PPP hear metric. out change our Yes didn't or honestly typically so program has component you.

have safety cost-related goals out have cash margin would folks productivity company goals got But got right in to program is, a We've those of doing are the also and goals. a we goals. year. the now. this year And job we We've pre-tax flow to of carbon X% good hit profits. around reduction each one pay for So full operating against really

So the that path. are potential those a see I areas, we potential think

Duane Pfennigwerth

for on I revenue wasn't across reading basis And be questions. the you into great. sure into point I far talk the of you're there then seeing wondered make that's it. at anything to Thanks XXXX? this up bookings I That's state to taking just too Alaska? is relative network a wanted may about if And

Andrew Harrison

Duane. Thanks, Yes,

at factors. it's others and know You some areas we're obviously, in the network prior not it's pre-pandemic stronger load

have yields We XX% they now that are the XXXX. back in not a couple into the phase where the of are regions by post were in

coming network in capacity really summer, brand this of well. our marketing Alaska, love it feel network So, are but this incremental overall been across we've we and building. and this our we summer, obviously for good about our State revenues

a story Alaska So summer this good being for we see us.

Duane Pfennigwerth

Thank you.

Andrew Harrison

Duane. Thanks,

Operator

The with Becker next from will come question ahead. Please go Helane Cowen.

Helane Becker

very operator. everybody. the Thanks for Thanks Hi, time. much,

questions. So two

goal you that? you how us are measure importantly, tracking how more could How your track wondering if you I'm carbon that, we So, how to are for actually, the going should profit you're or sharing? tell

Andrew Harrison

and So, jump a second. let I'll Diana in

long-term in is carbon important to So goal the airline net in two have on Shane impact emissions climate all our two goals, is goal, XXXX, really only Then goals. Diana to these we short-term performance a Helane pay we've we're it's based measure or referring was to have that second. are five short-term speak the what which is that target going carbon next per the program years, being where fuel-efficient tied the most the One which ASM.

our every we're that's that? little we're that measure to in payout the on PPP. Diana could goal, going you employee measured is to So do But, going for more XX% company how XXXX short-term be That be will the of how on to going and the a share that.

Diana Birkett Rakow

Sure.

just which was of – per Helane, pounds I as PPP our about ASM. COX is you pay think Ben clarify based Helane were in employee the said asking asking to goal just plan,

Helane Becker

I to just trying Exactly to that. right. All figure out measure going how like you're

COX per of Difficulty] pounds right, answer ASM, the [Technical that's So and

Diana Birkett Rakow

And Yes. it. Got fuel it's based use. on

looking ASMs target we to our budgeted year-over-year reduce at budgeted what be aiming our emissions based our we from use So – from on flat. and we fuel are set and would a predict carbon would

Helane Becker

to thinking Okay. do to know raising from That's bridge should based are pricing, trending you in how you a to part, if completely bookings would on Can demand, very be to how are helpful. think I yields? between you're where I'm Thank given you. pre-pandemic but And environment. this where want like bridge lag know, you we and – levels. you it's, summer, the a be, then you which say how wondering, about could my fares and other maybe about unrelated question Andrew, is, you

Andrew Harrison

couple affects things that as Sure. on Yes, know. a of yield Helane well, you

yield down. volumes can and to-date gets pull you up more travel And business of push push significantly can You when that's with flights really up yield up.

with exactly right. and in our a base We've period built stimulation would you're really so getting base. bookings And that booking low good during

actually others we're what third bringing comment and move the certainly that traffic, average the as flights and you've now into our too into coming now heard yield right summer us seeing that the XXXX. in we in than peak quarter second same the and new we So and fares higher is for it's for are quarter forward right

that a what We and lot and June. that, flying business to say beyond sort on dictate see of course in climb, we going on a see proper also yields. this load schedules May. will is sure you're But think I but traffic, what We everyone's of but haven't dependent will seen stable I happens know that with all So of capacity.

Helane Becker

Andrew. very Thanks, thanks Great, team. much,

Ben Minicucci

Helane. Thanks,

Operator

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

Jamie Baker

to Hey, that good acknowledging place. begin are you afternoon, the you achieve need restrictions a PSP more specific the as be to Obviously, before returning to milestones shareholders? in Can everybody. capital you bit little

milestones looking for. metrics you're what internal wondering or Just

Nat Pieper

Pieper. it's Hey, Nat Jamie,

won't before cash shareholder as items here, Balance it soon its have shareholders As levels, the doing equity you makes back sense. we remind know, take And run a we you. as restart taking to care and our Like things of proud our debt-to-cap the didn't that to for shareholders so, issue opportunity has you be always through in profitability. checklist raise flow to positive sheet been we're a And and – core we priority to for in sustained funds our we dilute returns these pandemic. for want I surprise have strength business. us as a to complete most target to get

once Ben really A our re-engagement an gives and anticipate I checklist, So us board in on the do area. that

the that government XXXX, September well dividends of You're we'll on And too. that balance as and we've right due got PSP restrictions until to triumvirate. both buybacks

Jamie Baker

yield from comments I found helpful. first-class That's premium perspective. Transcon interesting, a appreciate momentum, earlier it. about the Okay. that to market your I've passenger second, And continues improve

ever or XXXs you Delta a that what mint your happening flying I still refresh. anything you with might decision? happier sort call is are exit, getting the decision than that got market You now product, there revisit make are this pseudo premium of to suite Is with, in that Transcon

Andrew Harrison

you're to seats. Jamie, So lie-flat I referring think, maybe

the made have tell you cabin, is that for we Here's first the class about, on our today. what I conditions will product

And the on seats, before, Ben focusing in XX really selling and very a XX point for strong Hawaii largest demand pitch those And non-lie-flat seats industry. have the made has mentioned been seats. we've We into us. for

is May now, right into sort now. there demand is – right look Transcon XX% the you capacity down because of the if not even On our

north/south we're our Hawaii sort seeing and So that on flights, of on our thing. perform flights first-class

just been now people low it's good and willing perfect to the right are with product buy fare. So up

story. So it's a news good

Shane Tackett

three – for like, happy $X,XXX sense to better. or we're do for the a carriers sell lower is It our And we quarters those into make of to make $X,XXX of it. us. market. have. I'll actual we just to on really that don't lot just fares. fares. model sense have moved this certain selling selling totally not have Jamie, Shane. with Anyway, the like It's we decision to didn't not It makes We'd like money

good So our very we're decision. feeling about

Jamie Baker

Take All on right, strong care. topics. Thanks, answers gentlemen. both

Andrew Harrison

Jamie. Thanks

Shane Tackett

Jamie. Thanks

Operator

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

Catherine O'Brien

Hey everyone. Thanks the for time.

deposits On just your million is for first any of book. Shane. wanted is one and order I'm I years? from grounding look CapEx then not to when the I on financing And you given will deposits already what new million outlook, gross Alaska's probably to aircraft negotiations on my some CapEx Boeing net MAX next $XXX that's based those couple of Alaska. from guessing the that and around confirm think your has through $XXX CapEx, and like And the price, do order, purchase over work

Shane Tackett

going Yes, CapEx, I’ll have out first. not it's really hard but to to Katie. net. it's give help on thanks this, one the I'm one Yes, Nat Nat. gross answer this I'll

Nat Pieper

Awesome, delegation.

balance I our as and we about we to of. that think previous in when care XXXX all this with year are PDP talked taken related of it order, made Katie, that quarter, in obligations

XX XXXX XXXX, and public any X.X very CapEx airplanes or a airplanes, cash with if out X.X billion been in we've number that's So little, billion for coming of in XXXX.

bit. Boeing, as PDP negotiation our a have pool with restructured We of part our

as And appropriately well. leverage we'll that so using be

that we sheet big achieve balance where though still back get with And requirement our to sets. want even the to levels So we're comfortable can comfortable that also a retain. XXXX, that is and we're we in that strength

Catherine O'Brien

Got a American higher then sounds maybe but question. this, it. there's question definitely for a Andrew, on theoretical oneworld it like And partnerships, one more like level in on come to just

your ultimately improve, this and expect carrier, the side As for versus start maybe all corporate, of of see just leisure be the some couple potentially business, international a post-COVID pre-COVID, we just kind you higher and ease about, of of a recover Alaska RM to spoke corporate also changes of you yield share new assuming on question? else equal should ultimately to the

Andrew Harrison

Yes. is absolutely Thanks Katie. yes. view My

do that our I that numbers have that give will said attract place as that traffic returns. that corporate this us grow share seeing in demand business it on already, of the low side, been first on the believe as yielding high year in even part will I put Given things access even

Catherine O'Brien

Thanks. Great.

Shane Tackett

Thanks, Katie.

Operator

Please next with Your question Wolfe go ahead. come Keay Research. will from Hunter

Hunter Keay

Hey, everybody. good morning,

XX%, to will pretty XXXX, be down don't prediction record XX% but June, you man, do which actually you revenue guess. a you be relative XXXX that at that up to an know was track XXXX? So that, would I good as you how think made look how your Ben, did it given you amazingly knew last

Ben Minicucci

What financials. the I'll me say, it's ops background, that all with helps an Hunter

looked the we what, see. try know Hunter, be we way realistic we with what at and stuff You is

much at solid So as to see in We're businesses the relaxed business change of us roll business coming back of demand XX% we predictions. We look pretty year, see to vaccines step going will XXX%. into out some right happen, and restrictions. but it's the the exactly hard make this know as at we what's demand leisure by can end for probably the we now, fall, is a

should double, So of be end what by business is should the the it predicting year. demand that XX% we're for

And second should higher and much quarter. so we than first the see it

ourselves XXXX, and should cylinders all to we we we're you number can a XXXX. where So training feel getting just close done we in transition give back on all solidify in in that trying but set are so XXXX. fire XXXX, road to that good about this up I'm to be going not to we get profitability, to

Hunter Keay

it down little investing XXXX, debt, it what was two like allocation about know, doubling to on in rather might a down capital term it Shane, more don't post-COVID I little it balance be, then the allocation. about hey, this do Is in nominal sense makes a does balanced the Is dividend? the term how And relative post-COVID? than in follow think or up bit, How just some you that change bit product going pre-COVID maybe, on is just to paying to to from Jamie's think talked XXXX? years more you or repo. Okay. paying like, question change capital to whatever

Shane Tackett

– are These your really love Hunter. Thanks Yes. I questions.

little this off to the back that prompt bit us and a about cuff. a guys things bit something You go more. isn't little is usually This think

up areas and I that. sheet robustly to fund historically I'm then returning get you a tweak basic In an target sure make annually. And appropriate So has shareholders. range And a we where balance sure approach, our the we're then don't the at we than to know rate, go think X% then we're be though, or growing share and get off of Certainly to default, to of if want things that's because business I the topped been I not feeling we're question that with overhaul. – we from new. and or expectations know guessing of And and it's an the pensions had our to it's I making the our sexy liked do certain are sort sort exotic X% set of dividend perspective. then make investments more in changed that market a safety, although. something coming cleanliness out customer not there We'll COVID. see it's as around of forward, like and repos. we I

kind mostly allocation, this us. necessarily and capital of as really with that that now. head learn that we adjust where I that's our been And year is where mindset Anyhow, think stick before. are just at of yes, they'll it'll returning as I right to we've going my kind things don't things we'll we on view doing those – forward. were is Now but And past

Hunter Keay

Thank you Helpful. everybody. great. that's No,

Operator

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

Mike Linenberg

Hey, – good just Act. where morning, everyone. we I guess, loan CARES two One, with on Shane, the the here. secured are

and piece billion. another have The there I drawn that… second a the I What's $X.X one, like you know may on missed had status it, but down was

Shane Tackett

we we access any May. have that I billion that we right, stuff until loan on of because we it million see that decision how about portion to made haven't billion. we tap then we'll this May, down but straight. take But And that $X.X get $XXX through outstanding. by don't remains initially really struggle to yes, scenario have another have know I our all to a a quite keep had so access, Mike. sometimes law yet. You Because $X.X where formally you got to too, we don’t –

Mike Linenberg

the with the was right? me on loyalty still Is And financing feature don't you're lines. you to I into leads those answer maybe done I if considering are question. the like plan something that that or think can ask would then everything that along sounds you Which loyalty to tap It side. it,

Shane Tackett

You got it.

Mike Linenberg

now the Great. in probably Andrew, believe because just the second Andrew. of you I corporate us on XXXX my Great. I place. of American in all COVID. But quarter realized, gave that March sliver been share. then question a improvement is And agreement the little to representative your is, fact not quarter of of information And a normal has

some past year, you four daily to are factor agreement? five just past Anything the year. quick number Can three almost saw cetera. in for or say it passengers of has could the whether think on you in I maybe talk code came wins, been maybe basis, you about like us other in a we've give a connecting the a et the to place share of the airlines earlier again, load Although it into else do attributable maybe points part realize I heard that or in agreement, COVID.

Andrew Harrison

Yes.

the around come I say guests jointly and will the of and and with American, getting to from strong American our think We've and in engagement to a redeem back more feedback utility miles. just give joint think contracting overwhelming opportunity joint perspective, very everything, to guest them. us seen is Mike, that the positive from I we and ability on here's and I given their contract accrual demand been but that wanting there's contracts corporate networks what

connecting back the even behind hubs access U.S. full the from through have in We mid Chicago. through Northwest, Pacific and California

to when lot true a the your flowing the we good there's see point it starts demand we're but but of to through water the benefit, ready until So comes. for and won't pipes, things, it

Mike Linenberg

Thanks Great. everyone. enough. Fair

Shane Tackett

Thanks Mike.

Operator

ahead. question Global. come next will go Seaport The from Please McKenzie with Dan

Dan McKenzie

on Hi, mind thanks And in to of a the with sheet in CapEx sheet is, wondering the balance I trying targets, step I'm the prior up year of for to timeframe question what the following questions. get be the back just target. the squeezing that to to I'm where just next on reconcile some just guess, balance me here. your I up want guess you ultimately? in

Nat Pieper

Dan, it's Nat.

revenue for cap I there's we're in and depth stages see But region coming flow see cash of a latter discussed inclusive months We XXXX. being it. we as move as making be we and to assumptions us as positive of XXXX the part in by XX think CapEx the that obviously, the we of of XX I that's and from the that and next to perspective want requirements. over

Dan McKenzie

it. Got

then in we And in up step past Okay. you think what as as CapEx you've X% how X% context we normalized about XXXX guys the a of got move would for look CapEx, should to the growth?

Shane Tackett

a Hey, Dan, that's great question.

the XXX as back we fleet transition, and come us the on good I sure I going a in order XX need really, Let and our got you over to was think really next kind I add But the XXXX, maintain middle we've relative on pre-COVID to data XX of around. in want planes to XX to how coming many And to just need the just aircraft schedule we're to out shift want of couple are fleet basically we make we then which replace years. that. about to mainline XXXX as size, that to, of units year in range.

a sure It's a So of on all the to know math want I'm I but we answer – make sort it. I good get tight just you question.

Dan McKenzie

Very good.

guys. time, Thanks Okay. Thanks. for the

Operator

And at Minicucci closing this comments. time, to conference further like over to there are the turn Ben would no I for questions. any

Ben Minicucci

us. joining for everyone you, Thank

If Have any IR to and please out great a day our reach we'll next talk questions, folks. quarter. other you you to have

Operator

available gentlemen, now call. alaskaair.com. today's disconnect. call at future participating This conference you you be in and may for will Thank playback for Ladies

Alaska Air (ALK) 22 Apr 212021 Q1 Earnings call transcript