ALK - Earnings call transcript Q3 2021

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Operator

Good morning, my name is Sia (ph), and I will be the conference Operator today. At this time, I would like to welcome everyone to the Alaska Air Group 2021 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. After the speaker’s remarks, there will be a question-and-answer session for analysts. Instructions]. [Operator you. Thank turn Managing now over Alaska to I of the Investor Group's Director Relations, Air will call Emily Halverson. Please ahead. go

Emily Halverson

and Sia our from On earnings today's morning. Ben, good which is our Earnings (ph) you investor. others on joining release, This questions you, GAAP alaskaair.com. at calls. Shane. million. issued for XXXX Several third reported of will portion Q the Thanks during to we and team Group morning, call, also available us quarter our Thank call. for Andrew, are and net our hear updates your line answer the Air $XXX This A of management income morning, of quarter third

net a since $XXX were began. first income -tax margins items marks point quarter. an XX Pre adjusted of basis the adjustments, special Excluding mark-to-market adjusted fuel million. XX%, and from quarter on our hedge This pandemic the improvement profitable prior recorded Air Group

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

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

Benito Minicucci

inflection marks good And on an income Emily. morning, path Thanks, point net to XXX everyone. Group's adjusted our Air recovery. million

emerging X solidly and our the margin. of A likely we the margin how lead strong stable COVID to margin. despite of And During pretax and when demand forecasted is looking the delta QX was I'm I'm industry less double-digit to and our -tax due variance. Company XXXX pre delivered. of to forward from undergo shocks we shy the recovery pandemic, our a just proud is the last earnings third points call, quarter variant, impact XX%

operations been deliberate, performance. in matter scaling leveraging industry-leading Balance has measured way, the strong from approach produce our what a circumstances. our back financial your beginning Our to business consistent running external and the No Sheet,

strength Our season, the leisure of the third to demand reflect skies. results passengers bringing pent-up back quarter with the summer

Day XXXX with a For impact the had on planes a on second Xth total factor passenger came XX% XX the levels. in over and quarter beyond, just and down Even Labor point Delta revenue the that our from approached load and July demand X dampening August at and in quarter. sequentially basis, of was third variant year improvement XX%

below X% of up beating in progress range. third the better towards solid were costs few increased cost a productivity pressures execution about the per X% unit as sequentially, and end incremental levels The quarter, for goals Our more the cost our passengers XX XXXX performance, falling FTE provide our will categories. our cost reflects detail guidance just Shane in seeing we're quarter. points

then our still Looking our at choppiness -COVID to size from to at and normalizes. demand We will be anticipate we to continue from times to summer, forward, transient thinking the variant, remains return than no until ultimately our Despite intact. volatile live longer Delta grow to the next term our experiencing later and COVID, learn plan recovery there. about with as we're pre recovery is approach

demand business our QX matter that strong course when what does job no back, come model has Our is for tuned and performance, us deliver recovery is consistently shown to operational And the success. financial takes.

slightly the deliver to from recovery below XX% margins. will to to pre increase our fourth XXXX, there accelerates we the XX% capacity positive the pace quarter, of upside effect plan -tax Delta to breakeven Looking ahead we be variant, dampening If and to of here, QX given to the to our the of expectations. expect

top success. of at on-time because with hard Air and caring again possible Their is results frontline the our culture the I and efficient dedication our the putting an of of quarter's industry operation kindness in in efforts were thank our want the heart once to of performers work only cruise. delivering employees arrivals to and completion them rates for in this amongst Group their quarter. for This

though from points within demand their clear that Even of operational Several in our a something right shown between to not targets to have on performance far me us guests satisfaction repayments is financial reach to be. necessary Our so XX that have We're to made high complex decision invest satisfaction deluding yet progress during fleet. driving great in rewarding performance month gross sweet appreciation leverage depths debt-to-capitalization XXXX, we exceeded proven the remarkable is spot market of path Guest has that XX%. moving given have of makes making service Having and too. how our each have with our the XXXX sustaining quarters improving year-end quarter so not the deleveraged stability our our every made Sheet. from X.X down ratio to the for. guest XX% single XX% provided pandemic quickly internal Year-to-date the for is re-ramping and crisis. scores of billion, achievement for operations borrowings, our debt shareholders repairing of Balance we in

comes have will firm XXXX. of our fleet XX and for when for replaces more, XXX in with not we be half This quarter will and for departing of we fleet aircraft aircraft XXXX airplanes. demand XXXX. positions delivered we options growth and expect in XXX-X us total, additional XX incremental the also order delivery to be Airbus options XX XXXX airplanes XXX-X but which XXX exercised by back only This All two back, our took in significant fleet,

strong we optimistic financial to these while foundation close, Balance profitability. a the in we're for our 's Importantly, laid Sheet. position Group take to To return growth deliveries and I'm Air also about have maintaining prepare to

and allows with the low a customer creating Boeing OneWorld Alliance, mesh fierce significant rooted that, by operational a people like culture cost behind with supported book order Andrew. domestic kindness service our more will fantastic us a structure XXXX, compete to flexibility a customer for performance, and through strong a I caring. great loyalty Balance to growth a in importantly, thank have a product on-board time most coast powerful to for with supported quarter. turn with west fares Sheet, one I'd a a We with and that industry-leading low brand over network it And great it,

Andrew Harrison

and everyone. Thanks morning Ben, good

our on Our the revenue quarter. guidance comments focus and fourth for third quarter today recent will with progress demand alliances, trends, performance,

the versus of flown capacity down very that near was $X.X on billion, revenues. of showing Delta was this XX% were result, approximately end at in started We XXXX. This XX%, resulting Our third July. also quarter with variant up revenues the came in in at a the unit impact especially meaningful happy down flat way

approximately last to driver reflects sequential improvement from XX%, just while bigger points, which X but XXXX. XX basis, a the factor last to deteriorated XX revenue from was loads at at Our XX% in monthly to was improved points point XX% strong X.X sequential revenue performance flow quarter, higher, bottomed in increased versus capacity points sequentially yields, July August, represents and quarter Geographically, strongest our the trends the in a for which up then year given On Delta were XX% X% travel points our the Hawaii. These variant. about emergence the advisories yield damaged state, capacity, of performing weakest were timeframe, of Hawaii both down same X deteriorated X.X% the quarter In over basis. by September. up from region all was the negative XX% on and X for to July X.X% demand in during driven September, in a

In the would reduce the performance in our Delta X.X broader variant, I our the characterize RASM QX to Hawaii, impact of revenue results was with headwinds strong. system along fact, impact the to as points. by Considering

Our revenue commercial fantastic team volatile environment. demand a job a did in managing

variant from have steadily during of to momentarily, quarters still But building bucked with X lost loyalty on and bookings periods sticking results yet from occurred COVID back expand premium bright moment that a Xth not several program. have for we're consequences trends longer, wave, traffic. and there now: build I'll working our given the performance third QX were spots are quarter product the dissipated, As important that Delta that QX for the the

product paid X quarter's exceeded factor points load XXXX cabin our in points. cabin premium On was and first-class the this class over side, XXXX premium by X

our and believe We products as strong we with for demand along premium entry demand will only into continue continue business associated with international to see this demand returns our OneWorld.

our up in this we of compensation program, the was X% in same which the loyalty quarter airline's cash our Regarding history, highest received XXXX. level quarter from

one the program durable, is our are and coming improving of we focused maintaining Our and squarely competitive advantages, most this momentum over on quarters. loyalty

quickly they with improved combined approximately pre quarter. relationship rebuild capacity. Today only also as flying opportunities added our is on our and as American the strong COVID short, guests from markets on - network, been our at when this X. our year, throughout the priority the to Reflecting are results it's significantly. We're Pacific network. only shifts and XX discontinued This have new for Now, we'll capitalize choices -- arise. XX% looking revenue recovery to demand our our with have restore In we of it's approach performance this producing evident saving Northwest Seattle

during remains our we Seattle levels. is I quarter, the Pacific next pre year, flew by of back fully overall California be still -pandemic as will that XXXX of above XXXX Northwest levels. approaching while flying flying XX% with capacity XXXX the capacity Now, restored quickly hub capacity recovery is expect California to slower summer

that Area to Alaska Coast positioning U.S. the we've Mexico, we're Bay part the from West As to and our non-stop announced of rebuild, other carrier. with service recently Mexico the from more California expanding any flights

I engine been to Now long focused time. strong Company my will on has environment the future, call, for that mentioned current but building a turning last a commercial challenging, revenue as is serve team certainly this the

a do by commercial as will of benefits ways One like I'd shout available to agreements team benefits who unique that of been robust our tirelessly guests. unlock we'll the alliance's part give leveraging to to us this for have establish OneWorld. to the the and working out flexibility is

of time the more details first our added XXXX, with out efficiently network have traffic and very about X, American and in significant. status seen the the portfolio Qatara. partners, positioned tools our to and incremental far connect we includes This agreements we Codeshare with Iberia activated they American greater On their our Codeshare international many with order, partnership access services Seattle between Seattle, strong. With our partners really Air upcoming in OneWorld corporate to as Qatar place. in with partners, an January, new and we've GBT, forward is door in the with has in quality responses OneWorld preferred Shanghai see Los more for our to potential one especially market was Seattle is figure In route we've enabling our their also their I'm XX%. nonstop we well international access partner XXXX. guests than This Alaska share putting short American as traffic. X recently of uniquely routes sharing become believe spring. others Bangalore increasing travel, these more to top and to guests and California get to our Francisco, by So American to initiatives, as in with September global our you are launches corporate and XXX looking value San global eager Doha. -Doha Angeles, portfolio Express nonstop, The indication pre launched to opened Group COVID which are our - corporate Seattle greater is capture been and OneWorld and hub success with our with to announced with

fourth XX% to left July, expectations. booking a Delta it's and to looks the from the down in turning few down bookings deteriorated the during surge. although an variant to unfavorable on behind on Bookings our August, down XX% guidance, the Now, have days flirted be with imprint of quarter on us, surge impact XX% QX in peak

seen we've down we variant peak the experienced since than approximately reduced believe the Delta last recover X XX% fourth surge $XXX over recovery the after this of rate been by the has slower bookings that last we spring, year-over-two. quarter million. Ultimately, revenues has to days, While

is expect backdrop, as not XX% a revenues fully Although to was year the trajectory make this we down XX% year it to of basis. up for in With has bookings over improved, lost enough to QX X our QX. be on what today

with October However, our approximately assumptions down reflect in performance XX%. weaker total revenue

down RASM revenue looking about to XXXX, just is with is So unit December, between and top XX%, right while up discounts be and environment. preserving on capacity a shaping at reduction. perspective, but to we're XXXX, versus eye a cautiously XX% October expected with be to especially yields, November revenue XX% in in Filling and From down a our November line planes priority, December flat nearly an using versus our fuel improve could rising is

While the impact expected about us awaits we for predictions on making corner, near-term the shots, for economy. of any improving around opening booster have vaccines of the children, borders and vaccination, of positive what international rates aren't and a the availability recovery could approval

well. unfolds, I'm date will deliver recovery our work performance optimistic our in as is very the that we QX, commercial model positioned that relative saw However as out to and

shared, efforts that, lead with it I'll pass potential. And to break-even Shane. to As expect quarter our just with Ben we to a upside

Shane Tackett

Thank you, good morning, Andrew, and everyone.

grant and unpredictable business July of model. August points our and of my in $XXX going voluntary in us This total XXX of I'm included the down allowed $XXX $XXX our an and We improvement that today, quarter day they execution begin repayment from contribution cash billion our brings inclusive as essentially these delivered to results ended nearly The forward. billion $X.X funding. on-hand another was our margins cash quarter XXXX pension million million. is came team's to XX%, X status liquidity, and of down due provide draw decline results about impressed benefit excluding cash margin by of I'll I'll debt highlighted also retiring loan, pension total contribution. within credit. seasonal of were In our PFP capture sequential with performance down industry-leading absence the paid million the of and and the we made funded and a strong such insights our to Debt $X.X were of undrawn As Underlying QX today, environment. on and in from Alaska's underscore million commentary tax the and one quarter, time QX pension we levels. and in our permanent and durability this liquidity liquidity. to expectations June, $XX sequential cost of break-even, operations cash from results performance, ATL. lines -flows expected flows with liquidity, inflows normal -flows QX

depending XXXX forecast. our outstanding operations -payments we has this tax debt-to-cap are commentary, remainder variant. of and Planned refunds approximately at Delta million flows be Today, further his bears weighted service of retirements, for for service end Ben the which plans was impact as our $X stalled when a XXXX low quarter is strong to of the debt cash payments, the $XXX the to X.X% expect XX%, in of described refund. $XXX factors placing intended shy XXXX. for year. we shared. million roughly pre million in and Andrew result, quarter, to debt draw down of $XXX us as $XXX that anticipated higher the and net as debt year cash negative on just a we our due positive debt to the and exclusive recovery of With through about ATL This than quarter's rate variant quarter our Delta a However, average the range in relatively demand effective a no the have the between on very originally is tax and intakes otherwise to Fourth of manageable the in year, the dropped our million from forecast the receive bookings quarter, reduced expected

the debt annual service of million. $XXX range XXXX, to in beyond $XXX Moving is

to EBITDA less X in move I expect sustained net times approximately to profitability, debt the For XXXX. to levels or our return to

end great as which leverage sheet plan balance in to both and year. can are eventually we to order, our we in distributions, fund Our shape, the fleet look and next do we forward and liquidity reactivate shareholder of towards

now, approximately of total billion I As to expect liquidity to move XXXX. our $X.X in

our and growth. Moving for I QX a then return performance we focus cost costs, the on our over to as next prepare trajectory several touch on briefly months, to will

in with quarter, we non-fuel X.X% unit XXXX, $X.X This than guidance issued were costs better billion versus September. the up costs

for to this With the started saw quarter, the at months next $XX we $XX of per strike And up in have do per costs at teams hedged price QX. superb cost medical consumption quarter. hedges approximately barrel the our for lower-than-expected provided and average fuel a costs an Our continued $XX rose our quarter gallon. XX% have million $X.XX We fuel or $X.XX to currently from benefit in job their crude plans. in also QX of again $XX X planned XX% gallon, the per we meeting internal Fuel a where year.

Given oil, realize performance we and to continue to in expect QX benefits absolute the near-term. margin the impact in we also into current hedge expect see to headwinds spot fuel prices of Meaning cost XXXX.

to Looking pre remains an priority That getting forward, some the on steady we progress levels. make expectation continue of costs back team. leadership and - COVID

lower in costs fourth adding pressure in at an Our million in modest trend through also up pilot been compared compared large, to industry X% industry up Capacity economy across and the hire in to entry-level acute wage September, their $X the XXXX, pressure which the in be lead our and general to and June, pressuring creating XX% Horizon X% is same with to to capacity wages, adjustments are seeing is consequently, We're this as is quarter. in approximately attrition near-term. is also to December. we in expected believe XX%. the month operations, both in XXXX for Capacity abnormal capability levels, unit levels mainline category December be expected progression XXXX in to more likely in X the down CASM to solid aggressive still of has X% up and

onboarding than given unit and XXXX The million. approximately earlier offset. $X challenges of fully cares as employees without associated are capacity, ramping we and its run as XXX% carrying airlines additional capital Doing as capacity will costs, not returned costs normally to through for are In training the to continue particular -COVID is we airport operations charging ramp through put capacity we partners will we pre capacity. our summer. related with by Costs and more have returns. our costs next training to so as One airport normalize Additionally, is with would, quarter to both reduce grants employees two for we expenses. headwinds associated

costs to lessors. so returning of fleet the end are of cost Airbus other term. to step-up transition were economics long doing favorable strongly a in of aircraft related The our contemplated to our returning decision and areas return the single fleet, to The in fully

As window, XXXX. of main to we in XXXX airline emerge utilization and realization an aircraft efficiencies XXX-X order, in our we with short savings, we targets our the there the significant well to final will largest fleet. step a better line through squarely will expect recognizing return through exit flying move cost our XXXX one tailwind a or a now nice structure and a results as X expenses be in as XXXX, impact XXXX trajectory and into productivity earnest. will than the the in down -- restructuring CASM quarter's provide these this XXXX headwinds, ex step-down which increased our with I we of cost Notwithstanding the into for P&L as from equal reflect as are intact

say unit is expectations capacity. our close, As to costs a model would XXXX is will business versus again they To roughly that on up and I've our QX I X% result lower for be of underlying tailwinds strong. XX% that just the X% headwinds described,

to that deliver variant. quarter returns, were hate financial we that of Delta to the up demand the While think performance. we because strong and that confident to don't have have, reasonably are demand is We're when get set we strong we we fourth choppy, poised

We COVID there. forward pre growing are looking from - to demand-allowing to re-scaling and our size

value and deliver our and to additional unlocking to go transition that, your be bottom this, fleet As our cost restructuring on to And commercial to questions. we we do with line. levers will drive let's continuing

Operator

to invite to moment like first go would a Q&A [Operator to James. would We'll like Syth who I analysts Raymond will roster. with just the ask time Savi this from a for ahead. Instructions]. pause the come compile Please to question And At question

Savi Syth

Hi, everyone. good morning,

build there the Francisco, As -- big as is how are those a you was airports, here, This curious them, the you airports; I back. San talk rebuilding those about operate change network mission versus the and Portland, strategy Seattle, just post-crisis LA way behind you before?

Andrew Harrison

this is to and morning, have serve Portland there we a it's say made Andrew. Seattle, extent. Savi. but Hi everywhere wouldn't actually and I lesser from tweaks. refinements some we Obviously, Good changed,

and out top the going going very, in San of on leisure of out some is given what good I seen very make we Los little drove you've making more see to we markets. think there, built there, especially on of pretty for I Francisco, focused the is think I sure to and network we pivots you're us think a Angeles, you're And more and us OND contours see style XX, do a well. the flying XX us largest business out the

And that's where of we're of this. on landing all so sort

Savi Syth

kind San working kind Got it. those and learnings so that bit the out? little up in fit then, I build or more cities just on And tried do that of in of other within trying if any could to focus the City, kind a build maybe to past, past Lake Salt the on Diego, you've those think the we about in Boise. follow of Andrew, network How

Andrew Harrison

those major we're we've loyalty there. to good California. in very be Pacific non-stop cities, done markets, over our service Yeah, and a to We given the and finding of the the just but especially used to evolution the that hubs -- flow secondary lot on strength of we've demand Northwest traffic

all it's well Diego San got for all Bay San think and as part of guests. Jose sure loyalty for about making of the our is I and utility Area us, we've

very be San grow the and going important continue we're cities Boise's Francisco, So time. those to and while we Los always mainly secondary very, to over Portland, to the focus will and Seattle, the on us Angeles,

Savi Syth

is demand Makes one last just where clarification, And days? sense. these business

Andrew Harrison

Business demand back. is coming

In week recently the was say the in day, fact, we've before versus had the summer. just pandemic, best I which one should best previous

what So seeing forward to business of is increased starting we're return. momentum an steady demand

Savi Syth

Got you. Okay. it. Thank

Andrew Harrison

Savi. Thanks,

Operator

America. will question Didora with Bank come Andrew Please ahead. from go next The of

Andrew Didora

have talked you next particularly I industry Hi. are earlier. the But been question Andrew. this capacity growth it know over has capacity pretty the average you Good for you know I schedules. from that helping up, everyone. the about performance questions. plans quarter fluid we and but morning, a you're do Thanks pandemic how seeing Can capacity see some or for the based talk picking two? you've and yield what competitive XQ all maybe here, on about much benefited competitive see through of unfolding of in into I this the environment below

Andrew Harrison

We and Andrew, the competitive the looked look Coast, at we've environment West how at goes.

of I bit honestly rest the and to country. risk demand is weaker think [Indiscernible] a the subjected little being West Coast

vis how there. I it's competitive you not the mix though good. California of that capacity demand think network and may think as specifically, when others, as day, and see really stopped about - feel end being good really about our structured vis is the feel But we even at we do So high -a h you

performance. is for As our configured by the that good network you can quarter see third

Andrew Didora

certainly about that is list about you pre can think Shane focused And time And allowed, policy, return Your Sheet do maybe year? and up your mean, first capital high you you to returns think Balance think on dividend were way and it I you or your in this Shane priority was you're mentioned looking you prepared a now, handle next forward allowed the buyback it, Ben, think thanks more airline I be to? bit say once you it'll little the shareholder for of it be do questions. when think remarks -pandemic? or you're a sort your will as a when it this you're Shane, but guess I Ben, to the as on

Shane Tackett

returns stable I and how shareholder had we is distribution going into we But the first will not our Board that. be want that get to here to about say avenue to of deployment environment that lot what out today philosophy demand don't our the with to think pandemic our and a sure are. ourselves decisions that like have best think any ups We'll the make we obviously shareholder priority understand returns a terms in one I capital Andrew, consistent coming into COVID I going and and returns. what very the our timeframe shareholder that capital and and But philosophy to super allocation put about hand to our looks have making important enough committing go-forward thinking airline. levels. a liquidity manage But is is to on we with have do particular and We stable think be are to grow We're to also do business, has do the downs us. able to is returns. together what with I at changed. position our

Andrew Didora

Thank you.

Operator

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

Jamie Baker

everybody. Hey, good morning,

the So about demand. optimized extent on capitalizing do want up, for growing, that said permanent To to to what airlines however need demand you and you have other to is it? or do phenomenon premium this this differently season it you continue this are describe echoed mix you anything leg

Andrew Harrison

Hi, Jamie.

and first-class to much but and larger and to are place definitely especially ability out a when. cabins, play any to demand business premium are well so how we there, going hold -- Our product point, our we very I and with with don't our booking changes, curves your is class, configured believe, seats I foresee many

business more we've going denied I to we're historically probably get historically, think I that on traffic, cabin think and that. fine-tuned

more be bit would our that we're of just that other change. just the about going I premium making think little business going be the flights for part demand to that, a network sure too, see disciplined I is forward. our -- that demand. And timing then that for cabin largest increased coming

Jamie Baker

by And Did variant the million. XXX quarter to the say and Delta right? second, I revenue you apologize for saps helpful. pivoting model. that That's Okay. Was fourth

Andrew Didora

correct. That's

Jamie Baker

It's wrong. wanted I was to on that make sure I tape so it Okay. just million, wasn't XXX the

that's double was quarter, even guide, to allow implies the but XXX the costs we quarter if to said some million and was if it in I that, variable were territory So you we in pre -tax today's that July that just for plan on tack back associated the fuels. know cheaper be so, fourth in digit that with margin where because fourth you'd

math there my well is my I question So X, anything wrong with guess is whether,

Jamie Baker

plan not. summer But in fourth interpretation? it actually Is that despite mangled fuel. hopefully the if over strengthened not, fair, the your quarter feels ex-Delta rise a like albeit

Shane Tackett

call July, that do -- Jamie, But strong factor again know builds levels every load think above never above on were very this load going and builds. wasn't over forward every in month We turns at what for factor it's and on were XXXX single were what very, XXXX yields it out levels one at and I there redo us were variant. things were -- almost month. in backwards we a that thing sitting Hey above we is go had if you the can

is for exactly about strong interrupted, demand I if optimistic, fourth that would've And pattern so think it right been quarter, yeah, yeah, between if wasn't quarter. quite had strong to and know now that we strengthened we think way could've sure. played a Hard over a and then really But were out feeling to it. the

Benito Minicucci

Jamie think, I

Jamie Baker

Yes.

ahead. Go Sorry.

Benito Minicucci

prepared business I model. statements, is and we we're think this in confident think I said our why about this our is,

go returns recovery a you back and I I think had model goes to follow-up? ahead, going we're that. produce comes that when score think that just down think it business a it's But, I to

Jamie Baker

that's interpretation, as well. modeling And Yes. my certainly

recall clarification, that correctly a U.S. do still size only you doesn't quick have preferential Is bidding Just airline right? are that of a I labor in the the real system? that

Shane Tackett

our our true, don't group. We group, with is with pilot do we flight That attendant Jamie.

Jamie Baker

Okay.

checking. you. Just Thank

Benito Minicucci

Thanks, Jamie.

Operator

The Ravi go Shanker next from ahead. Stanley with question Please come will Morgan

Ravi Shanker

all front are going traveling that's just that the certain to so I and is it's that there? everything then given Thanks. pulled not something concentration out on coming the free-for-all travel questions. has had And surprised to you Morning the industry follow up competitive second, pandemic? of surprise? that on or last a e surprised strong and travel all at given the plan Are given the expected on Again on all. guys is the you side, lanes a two you that the the people's is the just of that out of If can preference back mix at

Andrew Harrison

I for the cabin. can't Alaska speak demand the the it -- space was materially Ravi. reduced was, I knowing business Hey, to rest for can where the industry, in front speak but of we of is

the on weigh Our down, coming first-class volume they much plus were up fares side. but will made

feel through the at I did net and volume. incremental driving team outstanding value job phase So lowering an

And part to so that's but premium I don't to I want in forward, or to going going anybody. believe there's travel clear, first of doesn't Who have what let's be mean, we're measure class?

matter it's volume. So a and what of price

there's So place people want demand, that's to sit. the first

we've so well And been working there.

I as lot back, the don't Coast. I'm one West for look I think control, and We proud a adding if think look volatile; again, all of disruption. other by you down capacity good leadership here that especially see inventory carriers adjustments on We've we Coast, been at I West and good selling coming at capacity. a minimal guest path I you have on allowed closer network the look And adding the And of, folks things with industry back, really been reducing, the reducing operations of particularly and steady really our the not that's is that the in. cost and system. across know Ben's

like feel us. I all of So working has for been that

Ravi Shanker

just If can I --

Benito Minicucci

Go ahead. Go ahead.

Ravi Shanker

ahead. Go sorry. No,

Benito Minicucci

just with the think comfort and to space competitive when fly, that. I had sorry, have they're was go leisure fares I another say, up the and more But are we're premium of on with they of this benefit do COVID, looking travel, ahead, have and question. I think seeing we I environment more the for you think our to class going first-class.

Ravi Shanker

follow-up a just specific point. Yes, on that

return they that used kind this little to cabin? a fares be to you to to bit even elevated do keep to about going at are and cabin Or if to mix fares premium this mix main shift of going be you levels? looking 'XX? how be of think looking where current into Are back So see we this 'XX the with if -- to going you

Shane Tackett

much worriers fares our The for other travel is focused comment to to our road guest thing first-class I'll opportunity but the we that cabin. are so course, not still committed returns, as return that robust the on, and returns, as business it's on into we're loyalty of having upgrade

So And have. a to rates. be going challenge it's we're going going to but good upgrade occupancy problem our to be balancing phase with forward, first-class that's

Ravi Shanker

you. Thank Perfect.

Operator

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

Daniel Mc Kenzie

guys. Hey, thanks,

that couldn't is wallet Just partnership, now just backdrop. a American what respect question to aggregate Alaska that normalized of part guess really me I can into tap to with And it referring previously? here the I'm to a the

an - for to that consider time flying current Alaskan can managers travel as program? the corporate alternative So American first their in

Andrew Harrison

be I'll and generous and more one overwhelming with of opening your much I unlock to also, We've the bigger from seating handling a here We're American, things improved. there think. Hi, [Indiscernible] We've couple our so options. response more as frank, for joint wanting really on big really competitive now whole fares to has your clients Yeah. with dynamic priority contracts Dan. our much point. But being and accounts. had first, them, corporate answer up the second Alaska corporate essentially, just is providing

question, could On repeat the first part of that? you your

Benito Minicucci

Codeshare domestic San into code the tap and was to the we're travel the bit streams Moines, Francisco. valuable, that potential we networks come really out that the demand a into to, I'll Shanghai, Des we focus our and take of linking those value when WCIA, is haven't behind places. behind suppressed, want, off get announced [Indiscernible] hubs of has us Grand to so ability been and we American it of is couple Seattle pass and think with This couldn't. Angeles, speaking the destinations excited out for has a our to about and Bangalore. to actively obviously there. But can't what And London, the think actually. Los Americans lets really taken the share having the Rapids, of but partnership, flights O'Hare unique offering American I international as hub passengers as non-stop the Chicago American on the Initially really before via over we And

Daniel Mc Kenzie

Helpful.

prepared then cost remarks, you're d structure less CASMex of looking XXXX Do sooner one XXXX to an you to a Okay, to of can XXXX than the in with to than of get you to later. a CASMex of rather or XXXX achieve XXX% similar, flying? your capacity that's comments a have get get to

Shane Tackett

Shane. couple executing single -- big we we back done. years restructure We've XXX%. would that that we're pretty don't get fleet, don't I it's takes is Dan, thanks large commitment a Yeah, A a on. cost get that of No, think that to full movement to to to have got and and piece of program

so in be levels. our that what cost us we, we'll back and business - And growing getting the the those and of will going for is with COVID, COVID get book actually XXX% set think the sort size coinciding with pre of pre costs about our front But West long trajectory to -COVID to it's same if of full XX% bit likely above time, and a commitment pre with It different items. or XXXX restructure to reason just time capacity be to structure. at whatever the - our down of for of opportunities it's pre we the with the will be the capture likely and our XX% -- be cost -COVID Coast a a think we up I above model, order about

Benito Minicucci

when which?has there. our focused productivity spot going on squarely is we as and fleet that and back we're for then with CASM doesn't the we're we'll And a big targets And get got That's goes sweet benefit seem with a be where us see productivity.? hand-in-hand -merger and that's to pre getting single well. to back we're focused on

Daniel Mc Kenzie

Perfect. Thanks the for time, guys.

Benito Minicucci

Dan. Thanks,

Shane Tackett

Thanks, Dan.

Operator

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

Duane Pfennigwerth

Good thanks. Hey morning.

seeing and any probably early hasn't But you whipped appropriately You're ask plan relief? to seeing on parting labor around that ground has because your of airport Airline not conservative staffing, clouds the this, been you handling, are schedule any signs availability, best front, are on as your much.

Constance Von Muehlen

Duane, question, the for this Constance. is Thanks

you is proactive solving have. said disciplined Sam, really in all your the performance And our has all as despite conversations, top are performers the across think which team in secondly, those the and in the return mentioned, true third quarter, I in industry. resilient, many industry have two that's capacity. for really to shown the challenges One, reasons. we we challenges delivered you we've the among

through confident quarter team do our has leadership think the I'm that continue addressing to see as those a and fourth great Mehen I we job them. done address Mehen we'll beyond.

Duane Pfennigwerth

staffing, comments as it All the higher that guess getting fair I is, we the agree per it I with, is extent which guess Fair. any acquire was? is you're effort the very difficult trying or to question to just easier as airport or

Constance Von Muehlen

I piece, a the every to would on is say acquisition then challenge. day the one it's consistently continues consistently retention and the staffing thing difficult. Perhaps be and

effort of I inordinate have think into put the we relative we amount in XXXX. done do industry, an that's so may true across that, what to

Shane Tackett

our I real -- it's it, Yeah Seattle certainly been is because the tighten a in but thing to to dealing workers. answers want add Duane, everybody entry-level quick, think get tough me quickly just let we it's region, with

been I hasn't labor what used it's say of but will to pool that Just be, improving. it

need think bit is bit. to as through starting we've pool a gotten a staffing for the summer and and the I I the labor into little less, our fall, think is expand

guests overtime right keep had things every So the job. who I also we the day, I a in did thing still in our the minimize operational moving to appreciate say really employees They think work they everything that know one operation, confidence are to single tons put direction. would going disruptively. is worked phenomenal and of came But

Duane Pfennigwerth

'XX? But thinking about super helpful. you just follow-up, again. are thanks And and in mentioned And how this. you That's then for apologize if 'XX my I Capex

Shane Tackett

little Duane, above well now, year-end still with billion -- it Again, our and be the a for north fleet about looking well. airplanes midst at as is in of that and forecast, in minimum we're based our right Capex XXXX X.X at plan then on pay on cash of XX. all at bit our those airplanes, our we're obviously growth for margin based a of forecast, liquidity liquidity pre to value conservative the XX, -tax

Duane Pfennigwerth

Thank you. Okay.

Benito Minicucci

Duane. Thanks,

Operator

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

Michael Linenberg

you questions Good morning, yes. headwind about here. airplanes. the redelivering respect talked Shane, to with Hey, Hey, everyone. the Airbus X

I How many And looking will like XXXX. I'm million to XXXX to go years? a just a size airplane. headwind are at is that what think 'XX we airplanes you trying said in and -- away it in million cost 'XX, few here? this X

Andrew Harrison

are full engine or number Thanks -- of that, due are lease. of If airplane had really sort what Mike. the the aircraft -- by cycles. these do of to all extended restorations to we well for maintenance The have leases It's had think these heavy a of north would've might specifically condition as I Chris restorations of aircraft,

Shane Tackett

Yeah.

end Airbus got be XXXX. we've that the operating by XX about AXXX So of gone s all will

tail anywhere cost. between So that's $X history return change on looking you're of the these. at to and had to really million some point, we've are These a number the are these -- returning $XX

the And of the we've expense P&L That's for lot bubble at looking this. years. you're a so couple Mike, for that's incurred next got maintenance the of potion.

Benito Minicucci

negotiate. to wants Everyone

Michael Linenberg

And JetBlue's from good of JetBlue the gives are. qualitative Interestingly, figure because think Andrew, away your I their relationship piece. out to throw it revenue what's XXX,XXX question, bigger going thus fact good a then my American very American getting just that a you you there's piece to with some go times we'd they're your second about sense helpful, said order OneWorld. they I on and to to said been they five what's have the obviously were benefit X%. about the is out and than to and was of they to commentary passengers. and accretive what's split and But far half super something by They actually some guess us comments some that's call, Now that commentary on about --

as on be that curious some what anything percentage up revenue to couple anything you. revenue Any points, So if it can it's throw been you've seen I'm and quantitative relates accretion would helpful. running? you Is Thank out a of the to since it front.

Andrew Harrison

And unpack Day. probably I for question. not more great we're That's on a comments prepared transparency lot later. other a going And going to of you little this probably you we're lot to Yeah. mean, here, whole we're say a to that's and give Investor than to that a then make

Benito Minicucci

we seeing Mike American We're loss OneWorld. upside Day. a more Investor of with totally do spend. will but see give giving the value Again, of We're and and partnership to it's a not on COVID, from this because details you lot

Michael Linenberg

by Investor Day is the when And way?

Emily Halverson

going in It's March. to be

Michael Linenberg

good. Very

Emily Halverson

mid-March. out sent be will [Indiscernible]

Benito Minicucci

We won't it promise be [Indiscernible] raining

Michael Linenberg

Very good. Thank you.

Operator

The next Cowen, ahead. Becker with question is from go Helane please

Helane Becker

Thank very the time. Thanks Operator. you everybody. for very much Hi, much,

couple questions. ESG. a Just of shifting Actually gears completely to

board to a number I of made of over guess changes, last the years. the You've couple

then thinking So And -- focus as other where is you. question that? are you for maybe with respect the to Star diverse, want for more some Thank a of get okay chance, SAF about off, board that? you're that to that. that, you hoping my Is can Alaska of it gives are acquisition is Ventures. or impact you the part you or to the What do? or What's focused change or that it Are you be? to coming retirements there with on to

Kyle

will Kyle. morning Diana will Good take first question and I second, it's the the think. take I

diversity super also marketing ethnic We're and to just XX% member XX of I so and last XX% added plus diversity. Our happy very I'll bringing proud fantastic right the that, to at we're is board independent just board. think with our now. about week, composition we're board and and Adrienne fantastic gender bringing board currently note, directors. a us experience we new just joined really Lofton brand

Benito Minicucci

board is on second for our and and say sustainability, on which your Star Alaska focused excited it's about ESG will about answering we're squarely here I'll forward us, they're dovetail And strategic really Diana? a is path Ventures, into driver our this on excited big question

Diana

Yeah. Thanks [Indiscernible] for asking.

is earlier which path year. Ventures the Star of to Alaska we announced on now focused Xparts specifically zero, net this So our right

of carbon focused gap incredible synfuel sort Obviously efficiency. to operational but target. is are propulsion, the our sustainably interest those which briefly, novel just the on the fleet close our evolution, So not offsets to

of us looking system fund and help do we're can help that our X the specifically sector-focused X That specifically Technology next accelerate the first into past. in to case that years. for the in us can those to So path or bring technologies investment that

Helane Becker

you Thank question. I helpful. have just a very That's very much.

you, maybe But -- with don't can't Dan you say say the what's them? up you to in You're anything respect negotiations. I to with for want pilot

Benito Minicucci

some safe they keep skilled for I do asked to are got we're fantastic want a sticky us for we Mediation and we're to of job and have issues help, They're great comfortable and a National the our we've first, going professionals Helane, we working a highly some through, value on-time their we pilots. get group contributions, to way state us. deal. and We've Board that

be Unions, to and for a What get is lot know have to grow growth so exciting future pilots this plan the I'll X our s. we our for over going their a plans, we have We a airline with of the we spend our so next to say phenomenal we're X, our history years, an you pilots, getting place will deals there. heard career

get we'll I So the there. question. appreciate

Helane Becker

Thanks you. thanks everybody. Ben, Thank

Operator

come with Conor Please next go from Cunningham MKM ahead. question will Partners. The

Conor Cunningham

on since couple agreement credit I you just I a agreement the spent everyone. card market's another the around America card was you've your of soon. maybe but recent could closing from how just The up carrier. you is wondering signups Virgin over think Hey, with some years? a the for if I reset or be has on had Thank past how been details provide evolved might wrong, the time. acquisition, many little

Shane Tackett

little We've working that on very change to agreement us. and our changing closely are of and have we've we XX-year been and of done, bit 're Hi, things other -- they're of a very are time relationship aware still who Conor. with, we got agreements working we America, Bank a with said with

prepared I a I both said the Spain. compounded in of on we've annual think X% rate since and got team I members think of as remarks, my our growth portfolio

had ever So receipts but this the deliver and done as I return, has had. we've cash highest also shared, program we've nothing and

and fuel got going we've exciting our it's think XX, a we only into that there as come I to to more things lot planned growth loyalty get of program. in So

Conor Cunningham

off West Okay. for Great. Northeast. and that clearly that brand I are Ben, big past brand be you've would I would you investment for Alaska slots making that in the And national a then involve in and the Coast. saw further the assume at of put in markets some Newark about the talked that

Just of Coast, the of of made where you that already wondering success Thanks time. benchmark for West brand outside how awareness you outside just are dominant. guys the pretty

Benito Minicucci

be Yeah. just a And X, strategic to we XX spend how to No, was network month X This next years. there. build It is a or thanks, from what our from initiative initiative. XXX% really us. growth Andrew Conor. X and big will and XX% won't saying month it's linked for This back

with brand our loyalty our will there sure focus our and making first and So a the and strength and people with the is with West bring product. we who our Coast in be on understand Alaska network,

we're focus to move coast going then there. on So first east the and west from

Conor Cunningham

Thank Okay. you.

Operator

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

Catherine O’Brien

Hey, everyone. Thanks for the time.

mean, larger should flag? from tailwinds then sounds you we I it if to and guess, XXXX. that's I costs scenario, capacity want like wrong I'm anything flat So comments, path a to wrong, for if have guess, that in correct up it there like expecting is me versus laid you be unit XXXX. Thanks. I any right and are there to earlier sounds out down

Shane Tackett

recognize of our next do to want totally short an that in back go not on summer there's want what back guidance to right understand view in, ultimately I hey. that allow year Katy, want don't configured appetite and to trajectory, don't half doing size Thanks, commit be see stop to giving for I that there to we because today. to and if our timing XXXX guidance. along that quarterly that capacity have could to the call strongly thing coming consider it. we'll down, we -- I just to but full-year for is - capacity full January, instead of is And giving grow, a guidance then step next second do get hopefully when and our for got of the we've flat pre essential year. costs think in the But and we as now. We us to costs by we we're the demand COVID unit year planes And earnings

Catherine O’Brien

frame the you give contracts onset wallet locked you with enough. else to on as the will fair clients, share that be This it is but that existing corporate returned have adjustments that's assume high-level your give the number, you've a guys. of your if Can American you either upside some help sure perhaps greater XXX%. corporate I'm in OneWorld made already now, that were pre recurred volumes just it partners. an new of equals XXX? to Thanks, it And with since exact a books Is and helpful. or us have then Okay all accounts like sounds with you you XXX? -pandemic have really pandemic can't

Andrew Harrison

that, Thanks. years. RFPs, know have is go. cycle through you [Indiscernible]. what I every things say I'll these few They is, But how

also businesses of we're TMCs engagement big just being with more at to I And and more think competitive contracting the we agreements, changing process our for an full. in found GBT. and we've RFPs plan working like on rapidly overwhelming agreements, joint and

only that to Just more. help going us propel

I we about So our on share. I'll around Day, strategy will what more that. think And again, share Investor that's

Catherine O’Brien

you for time. Thanks

Andrew Harrison

Katy.

Operator

please Walton with The next ahead. Myles go UBS, question is from

Myles Walton

Katy's necessarily to reasonable cart money, follow pretax is uniquely not your horse. basis? frustration afternoon. maybe I 'XX isn't double-digit on recognizing and I'll a your from or a market you But little of on But isn't the think losing market it's the volume some deal. differentiating the wondering Morning big a drops the the it as performance maybe Thanks. margin less gearing through simply is bit sensed year maybe before it was question losing is everybody and that a is up higher

Benito Minicucci

hard Myles, I It it. -- to say. really Yeah. appreciate that's

that more impact If couple million the add if one you QX wave, QX It a XXX from than revenue this for look impact. mentioned you we it's was at that alone. of in

is are choppy for. and configured back mentally going But with strong all open recovery, headwind. performance. to deliver we've So we're saying financial no what comes Oil prepared demand expected prices waves I if think we're and really to been that's ed economy be strong, now, right along we spiking what that's then the there are yeah Ben more a is and

could think environment's the everything that. to it and choppy that be So it's deliver we right would stabilized types margins. confidence now. But I hard of to love towards headed we're you give exact those too some really if We that able predict to

Myles Walton

in XXXX Okay. One detail, XX% so about count's relative as to you roughly head get be your your headcount capacity to will with XXXX? line capacity, down where back Thanks.

Shane Tackett

as targets productivity probably got, huge - that we've not targets, productivity we but well. down should an do as a Great better. the execute basis really question ish It little amount, a there on as will be we we bit the on achieved average

So that's our expectation going forward.

Myles Walton

All right, thank you.

Shane Tackett

nice grow at a a to just a And say time of of over Company, the other we've done is the we'll job I managing back we've rate slower -- and overhead overhead would relative thing capacity. really that really much got

Myles Walton

Myles. Thanks,

Shane Tackett

you. Thank

Operator

question Susquehanna, please next S with Chris from The go is ahead.

Chris

Good my afternoon. taking questions. for Thanks

the on and going think appreciate of ASMs it, FTE. through time lot just pro you wondering, there if we metrics finer comments if should your are that is gave But the productivity X that put a X about you've I spent FTE. ASMs it So a you initiatives, point was on could or per

Christopher Berry

recovery. per we point look we should recovery finer think of the Thanks. this something of consider, stage next hours block as is Just metrics on that we some X.X perhaps per or was next here this the here, around leg XXXX crew? about As month a of at it the

Andrew Harrison

level obviously I Hey, demand we production departure. be at but derived and is at a as passengers is closely. probably most Chris. externally which consumed lot group other not to specific it. two business then Appreciate labor perspective, Yeah. in easily terms two the The that the per more for are the employee of that do are inputs departures for certainly can it. FTE, Internally, And something externally, component per That manage the our a We that, something crews is track than as block of think, has those that, look FTE. hour other easily that we numbers. from

Chris

Okay. And follow-up just a here. question

on remarks prepared capital returns your signaling in So your here.

moving cash from operations about we have pieces a As here. XXXX, lot think flow of

around You back have in the point, thinking about partnership, inflation, we how access finer any you've yields. CASM I next should if have half concerns Or detail, year, more higher said we of there's but the specifically fuel, be think that. sort of

half and then for think book CASM of we would You're your you. fly as expecting XXXX? second XXXX, to next that the about XXXX for imply excess Thank summer what

Andrew Harrison

desire and I'm I do consider comment get Chris. of like that the to next more guys guidance better Thanks, we'll my you our that think I our all question. call, shape sense hear don't appreciate you year. for earlier of looks can on totally what annual appreciate on quarter-by-quarter. ASMs so of a annual for going give there's -- full-year giving about the XXXX for about next guidance I and both that to want to expectations, I stay CASM

Chris

Okay.

Andrew Harrison

Thank you.

Chris

on And we'll call. all questions, time. Appreciate all everybody. we talk are Thanks, the from everyone. next questions to Appreciate Thank out of the you. you the

Shane Tackett

everyone. Thanks,

Operator

Thank available in @alaskaair.com. playback be will future conference call for participating you This call. for today's

now may You disconnect.

Alaska Air (ALK) 21 Oct 212021 Q3 Earnings call transcript