Earnings call transcript Q4 2022

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Operator

Good morning, ladies and gentlemen, and welcome to the Alaska Air Group 2022 Fourth Quarter Earnings Call. [Operator Instructions]. I would now like to turn the call over to Alaska Air Group's Vice President of Finance, Emily Halverson.

Emily Halverson

Thank you, operator, and good morning. Thank you for joining us for our fourth quarter 2022 earnings call. our which issued investor.alaskaair.com. available we morning, earnings is release, at This today's from updates you'll Andrew On hear Ben, call, and Shane. our your Q&A Several line of management also are others on to answer of questions portion the during the call. team the

quarter reported million. Air income net fourth morning, of GAAP This Group $XX

Group Excluding special Air items income net fuel mark-to-market adjusted and of adjustments, hedge reported $XXX million.

differ comments today about which may statements will future results. actual forward-looking our materially include reminder, our a As from performance,

can be that factors could business SEC affect risk within on filings. found our Information our

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

Over to you, Ben.

Benito Minicucci

everyone. out and into we morning, build positioned our volatile Emily, on of incredible With results. well success and XXXX move solid focus employees, as Despite closed XXXX and continued the to beyond. this our dedication good year, another are with we Thanks, we

generated on X% This year, so levels, capacity. full XXXX above we less doing XX% revenue year

proving full industry, margin the have ranked for years. XX in X.X% year the business Air of our pretax last led XX adjusted now #X is the margins industry pretax Group's model Our resilient. that

worth largest pay. our on on weeks' average, or in top salaries performance adding of earned Additionally, of employees our the X nearly XX.X% payout bonus company's history our employee

all of Group the did people for outperforms care. turbulent a I Our them during times. fantastic thank job they to ensure even do want work to Air delivering

future key growth. advantage year, our prepare identified for competitive X this strengthen to we Earlier priorities and

We significant contracts XXXX, including: our and Our and improvements these creates for and all one, of teams signed delivered labor priorities, of employees. include company deals. in our each for clarity stability people which completing labor X on our

the with focused well completion fleet on-time and healthy of of Despite XXXX for; excellence we growth our Operational Alaska are transitions industry's performance aspirations focus year, delivery foundation single Integrity consistent best two, our the future; fortifying executing known throughout we both a on at operational place, and challenges the remain finished Horizon. with operational is and fully our positioned one reliability. to three, our is in the airline, these of With and on we balancing Alaska rates.

On in final AXXX service the January flew we X, XX revenue only and our AXXXs year-end. flight, through marks flight last fleet today leaving QXXX the

We regional both cost-efficient have more aircraft in retired the over operations and business. the last XX and months, way our few in productive mainline paving to

us committed out lessons As and a we XXXX we closed even year, with many take learned. taking We off solid we're are XXXX, to make better.

has leadership aspirations, will of a Our improve growth expand that our and strategic operational team margins support initiatives excellence. set clear

a and expect the competitive has discipline achieve guide introduced within be morning, For will balance share, have $X.XX $X.XX adjusted and leverage but to earnings the challenging per history to these XX%. shifts levels the full to are to year, an of airline pretax midpoint. there require win at and to structural we This Delivering been X% implies which sheet required time targets will that strong restoration between again our strengths. we EPS the margins business. in proven on and Undoubtedly, of us industry, cost XXXX

dedicated our all Group's it to gap. matter cost XXXX be it what down debated and close Air era, as team we we temporary, of in is in unit productivity begin is driving and believe where pursuing used not Productivity productivity to heart to restore flying leadership and structural is can what and low that to but the is stakeholders. cost high the this This be post-pandemic benefits and DNA, and is continue both

factors more with nearly X,XXX in by availability. XXXX, to is enabled our in and successful are XXXX. to benefits hiring growth come had the capacity staffing people and We and to will be Two that aircraft fleet plans critical continue in transition strategy upgauge hire our X,XXX XXXX success in in fleet. single our largely new This MAX confident

buffer And have a so and these our as as in confidence appropriate as remain communication support to to in X% areas, the both to aircraft, long in in we with Having and demand planning to prior environment versus relates confident factored continue economic close plans grow it are well. we of our XXXX high it. Boeing in XX% degree the fleet year, assumptions

road target. to our XXXX build and Lastly, map focus in Investor in opportunities, path expand is $XXX to provide contributions cost deliver we and XXXX. margins, outlined growing and at the tangible on excited we our revenue these revenue million on Through our valuable to have continue team March to Day discipline will a

To a steps throughout path. the taken and more wrap up, pandemic goal the our we've been date to has airline competitive emerge ensure we're that stronger, on to

of knowledge, proud us am results in achieved the beyond. and looking drive XXXX, initiatives to I'm the the of to even and so, We ahead performance. have opportunities we XXXX our deliver resources, on in strategic the discipline and people, the more but forward as we the I financial

that, with I'll And it turn Andrew. to over

Andrew Harrison

strong and billion. My full and along revenues XXXX, winter XX.X% holiday peak notwithstanding results, December. XX%. quarter nearly That's included period travel first Fourth of today quarter we results $X.X over up fourth our of totaled versus Ben, that capacity conditions Thanks, quarter These the morning, will good focus year was on guidance. in impact everyone. down comments the experienced our fourth severe the with quarter

for increases initiatives, XXXX environment. a that's XXXX we of revenues came XXXX, commercial industry-leading in power a and at pricing our up were loads, full which less and XX% which achieved versus came X% revenue year in our and unit mentioned, storm off capacity. up year exceeded full outperformance $X.X revenue the at XX% and of demonstrating Notwithstanding XX.X%. as versus leverage robust Ben billion, resulted of reduced of More This year impressively, network The by levels million. our approximately with $XX capping revenues, in strong on XX% the quarter constructive this, unit

to Turning product loyalty. and

in to we from the our continued been demand strong has case benefit products. year, all premium As

class and XX% XX% up respectively. factors class premium points load the XXXX, X of First X paid with up points, quarter up and versus fourth was

of were $X.X full reflect As drive premium XX% able the we above nearly XXXX, an or to year of billion we on increase XXXX. in revenues

was revenue America. fourth Our loyalty for significant versus of been XX% program quarter XX% the has with the of up also Bank 'XX credit card remuneration renewed year. given deal driver bank Cash from and full the our

product expect and of in half As loyalty's roughly loyalty $XXX initiatives, to million run rate and full a achieve product our commercial XXXX. represented and reminder, we

have and partnerships we the joint we've in Regarding alliances, Through seen that simply American the encouraged increased network results with contracting by did and including are with not through we oneworld. working MX pandemic, before our GBT. opportunities

our and stepping full We by we reach and we revenue facilitated global Airlines, is airline Qantas, global XX% for revenues to that gap own help XXXX, traffic These of us an partners to which X% expanded inventory network XX by American by IAG, partner Airlines, guests, Qatar capability to as compelling expect for we have Group meaningfully are share market higher corporate our total and experience partnerships. up sell our Japan can XXXX. partner our and airline Air our include offering will year-end. continue our volumes alaskaair.com alliance And improved carriers partners selling in on

We Turning bookings recovered the softening XXXX XX% to technology less fourth recovered, business late remains on approximately on in and down corporate travel. from basis. workforce summer quarter basis a located we companies significant exiting experienced XX% those operate. the the given the a volume which where across Coast recovered large West during happening peaks, coast, in revenue primarily not and at surprising up is a reductions

we've segment, positive in the trended in business. choppiness last seen few the this Despite has direction in weeks. Travel a

expect be don't we expect opportunity over based fully our we linear, revenue improved business still to on continued our to restore While set. time, recovery do

Looking ahead for guidance first the to quarter.

capacity to quarter holding comps QX lap steady. of our is up its expect remains total of XX% as quarter healthy are travel always to 'XX. leisure reached peak on be and in is to year, XX% up We that revenue but XX% first we the the year-over-year Omicron when weak yields weakest XX%

on expect to the unit For year, revenue to full revenue. flat be XX% X% up we

connections X/X of markets Approximately overly Our growth where will to in in on Northwest demand the will be the continue deepening will California. while focus strongest supply Pacific and growth added yields California XXXX X/X it will network our growing restoring dilutive be to focused X% exceeded of in and to our much our XX% to and Northwest of be XXXX. Pacific as not in our the

any can efficient year gauge comes stage. and recall This Alaska Importantly, Airlines. at growth growth XX% of capacity increased I that of is the most from

building and I we year, build focused and represented our even will which that And profitability. team The base, for to this of our from are unit industry-leading my In closing, result forward renewed card as stronger year. an XXXX continue revenue credit on to economics baseline squarely XXXX. look

improve gain partnerships and international as corporate momentum we Our to our alliances and continues set are unlock. share to travel further

seat opportunities forward. a differentiator to in combination XX% as our commercial momentum grow deliver premium. is upgauging unit going what and take excited drives we be that believe premium revenue mix This team will for further where we are seats Our also of XX for will I'm deliveries MAX us set XXXX.

Shane. to I'll that, pass with And over it

Shane Tackett

morning, Thanks, and everyone. Andrew, good

X.X% demand adjusted great led of we in As incredible year pretax and you a our is challenges for the the heard rescaling year the started margin given result from full and us our how company the travel. Ben, face for industry experienced

receive February their of our are year. all people achievements this significant especially will in that We performance-based proud bonuses given

goals cost We improvements running forward a commercial productivity our on on are operation, financial remaining further reliable our towards delivering driving road building XXXX map. in unit focused to by and looking and long-term

results XX%, industry. still our Turning to XX% our fourth the on of debt an to and cap were with XX% sheet. the approximately million. ended strongest Debt of the range and payments in to quarter target year among QX We balance the update $XX during within

repayments with totaling first approximately $XXX For full million XXXX, year are modest, $XXX the in million debt quarter.

our and $X.X to years history. full cash XXXX our year totaled of undrawn at cash the in and operations pay from billion, flow was CapEx $X.X great year CapEx the for of given XXXX, we Cash inclusive of lines for on-hand that which ended liquidity in continue one result, total highest credit a billion

balance cost to margins our our capital approaching invested range. of return In in reached and XXXX, above on capital of addition X% top our trailing long-term sheet target strength, XX-month industry and our

sheet other balance steps capital take and to of our important margin X position and us Our towards strength, results XXXX. allowed our cash return end the on

aircraft share And this of second, dilution. fleet focused offsetting be an positions December as engine with decade, positions it first will, through of quarter plan years order on announced overall we initially in prove option provides us strategically Boeing rest challenges, we repurchases firm the maximum we given next book X-plus restart flexibility the supply First, in now and to having access demand secured chain ongoing the and and having to to our aircraft terms. for XXXX, great on believe, beneficial expanded

QX, to beat winter driven weather our December. versus CASMex our November in XXXX, as and Turning this have incremental X and by of capacity costs costs. In increased entirely our above would slightly Absent severe approximately a QX guide CASMex result lost impact, guide. point XX% the

our down within ended at we performance-based CASMex to XX% our do and respectively, year and continue include pay full Our incentive versus in unit of reminder, as XXXX. programs And guided bonus a up year the our the costs. capacity in ranges cost X%,

of year, cost other more full represented than the impactful was our pressure versus points XXXX materially approximately airlines. and costs unit unit X For this on

success remain with will consistent and about largely pre-pandemic. drive long-term what believed intact beliefs what industry and the value airline Our we in

sheet these drivers of We in a We remain and areas. confident costs focused the strong stability believe be relative on and will firmly of business balance and low success. ultimate both

position. improve Our balance positioned XXXX pre-pandemic result us the based cost guides, industry and strong maintain cost Alaska best on to relative is our this is or within the unit helping achieve sheet year,

related Maintaining first half cost Looking current schedule fleet our levels priority, to capacity will the pre-pandemic year. our during headwinds of continued training operational our and returning remains of top to as safety transitions. the us complete the and reliability we ahead have has to we XXXX, transition modest

and solid we during on overall year-over-year of a planning levels reducing XXXX, are costs on our However, focused for productivity basis. to and utilization unit fleet are improvements

to year-over-year quarter, on For capacity for a to XX% XX% to down to with X% up XX% to X% X% we down be year, the be expect basis. expect the we capacity up continue X% first with to And year-over-year. CASMex CASMex to X% full

levels to XXXX the for remain currently $X.XX to $X.XX Touching expect to moderated have and gallon the full first remain $X.XX volatile. elevated. but fuel. be Oil Refining prices from on quarter $X.XX price also We fuel spreads year. per for

hedging, in Our significant likely turn from approximately benefit XXXX. a will was XXXX $XXX to million which net cost

As anticipate oil the money hedging uses our the XX% out we only, above be a and call what reminder, during strike prices year. our program prices of options are will

all pretax Ben mentioned, margin margins to year Taken adjusted with improve we year together, X% to full XX%. our as expect guide of this

year, full year operating structural demand adjust contributing approximately we the in, are optimistic to of ratified of CASMex. also to. our are economic need for impact and incorporates our if we we uncertain cognizant full And labor contracts, accordingly travel we X year are This this points about this the capacity while backdrop we'll

our to been One of strengths plans. primary our has years the over execute

of But from a foundation overall, recovery executed to on XXXX. components in we In major setbacks. we volatility and plan certainly some have the work XXXX, our and experienced strong

most have completed. labor of our We deals

We transition. utilization, focused performance on of are in reliable of improving a are aircraft commercial balance delivering in road map and XXXX. industry. in as our were sheet a one lead to productivity now the the great financial industry we We majority our order book. through the We've more on solid again we fleet And most airlines attempt and the of got

your that, let's go questions. to with And

Operator

[Operator Instructions]. America from question come Didora And Global Research. our today will with Andrew of Bank first

Andrew Didora

guys You RASM you're other West areas. not out here. further last even of much got year airlines on guidance with as the the of much as corporate a morning, like premium kind and other tech assuming RASM seem travel of Based this your growth Coast showing doesn't premium growth

travel RASM this kind XXXX? And throughout here maintain you Just baking corporate curious, your to recovery what into that are premium in for of you do in there's the guide think terms year? of opportunity

Andrew Harrison

Thanks, Andrew. Yes.

things. couple So a of

did the think year. benchmark and higher firstly, I we point, to last have your

revenue If we're flat. all you think saying industry's is at year, look I unit guide the for this about

more in So that basis. I think, that. perhaps remarks relative on do prepared with in corporate a as the upside we're have in may I line my than shared side others we

'XX. is in see third well is peak the where back as the And to it do I aware, that again, and course, we industry there. -- of opportunity you're not quarter. So there second capacity really And certainly, in was

good right in could now, a So again, here. be upside But there we're pretty place.

Andrew Didora

question kind be and the year, we XQ. regards any then that is models? XQ forward of do think you a Or should we peaking for consistent Got going in it. capacity to in these into lumpiness And Shane, our CASM like about When just across the to in there fairly quarters the for rest build that expect here? of

Shane Tackett

but in there modest a half think. sequentially QX From thanks. it's I step-up to the Andrew, QX, QX, pretty QX, to capacity QX QX, is a the perspective, second very year, reasonable, of it's

a flattish flattish and exaggerated. think of I and sort back cost, not half QX then in It's of half the the bit first of It's our little unit the with single-digit-ish of obviously, terms consistent guide, for momentum year, the year. year. the of the half the second then year half in first In of of

So big to I year. think you guys that don't quarter-to-quarter from us swing expect there's need a this

Operator

Our next with question JPMorgan. from come Jamie will Baker

Jamie Baker

we Delta that own you market, work I'm Alaska based can all our remind but do pilot But do you of becoming contract What's ears, analysis, us or on the group against? estimate little look your you mechanism? end. complex. mechanics do recall, clause. that Can up I it's a airlines that I know comp of me-too obviously occur? has but a as snap can I the if And the have on a my When of backs

Andrew Harrison

give you. then the airlines feedback. It's Yes, it very look of you and the Jamie, the I'll JetBlue, math. I'll The the guys complicated give formula and X. do -- for September you us at and than can average we on larger simple

you the raise. what downline and X% by have estimates the point think into sort of to relative time be make So impact back you might in what pretty easily the scheduled can industry would about that think ratified you

happy had if with pilots we don't up make have by behind. went So we're contract. to fall knew sure in first we that -- that have some to we a And the it the We our we to to the mechanism want than way, that going expecting. this, place kept were different market we

Jamie Baker

I gave, reaching appreciate That's Perfect. the right? on Okay. of color. then the XXXX. you said And group revenue oneworld, by you goal XX%

Shane Tackett

X% to XX%.

Okay.

Jamie Baker

okay. XX%, to X%

that flawed. is connecting assumed entirely your or rolled -- to on does incremental, flying. revenue assumption maybe I know revenue membership. I that know alliance up how than the margin compared one it's local if always bulled is I've But is and Obviously, XX% So basis, really highly your a revenue to less revenue connecting my been accretive. on profitable you've X% core

Andrew Harrison

Well, market I we've And share environment in this over seen or as think -- or especially better, need make a American year, Airlines shorter and we domestically, participated local some connecting travelers for utilize their well beyond again, so leisure trip. hubs their have. just connecting even international things. strong with to travelers a but network not our couple and code to of just We American revenue corporate where help what

I've these from strong international very with yields are again, And think that we momentum us. international year, the produced. are the last happy positive for year been all being we had of go as fares, with proration travel So what into overall, and again, this the I

Operator

from Catherine our next O'Brien question will And Sachs. come Goldman with

Catherine O'Brien

protect the need operational to to talking unusual operational of some on are operation. drove about peers for ice base higher that permanently the saw your the buffers the an some preparing have that case, being Christmas but be guys you really December, weather in issues not you So storm should have

in the buffers for capacity didn't change already Do X% to XX% appropriate that anything. guide XXXX for believe and December you you to place really had

Some color would be there great

Shane Tackett

you the By event. Maybe I'll 'XX, just hear the speak and you. from way, December good speak to welcome to to can Catie, it's back,

think staffing overstressing the network. I sufficient ensure plan plan we not capacity our our in have to and that we're buffers do

the you April best sorted If our we amongst both second half on completion look training, out we the and were on at pilot rate. of in issues the with the year, time once industry

that -- a actually lasted the it a aircraft and last Portland in did Northwest. parts and was happened well. norm days in because it's unique this becoming here in Yes, was the other multiple and as Seattle year This over ice event our although Pacific pretty of

And So event. it -- single pretty to do assume it's that not year, but us have to was for unique not more resilient a I we we're to build some think every sure. ops probably irregular it going happens

Benito Minicucci

Ben. my ways. couple whole look a Catie, Having can at it Yes, you operations done in mean I of it's career,

like in create staffing with massive can an can you cushion happen can You appropriate amount some events in, you might are of there's deal much with to things can matter level the do a nothing do not a not storm. that additional go ice for events. there's winter buffer ice event storms you or of with and a But put you to lot that massive in city, no buffer how an cripple operate

the that appropriately. what periods peak robust is there's So buffers to where create managed but it's mindset operate weather, got our or additional we periods create schedule -- to where be peak susceptible a we're in can

how out of event, good. big was we it got a the back team dug were This and we So on of pretty track. I'm and and just proud

Catherine O'Brien

the I unique Seattle, mean like seems some definitely understandable. in seeing of it a event. Totally just scenes

mentioned I elevated guidance else most for you you. have help you about think your should your go-forward moving remarks, Shane, know the pieces of anything we off, the then. this but prepared unique in year, Can So CASMex training Alaska. the maybe to to on be that's roll transition that the one as underlying thinking year some P&L might fleet fleet us some just behind full just transition about of Great

Shane Tackett

returning there's -- Yes. major special last through of sort anything took I related the think the to of aircraft a don't lot we year. lease expenses

fleet bit The year it in by the of biggest lot a we completing noise quarter. in slipping the related cost is in So in pilots the But a the we're expect to the that's quarter, specific P&L. large of terms piece that second really tiny this P&L fleet transition-related and into costs of training transition don't the transition. first

than seen I anything most the industry. what across you've don't think different else is of

costs growth P&L. that area the airport terms of have an in We of remain

I consistent everything as the to would think then to looks labor costs have point up we that pretty continue out. to certainly, say, And that's with as else I going nothing they're grow, of gone growth. go we fund normal, really And people industry. more structurally. hire to But entire trend, terms in up

Operator

we'll & And Becker next to Cowen with Helane go Company.

Helane Becker

Just costs? fourth about The on then quarter, Shane. one we the last that that? of the that quick the is million transition that way the end clarification Is point, $XXX think in

Emily Halverson

Helane, this is Emily.

that you in in done QX So AXXXs. charges charges all the all estimates and all the in leave saw and special we're QX $XXX We've put other over to the aircraft depreciation remainder going to that actually property the Those of our million of our should we've the months. for take XX because most XX next AXXXs. be on returning both the the accelerated

that we coming going up our come through there. special remaining to with the still charges books. some end AXXXs, So see minor whatever through you're thing the be true-ups last be to doing there on XXXX which are going is could that in

AXXX. will not for be but should much there So be some more dollars there, there

Helane Becker

just helpful. then very mileage That's the And plan. Okay. on

Maybe, I that members benefit that think around are now. can are I beginning new talk about and how accruing announcement you that your like your revenue to was Andrew, want an there there should line? benefits that to say

Andrew Harrison

Helane. Thanks, Yes.

you loyalty get members, even And Bank our boarding to if subscriptions, you'll hold as accounts, for for it really miles America there relates there. Certainly, cool is benefits bonus guest some of things. incremental bonuses X So priorities.

good things a there's lot of So there.

had cardholders, new which think some things I for specifically to of never Air thresholds, before. there's be couple for we've minimum going spend Group, a

then [Technical to we some But And add went done a not membership other which this card lowest $XX. that's we Difficulty]. increase we're the That if thing of haven't forever, the have again, will fee that did think one year, $XX quality. from to still and the of, I So fee.

we our the the from We a get very card will very, spend card So [Technical value lot on Difficulty]. and is of healthy.

well So the industry. within we is this think

it's have versus the but probably industry, In we concerns any don't low it. fact, about

Benito Minicucci

since And a you've card we've it, launched seen credit right? sign-ups, lot of

Andrew Harrison

a Yes, lot positive exactly. comments. And of

Operator

our with And question ISI. will Pfennigwerth next Duane come from Evercore

Duane Pfennigwerth

terms fleet, first In of remind to benefits, benefits us hurdles to of here, are realize single the what quarter moving what of you clear pacing a pacing just the if the can we the you seeing in and need further are any, benefits? to

Shane Tackett

Really, here Dash getting property. AXXXs replace getting through it's that Xs training pilot the and just the on the

We are XX-ish Dash low had. XXs and the of Xs AXXXs to we AXXXs relative at

we'll got full Horizon are X training this the restoration bunch these mostly half first of manage on coming. first We've transition pretty be of year, the a the in get all AXXXs, of We'll we coming into easily size as I through have quarter. have here the We'll hub, can although So we that. the X more on the base planes fleet through year. the and XX in get Similar mainline, those think year.

AXXX we the because still pilots, equipment the of transition that to off we the as rest with you've rate way we is through the think ramp be the do to of at full upon ultimately. quarter should close in have get what fourth run transition basically the to second I got dependent the So quarter, year, we and and start going through unlock

Duane Pfennigwerth

your were is a driving you this answer. identifying environment. Great Ben, -- was were guy very good a then of or variability And at it our variability, at historically. a operating and different difficult measuring recollection, least you Certainly, Historically, and process out more processes. Alaska

is you What of from Or out kind can But do the think bygone X, attack to X variability? initiatives productivity have that just X, are go a you thinking this you opportunities outdated era? those still drive year?

Benito Minicucci

a our what the a been that's going to -- of DNA DNA. talk think, I'm type years. question. you It's that in is about mean Duane, XX we here It's been thinking And wired. thanks how for for and tell great I is Like that that's I've for we lot. we how in our question.

of structurally that's terms could and -- debated. it In has it be changed,

industry my the isn't back view But that of airline capacity. XXXX is even to levels

not in got if talk you've aerospace flying ATC itself, the XXXX. now same We're in about amount you flying we're to have staffing place. So of course,

So departures, look if we're look XXXX. if at were times, you less than at you we block still in

So aerospace the the essentially is same.

got perspective. work already And utilization how asset place. an from we improvements is to a internally we processes better the productivity. And at people have look and it the It's get still and can in mechanism to have place to FAA we in

it So little is to it we bring -- back to has Absolutely. Yes. the it Are a changed bit? going left?

Operator

And we Bank. will move next to Michael Linenberg with Deutsche

Michael Linenberg

XX cost. months of Shane, on invested return trailing than your congrats on on getting team getting the better whole ROIC, I guess, congrats capital the to you your and

actually who the there that one You're objective. have of few out can achieved

of up Is that of just back we dividend? in year? on repurchase then that is thinking the the that the is part the You to next Is phenomenon? year offset MAXs. see later did deliveries Where a highlight your return the bringing amping dilution. share that Again, And the this program. Is XXXX? something of this some

Shane Tackett

for picking the Mike, up comment thanks ROIC you that script. the That's did. in nice

last We XXXX conversation question that We item to decided with year the on prioritize dividend is dilution offsetting are Board. -- the first.

period. really outlook a shapes the I is multi-year to but a for lot know, want of see have dividend the up, confidence mean, how a this when backdrop. think We're year you that something economic optimistic, we you I in do you with As especially

nothing and Board, our it. of capital still terms now on allocation in with discussing sort it of process actively long-term So in say we're returns, to the right thought shareholder but

Michael Linenberg

just Okay. Great. think Fair the $X.X To was $X Andrew. of few my And $X.X loyalty And it second, see billion, then question on billion a I back, billion. to enough. years remuneration. just

in sort X? we I something hit X that had do step-up back say, CAGR or in up forward? step jump should the Is of program? we at like there a Are talked looking How rate the or mean to maybe we rate? about that maybe any -- do could right think next mentioned year where you to of we we're going fee, see that milestones a type XX% a maybe I see or that you XX% here. the going but XX% XXXX. And think about growth over --

Andrew Harrison

And changes Yes, we're goodness the is I that -- think the spend new I well, now. we've portfolio, more excited about a growing from got you squarely step that's over heard is time. significant also there. is morning, there and focused change things. wallet, growing contract. this of what think my what will as -- And seen program, top a on this you've team be of growing couple behind is And really there the the us But now again,

it's to us for And move do and see so personally continued as I focus we continue a forward. to momentum, big going be very

Benito Minicucci

I Thanks, not to well. Andrew, start. Mike. the too to birthday is Andrew did a to the I which ask because the That as I today, And to was during be just analysts forgot mention on kidding. Andrew's -- I'm at want want great mention answer, it hard

on hard as Birthday be you Happy the like. Andrew. can him You as

Andrew Harrison

Ben. you, Thank

Operator

with today Syth Raymond question Savi next our Financial. will And from James come

Savi Syth

a these business you I I get of this getting bit Andrew's to you other if give getting a could it's but because mentioned have was Andrew, of color in the so back help apologize you terms of mean. curious recovery if maybe initiatives follow-up little on probably guess question that But should kind the kind -- of kind more XXXX and And a as to question there. I levels, eventually of is on you some

particularly, And seeing not there of job this get you're the any about have on I'm kind Coast-based tech of and cuts I -- of it -- that and -- on yet? you is West you guess Or focused year? just a headlines having impact what is lot tech the Do more demand? is kind is companies incremental business that recovery the

Andrew Harrison

for been experiencing Savi, especially corporate has on that. though will question Yes. already cuts, thing time really job severely is I I because headlines companies, their are even recent first And great for depressed been some we've tech now. a think large travel these some say it's the the that thanks

the So depressed. of that you companies high-tech nearly have travel, include already a cases, numbers some turned see corporate off but in us from with that already, severely lot their

business personally don't move technology because travel I confident and is, there. will to side hope and jury stable back we say go. the do we is non-tech share think will XX%, out little again, already bit over with continue cuts that But side on bullish I these back? time strength come And as somewhat overall, certainly we've seen I impact think of where I'm movement more So But I our get there. think tech range. XX%, a them. corporate on I XX% and portfolio-wise, that the the forward, the the is question does they share continued

Shane Tackett

valuable at traveling most Savi, like going are are the And some they And is add, of might tech for the companies again expand sight while, earth. again. they a been get going these to I these thing while companies lose just to quite and one they're on haven't traveling point, to not

just future more. It a We So come know us. away goodness it's be when for back. to don't year it's or really probably going could

Savi Syth

timing previous struggling the Alaska and of just talked the versus Makes of and trying back what the questioning understand, -- on of productivity, utilization get kind -- below and is, thought the everybody again, getting of around is with it then if sense. yet out what and I of we still back controllable -- and to kind seeing you're what's control? then we're kind productivity that the to about to you And side aerospace your what's

Benito Minicucci

No, Savi.

of a me couple let with things. start Just

up from for to pandemic and where back that's us, a getting coming think a back the capacity. operation, I not for the entire inertia think but getting of industry well, level Alaska, up struggled certain I just the

lot was there some -- there. there So a issues of was

fleet terms I forward as Boeing at the your terms in Embraer of of your majority the now reserve of and just crews. I Like of having single of look XXXX, airplanes efficiency fleet that fleet into and when crews, and look XXX, drives massive swapping in majority getting the benefits

there us is major a improvement. just for So alone

getting staffing training, of again, the a through that away. and volatility bit Secondly, goes with little

volatility goes that out. So

and on we in is where every out. of performance them part snuff is see see volatility volatility in folks our staffing, in issues So the those operation where and pure in go we to

doing and what reliability And critical I do mean that's in just good airlines operational right. is that

never to things Now back that in our is be were will go XXXX, but will there this of the way control. they a I think lot in

going that It's don't up to savings after, And go after and we're give them. of can on you we type go things. just those

Savi Syth

related but to side, Are training and The capacity. fleet fairly trading. the staffing caught you just pilots just the being to for transition, Just clarify, taking to in source the is right? up able the on

Benito Minicucci

Right. Airbus now. lot the Yes. going AXXX pilot We're right of transition through a

first Same the So the house the [Technical we'll that's and the so school quarter end now. of going XXX. all thing And our Difficulty] through Embraer QXXXs be it by right through with

wave. So we'll that largely by done be big

Operator

Scott And go Research. to we'll with Wolfe Group next

Scott Group

want guide. just back I to revenue go the to

reaccelerating decelerating quarter it quarter from So first then from when like of decelerating RASM looks the I and 'XX, versus fourth the year. rest to look

Just that Is that you market to understand color Just something that. guys? there? help any a specific Is view? us

Andrew Harrison

Yes, Scott.

to if and unit the our So and are with first go travels much a a back think always bit but our quarter had And talked I the little highly But not the January has before, in and in general, business as right look our this of back obviously, couple as been weakest. first is hoped. revenue revenue did about and return XXXX, choppy a industry's things, certainly you for you step we guide quarter at unit line even we've take guides. in

handle for again, big for will also tailwind but for travel where have our big we're -- them. is And international And a I back, very they we've again, work very side. in forward is our March network and We sure again need But January demand. to solid. to our do that we lulls on network make these and on do which year, about industry to the coming be construct February again, right the got think us,

Scott Group

Shane, you in hedging for think Okay. I guide year. And this loss there's a said that embedded fuel then, the

not guys hedge? it issue Just like be way know want much to seems maybe so I to how crude. -- if but effective thoughts crack much hedge more would is picture, any more Like revisiting complicated, just a you spreads like much you it's that how been it has bigger hedge -- on the all. it

Nathaniel Pieper

on it's question Nat Scott, the for Thanks fuel. Pieper.

sheet I XXXX broke started you to think our said out the then we as first just -- profitable XXXX. move program. we're XXXX money XXXX, to hedging thing. in just use planning as money. a just this our XX% out as and in not way to back it's our cited, of good make know, formulaic But us insights it on even straightforward, the forward. eliminate balance very basically a And some better we you We're We volatility think as be and hedging to calls, in script, gives turned it we hedging to strong

you're and We main banking have that's of spread, time that the a et to considerable to friends hedge cetera. the volatility, amount spent Coast about potentially ways crack source frustration, been investment right, of on with East the back

consistent financial underscore, autopilot. on looking just to it's it company, values do going core with foundation use something strong if our a And again, it and keep -- our we're I'd we're as But only at.

Scott Group

And hedge in? what the factored you've is loss, though got

Nathaniel Pieper

about $XX moves. as at can different the day, million first it every snaps the in forward And curve quarter. then looking something you imagine, We're to

Operator

from come McKenzie our And Seaport will Dan next Global. question with

Daniel McKenzie

the my related is state the And touches guess revenue percent growth this, was pretty to revenue? the of back the getting question and markets this of percent out come pandemic, slow California question is, of I what state to year of revenue levels what is just The simply XXXX then to of Alaska's of California?

Andrew Harrison

Yes.

of going California. going growth, and is be our Dan, to picture, big X/X Pacific the it is to on be it X/X of just Northwest So

it in it as Just XXXX, XX California at look you now But be if to the still down higher will relates double-digit last be than it was territory Pacific Northwest recovery, close, that. and better growth in year, XX% is points the XXXX. our than will

somewhat network down our recovering. revenues is tied 'XX, California. our points say, again, XX be I And still So versus about but of California high to year this will very to X/X XX level, would

Daniel McKenzie

Wow, that's big.

On peers. the prior that comment revenue corporate more has Alaska versus on upside

you on I still or stat premium guess wondering stat seats premium And if that's where this versus to what it year, but if expect right. is the I was guess revenue, might So I to the can that And is XX% if have you you or can, year exit helpful. XXXX. share I'm correct I'm not today mix believe more sure -- that's versus if today what is but the

budgets, to given or a higher this, are corporate travel then the And last lower higher exposure. a year, in little related coming the lot just tech just they than

Andrew Harrison

Yes.

a Shane $X.X So were MAXs. you I premium increase XXXs things. shared, And our has trading to my that maybe we think saw first-class for nearly remarks of XX couple seat seat of as first-class revenues in able out sort XX billion. prepared And by we're

upside there's So there. real

significant opportunity overall, think about there. were -- class XX%. revenues I is first And think a there so I up

The sorry? made good on all progress which and other have corporate. really filling we're that. and happy those we're And opportunity work and we're with actually XXX the last continue we've and was fares, premium, our to working we had on we on now, that one you Could on is you then at the first regional fleet, then question repeat again, seats

Daniel McKenzie

is a Yes, corporate budget given or a higher, little little lower tech exposure. the the

Andrew Harrison

Yes.

my for some I still last I to of think budgets -- when the this finalized was year. being spoke team

or think we're on-off switch. here, I some budgets I bit little budgets, Dan, the what really no is in a think seeing cases,

for to ask Vice so people travel, You've go and going. to are not President to got your

the average cuts or to deep So travel more we either very means. in see

hotels, is, permission for question So start traveling again. air I their it's it's as think people it's cars, the high-tech start And know, will just to not real it's give you to fares.

anyway, where at. So that's we're

Operator

Conor Cunningham come Research. Melius from with will next Our question

Conor Cunningham

on this the would outlook, one. Just capacity easy an be

It you great. be what's going some would versus the markets, you that, new be just stage utilization core provide gauge. this growth that clarify could is context like can a of year on just core feels lot within base to utilization your engage but Just if

Andrew Harrison

stage day, This the restoration very, all engaged. essentially end the you're of of XX% mean, exactly right. core our growth few I new of very is all At Yes, cities. is and

a very it's growth. So efficient

Conor Cunningham

Northwest Is mean, that mentioned that California? Pacific during like prior. in on feel the the I you mostly I

Andrew Harrison

Yes. Yes, that's correct.

Conor Cunningham

a ask confusion. some to but got hate because you I bunch, then question And seems like I cost know right. All there's a it

I the look XQ a half CASMex prior it it's second guide, Just to half first would kind seems shaping just would different be. than versus like have of up to thought lot

second maybe level, easier share profit high half benefiting about that maybe improved and think from -- on stuff, I transition, more all the then accruals when just fleet productivity, is like right half And comps, pilot. another like just struggling it ultraconservative? a cost being uncertainty of the the lot there's in idea, is just increase on second side? Or are now you I'm -- with just offset

Shane Tackett

Conor. Thanks,

your more if second I think of what you're be the in that would you implying I'm sure have if that's But... sort half. down question was. it might thought not

Conor Cunningham

Yes, yes, yes.

Shane Tackett

anticipating year, think margin this place I industry And those accruals in next while like to say sequentially our it's -- noise, the There we the not as the create is our little There's side. a QX significant to first lot lead Got And still earlier, of results enough very a year. profit of of significant throughout differently come we on think see Okay. to you'll bit respect performance quarter. you. XXXX Yes. sharing Catie asked I accruals, in because not I had a will with are noise.

what shared do get better, to we what highly to. that's we towards. But transition first drive target the think decisions planes and quarter, we're through going to need we're no, I to the all about we've come training, some can I little got to AXXX. is sure make confident think, the we've get look, internally the We tend And and a make something bit to

to year lot We those but a don't conservatism and couple last execution our some do. guides. capacity of plans of of of And and of years, ambitious the had anticipate in of think think lot setbacks. other some but this lot a informing ahead a there's I been we've -- I But in us, year, our that's

Conor Cunningham

that you I I'm return in the sorry, I'll did mean is maybe I'll offline. have of lease ask. quarter Sorry, expense year just the X first like clarification. last take it

Shane Tackett

like Yes, of specific I lot for the you yes, a we're progression. color obviously give happy -- more to get but sure, mean to on we're to not the into we're happy details, going

Operator

our question come will with next Stanley. And Morgan Ravi Shanker from

Ravi Shanker

do you it's afraid, I'm can't that given business. another think corporations corporate, -- customers going of that follow-up the we you true, are and of said which yours XXX% tech the I to giant to then guess I way on but they're kind eventually back, of were So come be sure

looking are -- if corporate So come customers? forward? change wait you your to happy to going base is do some back corporate are likely side? maybe to differently standpoint more Maybe to need marketing Or from footprint? for you chase the you expand is either SMB network of them kind there customer to your on anything And or corporate a customer a

Shane Tackett

one traveling thing Andrew of traffic. the Ravi, of the make trying last just And were to business the haven't lower-yielding I year. think discounts. have of much It's can of best say, sort sort composition. is tech to some tends I'd quickly point I all we speak been to they

mean back there's downward go another travel. really terms their they in So doesn't you at these never travel to headlines pre-pandemic. where volumes, And like though may do that historically step layoffs, have not low of it there's even of I think they that were

that. I'm don't I very today. going above they're when. know just are to be think they I where confident about

Benito Minicucci

SMB And of then on maybe pursuing the and sort all. Andrew

Andrew Harrison

Yes.

tech sell. we of about and we're and day, obviously to obviously timing back we'll when think a and manage I sell seats lot to there's just we we who selling of through our to And and when when where, relook this. will don't opportunity using high channels the get about and end this at where they the the think your adjust. -- But love the is were. and would to We I

Ravi Shanker

the with is way your kind Got it. mean, sheet and the obviously, last side pace everything and couple of quick own kind you years side And cycle right year? your come biggest checked the where returns build of maybe fleet the confidence long or guys follow-up. returns thinking as have and the of of on the you year boxes the kind through numbers the in transition of shareholder and balance cost and through of your a I now. in of as else. cash How kind are maybe a maybe

Shane Tackett

we the announced I sort Ravi, of -- Yes. offset dilution think program. so

the ranged throughout year. $XXX it a assuming the little I price it up. throughout down We'll be stock million more somewhat bit goes goes the the $XX think the if of should stock put consistent obviously a But and less to stock we've year, place we'll buy million. if from sort grid in ratable is

get at guess fairly that's year, million through the point. of is the this And by But the entire it's the our end sort we'll $XXX ratable my plan of across quarters.

Benito Minicucci

for All our quarter with day. you right. out Thanks, Look have Thanks, everyone. on call. following a and there, Thanks. joining everybody. to up talk us anybody to the second forward Thank first we'll Thanks Ravi. Everyone, you, nice quarter. for

Operator

Goodbye. And this concludes today's conference call. you Thank for attending.

Alaska Air (ALK) 26 Jan 232022 Q4 Earnings call transcript