ALK - Earnings call transcript Q1 2024

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Operator

Good morning, ladies and gentlemen, and welcome to the Alaska Air Group 2024 First Quarter Earnings Call. [Operator Instructions] Today's call is being recorded and will be accessible for future playback at alaskaair.com. [Operator Instructions] I would now like to turn the call over to Alaska Air Group's Vice President of Finance, Planning and Investor Relations, Ryan St. John.

Ryan St. John

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

morning, Group reported loss million. $XXX Air a net This of first quarter GAAP

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

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

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

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

Benito Minicucci

and Thanks, good everyone. Ryan, morning,

you As involving significant this X/X accident quarter aware, the of grounding of was and X-week most are all subsequent fleet. our XXXX event Flight the the

Our oversight focus employees enhancing return and of and of guests been for our safe fleet, caring our the new aircraft. our production our on of has the

grounding. provide business has QX This a million, on Boeing impact, for. the substantial effects fully excluding results, performance, and core clarity To MAX compensated XXXX totaling event which our the I will us our $XXX financial had also discuss Flight of

regarding our of also quarter, we acquisition received a the second proposed the DOJ, information Airlines. During for request Hawaiian from

as as We to are possible. these working to quickly respond requests

and the swiftly to with involved, possible. granted our XX we to the continue have government the work responses, additional Given days advance as volume process of an review them to as information substantial we'll

internationally. excited this and in and strongly of the and Alaska, the will opportunities believe by merits both deal pro-competitive domestically for still We pro-consumer this unlock are

am years. a over traditionally in progressing first next impact X year. for have X goal grounding the ago, my excluding that in weakest, year set to I our the of announce towards proud reduce the to quarter, breakeven I losses we A team this with goal the achieved aim

initial profit a XX% Our performance coming far this exceeded our QX into expectation year. of improvement

losses, we absent our the on including positive of capacity business the factors profit, We quarter. contributed MAX disciplined turned effort but a this markets. to among companies planning, technology strong Several only for return throughout revenue and to Coast performance, network, not our reduced leisure concerted record a the and reconfigure demand thoughtful travel, particularly West grounding and optimize small

our despite better a we do to the in business in the MAX across business Group. grounding improvement our While strive significant QX, Air result even for disruption underlying core the fantastic felt is going forward, from

beyond. which outperformance, and revising season our and adjusted have encouraged We prices. QX are fuel quarter visibility EPS not to outlook higher this to reflect the to break see robust compensation. $X.XX continued does adjusted we demand through in second full the from despite by pretax With margins year our remain $X.XX, spring any We've double-digit travel

this year, the stronger not at profits of to years we look also over for QX but better a Our base. us outcome starting commitment a the from as point, changing to earnings in only come, time in to rest and positions grow

remains of our ahead, looking on our initiatives managing our elements focus control. and forward driving Now business strategic the our within

fleet and We a with and back running solid track on are operation to full excited service. be our

Boeing, $XXX for compensation MAX related million impact in us we I profit from total making the cash to grounding. stated have As received earlier, the hope QX

will relationship. to out for partners. us factory. our bar Boeing important with hold a the quality But We committed reflection the is agreement Boeing strong success. The is to partnership we Our and reached with long-standing that of we've financial to them of remain highest

and line our enhanced have XXX and production with Boeing regularly schedule. are Alaska And to we Boeing. on end, needs that oversight engaging in-person quality leadership our of

Boeing, country leader our Boeing Our industry manufacturing. in airplane be a needs to and needs

by reliability fleet positive throughout on guests evident our entire February strong and regained demand with we've our beyond. returning been to The our Operationally, has service incredibly response February from X.

resulting MAX the A Our service XX.X% around week safely teams and rate clock second engineering have to bringing and of through entire all dedicated out historical restore themselves improved for operational shout to our standard an in team line maintenance in were reliably. February lines of March, into excellence, the back from our our completion of performance. with big

Safety Group, aircraft from uncompromising is we quality but a highest for value Air and the foundational Boeing. and expect nothing

stated we've from 'XX deliveries, fall our us. of will of high will reliability and but as in detail discuss objective more schedule will Andrew guests year. short expect Boeing deliver to to Regarding capacity us XXXX a before, level with know this we the a be expect our and service aircraft deliveries planned QX

discuss Shane impact And CapEx to the will fewer year to due deliveries. full

our determined in we and and profitable And busiest optimistic As paramount. periods, restored drive successfully business. second remains excellence. the of one operational strong to we most are Safety kick we've off results our quarter,

profitability positions and flow. now year's capacity, last X strong experience, across the With premium on free to financial solid leveraging unit cost generate a careful focus well with productivity QX guest next focused deliver and foundation, our combined Board strengths of on enhancing the us as cash Building improvements, our our we're performance over to these we're quarters. expand our profitability results management on

being operational we're frontline this who the step Alaska service guest every day. from And holds employees of leadership our to that success acknowledge team our each amazing lastly, to accountable way. just consistently team. I driving strong deliver want results Together, and exceptional to better itself

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

Andrew Harrison

will good a our my focus and everyone. results Thanks, unpacking guidance. core quarter Ben, and trends second with speak performance first and to morning, comments Today, on quarter our addressing

to This revenues $X.X revenue consider lost year-over-year. especially grounding. incredible totaling an in quarter first record the you up billion, achieved result, we $XXX when We X.X% million the that is due

challenges to best in rethinking deployment the demand order combat the job of masterful we our the in and a network our geographies. did team face QX serve Our seasonal to

Capacity better accident expectation year-over-year, than was inclusive weather. significant of grounding. ended due no following winter initial a to This the down the quarter result utilization, better-than-expected high point approximate X.X our impact and the X.X% an rate completion from immediately

the we a for Absent feel was approximately capacity X.X%, and up would level QX appropriate network grounding, have environment the been our reconfiguration.

In a addition impacted drove our we by efforts, were unit travel rapid corporate network of strength, revenue positively to close-in focused revenues general return which and strong result. the

up was revenue unit quarter, the year-over-year. X.X% For

X of been of X.X results outperformance impact was points First, outperformance X%, better-than-expected the would flying. X% to RASM revenue from the higher reallocation guidance up factors: came by to is the of This markedly unit up Excluding related original which than X%. our grounding, of have driven

leisure demand These changes flying. met we more the successfully our capitalized on markets, more as across

points RASM from of Second, beginning a improvement step-up from business material travel in in January, X.X came technology companies. large especially

XX%, yield services Tech business and volume. XX% approximately biggest Managed saw grew revenue over XX%. XX% from QX, an up revenue driven improvement the and companies revenues year-over-year impressive professional with from In XX%

approximately the the despite Managed away into XX% XX% corporate recovered. in perspective, speed revenues revenue fully in achieved increased recovered March. XXXX and recovery we XX% results grounding of To Managed February were is experienced. book XX% January, These in the Today, business while put Tech and has levels, a stunning

for today. business said back we seeing time, we've some clearly expected come which travel are to As we

travel not any anticipate this QX. not did step our bake corporate do forecast, QX we we in in into back While

expectations, the half pregrounding restored improvement beat reliability, in revenue point leisure saw And strength especially and despite schedule away where demand at our came and beginning month. February, third, RASM strength of original our This flying book of once in is close-in the we return. we evident loss

our month close-in revenue Similarly, surpassed driven our by by strong X total bolstered performance. over on factor, lower in record-breaking result just point last load improved points X that yields March year

these improvement above original point midpoint impacts guide drove for altogether, Taken quarter. of a the our the X.X

a to our believe Cabin shift premium higher what support for Lastly, demand be products. performance Premium in structural we continues to

First during monthly and Class the finished first-class at Premium and our records XX% in hitting March. during February respectively, up XX% quarter, X% and XX%, load revenues paid factor with

higher significant the What makes results had more grounding. these would experienced premium not we have even is they been that revenue

Our Coach an a capacity days way factors from XX% in paid the long premium fleet. paid All the range load and Mainline has Regional come of for

refine to to come markets, premium our remain building and guests have and committed on members upside the to and our loyalty products further strategy our continue we want. premium we As across products guest our experience, offering

Our post to which on share we more strong results. to continues loyalty program, year, hope later also this

major of QX, grounding contributor to main With X.X% co-brand XX% generate outside approximately revenues cash a and $XXX the million remuneration the notwithstanding of year-over-year, in up cabin. we the

and our to outlook turning Now guidance.

are with to second We the up quarter. expect the to aircraft delivered in capacity range, low X% assuming year-over-year X% quarter, end of this this step no

extended where the had have the the higher pushed few aircraft our utilization around delivery following of uncertainty and timing, we the grounding, over of we the next across Given several Mainline Fleet, months retirements slightly opportunity. older

added the We and flying a also more Through regional schedule back capacity staffing. higher of SkyWest, pilot from utilization confident these side in our combination improved we given through reliable the on are changes, for Horizon guests.

be will for highest growth this peak with quarter it our also second month is clear most growth, our the While us. a June, year, profitable

routes in a where added our across have profitability. is on conviction frequencies in the focused we added of majority their flying we've new our markets, handful While network, high-demand of additional

growing albeit in persist. April at Second expect This capacity. building should industry we with quarter beyond yield year, have yields a bookings in, trend closer on continuing so far as a slightly seen through in are more strength moderating curve, quarter booking encouraging, and healthy normalized get the we levels we and

well this premium lounges global for to another tremendous to Looking full in our performance, constraints beyond solid of to In a period, of result seasonally with competitive a well produce looks we to quarter as in our team as place done our challenged the year offering into I believe from the and job periods value drive QX, Coast reshaping seating up partnerships, strong back across differentiated capacity most dynamics intensity we stabilize. closing, markets has our move positioned be summer. network the shaping are product West peak of half to the our industry remain

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

Shane Tackett

morning, everyone. good people and In to a amazing Andrew, the resilience. has year, business our start what been challenging our have model shown Thanks, and

of been quarter improvement absolute level our all be continue focus to our else. to priority, is see year. will course, core it of and however, performance top to Safety, first It our this the has, encouraging above

the Flight us its operating admirable and a time, positioned target network did managing to well meet coupled aftermath. difficult The of put together team commercial breakeven job on in QX. circumstances our to and with XXXX and that long-term an demand, teams our through strong safely While plan

for setting commitments. those about on shy not delivering of history we ourselves, are good ambitious goals a and We have

remains delivering to strong Our financial performance model the continuing term. focus and on our business long financial over strengthen

results. our to Turning

loss excludes adjusted profit our quarter, million per share first $X.XX the MAX grounding. which fleet the from our Boeing margin. was points received was EPS related $XXX in of fleet For grounding to of and of $X.XX, X compensation The or QX impact

Fuel price the of to country. $X.XX, West per gallon refining to relative be was continue margins a rest to our unique results margin the headwind Coast as

of credit as $X.X Our total undrawn liquidity inclusive March on-hand and stood of at of billion, XX. cash lines

$XXX the and in million repayments were Debt approximately $XX to the are million for expected second quarter quarter. be approximately

levels remain our and healthy net while debt debt-to-cap leverage above to X%. at stands ROIC Our X.Xx EBITDA, XX%

of For the the loss significant grounding, quarter, fleet which were points the X up year-over-year, capacity. to from attributable are costs planned directly of primarily unit XX.X%

grounding million incurred as costs incremental the to also of we approximately So operational $XX well. recovery due

people. impacts grounding year-over-year higher is Our pressures quarters the The up similar quarter. with absent primary first to of core prior faced which are unit remain approximately most rates the consistent airlines, labor and costs, were drivers in our X% for by

the continue our X our X a over We labor and attendants. past to years, recently prioritize an agreement technicians, flight agreement have completed we signed finalizing contracts with including aircraft with

the our absent passengers measured in per in committed had would have by grounding, we productivity MAX remain X% productivity high year-over-year, FTE. as carried a We to increase contracts. And

for both more with We expect bidding the we'll pilots are which continued aligned system productivity and time, preferential company. under for our improvements throughout operate pilots enhanced May, for that schedules will pilot our the importantly, productivity new And first in the year priorities. allow across

are the health overall While And for costs the we cost decisions alone. making higher evidence, to capacity on margin profile growth are deployment. the margin prioritize quarter industry, will unit materially right structurally continue the performance for we our company of of the for the over sake first is

United advantage, by last have cost adjusted costs, that committed well to to and quarter we Delta our are achieved continue basis. stage We also unit relative We do X cost retain a outperformed both at the year best looking our and length industry's cost we basis. points and X rolling unit on performance on

we may are our on a advantage. variances basis, experience unit relative ceding not While of quarterly any we

gap on margin the approximately XXXX, the our have only X points. and by XX we budgets delivering first $XXX months, and We excluding gap year-over-year, the quarter X peers to past strong profitability, focused and to widened remain the aggressive over managing compared we improve million largest grounding closed Not by margin we've the did performance. to of XXXX when X

our ahead to shared year I look the metrics capacity and rest margin CapEx the fuel, on the last QX we the focus of overall EPS guidance, of the quarter with will and As and provide we profile consistent business.

that expect all we year, we originally do full to year. from Boeing this as had Ben shared, for not deliveries the For planned receive XX

our clarity those but we growth lower due billion this at our gain expectation as $X.X expected update $X.X billion. We deliveries, X%. expect of capacity we are expect be year CapEx now Also, of full in below to will And discussions $X.X to point $X.X expectations deliveries, versus we to billion with more billion we Boeing. on to prior

and Coast, Coast to weeks. the second We per Gulf refining fuel several be expect more seen economic in quarter West for margins $X.XX gallon the in expect be and on line the between past to $X cost which we've with

Coast mitigate we versus the this strategies of Given West the to the spread country, costs fuel are disadvantage. significant in rest developing

from. fuel bleed value to not first The hedging the component refining program, of us reduction Our hedging more costs, full become volatile take to which hedging did margins in. step quarters discontinue our protect will cost was of given several have

program are our into are and of modest our annual begin and We tender to fuel fuel amount year also for changing to this a a better XXXX. of self-supply to obtain strategy pricing process begin likely later

will fuel our will lead well to us to in current take the margins. fully face the industry these we expect of mature these into help to we close While the to headwind and be actions time rest versus results, the industry positioned

And path as full $X.XX margins fuel, year a we for QX. back way now EPS the to $X.XX to to for have headwind likely $X.XX another year strong performance. Ben $X.XX year-over-year year visibility and on double-digit mentioned, to we in and full our expect a between land and $X.XX second Despite quarter from the full healthy

outlook preference and optimistic are growth, economy immediate of back grounding The the of trends reliability supportive expand track, for and the indicating prioritize our on rest the spending on impact us continues over goods. to year. the operational travel recently sentiment With and with a we behind to about our continuing wage improving consumer experiences

focused continuing performance remaining and of our benefits reap safety, operational relative excellence strength, historical on and initiatives. the our to cost By commercial

deliver compete, configured results. to to maintain our advantage financial strong Our to relative to continue business and is

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

Operator

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

Andrew Didora

stepped capacity. as of similarly, CASM out Are think the puts up. and we to guiding maybe X.X% on as XQ, fair down at you X%. you're being expect back you're call XQ X% CASM, comes think Is any for would assessment? a know down, but there would about whereby I not then growth of flex were that nicely takes I to I wouldn't about I kind Shane, CASM to up growing see half back just given if kind And

Shane Tackett

improvement that and a the contour mentioned, again quarter, in of that's the we're unit profile of half And down back more little we'll think slows unit this year the as half see company. the of a in costs. back expecting I the probably year. on the given you year, growth right in yes, in see We'll see the Andrew, second decent the growth to cost pressure

I company, think mention balancing I want cost. do just think capacity -- though like I job done like the -- I nice to we've a unit versus

increasingly us the on heard of company. our You've focus the margin about talk health

really unit larger continue to and smart a markets. we So we'll continue in market, cost capacity on basis the we're to airlines going how be compete the our against to into about well

Andrew Didora

Do I what you that color would know RASM And us in today And any be of just Corporate and color Corporate, pre-pandemic? a the say, gave are Corporate you Leisure give your just Travel. compares then percentage for great. Travel? you That's on to the of premium appreciate how follow-up Andrew. terms what can on all revenues versus

Andrew Harrison

Andrew. disclose coming We Corporate Yes. will our that business see information. that don't Thanks, sort But of I continued strength that we improvement the is tell way. our position, in you in

this how others' at business I And you increased, some return area. Coast we've been around shared business which comments for more as significant. very when very travel, increased ours significantly managed West again, is much It's look time, think especially from the travel in encouraging. just year-over-year, And their technology

Operator

Helane question TD And next from come Becker our will with Cowen.

Helane Becker

the the think half about a year. with of Just the respect way we should question to second

second So third thinking quarter? quarter continues the then of And kind you quarter versus strength? quarter second how are

peer Some strong and a group I talking so have maybe maybe June in the to seasonality, travel you shift goes? August, want about of -- July pattern how guys of or July. and your stronger stronger say much a been so not

Andrew Harrison

Yes. Helane, the yes, we're seeing thing. same

think geographies. the network the of I and has and exposure the our August single just strongest across schools becoming different month. June return of

what accommodate to move that. capacity is so around you'll see And we here

So getting we pretty ahead that about good mix. feel of

Helane Becker

seeing from your you what's capacity if overall, right adding the Okay. look just That's of know, don't impacting up share is various maybe not capacity wondering and cities, I'm market word the I Fairbanks And anchorage Seattle. that's to kind at some there? of there? capacity airlines other then, really up state helpful. look like And been and industry like -- the situation as Andrew, Alaska Alaska, I've

Andrew Harrison

Yes.

what haul decently. flows. Alaska into would period. as I to capacity, I long call the Alaska, their is up say I go we into think summer capacity it love ebbs put industry People and

a So bit that's pressure. putting little of

overall, And about But anybody is really in Alaska our feel who wanting serve. the well and to very positioned we of to course, that we position serve good Alaska. travel are we routes to

Operator

question will come Savi next Syth Raymond Your James. from with

Unknown Analyst

Laura environment EPS the half of What's assuming year that This second for general the your is reflected you're Savi. year for guide? the on in that's full

Shane Tackett

strong I now, it's be Yes. We to what it continue we seeing think the expect Look, to half the stable. second consistent with be right going we're to view of we -- think year, today. and

We all. down. at there's is I sign that expect a don't think slowing demand that don't

I think higher think in and for And in we of to which the had the $X fuel was came year, certainly costs $X.XX. be planned on are roughly a by the business we offset close-in demand little at increase than expect that some side. I costs, stronger

really a our we And environment. strong it's be year, to for changed haven't full continue the so expectation to we think net-net, and going demand

Unknown Analyst

Okay.

these good. more, programs, provide that commercial then for your about expectations initiatives one you be your any great. Sounds if contribution And Access would can from Alaska the color and recent like

Andrew Harrison

I'm Well, noticed glad you Access. Alaska

and something is seeing we're quite we you're I small. that's think what offer. that really broaden to That's that continuing here services obviously the products

distribution the is is reality changing. The landscape materially

NEC, going are our products these delivery also to and massively various and revenue technology settlement changes You've side ability got got offer the distribute order, you've but increase on to services. our

to products going to what have ways us see to distribute that and different we those So all continue and forms over in bifurcate do and to you're services time. the is continue

our to So greater way that's the about technology revenues. generate just coming us we're help really excited

Operator

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

Ravi Shanker

So just commentary. closing on the

because or particularly competitors close-in was of comments your strength some the with have close-end on actually. challenges of having Your some weakness, been notable strength

idiosyncratic that, as strength differently, to are be doing you unpack them? something would as weakness can you you the that to So the If idiosyncratic great.

Andrew Harrison

nicely looking coming carriers. into to through unit increases you sitting of very can't in Demand can the move revenues we double-digit speak tell I with other I April. in What as April. year-over-year, is month here specifically

June, as coming we in very system. look we seeing are have, through bit little capacity. And direction that in the also where to positive We're more our a obviously, May and yields industry a

QX strong. feel we that to continue overall, going So is to be

well configured. is network Our

performing. is class premium Our

Our ancillary though passengers X% the actually revenues performing, even are in were up they down. quarter, were first

setup our about second good the for feel quarter. we So

Shane Tackett

some might that. effect And Ravi, could just I -- be there

As the pretty I on quickly could helping quarter, that's depressed first you and more a have that been And West be know, the recovery Coast basis. us. caught up think here business in

demand the meeting also think continues I doing think then the demand. And that I we're happening, just to most where premium and growth job place be a is of good

Ravi Shanker

understand follow-up of XQ rest in detail for look kind That's the that. CASM slides that RASM for the what might in the between year and CASM like RASM Can well? and it. maybe and Got a to on walk. And maybe you maybe helpful. the us Thanks as gap the of the help

Shane Tackett

will we'll but Ravi, able mentioned I given did you, in metrics, quarter not better Well, tell on it first I we those the the would first unit give we're that as going better perform be quarter, I maybe in guidance higher than question, to the to think result. the think a second X capacity, just earlier, CASM see

It flattish. could like approach

I to think based of bit the see of think book going first grounding quarter, second by away the next and revenues, the if break not, the in of some or happened quarter. a they're impact over pressured I that spring still months. the midpoint guide be our ultimately, XXXX capacity of could unit And over couple to we deliveries we'll in on CASM the get

to they're strong. going be think I But

I the anyhow. best domestic on in think they're industry, going amongst to continue a basis the to perform

looking is what strong So I at think second which quarter a we perspective, in script. margin said we're from a the

Operator

to Pfennigwerth with And we'll next move Evercore ISI. Duane

Duane Pfennigwerth

little changes capacity in a the competitively, any you're Maui what there? And recovery thinking talk bit about you in there? you're you're how recovery what Can Hawaii your seeing about and seeing

Andrew Harrison

Yes, Yes. Duane,

to general. in to still total, move actually, close as framework our going said, Hawaii, were XX% Maui strength down the we of through. capacity very So as pleasantly on was XX% be out as surprised general down think just of I That and far Hawaii we in

expectations. Maui, performing within of is outside So Hawaii

be to think I to some it's going recovers, be frank. Maui before just time

a we're are to it's the certainly journey. And capacity meet that But slow so we demand there. adjusting seeing our

Duane Pfennigwerth

Okay.

you wait fair see down and recovers a Is So of that maybe it? about and to at level. XX% way think that XX% down kind to the

Andrew Harrison

into think about assess then back get we demand adjust how through Yes, as more we I way this think and to look we'll weak, we're is the the of is it is year, which to the appropriately. going end capacity summer and seasonally

Duane Pfennigwerth

piqued fuel. supply Okay. just interest self Can elaborate of with you Great. And you on then my I guess, that? Shane,

Shane Tackett

Sure, about the supply. other Duane. we've Thanks the for line asking fuel think passive the than program pretty managing been business. Look, hedging on fuel I in

headwinds us, As that you industry. had to know, we've relative are unique significant to the rest of the

being And margin last West I on industry us prevented the think refining in year, it from margin on Coast. producer just Coast Gulf the the to a basis top relative

spent So the $X.XX have lot sit to industry. a we're let relative the and in idly quarter of the not why that differential our We going we continue first time by results. to impact understanding of to rest a

of into going And buy ship that gallon, things brand-new get into say a pennies believe up fuel cities. later a industry. this more go globe larger year. way the Takes it about idea saving And a firm few next as airlines from and not do think It's our it can to year we done. be and there'll one of we We'll of a per the places we I to after, the which to around plans. our we're Other is some other it. is while ultimately own do

Duane Pfennigwerth

And one great. I in That's if could more here. sneak

maybe year? year strokes, be last percent a regionals broad talk would what capacity mix. versus as your Just on Can this regional of you

RASM, estimates there's how giving for not that. regional should know feels network It be the but think like you're that -- is parts about and we to And maybe to of it Which strokes on point starving just impacts. about headwind margin us your lift. tailwind we're thinking metrics, more probably of kind help I broad CASM

Andrew Harrison

Yes. Thanks for the question.

from don't XX% think changing. take is our our capacity around perspective, that I see of regional. it's materially I or give

with otherwise That Boeing help are of they've to the is backfilling significantly, utilization said, our redeployment Horizon Regional SkyWest and a profitability, return serve. valuable deliveries some and partner, and that XXX the businesses markets been those and with has we us both jumped Embraer couldn't just

Benito Minicucci

Yes. We performing and this Horizon for put really our in last up. few Duane, Regional see that a And part, year. nicely, the just of just performing -- over on is the trend lot Margins to rest business, say and Horizon's Ben. of in is years we focus continue are I'll continue the it's fantastic.

Operator

will come Jamie from JPMorgan. question next Baker with Your

Jamie Baker

Alaska to Access, little I had off Admit embarrassing to that. start with a Google

the thing So is that patterns elongated, How sort does to corporate Can are duration those away, fees corporate booking the asking behavioral pre-COVID? though momentum positive. obviously, as speak a gone have curve I'm you as change change, guess, what about. compared compare -- how to trip of I is

Andrew Harrison

Thanks, Jamie. Yes.

I you have think a will probably quarter. I answer for better next

through need the quarter. up quarter As digest, we up to rapid XX%, second as XX%, this we the just XX%, else I move shared, in up something first with everything going better was on

lot But of return a better the historically. seen we've through quarter. digested a after as have second this it But traditional we've seeing and quarter am I'll get the demand I answer

Jamie Baker

asked XX you the days then won't same Well, Okay. fall when I -- that's good. question me in

First was quarter solid. question, revised guide, year second on the full So just

You've $X the second, wondering guide? I the guess visibility, I'm in mean, to range be $X I range and United fair, what's driving got the good as has in well. a

Is to what you fuel? second the there's it do most that half? if really And model uncertainty your inputs that that range? in variability and just Or maintain the much stylistic are besides uncertain you in think chose so,

Shane Tackett

that think habitually Like we I up largest in see in $X or a will the EPS of guide. it the you, immediate Thank or just and do the component is we probably fuel Jamie. driver large that range we've maybe habit. something. that a that's tied it Yes. done typically run There's down us fourth quarter

a worst-case the But do like side side. anything. range on outcomes That best habit of versus set trying think architect just yes, $X than is case more we're specific around out the I to the of

Jamie Baker

And just a you April? capacity if clarification. X% RASM did the I can double-digit say call, sneak on in in Earlier in

Andrew Harrison

double coming that was said I are up intakes months April. into What the digit our for

Shane Tackett

debt. to the selling entire we're the Not Like held tickets book...

Jamie Baker

client makes was that that. pinged a I by Yes, sense. about

way I heard it either. So that hadn't

So the thank clarification. you for

Operator

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

Scott Group

to it So like up follow assume flat, want you're I it X% QX. to and just right, approaching feels that last CASM if saying is the point that down because up assumes on was in RASM you that's flat guidance

like really good everything in is QX. really, sound You

So sure the Or there's be would I'm a I'm of something in or missing lot helpful. not color if conservatism any if guide?

Andrew Harrison

Yes.

Scott, weakest. first to by remember the seasonally obviously I the in it's -- is, think our I think far thing quarter

quarter second. Second much a is in very industry-wide is obviously, very, strong. And more growing, capacity

it's all relative. So

the I this CASM directionally we look we profitability for and as through are from spot as think is as second capacity then what and the we've period as your reducing we've And we before, margins reducing. statements our before, and And this West is Coast growth -- quarter shared industry move and been shared RASM strong. beyond, quarter, into get at on. very around

So there's of setup for a the half the year. back really good

Scott Group

Okay.

us about think had bit -- referring about be of about you that give what maybe some I more little point but I understand. just And would tell you're at some a and then helpful. a thoughts you we'll loyalty, comment to,

Andrew Harrison

the time, more. a on not in I'm wanted on. folks we're the to right we but sharing really the to revenue Yes, know, And number Scott, working going in things works general, going side. to have that share think today, at much just I especially be we're I of

to store, good and share yet. those really some we're ready have We not things in

Benito Minicucci

things there's the loyalty lot we've a Andrew and lot fire But in in irons of just of of look, terms and got stuff. products and that was Scott. teasing, a

on excited time those. the really is when right, them. yes, we'll provide about color So more I'm But

Operator

from next Citigroup. with will Our come question Trent Stephen

Stephen Trent

this or but your one at an let's to refining the kind that aren't exposure down. juncture it one whether would of Coast adjustments and me, to early in merge, of with combined kind DOJ tell Hawaiian any first sort the would for stay Hawaiian? of rise is Or major kind cost tell? there too you say, ignorant Could capacity it hypothetically The passes of the West same Alaska

Shane Tackett

see you significantly in Continental going are you hypothesize much, but Yes. the not than the Thanks, Steve, in to -- I'll I'll fuel prices too that I'm U.S. Hawaii tell lower

Stephen Trent

Very from work about doing investment-grade rating. days I and of X investment-grade Super. Could get be are my having the what what rating you all just the Okay. memory mentioned agencies? And that XX you push ago might and quick to refresh done clear. credit guys you've one sort an nice follow-up.

Shane Tackett

Yes, Stephen, question. good

I with do really to they closing think the reconsider are and got hopefully, and and we not and market going money raise some the agencies go on, a it, deserve soon hopeful got other that to talking proposed we out actively review their ratings. potentially we've now. of us acquisition focused we're that. We've right lot to We're Hawaiian, on X

credit We'll that's So good I metrics, really got that our we've debt then think focus right metrics. now. get us and behind

case them. of we're and definitely think deserving the our we'll keep I reconsideration by making over X agencies, time other to

Operator

we'll And Cunningham with Melius move next Research. to Conor

Conor Cunningham

of is focused to there As you order the talked It from rework today stabilize you're like I'm opportunity don't like you couple them trying in an the on stream but Boeing, that want over book? seems the just know, forward? you to 'XX, a next to kind of, completely new delivery I are going understand more what seem -- just years? comments to looking

Shane Tackett

Thanks, Yes. Conor.

own us important safety the quality stream, the support pieces, of to or production yes, there's their is ability process. a -- think manufacturing that to and I consistent back X and moving reliable rates -- which to get look, delivery most

So we've got out. sort to that

expect the We that. to make not MAX at certified We've when prefer got decisions It's yet. this also to XX point. about

to it's we second half had come think than later next I was of going which year. expected,

is XX to to have today. we think if able another so about, XXX XX transaction And proceed, then with aircraft along we've got the to again, or proposed

and time, just at all the some for need of take skyline look together a new Boeing put these variables we to deliveries. So MAX

I a it year ago. think, less directionally, had than will been be about even probably thinking we

then story with partners or need on So our for a to be free that over it cash and quarter work we over through Boeing. story, our at good time, CapEx for good but side X should flow another really

Conor Cunningham

Is cabin think I'm into Sabre, if term. just your Fare anything Okay. there's glean like That's I'm helpful. and versus to pretty long how this -- over about understand your on on. the seems then going like there's know it And Sabre on the just -- Premium to spread -- don't trying then that a huge you And main option. I revenue spread

and close-in your about given -- inventory premium you an -- the forward -- your demand incremental as Are to offering. And try far -- of closing. sits sorry, that, think you out going more then follow-up talked how to your as to your inventory you changing thinking as about did you sell capture how inventory your maybe I -- initially didn't as you

it's about Sorry but X like realize questions, that. thanks. I

Andrew Harrison

just I'll Right. answer level. high by

been Sabre for product us. the a has think very Fare good I

we tool also In fact, it seasonality, of network out a And significantly available in we've in very more than buying valuable given around. moves Sabre. seen revenues it's the our year. last where made significant did increase at We've

where on the historically, is we I more I what deliberate that. we think and I respect. you of pretty structure to yields we think we're we're some than we've focused manage Premium tell And more we're to the more product and there's on and putting the chased where good cabins, can our is Main Sabre. probably, I both only loads as industry news and much cabin. seeing how focus we're And come our are, pricing in about from that And think how setup getting ever think our I and

Operator

move next And we'll Deutsche Bank. to Linenberg with Mike

Michael Linenberg

like. was to the scene your whatever I don't it feel it And corporate, lot of you of minute. -- it's becoming you ticket close-in piece. bereavement X% hit a a a scored and found A kind know, about long-haul Leisure. concert Taylor than I But international. look that or out when your last-minute sense big to evolution pre-COVID, reopenings during something and this feel sort of and anyone, probably really the either just of of time better it with a COVID. Andrew, the have like was had do good your Swift you I know if bigger maybe last discretionary, segments, various at it's pal you don't of I

that Can RASM. but can become on bigger a you think and evolution? a than much it's category maybe don't Because it I about impact meaningful it's have talk what realize, category, I a

Andrew Harrison

one, you Flattery get everywhere. number will Well,

Leisure. talk But thank there leisure agencies. I And out squeezing loads. the about had COVID. because were We talking from robust loyalty cabin And a we for Chase So I'm huge about and Leisure, learning also we when of you. course, was went a major Costco and

what less take that what closer further we is customers I -- there us think and the in. much out really guests of whole to who a available just and that are is them making for is least, environment the finding our cabin today. we're at So had demand given structured are a we're and leave a all in that And more our seeing closer the of group And than be strong how lot works, further fencing they would and fair out. we're yields leisure seats book for traveler and better course,

Michael Linenberg

That Absolutely. just then we second, you did my out look makes and things Absolutely. about couple for. a I know teasers sense. talk And that should of

for this are we loyalty. did know Ben year? drop I up renewal loyalty. anything, If You mentioned

Shane Tackett

business. what and I other side part you've I of But powerful think that. just past -- heard would very We're you No. important about such if is a our and say loyalty, --

changes. loyalty If you and the there's environment -- look evolving. programs, all and they're at how

to we are this And today anything area at of there's an And other I our looking upside. how program for is just change again, we're and than evolve. And focus real think so us. to needs share loyalty not willing

Operator

move with we'll McKenzie Dan Seaport next to Global. And

Daniel McKenzie

is A really my versus question. couple head of count question first fleet I guess count here. a questions

in So than little overhead -- And Boeing going Alaska the deliveries to? what or I for less that the compensating are because guess, burden then that a carrying guess, cost you deliveries expected. are hiring is I burden? I is you cost And of you I'm guess with the where is then number that guys coming are

Shane Tackett

Dan. Thanks, here A one. on things this of couple

we XX think had originally deliveries. I anticipated

Of important as course, when is variable come they an well.

year As to that. revised full evidenced expect guide and capacity by CapEx than get our fewer guide, we

Boeing ticketing through built XES XX going review essentially and in process. aircraft final the

So all probably additional we beyond that. expect units and those get some of to

million. So we're between thinking million and somewhere $XX $XX

number are aircraft retire. have planning we We of a to

those going to of many So aircraft older were XXX replace classics.

relative coming to in good situation shape our is headcount the way. stream delivery really our So

in of the this We're extent us watch in and to that. I year but We get We any part bit the be our conversations the from last significant going I a staff for throughout closely. perspective. that not are going ready to for terms with of compensating be had to to to up of a in business. don't spring, drag we year we're don't materially overstaffed. believe cost think a that that having end position Boeing And

Daniel McKenzie

good. Very Yes.

I a the small trying what in I'm can headwind to highlighted guess of is jet differential West percent XXXX. gallons Okay. And of get from at margin gallons get planning X of SAF XX-K, And Alaska here versus that probably Shane, time? fuel? to that. through guess years' X curious, you then in just think cost XXXX? but guess, you're today XXX a I where differential then to of buy to trying go, I'm just In sense overall what And here. I'm do volume, say, another how And for And you million the question is Coast the many I that your

Diana Rakow

Thanks for Yes. question. the

large. of small overall part a the So it's is large the in part part a and because in that's it of the supply at buying small world

about total For will XXXX, cost It over -- of of be coming of different premium there a our a suppliers. X% and green couple A. is fuel Jet that's is it from the

try staff and to in to which at includes we're cost and And and producers. the the X emissions have business strong curve way SaaS We're in are lot fortunate different the a market to market the lot in mature different working doing down technologies in future with offsets also the that partners co-invest Scope their grow a corporate to travel. a of of of looking really that us

Shane Tackett

becomes a increases a going fuel that probably to larger but years it of part way we're plan. into the -- it's starts a really move industry Dan, it before up materially few from the cost the for of color. supply, and margin in noticeable the Diana, there's thanks, think we a headwind year. I entire a as think this Obviously, consideration for show forward I don't

Operator

question next from come with Susquehanna Chris will Group. Your Financial

Christopher Stathoulopoulos

Shane, XQ, it was I the you comment said for think CASMex. flattish

the ex here. that's cost? are that, confirm freighter typically not then to discussed freighters want Just And

size where going I and remind just think you this that's that of current the fleet. you're sizing Can up year? us

Shane Tackett

X, for Yes. that And to I work able Alaska. think see if you the do a is different small the to it's cost. Yes, Chris. both fleet fleet. Thanks, ex of comment which freighter us of They you'll even had don't lot we a costs in of materially year-over-year. is years. be in a freighter But be going included State up

to We're predominant able We've been State And all knows if that We able increment most the to the customers the business up of of Alaska who moving It's being most do. to base in carrier for something over like we'll Alaska. lift from be of will time, dedicated really It's cargo important strong. freighters. if to continue our of that X. be would State to the of in remains certainly to of history. proud there. we're our X Again,

Christopher Stathoulopoulos

second the my in prepared better And follow-up, you markets supply-demand anticipating Okay. remarks in Ben, and half. just in I think balance the a core your you're that said

if retreat parts this, dynamic, this you are of I'm L.A. we've they're forward. coming back, It you competitor supply this had a doesn't new backdrop curious outside of in sort confident like so will, how look from of And going or

Benito Minicucci

it well, look, it amazing just us if QX what quarter turned an from was I out of you XXXX. you. again, look how and for at was think Thank QX in

the So level we're forward QX, starting just from and just into water QX. higher looking translating we're in at that's

touched on everything of of demand feel lot on positioned. based we're Just we're like things, Andrew we just in and those seeing terms a well

So forecasting we're that's pretax double-digit margins. why

It's profitable quarter. most feeling we're strong. And really so our

for up year. I really the think of set rest well and we're QX so And the

thank and Chris, much, so joining you, everyone, us. for you Thank

great and have you we'll -- talk a You we'll day, to quarter. guys guys next see

Operator

Thank you conference call. for today's attending. This concludes

Alaska Air (ALK) 18 Apr 242024 Q1 Earnings call transcript