ALK - Earnings call transcript Q2 2024

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

Operator

Good morning, ladies and gentlemen, and welcome to the Alaska Air Group 2024 Second Quarter Earnings Call. [Operator Instructions] Today's call is being recorded and will be accessible for future playback at alaskaair.com. 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 second joining call. XXXX for you for quarter our earnings Thank we along which our investor.alaskaair.com. release our are several at Yesterday, earnings detailing with issued accompanying slides available results,

Shane. updates also Group are the reported morning, net portion line questions GAAP Ben, hear of management your on you'll income answer second million. the call, of our quarter today's Andrew On of Air and during Several to the others team This from $XXX Q&A call.

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

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

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

Benito Minicucci

everyone. Thanks, Ryan, and good morning,

As success, we pillars to care another paramount steadfast remain excellence, are that the we our executing of quarter, on and strength in and key operational financial taking closed safety strong out quarter and with generated the few A guests for achieving premium segments. our highlights our revenue, from our billion $X.X nearly in highest the in employees. result billion quarterly include history, $X

us industry, Our focused terms likely XX.X% will adjusted profitability. from other domestic differentiating margin the entire lead in of pretax peers

margins August, our This our stability it and cycle in appreciation their at announce that increase achieve same the commitment happy in we in improve labor ability peak a labor pending that labor would for in to will weaker prove their during seasonally operators. on last summer actively This bring record investments major is to contract flight remains and continue a We our are contracts with tentative includes focus, working and best-in-class business. QX. We're the alignment role futures. XX% in with time, the deep for people the agreement vital industry reflecting a and profits quarter underscoring our attendants, aligning And to the QX focus our to industry-leading second we ratification unmatched. and to our the compensation, of our being we mark us. Making standards our this conclude completion to forward look as and

acquisition the on a the management each planned business for cost We Our X% down remains cost productivity month out information. unit of with nearly industry, expectations, Hawaiian on our reflecting the better operation as focus internal lastly, the delivering dedication our our was teams for a year-over-year. This an resolute rate of the among were second And quarter, our update aggressive and strong, better than a across best or on and result the ran XX.X% that carrying we submitted driving teams in is completion focused guests. quarter this even plans. safe, our Airlines. In DOJ's reliable of request our

be completed potential We more the communication when August process finalize learning to by they review with maintaining as are about their transparent expected X steps. and anticipate we DOJ close next

to turning business Now outlook. our

drivers to As top environment. are producers of EPS well in we fundamental That economics placed year, our midpoint half the our as unchanged. consistently attendant we the reflect the as by have full the remain of that the deal into said, move us adjusting industry guide among domestic the second year margin of $X.XX the flight the current

to be us. the of full XXXX confidence are acquired we aircraft deliveries, we growth aircraft But process in deliveries, to delivered than increased aircraft highest guarantee sight from to expect line maintaining growth production less Boeing have of X.X%. to now terms XX of oversight while but Boeing vigilant In MAX the year nothing and capacity quality

excellence for Although start XX.X% of to job and managing challenging as teams a are and fourth our to we lower business doing this our period largest-ever posted despite our productivity. Operational our the configure DNA, operators and July over summer We're rate schedule best-in-class to fly great completion year, guests. construction airport costs a great of than core holiday the we we off committed is a are and weather being the some level delivering growth projects. for and

our a complaints further exceptional airline. This XX% service, the ] reliable, testament care on-time airline. safe, per our industry an airline improvement shows released second-ranked commitment for Alaska better customer to the and employees generated recently average Still, we're DOT run than As our the U.S. a lowest provide the for versus XXXX guests of with to idle. sitting of XXX,XXX XX% result better than XXXX is not any guests number [ data and

World preference and are beautiful We're carrier more where brand our and up our demand this We stepping in San in given through and the and to also book and now have Partners we of to at segment. and new brand-new a experience. the the Portland. largest guest lounge new a XX easier strength lobby with [indiscernible] state-of-the-art to second shift in do Francisco, towards alaskaair.com. We're terminal stunning premium and guest exposure travel technology One experience the elevate online continue Global enhancing our making with available process We're and

markets. far the our building a that unique Alaska, achieve committed the which, for to will million a on we this on balance am grateful base. our approved, we team dynamic and broaden our Airlines, the and our and challenges been the we'd at the competitive and carrier. I including from corrections. Had Hawaiian underlying to year talented grounding head-on both acquisition in be course costs. X embedded am operational margin and our guest environment focus and This XXX-XXX Flight revenue total our as and in respond preference strongest of material out business we be our excellence, adaptation model and softer was care to the decision and XXX-XXXER for this to maintaining labor At we excited forward demand fleets as we September, full a relentless strength is it for are set year domestic we making that, step-ups X seats within requires seat our and expect to potential impact focused DNA, guest MAX that mix our we of domestic with record as some are build of year, to advantages fleet domestic top and areas industry to and control. continue adding $XXX fleet, The in to believe last if class and enhance Andrew. amidst a diversify to not international done premium We'll first seats over fundamentals constant confident continued points when improving industry the success XX% even just this and track full X for a Group meet a I on strong And our premium going years. our I'll driving dedicated investments we track producer investment it first-class With still, margins to and sheet versus consistent that XXXX in begin to X have away day employees time start excel I'm day a here up be presence completed. modification And X made long-term ago. turn are success. Air designed

Andrew Harrison

reached quarter, capacity outlook revenue to my points Thanks, impact the of the our in and good result fleet increased revenues month in provide of year-over-year. as June. Today, million moderated RASM. growth highlight This the Lower peak a factors third as $X.X increased results in quarter lost quarter, our unit resulting on Ben, revenue unit sequentially, of X% second and quarter attributed lost everyone. our reaching morning, X this record grounding this $XX industry billion was load achieved guidance. unit revenue capacity and revenues XX% up X%, color June. also X.X%. Notably, comments on Throughout reflects the or capacity will well in down in as We

additions below records years factor outsized loads the more of load past XX% capacity than and the quarter anticipated. pressurized yields from impacts for double-digit that originally Our saw regions with the X both

As continue you volatility trends us in significant are have allow should few past I passing to believe stabilizing but and demonstrated demand years know, to the optimize further.

they the what part, patterns to returned. were business For and travel are has largely pandemic similar most booking

preferences when For I to guest fly. Alaska, still guests see in cabins as front given refinement well network to want and where opportunity as match

spot in bright the performance. be our to continue cabins premium Our

XX% yields. to premium class revenues revenue and respectively, factor X% Class growth. load first-class up continue X outpace for main and points were year-over-year, the quarter, and flat X% Paid First cabin was on up

a including added our to As invest approximately our Ben starting seating. Late to XXX fleet XXX premium real MAX regional class for start XXXERs premium fall, last all we with continuing Embraer our are and aircraft mainline bank in quarter. and premium and program being mentioned, on remuneration property, this of Xs Xs year, XXXs, with loss mid-XXXX. We seats seats total in remains the Similarly, fitted strong $XXX by ship loyalty with with cash completion will program our totaled additional million we

offerings the mileage that build of unique loyalty. build ways strengthening We plan varied guests ways. attract to younger, new value program in the MEMS different constantly next-generation and allow are We to our with value found lifetime to

has credit had card rent and Built initial great results. with partnership pay example, earn recent triple Our where Alaska's for customers miles, can with

helping And to partner seen also April are redemptions month our to X% in to have we global ticket colocates contribution of terminal partner us airlines, XX Our sales many this promotions long-time total customer of experience. We're continue to purchased selling San revenue with To now more Francisco year-to-date. XX% our British XX move relaunched partners continuing countries a date, global invest our activity we stunning with to partner, Airways. including pricing, drive the which excited We're increase more than proposition. in Guests refreshed partners. of Oneworld new new our addition covers platform on and revenue. X XX% and content, loyalty overall from to recent our Since our we've up and enhance tickets

our also lounge will XX,XXX square week. open foot next We new

guests to a within innovative Terminal This next-generation get addition drop the and experience in Valley bag and In the process minutes. technology. world-class seamless the Harvey the technology Milk lobby our offering in automated Silicon through introduced is of self-service check-in to will heart first emittes the offer X

Our main premium in checking prepurchase cabins. has a in the at hot also bag they been our technology, reintroduced check-in system-wide before We've self-server to meals for using guests aircraft for and implemented in our has XX%. arrive also doubled and resulted airport, digitally XX% in over tag onboard which has guests increase bags

guests. experience our we Alaska, for At are on all focused quality

continue excited experience premium and in the to for this products We them. create are investing that amenities

we quarter year-over-year. the companies year. Corporate year-over-year throughout Turning to given were is business up the solid be driven the potential have we our revenues held the up about continue over XX%. XXXX, as we are corporate were corporate XX% managed significant quarter the eclipsed beginning date. Encouragingly, and market revenue has On sit that XX% step-up second although up overall technology managed at volumes Bay revenue XX% the of see here by on the to revenue following recovered. Area, Specific of a recovered we basis, upside today, books remains to further travel now experienced to XX% only in the

and guidance. outlook our to turning Now

third X% expect the set quarter, moderate the to third quarter. domestic saw X% to quarter. down upto to the increase from sequentially We Similarly, is the X% in capacity that's second approximately capacity year-over-year X% industry in increase to we in year-over-year

exceptionally result, the QX to second yield towards before capture more we load. in stretched strong rebalancing Following an quarter

in to capacity beyond this into and saw and is what for expectations and in to breaks, While slightly summer competitors supply we earlier flying June network August. in versus to QX peak calendars we adjustments a and periods. Also be a shift in factoring we've demand results versus believe period, to better good strengthening July off-peak leading match our made school

stronger become As more month. leisure trips a pushed to June this peak take has place earlier,

September flat capacity with during months, yield are the August planning observed we XXXX. and for shift this versus in along nearly we year last environment Given these

that domestic has Lastly, otherwise domestic With high-value XXXX, not international travel still phenomena yet although normalized, from demand since one detracting over traffic this believe the of mix will is domestic of over demand expect point still it out be present. we having versus time. would we shifted

and currently in our advanced We been are growth last of in by for Looking have ahead, of coming revenue as August load today's encouraged bookings, ahead capacity XX% we've of the above with building books which call. forecasted factors September coupon year.

positive the benefit in of give to periods achieve we growth can September, we are revenues Given last shoulder stronger in loads the as trends confidence go to unit July, year. of may modestly flat assumes into our year. These months. August lower we seeing corporate unit September and and that us relative traditionally versus travel positive summer quarter August have solidly versus upside positive the revenues negative up last in as third potential picks This the September. revenue unit in more

that We room have great plan results for offers and a is strong guests our commercial has to grow. producing value

layering both currency in own anywhere and our I'm from while the the world, valuable to modifications to can go our this there. lifted excited our mix premium can the Our and accruing in completed, XX% our program partners network on internationally, so offering, comprehensive from the when most more do out they X.X seats expand loyalty seat will through million revenue guests annually. upcoming side fleet seats today drive of business premium XX% of adding

long-haul many on of results. product value domestic our supports metal, global airlines these trips, segmentation among doesn't our own to financial This I'll Alaska taking to that, peers international guests it sustained with ecosystem. fly the Alaska approach drives attractive a options Shane. And us partner premium our across our our choosing one offer differentiates services pass our is and to choose for guests from when reasons While within over experience multifaceted long-term creating consistently the the

Shane Tackett

Thanks, the narrowed month in Absent quarter fleet XXXX the and and grounding gap impacts sequentially. our by strong during everyone. month year-over-year, our first a to year quarter, quarter, Andrew, strongest half of a the each year, margins large while morning, become of strongest We slightly first our year. quarter the the margin has delivered the which the were of of down second now June in trends attendants that indication the results of we is good would distance, model strong of flight be labor grounding should as our impact we'll nicely while others, again, with or year costs, underlying agreement than are full demand-wise full have have expectation results, significant pretax tentative created. And XXXX X.X%. an XXXX's year of similar business versus our fleet the of result is ratify, adjusted for our similar our would improved in experience the the better a and step-up we seeing this

our to Turning second quarter.

was XX.X%. down earnings first be during $X.XX encouraged adjusted were quarter. West margin Coast with what to the per price refining margins Our industry-leading being with we we $X.XX particular, share will from pretax Fuel per to believe of the quarter. returned an gallon see on was adjusted $X.XX, par in Coast In Gulf

undrawn billion Our are and approximately million total were in lines on-hand liquidity expected at to the for of $XXX credit quarter. end. of be $XX third inclusive approximately quarter stood at repayments million quarter the cash $X.X and Debt

to quarter turn. Share industry least dilution to at for at year. net this for a continue with have the tracking $XX cap the million, million We total at in offset are and balance to of the debt healthiest year-to-date XX% one sheets and we X totaled debt-to-EBITDA of $XX repurchases fully

as across improved year-over-year, job down this with was going with per our quarter teams managing FTE sixth than Second This coming a X.X%. continue again original better grounding, of costs the to the improvement expect quarter fleet of adjusted forward. trend a up organization. Productivity quarter expectation do in the to for passengers we continue the great our productivity impact consecutive X.X% costs better incrementally unit results were

Turning to third guidance. quarter

that costs I in an deal X% we quarters, half we We in the high those than led for anticipate with pressure the in what the unit saw natural note the that creating single-digits expect we of the in a half first be and is unit quarter, year, but third cost the second would will more we up will which in provide on X% this, performance second last average to year. industry driving given down costs comp industry of versus the results. in toughest in have the headwind year-over-year back

this X- quarter third are areas. to drag For CASMex ex seeing the following the Boeing from on year, X-point a we

will of year, level this is and driven First, than from higher from of later deliveries realize by we business primarily configured our headwind growth a X one. having points for fewer

managing at the are still done excellent costs have in we of job an we While lower face not level. optimal down an growth,

While it's to we tailwind structure and opportunity this levels, will our new driving as a at continue a cost in be future growth QX. rightsize these headwind

seeing points Second, and with materially, the and up in in we technicians it pressure higher and are later there's see costs our will attendants, costs the shifting a ratifies. And This last includes maintenance X a costs new estate of snap category, year. labor half second last modestly Third, of continue pilot assuming from in real airport from flight about X. headwind a year. from our X-point the from also point wage to the than X timing September step cost our spend And up we reset agreement industry labor of July the more to of agreement that from annualization pressure our late little the with to

about excited with model we adapt have bargaining, make our to people. too. visibility are sight closing to our been cost this now we labor we've future We of fully And in to more able business structure, the of our need deal now our which of line round into last investments

unit this we stage continues a still case. versus industry with the long-term XXXX. cost Importantly, remain finish year commitment to advantage basis, strategy our in to of the we and expect to competitors, results adjusted one On the the is be and versus length our maintain our CASMex best confident

a the be to profitability unit near margin While I crude the barrel quarter calls, with in refining and change trends $X.XX on unpredictable, prioritizing over the we'll term, $XX on Gulf averaging given in the over other margins been we but metrics. Fuel around Coast have a remains be demand for welcome context, premium noted and responsible few may West and last with as continue the pressured current somewhat focus metrics quarter. Coast capacity will last a only

focused fuel more levels, Although still other spreads the disadvantage with time. over historical neutralizing West we Coast line seen have are these recovered in on through we've initiatives

third our to we the economic fuel be $X.XX per quarter, and cost For $X.XX. between expect gallon

we $X.XX an EPS our we've by new driven lower are $X.XX to midpoint. quarter that be together, $X.XX by all a domestic and adjusted of experienced in moderated Taken year. environment compared labor months moderate and incorporates expect the full the both earlier EPS now a the fare year we've the half to outlook recently contract, at principally second These third in growth the year more to few

said, more be a in fundamentals the the in That Absent margins validating year, versus flat last producers long on business margin leaning to any grounding, of our and underpin industry, we not positive total expect to year years And top the success. at both premium for a achieve this in we're record revenue in unit seats the without of that come. Alaska premium strong our and model least our but still group do metric, and to to differentiated we're from a seats, planes, environment, to it. cost. By has only so excited any add track removing

business we build with strengthening of to model ourselves and successful to go we continues and on win in to as And our position are to adjust questions. the industry. adapt advantages control, competitive delivering apply business best that, our that's margins continue we learnings industry already the As evolve, will environment. to let's your our within And the in amongst continue us helping our parts today's

Operator

[Operator Instructions]

Jamie Baker will And first from with question today our JPMorgan. come

Jamie Baker

paranoid. It's a should row. I be X in

folks. So a deal-related question,

mojust in sounds and see X I what August by is as yet you're So Eurado Justice discussions. constructive to remarks? having It [ Rather Ben's how remarks were being should you said with remedies opening that the as Xth market prepared Virgin, trying about. to if the disclosed, that speaking not is justice wait back from the incorporate and hear then, with you ]. regarding bantered you square against I'm were

Benito Minicucci

X occurred. Yes, Jamie, documents and stretch see what in with back DOJ the And entire we're home look, with. us We're went to the we weeks. the discussions comes process waiting through DOJ have all the to in here and

a made So our pro case and case competitive. on feel our we've strong and about being pro-consumer we pretty

wait go the DOJ's we'll So decision from and there.

Jamie Baker

to or on with premium estimating range, close you second, premium class I to a then average if And I'm XX% find don't what's usually forecast. to it's I'm disclose. a metric yields. but paid economy class, paid basis, know XX% that your class, it's not in yield out Perfect. trying first the premium traditional just

Andrew Harrison

of Yes, half of is around you Jamie, tell head, can those cabin paid not. think top entire versus are. XX%, I the I my the and Of about are

sit it's good the -- encouraging. sort So cabin been at it's so a of very cabin where I that's that we for think -- over the you're and XX% main

Jamie Baker

Sure. your right? But upgrades, -- includes but XX% Elite and again,

Andrew Harrison

Correct -- half Yes. Okay. them. There's of about

Perfect. Okay.

Operator

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

Duane Pfennigwerth

this see overall competitive I and don't know in you And but capacity have if perhaps. XQ? was that metric, XQ how do you What in in that growth markets. your evolving

Andrew Harrison

very even in seats up. our elevated, long September, haul, over to was all flat as low you're Alaska XX% was aware. our network. hubs, And it my of sort which up capacity as XX%, are industry looking digits remarks, certainly, single through you an of of October, But in is forward area like prepared Duane,

much a So see growth of significant reduction that overall very we today. in the trajectory

Duane Pfennigwerth

Great.

you, pacing point? piqued maybe XXXX? put my to Can How stay but us say, booked sorry at context compare last interest this would you year with of that the with or XX% you in comment. revenue to, that XX% And for

Andrew Harrison

head, -- XXXX towards we on to mid-XXs, is off this line. my it's in the XXs. need might But anywhere the normally It's headed top in higher follow that. the up of

X. or year last the over line in right certainly it's So

Operator

Scott question will Wolfe with Research. come And our Group next from

Scott Group

the want little side bit. on a I focus Shane, to cost So

capacity year-over-year I costs hurts and CASM on absolute try just So want get on and the I focus harder growth to a costs. totally less for comps unit are minute.

much a with just ex million. to X%. it's almost but help go attendant, factors? is us fuel to And year? out And QX to that stay? to sorry, that? in level only costs does quarter the of bridge next Help down again like fourth new QX, a XX%, how absolute flight start you're pilot that other to if look Does $XXX that us you capacity XX% than bridge any you just -- increase as like How guiding little Just up So much million less $XXX cost is like come thoughts?

Shane Tackett

Thanks, Scott. Yes.

is terms bulk In do is labor very in be percentage with last of we the our much I in in rest just or on but of last July proportionality, in the a will rate the June. noted the first some pilots significant another coming got X. occur the being prepared the with basis, really airports like side there's of going contract. The that again, the in up shifting airport with the timing And We rates remarks, of think cost X/X my to have a so had in half increase flight September year, on year, like magnitude snap We modest have attendant things. more than but new you've credit that hit different adjustment current I as in contract.

-- rolls base got our from QX. we've lower And we've we that's don't to of and bit, structurally talked is so of about a a to And different this any QX. I similar. quite think than our shifts QX Maintenance There's QX competitors. are costs slightly in some continue that to. will any over

against LCCs. cost shrink to our the cost legacies advantage maintain and going are to the gap We the ultimately

And cost on not and the that's can what close Southwest. today, blue as us. And balance We we and to is we're letting we're forward. delinated encroach year go the expectation of our [indiscernible] for lower have America

improvement. I X tailwind other sure we're just want year. make we will year quarters I be and had to even though this continue, it's lower, consecutive into the to of having adjust of rest productivity think to throughout next and know, growth The I thing, That going a

So high new be normal we us expect single-digit a for don't a to at all. number

this the as particular it's think labor if down is which cycle and step-up this of ratify last deal. costs I our we probably size some I this rates, their material close attendants flight think in negotiation timing

Scott Group

then And -- current far Okay. to -- I it just hey, looks September, good. about, look QX. That's helpful. look like you out things looks has talked the it flatten start in so at you have August, all capacity, airlines When guys on reaccelerate everyone at schedules, so

flat? in about is a that that are So down for September? revised you, to QX gets any you And how think And thoughts 'XX. about in then you think just closer to like for early placeholder and capacity

Andrew Harrison

Just year on year-over-year of the I'm What seeing. remarks, heard Scott, as the sort what prepared on will be that -- QX you is capacity, sub expecting on basis be QX the actually will X.X%. I'm than a a lower is in our little

Shane Tackett

year. retire expect Yes. One In we take XXXX, share we not to expect is ready this next I aircraft. aircraft fewer than to will to to. did speak more thing though deliveries year of And do we

so forward. time expanding really as going call, -- about margins on about capacity think the -- really and thoughtful the to to be think call and this network I making before and remarks going company go be prepared focused as on said in last we're we're we I it's for And that, judicious the and I sure

Operator

Research. And Global next Didora take our we'll with Andrew question BofA from

Andrew Didora

that Shane, question was the actually of growth? ask year of I next But of to as say sort the guess, below picture, to going kind continue to fair Is mid-single-digit targets big will your longer-term capacity of delivery given to remain kind delays. XXXX well. it kind medium- I of

Shane Tackett

it. look fair that's think at I way Andrew, to Yes, a

order I really our is that And network. us MAX XX. forward optimize to and to we're extending book continue now the to really we there's further a think I for the certification positioned want bulk XX, I and work is opportunity of think of going lot the as to a the what right. That's think

sit longer-term our as be of sort And below in fair XXXX. so target growth looking out we that likely would here I think we today, it's

Andrew Didora

'XX Got thinking by at that of these that? just unit half Or level do you of will it. seem of high environment, the earlier costs Yes. ease will much of similar Makes sense. And because single-digit than like expect sort see headwinds in of it doesn't type some into we then? that kind about it growth first relief

Shane Tackett

Yes. single-digit elevated Thanks, about about really What wouldn't talking costs. the level our be to our expect Andrew. have to not philosophically, place. unit unit see be no, us us look this the model were fair early to business of to cost. And holding a against cost unit no And productivity thinking levers going XXXX, mindful a the the work different and It's or be at part continuing I I year, we business. business we're thinking basis we'll It's It's XXXX. to to say not for think business become been or of of about about model. all for very in our if a is, the on in efficiency going a of high you the other thinking part or would XXXX full against about the against industry. own And on

out you, Some thing a the to lot in remind last QX I'd of begin base had these next And things of just do of actually of we part the year. capacity lap year. of then last

forward go in be even we in XXXX. to the noise going there's So some as comps

Operator

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

Daniel McKenzie

economy, on assume mainline in links? is the the premium and shorter the all little bit a to haul little haul it across stage to cabin a XX% reasonable over flights? higher premium Or on is back longer less Going the it's bit

Andrew Harrison

a as correct. regional length longest a industry. of stage premium across domestically class well. the absolutely that's the reminder, And our our have yes, Dan, fleet one is we in And entire as just

probably think And class why most than this asset a so longer And huge for I well. regional aircraft is aircraft our -- us. as other such is fly regional premium

product a is why really that's us. good the for PC fit So

Daniel McKenzie

course. here? that account Francisco XX% recovery How corporate about back much recovered? of going how are how And being then you we does recovered cadence it that And to primarily revenue then hasn't from leisure? Yes, San are for? is And thinking -- the or

Andrew Harrison

get to just which have Dan, we're is network these we we've in the Angeles, not in and travel. well leisure are Certainly, well There's you Bay comments be of to were little of for specifically on the here low Latin think very time. the California. because in the again, ahead sort of look more lot has doing And spending no Area growth, generating cadence what my post a we curve growth quite a on our for I at of again, demand have business been bit, very positioned Los going some as And been and we here And high revenue will moderate focusing there. COVID done on next us. But markets, network. autopilot

the this will the this markets our airplanes year to where maximize revenues to fly. We be and right actually in we've ensure to that through to guests and into year got our managing dynamically next want accommodate

Operator

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

Ravi Shanker

in fund Kudos sneaking autopilot that in there. for

who's cabin, premium the legacy other Is of kind that the there, coming that mix kind the that from One coming to of Is coming incremental given Is partner from? the just raise main on initiatives where cabin? carriers, airline? customer? is target from Just new that converting the and customer World from incremental

Andrew Harrison

Yes. Ravi. Thanks,

sort I in general, our both all it's of of going think above. a of the class story we premium a think around premium and product first tell to more lot being class. are And I

partners shared And a and as we've Our for earlier, just appetite real cabin. just seen, that premium international class demand I can into sell that.

look meet I Saver better and think the the with fares, those we at you a look doing at actually of fare, our well very we the as are selling job we have. product much but lower industry you at end

premium could way the you would seat there. seat, us For you and only go you directly choosing instance, your we on were not while the upsell into too to long class map was ago, buy

be Now soon. will our it then page we front to it coming here fully have mobile and matrix, on

opportunity it have merchandising we that there real think much out catch demand we them. could seen haven't put perhaps folks as of it I in front So as have

Benito Minicucci

the -- time check Ben. but we're our just you Ravi, the I what from experience. higher premium I backdrop. From And is about just in, us a innovating domestic with we're not premium talking And differentiates this seat competitors. lobbies think it's automated level, even really

We have lounges.

We have One partnership with World.

great loyalty rewards. a fantastic have with We program

have beverage, food local board. excellent on the got beverage. We've We product food premium and and

And seats. the And premium from this entire comes where a so is experience. the the look we're I you with premium accretion providing experience, think at

Ravi Shanker

confirm wanted lingering incident? everything. behavior to and to January the customer your there look forward and some Maybe follow-up, check is just as that. Understood. I you That's like scores Is that great everything to booking and promoter a still experiencing normal when back net after Or impact?

Andrew Harrison

Yes.

I quarter. think impact first as any quarter, all the we think actually last I lingering in at from the effect said even the we're seeing -- or grounding not

Benito Minicucci

our company I'll proud add. of so through first And I'm got quarter. just how the Yes.

of in tribute losses January the so of airline we the about data, was And company how And of streaming a think the incident on mentioned I think future. just here. -- pretty immense you I and how out in really I posting our my us. the Ravi. people to feel behind we're this customer I'm quarter there proud in operation. all grounding, in to XXXX everything no, our our is out complaints came think going had margins, attribute the it, And of doing forward in what them QX in and DOT we And where good If script, industry. any people in And the that are fantastic the lowest it's that's X the

Operator

Melius with Cunningham Conor Research. to next move We'll

Conor Cunningham

-- When the expanding anywhere. mentioned you Just class, actually much turnaround the thing. I that quick this as you. a a just you're second. you've if pretty I overhaul -- And I'm just is know driving -- premium the on on time, topic like curious to on it first seems just how for quick don't then whole CapEx

to finding you at did Just capacity this all do MRO issues retrofit. any have

curious. I'm So just

Benito Minicucci

me start. let Well,

and in here. script, happen this ago up just put invested our it thinking said about didn't something We've in lot. doesn't a in many I my this and I many, we overnight. years, Conor, experience think is we've a This for with month come been now just premium

in with match the rest seats, that of the on first-class there. smaller over to have XXXs feel we time, a on need we we XX It's But So airplane. the our fleet.

to So XX%. that's where we're going

terms in Now CapEx,. of

Shane Tackett

ER Cornor it's XXX partners and seat repitching quickly. And years be out just It's done allocation a new a an airplane, that or the The forward. and we've will capacity and of looking relatively couple spread will us had is be good over it now, roughly MRO to It's XXX. years. easier. good in available to million from going $X our be

Conor Cunningham

fourth That's you you in And in business, that opportunity Okay. are your to just of peak of what helpful. XQ your the change versus the changing in money learnings XQ, that about Is saw then fall? majority significant when vast Ben, think I off-peak you make could you of you XQ guys your historical mandated apply as of your think XQ, in about more quarter, it the seasonality an capacity.

earnings in how on your curious you're stream? general thinking of Just seasonality evolving about

Benito Minicucci

to the Yes, ones going know, for we we are -- Connor, attacking. And more year. super, where we you're places those several detail. let we're script, we question. we airplanes those like in can quarters And both QX like in mostly said and and point the we're right, it's the I'll QX, in outperformed strong, and my the And are and provide there's control, we of money. make the QX are for where can as control Andrew things thanks QX, But we that everyone. of us, you super the is know weeks weaker try just rest than I and

on actually little Andrew, with more just that. a announcements. So significant that, we -- made some color pretty some

Andrew Harrison

I -- are first more quarter Ben is think the before side And the and that folks on about Yes. judicious ever just exactly is remind being just just on But the been not the we I and days than capacity of this fourth to week. we've want network. right. And

our X-year of digital with we're think I nearly monetization done a platform.

to opportunity. just how We we're there So merchandising conversion rates, what is think we're able sell. more able to sell,

You whole program that row at class. exit looked cabins of me, loyalty that sort redemptions the we've the and reracked the seats exit rows our then monetizing the we've and and the awards how of front and domestically, and we're globally rolled also excuse the premium and of heard out more in

think better see and us And and product on network I to entire we're also have the but very side, we're at service portfolio disciplined the of revenue looking improve. more continue and exact think being guests options. numerous offering So initiatives, I we to just going

Operator

question with comes next Bank. Our Mike from Deutsche Linenberg

Michael Linenberg

to just domestic the this you want go about I called guide in moderating revenue environment. out back,

kilter? any much organic greater stimulated forecasting at demand. Like your you starting I you really felt a prevailing domestically mentioned when of is I Or of versus softness? a up How follow-up. the of Andrew, maybe look that supply stimulation? times. another like true absent have kind think, think what maybe pure see heard I way that I to demand, where much running of we of things see volumes macro see it, is do like But that some it it -- is demand, of X% out And asking portion what's then X%, I your and you few now. view are right sort you just macro think a is we demand And

Andrew Harrison

this, and I is firstly, end think of of fares. say would I think just there. there's a I travel, bit then What little difference there's and lower people flyers question. on Great do Yes. who there's do population the general a and the

OTA XX mostly I they're direct, a into seen of Just of we've sometimes shift really that for that capacity fares, lower would mix even more think just us, story. the there's in the so seem last But out days, softness it's which a there.

our in As a I up The in seats first quarter. said, cabin X% we and bit story. class, was different And main the of went second a X%. grew revenues little

think equilibrium I go will -- adjustments capacity, getting do I we a think, the our we're there. if general, demand, So way to long making that in of

Benito Minicucci

think incremental margin, if again, And better for XXXX the cost that's impact ] [ was achievement. than a at you have, a the and you in the in or line, model we even investment the of remind look tribute it all premium. if we 'XX. business XXXX that And I we on made have step-ups it's be it remarkable think I same will with our year bottom at the that, and you -- like at of what our ex to full margin look counts the at look Just our if you

enough resilience in lot that And product and segmentation we we're there's so the of do customers, win. think I like to -- in there a right of set have attracting our

feel going. we're we where we pretty are about good so And and where

Michael Linenberg

driving that me -- inning, you're Great. now one saying that flight to established Alaska. They go are is who whatever, I to probably you And a like the it then fifth What still Portland someone a or or even state maybe comes you you and seeing that BA or even you're not partner, a well front And quick be from the product. is in seat oneworld want tell of XX% would the know, may you're as just on third off although Medford contribution? what seven. to, maybe because maybe XX% maybe to connecting a still don't

your synced own So what if much load gave is that I you've very points more we you're mean or now think I know on on it's oneworld, factor about getting that up that if in how don't nicely. you whatever you're some it, the selling driving metal? numbers

Andrew Harrison

and And great what onto carry is just a domestic our not we I given of size, network, it say of connections would international that huge component that's question. will, it. the do in Yes, scheme our if a you number the of size

loyalty think we all many seats put their that long trip. continue system to them upside. But Alaska's and really do loyalty and your our is being up the premium elite to point, long-haul as the is able them members our and opportunity for more as within the carry opens as choosing premium up well aircraft nonetheless, to their to the oneworld system we real benefits as of I also on globally staying seats oneworld more first-class connections provide

Michael Linenberg

it's Andrew, revenues? percentage What X of --

Andrew Harrison

X% mix revenues the again... of the is Total partners -- about from

Michael Linenberg

well? include Or that that as your is that is connections? Andrew, -- regionals nonregional Does

Shane Tackett

saying he's partnerships. Mike, X% mainline by our revenue our we of weren't enabled Sorry, -- versus just wasn't regional. I is think He talking

it's oneworld from and our -- from high-value And think it's speaking. I other coming to point, partners that's to going generally grow your a there. And So traveler,

Operator

We'll Savi from hear Raymond with next James. Syth

Savanthi Syth

a was thinking on just what was about that unit was far cost curious X% I think than so the grew gotten that you I before? thinking holding? relationship costs can cost flat. questions Is think And been just incremental the have of little there the that still bridge what keep If bit I if very historically, might you've in versus XQ chart or you along I you that, might, side, helpful. were line higher the

Shane Tackett

-- Yes, that like our of different Savi, resources been thanks it's changed having the certainly holding but question. that, to original than us of not more, to a it's year, sort and certainly, in I of earlier for line coming the what terms the we forecast, fly the think from configured like has had second expectation have and for in rate half down sight the year. growth

and higher terms a planning negotiated labor And relative originally in might then the maintenance of we some rest shift it than year, the in and not assembly, at deal of year be. Our somewhat been and we it shifts of had thought deal for the but the is land was was thinking rest to the the some how beginning credits final airport of compensation those higher timing. timing about than had really

predict hard this It's relatively the be happened just year. So happens and side. expenses significant of to the in airport year think shifting and credit I to every of kind on maintenance side

cost unit And not we If growth, to or changed X%, do fact, have live That a expect that intact thinking The against still flattish. and even philosophy over thinking. that's we than is terms in little that I'd of a Alaska. our leverage time. grow X% better we to like in would be

Savanthi Syth

finally, not product taking a on launch, And the you're receive. helpful. That's new

might seats. actually be adding you few a fact, In

-- of that as kind next So is of should kind being unit to we a we or guy think that the of months revenue cost XX look and so? unit

Shane Tackett

seats, over. one couple seats it going spread fleet, of remarks costs adding and I have think all seats I mentioned the to other. And we'll I X of last not slightly Absolutely. into that, we're revenue those to think my more We're that was get we're the losing yes, prepared premium to in words

Operator

from and come will question next Our Tom Company. Fitzgerald Cowen with

Thomas Fitzgerald

curious on Mexico. is between traffic like U.S. a all the countries? have much answered pretty Or the you goes have the Do any is have just back been in that routes participate X into that -- -- of and you point-of-sale VFR granular, I'm you maybe might leisure? this but too do of Most new just do

Andrew Harrison

this it, about of that new winter of or XX cities, of Yes. And side areas, are is if until This these these other we see And is well. look a sources. at focused the while of routes. thing Tom, leisure And good again, most revenue the have lot capacity on expanding -- you'll even doesn't the start the first our just a sale, trim XXX% quarter. January. lot it's this the in in the is of This, you which done again, depth core December U.S. point

really feel these we changes. good So about

Shane Tackett

And And the Tom, welcome for who we'll best our send we calls. won't on these the Managing on. to miss and being do Thanks this new, earnings please but Hale, to call. again, I guess, Director Mentor,

Thomas Fitzgerald

sure. For

Operator

question Our next Trent Citigroup. come Stephen will from with

Stephen Trent

this, on changes I your I premium? appreciate missed the any or in the if you increase. for distribution thinking follow-up, make in parallel you the color app pivots I a might channel that your but on And if adjustments me premium Just that example, do as any see to you may. forgive increase

Andrew Harrison

as updated excuse me, we question. -- and app. our other as full significant on earlier, great some the a have app of our Steve, well category our in I as we changes Yes, premium month so now or will be that's to here next shared And website

products upside our which going. we are increasingly app, in bookings where So have through is our distributing

Stephen Trent

other that, deliveries appreciate appreciate Boeing what mentioned what quick have have you I I Andrew. Okay. and And the just you. question. one on

possibility the potentially your Embraer depending role OEMs? what do larger perhaps see with on the in supply that happens play from could the fleet any term, a bigger long Over you EX

Shane Tackett

looking don't I -- today. not we're Steve, aircraft have at that

we're do really book on order the I with job several and for and aircraft, with fleet next the executing years. want that We've we're we We of great to us, over great order a a really stable have get Boeing. focus. the excited our into the really focused deal think got about and XX them. They arrangement that's

Operator

Susquehanna with comes question Group. Our from Chris next Financial

Christopher Stathoulopoulos

I want question to, to it back capacity. think was I competitive go Wayne's on

You said think whether you versus did were sort XQ the that XQ, domestic of and yield as about -- think sure we I'm a for of referencing competitive and XQ, give, you for I kind network acceleration, it's competitive network a drop capacity whole? that we I'm and I number opportunities around you or your would potential to or whether expect trying think, map not see broad-based opportunities localize just look like your at potential that? for hubs as things

Andrew Harrison

it we by The and level. at as single by further level competitive hubs obviously will higher digit. see hub, amount go low the Chris, continue into of highest average extremely at in is out. the and say, the we I increase carrier, varies to September CASM October, to adjustments On

So marginally I would just say to somewhat they're flat up.

Christopher Stathoulopoulos

year. here, capacity and for next but I about on question, don't speak goal to have want explicitly second the as to we And give you Okay. color of any fewer realize expanding But here, you or margins deliveries. the think

think different sort pieces margin how of parts -- accretive Just more So the stage should positive for profiles? each margin of want to about we a to or those to as of sort that capacity or pieces because of engage high next engage, year? understand level at thinking dependent with you're about come stage

Shane Tackett

Yes. think be the of our units think really the next growth on. is Steve, I to similar -- I we I sorry, think likely look, it's to take number year

of MAX the be for one stage is for growth industry X, lengths gauge us. because are we have that premium Coast, come fly so West to have off seems We going The X the when domestic year. away, not the are is reasons most worked people longer in real X our configuration of X, next X, we -- also opportunity the the of it's hours of which where well segmentation And XX and next in. places,

in get XXXX, tick we are in take to probably But 'XX. a that. see gauge from XX% benefit So the up to we excited to we start maybe once a see in

Benito Minicucci

you Well, everyone, for us. you, thanks, next to and talk quarter. joining thank Chris, We'll

Operator

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

Alaska Air (ALK) 18 Jul 242024 Q2 Earnings call transcript