Alaska Air (ALK) 21 Jul 222022 Q2 Earnings call transcript

Good morning ladies and gentlemen, and welcome to the Alaska Air Group 2022 Second 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, Emily Halverson.

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

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

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

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

and Emily, Thanks, morning, good everyone.

this our of a Our underlying to adapt business evolving model continues external performance the to ability environment. to rapidly demonstrate strength quarter and

is of We the are period results a solid in demand, record reflected reported morning. QX in we this which breaking

deal of margin lastly, history. monthly June, the month strength demonstrating the quarter $X versus given June, unlocked of travel during of on and is both coupon capacity renewed X% revenue power achievement Bank result, the And the continuing top this Bank an proof and partnership generated achieved demand for given challenging. industry. our XX%, we these were time fuel the and on and that a we or industry in of top fully increased record terrific performance levels revenue, second was partnerships of business June our recorded operation month the representing July. in card of XX% And an still credit in cash month, over revenue in the near Marking completion occasion. yet. trend, surpassed at in with highest America. historic remarkable this the near into And as of below lands of fact remuneration we our with XXXX we exciting our rising is our levels. period XXXX. from is exciting same us are both up the A the that expense to as this. XX% revenue rate especially important phenomenal international haven’t the Meeting turnaround Our billion, airline pretax the

our forward. of to turnaround to lately. want will It’s two of thanks XX,XXX over our is airline. we commitment fundamental delivered to a and requirements that them. all our Our run prioritize become guests has of continue and safe, my is proud more past reliable challenging I’m simple, has very that the complex we team move those the months, to people a I This industry as to and on-time extend

to challenges met year miles in Our fly. but people, us a XX,XXX can to with and accomplishment that and company use This this for with and the XXth our fly our professionalism industry, an into anywhere celebrate is put we Group world our team year, persevered, Air business, remarkable especially to issued partners continues operation remarkable day. are has celebrating care best we which to new airline, as their each other one employees and any they or

to Now, with manage along that me challenges for areas the let outline us, briefly well going are some through. continue we

and as card, demand, more which get as to seeing as our contribution friends vacations international Andrew continues guests travel domestic our take to a from partners, into course, QX including business see. growing and family is talk out and about summer to will demand and we’re what bright Of revenue spot is great return. visit credit well and

goals. hiring pace hiring a at and are consistently our continue meeting rapid We

groups and work are We across currently our locations. at levels most target staffing

Our single remains fleet track. transition a towards on

fleet at retired AXXXs XXXX. fully by end by grow MAX XXXX, the of early to AXXXs Our followed be the the will while QXXXs and continues

people our to two for new and as and quarter, X,XXX agents. extension also of TA both voting This raises a service, with we contract contracts Association an ramp, We International XXXX. current represent Horizon look pilots customer who the reached ratification clerical The well. and reservations, is stores, undergoing tentative the and of Machinists agreement provides to years Alaska forward by reaching our with

we’ve Year-to-date, in $XXX million financial flow billion our from cash which operations free relative commitment to is performance in cash Finally, our is generated strong, owners. with $X.X flow.

On for the the costs industry. front, an issue challenge remain fuel

for approximately XXXX, $XXX levels. unprecedented This impact as are pandemic. pilots as dampen regional full disrupted SkyWest. Horizon industry. the we the most to attrition the based forward on hire to mainline the our year carriers expect is the continue at Pilot is remain of regional our carriers hedge that at attentive and hedges evidenced economy, XX. as benefit And is Our constraint challenge case is July Alaska, for million and across the us, and to is we down is XX% acute by at across a Attrition to another entire be by versus chains capacity XX% lastly, supply curve industry

more stability conservative working We our higher see and and we planning before, of predictability. capacity levels partners are will closer key in than with until and ever operation be

extraordinarily working in to Our them are we’ll support efforts. partners engine their and hard continue component and aircraft

we excited years. priming and producing forward, As success deliver we strong XXXX next on for this look this in are what our we am over year, also I company financial can to front beyond. about few while results committed the

new with expanding through connections we’re an We global are growing and within partnerships. our fleet improved network efficient aircraft competitive our

few remains for headwinds move next the enabling finally, and and on us to a levers despite years. cost incremental advantage are fleet already industry unlocked powerful our materializing to relative structural drive focus are overall, improvements we’ve our be for intact, us cost And and forward. Our will going single that set commercial over benefit enabler

at economy growth fuel wrap in many so robust, and to all financial we leading that and drive have the real we X% and as margin. to expect today. the industry strong exist in up performance prices, Headwinds high continue Ukraine, the as demand ourselves industry to short with financial year despite X% full to remains the pretax And quarter, headwinds in Air to up, deliver year in setting to we stubbornly still factors, pretax like our years. are have We well potential elements war our double-digit with inflation, continue in negative high To recession. done a third the and margins even for as these deliver this term place so Group sustainable results here profitable

steps who for only taken, learns business, period one in comes industry airline been time. has of anyone the a taking As time our The strategic from a at streamlining long-term we’ve step success with moving in and positioning fleet And any company, a environment. it stronger Andrew. us commercial I’ll to over on opportunities capitalizing are single a to well Group turn to set Air that, make

comments the our with on quarter I for highest Thanks, quarter good quarter progress in our third well result as the as tremendous want to This today results, will focus morning, Ben, start guidance, and revenue My quarter. on revenue was generating a second everyone. commercial history. initiatives.

demonstrating how the the billion we revenues change year. compared swift started quarter totaled Second in $X.X environment to

for to partnership from of the I’m points. that strength percentage to saw at of our industry product pre-pandemic at at outperformed regions all Yields share June load unit XX% points Air record revenues We three down increase resilience testament Amex coupled capacity April and May was GBT time revenues. continue our with May to we by premium strong our flying revenues also reduced increased and a quarter revenue resulted that revenue XX%, channels the business from Group demand the exceeded XX.X% from and excited capacity the and Airlines impressive on quarter medium for up Very leading factors with was first first X% marked Second months the finishing midpoint in guidance to in business own an XX three perspective, quarter, levels, June, from small across quarter. XX.X%. and all a over accelerate American customers. April to our XX%

this premium premium premium only which XXXX. offer premium continue length were will average long account this stage load for domestic the to we one seats for our about which carrier. a Today, first XX% more paid AXXXs well MAX-X, eight quarter aligns mix improve on retire product seats. first premium have points fantastic class up And in the class our and versus as For factor seating. XX% up bring total with We of our and in and points both quarter, revenues with XX will

you strong of remuneration accelerant. loyalty Day, As Investor America be QX Cash primarily we a revenues loyalty total of of from this versus at was proof bank to the mileage XX%, second shared both card Bank and redemptions. program this. with revenue XX% while profit and going is our plan quarter by the commissions XXXX, quarter up was and up bank were driven

As my shared, million relates approximately and million we’ve commercial XXX loyalty. initiatives XXX product team’s to of

recognize P&L about oneworld And talk our our from get meaningful this to year. we expect XXX in from or approximately of We initiative million the this XX% membership. to revenue lastly, results

by This increase As global revenue this travel representing total coupon restrictions full record of revenue XXXX. drove earlier. relationship we the rebound quarter. over June, revenue travel saw approximately mentioned we’ve international as two-point a incremental of In X% a been alliance strongly, our amount and encouraged of ease Ben is

oneworld from our partners, our of We if need see are we what revise revenue to revisiting forecasts estimates volumes will because indicative in will are forward, going upward. currently our June we internal

quarter period higher moderated backdrop capacity Undoubtedly, Considering today, revenue positioned on we’re sequentially second but to that Looking XX% we which With guidance This want provided, well to produce ahead, quarter. X% do capacity estimates. a into X% solid versus on performance. the I to which we are is up third be revenues to an XXXX. we XX% are current a color the XX% strong result flat these demand trends implies another minute, that versus outlook and a I’ll on expect in expand up down financial in for are offer our sets on more exceptional capacity. trends, seeing to revenues factored slightly approximately the unit quarter, strong

remains have wise. demand demand our Leisure continues revenue business now fully strong. XXXX well very levels, recovered clarity, channels sit For to while above

XX% to put the high at remain not we prices yield second to approximate which we and the a interest and where That volumes recover there training from if past approximately quarter. regional as for look face that And and been all business we are weeks. as run aggressive XX% to their on little the three few demand partners been corporate others pressures choppy, oil approximately continue we while half we to are like during to removed these bookings consumers, persists levels across XXXX the have was of to high from peaked recognize points. high XX% Compared today impacting enter inflation, said, have rates, in fall. yields, Touching our second There to challenges. likely in historically downward on do pressure just very new XXXX, volumes moment, the do significant are today. by our yields, including While CPA travel capacity expect a continue of our block on staffing from up hours a rising pricing industry have capacity pilot rest as therefore

impact XXXX. the the proactive of our we’ve well also We persist loss of several QXXX Apart capacity. headwinds network to taken into retirement these this from to steps accelerating fleet, mitigate expect

pivoted we’ve flying operated where regional had mainline First, aircraft. previously we’ve to

stage cities. day mainline with MAX regional next limited MAX Second, the have week in Touching through mainline XX% month, capacity. reducing number in markets markets. XXth And no long in a represents delivery our any capacity spring, our of instances third, service length of suspending on we exited aircraft in now by of last of

up commercial take our tangible company over will over years in growth off the incremental the XXX now transitioning hard revenue to times we that destinations, roadmap to like competitors. very fleet years. seats a putting which more includes offer opportunities worked post-pandemic, several several that by Seattle, gauging enable our our core expect profitable ready we’re where last which of we deliver We’ve are we in nonstop $XXX And million a into As grows, strong hubs to next start. advantage the two of is

that fleet pan, hubs quality loyalty coast, guests well partnerships And expansive across with our west it serve Shane. we a growing pass I’ll have a to and solid to for destinations program the cannot. the placed We high that,

Thanks, Andrew, morning, and good everyone.

the a to Our start our quarter turnaround financial year. second significant we experienced given losses highlight results performance, dramatic in especially the

higher was than absolute Our adjusted on quarter dollar XXXX profit record Air in for this Group. terms revenue

quickly done wave. as the great returned revenue of after winter’s Our teams ledger a the man have managing the this job Omicron side

we time our reliability Alaska as have stabilized and operation and with move to will at running XXXX completion has an importantly, high performance. both our on and priority More Operational forward performance and into returned remain high fleets towards Horizon. we factors airline single and

our sequentially QX liquidity cash increased the free lines from Turning with non-fuel million in solid. hand cash inclusive $XXX for XX% range, results, to leverage ended within we CASMex billion, approximately Debt-to-cap up quarter at million. very $X.X while XXXX are by tax total and the with remains rose quarter financial costs million operations QX. strength debt approximately Year-to-date performance undrawn versus refunds $XX second quarter $XXX from target in operating XX% ended and manageable flows $X.X is of billion capacity X%. are on We our was credit. XQ of and and payments XX% scheduled cash flow including QX

Aside our and costs accruals, third-party the pressure up capacity believe our and our levels were is partners which as year. as versus and both capital our that and and improvement areas, projects to are fuel rents these year are Obviously from over unit of prices, you performance wages, system. airport our know will the from primary not are employees this pressures completed for program large XX% Despite are two strongly highly continued headwind based These expenses, There related are deploying we we a cost are the across the consistent which to industry sensitive throughout reverse. capacity in. pay high we start Alaska. ultimately unique and lower also believe

of double-digit sight QX of deliver another result and guidance line pretax X%. on X% pretax reiterating in margin year to to have full We our our are to expectation

before this us more of spring, we we to The versus breathing a made was lower from scheduled primary which down necessary grow. aggressively the pilots of output get to the we give operation, back is to running Speaking requirement reliable capacity, needed. to adjustments training room a of driver what attempt pull new

in staffing We visibility schedule capacity and not more conservatively into continue plan have our the throughput to inability ensure operate term are the we’ve will improved driving much shortages near to training an to sold.

fourth will begin to our in Additionally, exiting the fleet Airbus we quarter. as XX know, committed you AXXXs are retiring and the

the the full X% better Given quarter are reductions a X% from more shared, capacity to quarter to capacity impact conservative our to two-thirds CASMex retirement capacity, direct there contribute Airbus The XXXX near clarity a the capacity The roughly XX% growth. we that Overall, expect approach capacity mainline guides. from capacity are to slower up performance X% full of capacity XX% regional for on reduction the with for headwinds Andrew from prior specific to balance lower capacity regional our reductions Apart staffing pressure CASMex term up also and of our plan to expect impact year. be and we reasons, outlook third to from year XX% lower down third XX%. and to be few CASMex one-third to will year be guidance CASMex down X%. versus of

wages benefits. and First

industry remains the pressured. and Given market dynamics productivity wages in are overall, labor increasing

of add to points have in expect Ben agreement to and approximately million are XXXX. it on add As Overall if XXXX of expected increases second annualized a to rate. year excited tentative the pressure recently $XX $XX CASMex with it and IAM ratifies, costs in to wage mentioned, an we versus reached three run we’re approximately this million half

ramp and training up Second, costs.

staffing XXXX. and persist will levels, through up bring related and costs to elevated XXXX continue we training As

we million about incremental year, full approximately these or CASMex. $XX point training to the add costs one For of expect

performance pay. Third, based

incremental incentive And We’re nearly proud CASMex. the of included to for CASMex. to our full program, is the year, which our in add one expect we point expense

the two mile million that earlier Additionally, or bonus $XX is quarter. the points XX,XXX shared employees in another for adding Ben third

to price expect I we the XXX on right our that our competitive the XX This the structure long-term to quarter, disciplined sight our All view succeeded third company resilient. growth have cost our strengthen for fortify advantages elements the model despite has and the losing industry operation fuel relative industry. years, of and running now. a drive and profitable we’re we be facing. to is business not position continue for within in and intact per XXX place with a Lastly, to model of believe some currently gallon underlying low business to remain is headwinds

focus Our supported will drive improvements operational structural move on to cost continued single excellence. by fleets

are million balance commercial strong nicely We we and by $XXX initiatives, are in progressing the a supported sheet. on

So face go in common industry position ability to competitive to gives this that, questions with your let’s next unique over the several combination me pressures, while And our our we confidence years. strengthen

the Operator, we’re ready Q&A. for

Instructions] [Operator our comes [Morgan question Shanker first And Ravi from Stanley].

Your line is open.

follow I to Thanks on everyone. want yield morning, the up commentary.

[ph] random in recent maybe your was XQ slowing guidance been I weeks strong, indication but pretty trends. some is think the there there’s I think in that still of some

So, can going looking is where of you of compared the And you’re you quantify mid-XXs just the booking very run still that? well had curve? at ahead tail help of, said, end to XXXX, that to us kind the but

thanks for question, the Yes, Ravi.

for are and now extremely to are just period. for August, of starting to September. period, move is the we’re the still as now that we fall bookings see obviously demand But that summer what strong in coming think, I which reiterate peak in out progressively July, is coming

of one load are on ahead average to Our factors two points XXXX.

it’s again, strong third still expect and the peak weeks per and these just tad. a we revenue very unit out guidance, a performance. flatten to at quarter few saying extremely down just our come last yields, But as starting very we’re they’re small So, just strong

that that’s seasonality or different say normal is you Would that from consistent? it. Got

as as peak the fall in get seasonality unexpected. that wouldn’t that’s, from away the think I summer the be Yes, period

follow I on Analyst just of that? spoken resuming out cash any guys up And you you update Understood. have do but think had kind about one the return, the line environment latest very at site choppy there, to obviously on Day, of

its Pieper. Nat Ravi,

business Regarding quality exceed a that that long-term that it’s to want. as we committed to attract the with think the on strategy, retain critical well returns We high capital successful that, industry run average. Alaska owners we’re and generating as

our once October As you care’s restricted from know, that returns off. with restrictions roll those with until shareholder board, discuss And the our with we’re pandemic is funding, XXXX. to of doing plan

you. Thank good. Very

And next Jamie Baker from comes our question [JPMorgan].

is Your line open.

Hey, good morning to contribution corporate update sector Any everybody. tech on travel?

excited distribution Yes, at American contracting Jamie, ways for frank channels I probably Airlines. as as remarks, has in that joint the very given GBT I least prepared would well that us, be tech go But the tech our as about say weakest But recover. Amex network. shared of restructuring the just also still our with have been we business, our has with sector are a to to for to

look so happen. And we that forward to seeing

Okay. for you’ve you margins I’m been, with or ran impact on contract, if pre-bankruptcy and done from our the be those through we wage the American TAs not say, what’s whatever the a your earnings, used simply TAs throwback. analysis? you’ve through if the a if run And second pay would’ve work ex-fuel and of I the rules pilot rates Continentals X, remember me, bear just CASM, rates applicable bit your to United had in if MAX American wondering model. suggesting the Alaska, model, it’s earnings I’m but would

properties with the Shane. it at sort Hey, regularly when are pilots. question. are we aware this; at Thanks obviously weekly the it’s our to Jamie, almost We of comes other table of movements Yes. for

can. and with the to them economic We’re understand soon on as business TA fine. forward as we we it’s looking the totally getting Yes, impact a

business. guidance employees market. gets to both but will because going provided, of companies the it of need where going terms I’m of haven’t Our take structure mean sort in to the of about we’re folks. And at the that that the not we share be into that’s what anything across well aware ultimately we’re like cost to impact,

worth shot. everybody. It’s a Thanks Okay.

Thanks, Jamie.

America/Merrill is Lynch]. Our next [Bank from question Andrew of Didora

is line open. Your

quick here. Hey, good on Ben, cost everyone. more questions morning, housekeeping. Shane, two One

the potential staffed was fuel if where guide? in is on out you what in XXXX, in you’re XXXX what shakes fully kind your being And think benefit versus that Just CASMex just say XQ of capacity XXXX hedge next type year, and CASM, basically, then well XQ do XX% for is of in scenario? fuel if on implied track up, your

hedge, and back I question. Andrew. hope follow with then the Thanks, fuel Yes. Nat CASM take I’ll the

$XX it’s Hey on, curve Andrew. then XQ impact XXth. hedge And book about the our, we that’s the again, about based our with $XX. third for And The million. quarter, is on snap on

So on Monday.

Great.

to sort growth lot of next Yes. next not we’re talk going year. And potential about into And on CASM a year. like rates

productivity the still we’re that. smaller mentioned middle slightly than today the I areas we But the FTs script, in of and of same it’s, a had trying carrying think company. are we’re real in the to wages maybe for as we’re more are in I plan but XXXX, then pressure amount

lot of of more a will as we sort levels And move to which us. productivity help traditional forward recover so there’s opportunity

is across the think industry. not I in big unique participate and us It’s be the wages structural likely to and labor costs we’ll to Andrew, change that.

less had sort And give will take flown a prepared costs more seen into for in I we’re probably and that X% be we exchange, next XXXX, or margin. capacity flying unit headwind year. Certainly it’s had than the We X% for on lower think so, costs we one today would’ve for. of And one the have ASMs.

what flavor where be we So anticipated, of give what reality is practical you can fly to capacity the right in of, versus just now. of terms could we some had we

it. Got really That’s helpful.

margin kind XQ if decel bit, morning, math on I And might bit looks corporate exposure might little guess, your little this you a correct bit doing side, little your question a hurting Andrew, mentioned like growth outlook. second the be I’m my revenue from [ph] to for hit is, then maybe you So tech just it booking a your of there. XQ

said, down kind of, in just, of what’s and thoughts kind with thinking macro, about going from broken here between network you corporate between, of and yes, you sort about then how that the trajectory your and are Thanks. the leisure? across So on demand your all

Yes.

I XX think we’re XX strong. of sort in in And looking XX April, May very, up, is even at here June. we QX out had very very flattened done run RASM I as nearly with in September July we’ve And again was and very, a again, strong up and think today. I’m as sit August

are coming with We in. pleased what we see very

little choppy, think they’re strength there but I speaking. corporate, a bit I think we’ve relatively seen good

where again, And in we so reflected very, demand guide. good environment, pricing And third still the what and I sit today, very about that’s quarter. our

And Andrew, guide inferring say, you’re I might just the of I know pretax reiteration. because sort

will I we what we know July exactly that and in be it QX just in with prudent the is experienced what to think don’t wouldn’t normal. happen new revenues assume

outperform just robust sort we’re can stays look how demand being super we those. the thoughtful so at we of And and of about but the hopefully stay rest year,

perfect. Thanks so much. That’s Yes.

Andrew. you, Thank

you. Thank

a Mike have from Lindenberg We question Bank]. [Deutsche

just, when how just harnessing lot buying call haven’t It about, it changes tickets management where off maybe is fair tell and can and to there increases I strong, back this maybe increases. there’d pandemic, is good moves have I’m successes. purchase up, revenue impulse of board Andrew, Oh, are kind generation about, been change sense I, on just consequence And increases. how of demand anything a to really power you in us you people know, just seems back, more things years and of industry meaningful demand changes just it’s would there I there, in think how, lots that well. it $XX evolved and yes. everyone. is environment Hey than that’s put past revenue seen, their distribution airlines be through morning, The or the of like right. $X because of we good able in that. of, yield thoughts as buys, want is, a see structural we a them that significant curious, was to your on phones. we’d sort everybody my and the the And And fair the sort driving manage maybe get these, next that increases. systems if strong. Rather Has read across structurally

thing here interesting that’s team The bucket Yes, very a Yes, we’ve active with me. on or that inventory, leveraged very things very, to the think, closure increases heavily excuse there, and is are come but seen, question. mind being two that. pricing I

think were or secondly good versus I how the the because frankly has volatility we and is to be more that day last just revenues thing two the on revenue way one way frank, given are we and years single muscles but every granular the in skills manage pandemic there, dialed whatever, more the we about and quite over weekly us didn’t use.

way you’re connection for the in demand the performance, marketplace. with looking to think the I with think I seeing volatility better So systems our things closely, the teams, new more pricing management at inventory and index better

all So, things. I think those good are

sort that California, And maybe initial Thanks. pertains would and Any maybe given questions. system, to then court thought relative about Okay, ruling for this I’m to maybe you, again, the question, times, great. And attendants. rest state about it flight Ben, as curious thoughts your is in kind duty yet and just least impacts Thanks consequences historically at answering and second any up take? of initial you’re that, a to for settled, it’s I of now my dust but looks exposure the I always that state rule your the potential requirements like box. It for Act and trumps on Pandora’s unintended meant thoughts hasn’t and federal guess, opening rule prevailing. Deregulation

yes. Hey Yes. Mike. Thanks,

how that. on working see Mike, don’t it. we’re if that been to going know I think that by anything so on and I know we’ll I compliance you take you’ve on we’re going Kyle, And add slow step. that to head we have towards step and

Yes. Mike. We the you; way. it Hey, Thanks about Court as had preaching choir the Supreme see hope The to didn’t same that you’re Deregulation Act. the

figure as are options legal our need next. to and we happens Ben So mentioned, out up what

ISI]. [Evercore Pfennigwerth Duane from question a have we And

open. line is Your

Hey, thanks.

you As and feel quarter. assuming It trajectory your recovery supply you a plans, third like your up macro when catches doesn’t competitor’s your when think, the do certainly do look stable you with demand? at think plan, like, and back

You’ve supply and as shot couple questions the this that’s a demand? a stable already just back is gotten about up point, plug you supply and think, earliest with fourth demand at the of sort my when macro, quarter, is but at just catching guess

at up we’re our focused And beyond. on what XXXX what done. right is and for trying getting for transition fleet Alaska, us think Duane now, set to I ourselves is, we’re single do

us, heading the that some really job mainline side So regional economy. We on XXXX. into be is side. the about the both in to talked We want one configured well headwinds and for

we’re set we really not to external configure company withstand and really now there. out happy demand for yields, So, want shocks we’re whatever are our ourselves to also with But sure growth. right but up

us. then single get So for be to we once is growth opportunity the for going there fleet, to

how And so at we’re looking that’s it.

Okay. bit a It was of…

normal and Duane, of capacity, XX% catches much up. probably capacity is I quarters. is it If of it quarters it’s probably couple negative I XXXX depends would demand before sort in It’s is, a normal how on XXX% all several XXX% for add, today negative would demand just, I it’s think a in demand XX%. it just

assuming the to So we of right it’s economic like it up catch backdrop. sort stable seems before fully a

curve of for restored has just what what Hawaii? seen industry capacity just The looks there? level of then a you and booking And could little the been you’ve level taking like that environment, bit the comment the questions. recovery Yes. there you competitive on Thank maybe

good regions. Yes, don’t into talk that more marketplace. how Duane, about think constructed specifically Hawaii, we huge seats pumped the industry We very a that we’ve has obviously I while about feel amount

relatively as cabin premium said, those our performance. some but I’ll there’s my headwinds performing, and I premium off in our helping is speaking, is supply chart And remarks, some prepared in also Hawaii place issues. there, So say, cabin is where the mitigate really of one

great airplanes, usual full very demand business overall for and So, now. as

[Cowen]. Helane is Becker question next Our from

line is open. Your

thank very time. Thanks everybody. you for much And operator. the Hi

well. as other providers most And So, mentioned company. that issues respect Horizon Air, are own you as two to with that with your questions. you’re One is regional seeing you airlines

should future years regional the Horizon’s have? So, that one we the airlines given don’t think phase? to how next three over year know, constraints about I

Ben. question. what I’ll Hey, is great network question. say regional Hey, our a the critical for is, our first, Helane, to It’s it’s thanks Well, success.

just entire the serve all domestic we to markets integral network. Northwest our So, are Pacific

and needed required. it’s one So

I think, the no XX% said, there’s the industry a in XX%. in I see down, like you to there’s and is doubt shortage pilot where secondly, regional industry. it It’s

pathways and think to So, working and to to to is really lot strategies with the industry did this us going our that. mitigate, on we’re for we’re But I evolve. with And a fleet pipelines the one pilot try on got regionals. honestly, working Joe, continues we’ve want plans you of this single going to Helane, And the and again, evolve add mitigate in shortage of changes to we’re every anything? quarter close it. thing it. is to It to stay path

I this is Helane, some think, No, Horizon. with is optimism. Joe There

rebuild becoming been in of rebuilding will And time better smaller week. that announced There’s of staffing four Horizon in which the a we’re make allows timing earlier the sort it was have QXXXs history size near alongside lot few our a away, to in never airline that next this airline the sort over those new over capability is pilot us to fleet order years. And tandem deliveries there the us years, We addition of a interest an become about to next with going an pilot. of excited the for term, in our fleet pilot. in

interest we’re that And there strong definitely end the that pool the of come both industry. sort at into seeing the We’re some of with in to applicant to doing funnel is the interest. and top encourage things people the Alaska and at Horizon

to follow That’s this other And hear. Airline you. up I’m is has good decline manifest with like slowdown? until bookings that question, you start then good not economic question it’s and my when like, to decline, to my be tends to an When maybe And wondering, would itself? Andrew, do just see traffic I in know, would don’t a the to good. for related

look day, mean, get I confusing is of we I part at you know, is think, be pricing it just clear. as as demand this, to really well. a Why, sometimes here, Helane, every big obviously can because

as is strong right very increases demand XXXX. so shared now, very over high And at yield I’ve

see demand and before play to a is, is we’ll when in it thing then with reach room first go the and really the levers. the lot start maybe we’ll we to obviously think slowdown down of I So, comes a if, But yield and there XXXX. of come floors

as well even we the in held changes would we’re our and as September high-XXs still say today are business of sit yields position this into good here today. I seeing and So, strong relatively

everybody. Thanks, color. Thanks Andrew. great That’s

Helane. Thanks

Thank comes James]. you. And question [Raymond from our Syth Savi next

Your line is open.

everyone. morning, good Hey,

kind if answer Not type on up First deliver specific moves just capacity made realistic caution given, transition clarify part, and Or pending I you X% this going I potential. demand gave off, do I’m but in you Investor can I XXXX, you XXXX kind at you think second just of could this know half, building the think you terms on, range early the could what outlook. a the that mentioned obviously? curious for XXXX? in of of and could guidance, and be wonder the XXXX be Day, in a you of that have capacity what I previous here for

the what’s years its last thing Savi, is all not Shane, to we’ve forecast most – good to learned not used that pre-pandemic. be Hey, ability it over our is as going of one as very two happen to

with a So salt. take of some grain this of

Ben to transition. are that we’re two is be the that mentioned economy critical, just that. think absent, doing going the our whatever things is of sort committed totally I to fleet

and operation. number of other to to from ability the quickly get right produce ability aircraft staff just supplier, of then our replacement our sort for pilots Our and the is

more to going until last probably aggressive of sort assumed going exactly to of think, that originally the assumptions. was planned. just, over work And really we’re belt have everything reliability under good two, two anything, if a quarters of be we set operational think I levels. year a was several So, our as just or really little conservative good we’ve I staffing we’ve

terms So, planes grow bit have I going of year. a to next ultimately we’re aircraft in to think enough units quite

our discussion months internally. the I up obviously we with we’re And couple to folks as think know probably over that’s were somewhat going decide still having more we’ll be next But get on we those a are of moderated what what we XXXX and to what and air talking is do growth in, the in from Day. say interested they’re plans about we are. clarity at Investor

helpful. you, That’s Thank Shane.

related there is a increases. capacity competitors, house you’ve I that’s pay And out lift as some your that regional longer-term transition fleet of to are I kind big I – there’s those bit, mean a of rates. curious, And with you’re got pointed regional that Alaska economics quite pretty match know one these almost well, and had because if just that does a as mainline in of What it’s regional you of airlines pilot? perspective, you’re for pretty is where and a somewhat bringing was can at from down. Horizon fly of going kind one you of much fleet basically, kind the doing regional the down

Savi, Joe it’s Yes, again.

question American pressure airline out. no cost deal regional certainly stood there’s I think The pilots. for

watching to there’s of what folks think a transpires. sort else see I lot of

pilots But ways our And We the right Shane I changing find retention dynamic for Horizon. to additional improve bet some a some are thoughts. definitely now. at working it’s with to having industry

to you done of a business spent leading with to pre-pandemic. to – time. – us whole. Horizon. had just repairing regional long We Yes. be model a We may And actually one, lot I a number had the phenomenal time he’s job contributor gotten I a out it you’ve profitable a the back Savi, been Joe, shout

up. that just it’s to different a going costs going regionals it’s go operating reality The So are direction. the of

think What just or regional requires too network long-term – the way our In to reiterate strategy, I tell we what of terms what sort to anything. lift. Ben share early of a said, large will that it’s have a that of is I means part for that

We’re committed to those communities.

We our fits terms costs, network to and within yet. up aircraft standpoint. to for we’re once of our in don’t have future make EXXX where how We we so reasonable of not see exited just figure have we to that from a them. well want And ends to, community understand part network that whole, a everything going and economic a really out

Helpful. Thank you.

Thanks, Savi.

Our Your [Seaport next Dan question open. from Global] is line is McKenzie.

Hey, guys. Good morning Yes. thanks.

flex if on a looking curious, paid is guess under you’re So percent to I retirements. down tougher get is Savi’s. move on of is flex flex of It’s supply next just backdrop? of I’m down really And And question what my just the to supply some a year. to of flex sort sub Or easier the question flex to similar economic up I’m trying ability sense sort Airbus to the fleet fully simply for? accelerate

of fleet is Yes. color next X% It’s Dan, Airbus a which we’re give some X% couple the that or that year. I AXXX of Air with will total is things, And of be fleet, us take, the capacity AXXX QX capacity. think about remainder down. is Half Group about capacity. drawing

the You amount more talking could potentially retire of And roughly quickly. ASMs to that’s move that about. you’d be

of spring. too a were into the we much questions thing, we it And in to as how really put And operation. aggressive sort the a I gets flex the to that’s utilization question. back I couple stress up think ago, said, think want I

a be to conservative next the several going for We’re quarters. little more

to would I little work we utilization year, next suspect level a So the but it. maximize try more not

a there’s range – next to there’s capacity tight end I we’re in up So of going think year. pretty that

question, Nat. should of pull pay for too, it’s go have Dan, that, owned. the cetera. could of capacity with on not your large no really We’ve leases et Hey, point for, airplanes fully aircraft got fully unencumbered, One other XX, those aircraft are that et on and XX down just all paid on part We to because any at problem cetera. depreciated economy, south and paid

guys. well. Yes, Thanks

market. I really margin. on know mind, a see solid. can up I pre-tax thinking system the back have here just inter-California, here. of that Seattle Hawaii And is couple entities competitive following an in the and earlier But on on solid. dynamic that a that you my is drag outlook in I’m question margin Next are the still the question,

of some these more you on if a bit elaborate could wondering little entities? just I’m So

obviously Yes, do bring think to exceeds. Seattle, back seen generally the the Dan, fastest obviously you’ve is in I us quickest what and and capacity,

the to you’re presume as I rest alluding far our As and network of California.

significantly I sort that is the there of we capacity been to are and down back. has again that working news think good our bring

have We new deals. corporate

have card credit We programs. new

who’s bay It President sure Vice parts of area other our to is in have We time get now to better. full make network continue the job. our

thing The we’ve just last becoming been feel we continue frank to a very sort think theme to will there’s up where work here. from be only We it. we because I just good. quite it’s So of mention, as

Air very, I the what amount me is and hit do financial a of think the set Alaska loyalty to and is very personally, it taught driver for me you and plan its when is and economic capacity guest its frustration plans best Group, has set frustration for XXXX The economic large. don’t and guest it.

best execute adds extremely So I well. will revenue cost that’s why very hit whatever and confident we that Group. feel And we be grow think we will Air up the for year and that we next it that’ll

Thanks guys. job. Great

Thanks, Dan.

Stathoulopoulos. Our is next question is [Susquehanna Financial Chris line Group] open. Your from

taking thanks question. my for Hey,

a but as and a in for of industry, months taking at everything outlined In light now, XX% tightness, frequency to issues peers, from labor your the makes moving operational down, X% ago. the through out capacity the least murky. sense that’s the XXXX, X% XX% me still the likely few for new guides, does bit economics market targeted growth So slow are right are happening you down Shane, still know or parts as you the

you on you. what months respect growth a with Thank move ago? color any that outlined four or buckets So up around of few what’s could moving to

– think thanks, I no, Yes, Chris.

And focused though I going in – to rate capacity wouldn’t even remain But backup get the priorities. incremental a smart the network it, that we network, less the bit advantage at had our anticipated. that’s on grow but here we’re from definitely think, idea new California forward into towards but will recovering doing market getting opportunity most back. where markets. I’m it’s as Those a pre-pandemic there’s little network slower than we That’s we’ll we go. take of obviously there a are saying and been biased of if new, not or reshaped, the yes,

so yields more think you for about we the pretax follow-up, CASMex XXXX? Are ladder your how thinking here? can, for as margins year rates you. you are and volumes heavily waiting you Thank And you if this for Okay. and as exit about as plan

That Chris. exit on Sorry, rate. was CASMex

Yes. guide. Well, the have it’s we just CASMex CASMex, a we think about

guide. have pretax We your margin

you I exit think year What lot and you are are thinking here split and of here are about investors a setup the looking between in your next yields? at for or the emphasizing extent, and how projections? the rates volume you. weight the Thank

Yes. you. Got

terms like yes. sort pretax of, the In of

ultimately we’ll QX on there guide year, economy are relative Airbus what marginally little but and determinants draw the an we based bit going and those anticipate to air on implied I of exit the and see our out think be in the there’s – fly it’s And of And capacity to to full what on in year sort CASMex. it’s we’re I meaningful we based how a up going still more down. think QX, I QX. the QXXX then think

to a of something capacity capacity point CASMex. had we’ll I reduced kind there’s fly one to right relationship said If the we As one one a now. I like before, – of can equal think should point

guides those we think it to forth. it demand in think and and now. I turnaround that now, we about hit is dramatic XXXX. think, smaller us of take our would economic were differently higher that And right still XXXX set is for than than plan right as pretty stands to demand Because a we’re here today, all we

right just of in bias not a lot QX. to I there’s capacity So down try now, take think further to

what just terms to go going of in and We’re guidance. execute we’ve shared

Okay. Thank you.

question comes Group. from final [Wolfe our open. is Your And line Research] Scott

CASMex just about I’ll thanks keep year. Hey, for talked Shane, for in. squeezing you one. some and me puts it takes next to

versus Just up in CASMex you or XXXX down directionally think XXXX? is that would

very get likely up. done that it I labor think assuming be we could deals

XXXX? Versus

getting it’s XXXX. be versus could It’s but know. rate, – XXXX the against don’t us I do growth be chance labor versus I to And highly thinking anticipate was levered I done. it going probably, up. there’s deals a

but they are sharing that, base our next year. of our sort is hope guidance in We’re not around that cost not

Thank Okay. All you guys. right.

Scott. Thanks,

Thanks, for Scott. you joining And us to everyone and you thank quarter. we’ll next talk

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