Alaska Air (ALK) 20 Oct 222022 Q3 Earnings call transcript

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

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

materially to fuel. be the performance, from comments non-GAAP and in our will forward-looking which directly today on may as future factors such We'll And our differ comparable today's our most costs, actual measures As could Over to earnings as a reminder, certain filings. usual, provided financial excluding risk between our statements include you, refer Information unit we found measures reconciliation Ben. results. affect about SEC also that adjusted business in GAAP earnings non-GAAP release. have and a can

good were we period since everyone. and busy travel began. was Demand strong. Thanks, Today, pandemic were our busiest third planes people results resilient, released quarter closing and were the the Emily, morning, full, results, out our our

September. new the the the Our is margin likely and to the #X We best with industry from contracts. and XX.X% through came performance despite top multiple June operation this pretax leading labor ran industry summer, on-time DOT

history. revenue billion in marked the in highest $X.X our ever Our revenue quarterly recorded

airline a becoming X XXXX, XX% but pilot contracts our are was last industry revenue group. unit delivering. with also the labor initiatives ratified first reach versus underscores major least, up we commercial deal and best we not believe mainline our Our the which to is that major in And

and been our Our success. very setting deliberate year about leadership up for team continued ourselves this priorities have

focus contracts growth. rapidly we business delivering excellence, fleet, operational configuring moving a are and profitable securing on as labor to single results our seeing We for

simply, it To to to business our about we outperform model continue is excited Our and holds. put are underlying and strong future results are are financial resilient. poised the what

give update me a priorities. let quick our on top you Now

is and transition by fleet. QXXX XX XXXX. All closing of we will Today, of the XXXX, are fuel-efficient out the fleet on have smaller to fleet and Our that are and more aircraft getting progressing by will MAX a of back January replacing. well, be single follow AXXX seat aircraft XX% AXXXs the than are end AXXXs XX we per they the in

aircraft of fleet. by We over expect next XX% mainline end year, MAX our to have representing XX of

single transition As outlined a XXX toward we at single year. focus a fleet, on to begin nearly continue May Investor savings fleet training million $XX through of we to our for pilots After reconfiguring ramp back will to next our business which expect Day. we of

for operation delivering reliable Our load with throughout also rate returned This completion track. each back over despite with operation the is of to has month summer, Horizon a XX% #X completion posted results we the fantastic target satisfaction primary at our record milestone a industry with for several labor of deals, quarter. that have the and noticed in focus And the ours months. guests locked a improving XX.X%. been major our our us guest score the factors high also operating summer. quarter X has We in a rate on importantly, for flying exceeding huge

for recognizes robust new a success the week, a sent Horizon new pilots with of by to our Also market agreement for ratified contract ALPA, and our video Following attracting deals industry. in that contributions represented their pilots in X-year pilot Monday a pilots mainline this pipeline. Alaska the with extension our both horizon IM the of our and ratification with contract securing a

the brings getting done our well. prioritize upcoming labor organization stability for alignment. our as We agreements will This are excited and and

positive about be lot have We to at Group. a here Air

demand and strong. goals delivering remains are on our We

We are in step-up facing, wages. our challenges is also an there economic and uncertain realized structural a including industry backdrop,

forward, are have offset in we this to place. leveraging already pressure initiatives by uniquely positioned we Going

One to single will we cost-effective to increasing a the unique that harnessing be cross-training moving of most eliminate line upgauging. scheduling fleet, impactful return includes with that more our will Alaska. This tailwind efficiencies through the by efficient productivity be structural as growth events pilots come

are forward. remain to we of keeping challenges not advantage We but as to cost relative immune industry move competitors to the the our committed our

out build fortunate our are solid we on into footing the to We finish and performance as XXXX. look be on to year

Our bolster taken the profitable have growth, this priorities competitive have for steps preparing airline year but throughout only advantages. not to our strategic our we and pandemic centered on

foundational the coming of impact of up, to our the these strong full hard term, to deal. longer As this are that I labor and from both and and us work to and ramp begin performance. our all road term, years. will with in sheet, the in to financial long is still fact to close, outperformance evident And To we term. excited already our our results opportunity over X% our year support of am fruition will balance near revenue Near new including initiatives they coupled deliver to come now that the excellence continue continue we to unit have see commercial commitment unchanged for pretax our ahead and quarters a despite fully margin X% the the map tracking support strength operational adjusted to

they our over our critical a of to success And their day to for tremendous thank all not our over Lastly, communities delivering want our and it continue effort operation everything a the Group financial Air success do. day performance. on our be safe, and to connecting in care hand I would serving that possible Andrew, on employees with and things our turn and to summer all and they show I'll Running great and is without before Andrew. to that, guests, out. fronts I reliable

XXXX guidance. today revenue comments and strong results, everyone. already quarter. XX% back In highest recorded versus will sequential full exceptional an performance. yields third on My peaked our XX.X% revenue coming XX% levels $X.X morning, month versus our in seen and July. revenue the for This despite billion. capacity, focus June levels having achieved X% of good in revenues quarter, we quarter and were Load primarily factors second quarter in XXXX, exceeding less a with unit very resulted Ben, Unit third our performance, the history quarter remained fourth on every thanks, Well, the up improvement up quarter at in from XXXX versus the also strong, along

into revenues also strong did industry coupled partnering initiatives. job demand teams from fantastic period revenue to performance, fueled maximize commercial teams a factors, generated capacity the constraints a during and by network environment. across has together revenue with These a elevated pricing which Our was of translated the

product categories. to Moving

Our show to products they premium as have strength all continue year.

by revenues was program the also XX% third versus factors recently First on has XXXX over points of approximately up up continue from continued levels remuneration XXXX loyalty to XX% Paid points, cash flow premium Class total our bank higher The and and Cash voted while year. and quarter from X year X Airline load strong Program average the both U.S. loyalty were quarter finished up exceed with class Premium throughout #X XX% Best XXXX. Rewards up both the versus fares. generation Class revenue first-class the the X up

exceptional to of this our believe guests continued a were for card credit and growth value our included World program These & loyalty Report. our News and our strong and in year. our initiatives We business. product offer results source loyalty

initiative approximately to ahead million We revenue our million. recognize This and $XXX plan of key goal set unit revenue incremental the are are tracking reasons one outperformance. long-term is of on our of $XXX for in

demand recovery travel across travel XX% recovery environment. our to underscoring Notwithstanding levels, we have remained with year, West the pre-COVID. offering while XX% in the versus a business taking the After XX was believe better slower we is up Turning to earlier given business have a than recovered from corporate majors, Coast, around this yield revenue the trends. approximately corporate line improved of step this points volumes business XXXX

hybrid levels have coupon shared slower to as continued last work One revenue I to revenue. our working restore a we of we gap through our Amex, of opportunities Year-to-date, move return Additionally, and we sustaining business GBT momentum from improved what contribution while we've our employees believe travel, partners and the the fully finally, have joint contracting we have distribution around to at companies and can from corporate increased because our share international single-digit quarter, benefiting corporate quarter. high are total remotely. channels personal XXX% with travel some that of expect our from we their positive from more these partnerships taking American. they And World been XXXX for with and

It from there quarters not have the revenue travel for but more these business of and an this doubt for few is and our partnerships we accretive that take will that international real sense only going impact, is more a upside recovered, today, business sit the partnerships. complete source offers a get revenue believe more no forward. is strength we As fully which these to

quarter. guidance fourth events XXXX. for in January XX and XXXX capacity will X% XX% total By starting end expect is our versus Looking versus constrained XX% the preparation aircraft across the to of mainline fourth to revenue fourth go-forward a approximately first margin, and growth ahead fleet XXXX. revenue unit for down our be guidance This implies quarter performance we XX% to retire wide that capacity to regional in we as on by training be quarter quarter, the the XX% execute up most in of

remain we continue to to guests bookings book quarter, travel. the As healthy holiday look as fourth

a load the the As the we record on fly has of through to end summer, been ahead track booking load fourth are and quarter. XXXX the factor year, of solidly case are the throughout for factors

versus of currently approximately are XX% higher at yields the We XXXX. QX holding

the On by will restore capacity system we and grow there. deepening our the to levels spokes XXXX fully focus on our network of continue side, spring from we as to

network, with our as at look West XXXX. is the competitive recovered backdrop least over the XX% the versus remains we down As capacity still Coast competitive favorable

As from environment, we our seeing grow One MAX XXXX, And remarkable with of our closing wrap strongest and to year performance. a benefits upgauge strong to joining American credit capacity-constrained card incremental we are we some demand World, remain look for looking taking partnership and improvement move business new to and already deal. as in forward and into the configured Seattle. forward out our to revenue of efficiently markets and more we are our in such deliveries We've a up,

way commercial we I move year-end importantly, greater More poised to unlock drivers call. in during even we details as into forward place the are to our sharing more XXXX. look have And in

it pass and revenue quarters to I'll continue and the Our will over $XXX we And Shane. and our million of to coming support commercial over initiatives tangible, with years. is proven performance that,

good and morning, Andrew, Thanks, everyone.

Our the $XXX we this strong million demand the experiencing both reflects net strength backdrop are business of profit Alaska's quarter adjusted and model.

reliability encouraged had to by are of COVID-related encouraged operational we We years. volatility return for us the more X also and this are and the than quarter, stability that extreme the by absence challenged

guided no strong ensuring Our pursuing and is causing taking are which that these care with previously in us maps. quarter through X Ben major seems as labor performance highlights a briefly step our well. very to deals unanticipated focus on our that results contributions only small ranges financially. our of growth mentioned, key we of and Completing as guidance. walk and we and people thing, before also important quite revisions, and allow performance labor deals costs it's and operation, Not largely a ratified have an disruptions running the refreshing. like a fully landed discussing quarter in and of incorporated guests results we actually operationally But within significant fourth financial contracts did quarter third road I'll contracts deliver our but great our recognize

our of $X.X quarter, the of in Total cash we we cash undrawn demand deliveries billion, the inclusive of generated continued lines the $XXX our our to healthy run flow back operations environment, cash during cash on-hand us liquidity, strong at billion. the business pay next Boeing remains year. to flow need for credit and to providing the from million ample funds $X.X bringing a On and over third operating Xx aircraft year-to-date

rolled officially of returns and and discussing during With also $XXX off September. and strong associated month. cares strong we our look the our year balance end operational to solid $XX performance were are Debt quarter payments balance sheet know, the remaining payments Our funding with financial as you forward XX%. shareholder And next cap at sheet, remains million. potential our Board with approximately to shareholder debt for million restrictions with at the

in above our versus range. Turning XX XX.X% to points quarter basis guidance costs. increased the third XXXX,

ratified. not our is practice guidance our new in contract impacts reminder, until to include a As

recognition Our of a below drivers of would items in work our our of during mileage up complements flying million new which labor believe transient cost quarter. in And the will airline represent the anniversary the higher in in these, our their pandemic, associated we two each the with our costs impact not in the XX,XXX in million excluding need range. been and an miles These $XX plan CASMex carrying extraordinary that $XX to were all our CASMex as and have of our staffing include agreements original approximately cost quarter million guidance employees with relative to added $XX X-point XXth future. that would issuing been Other associated guidance. of XX.X%, midpoint have

fourth to thinking our longer-term and XXXX. quarter into guidance Turning

Let artificially revenue focus QXXXs in in constrained training deadline quarter and added transition our next pilots the during and capacity first quarter on our available we AXXXs fewer the have have me to as fly begin year. and We'll into training by to remains of events for these QX of both pilots our saying the cost meet January. that service retiring

where year to capacity versus We quarter fourth points capacity sequentially third worse expect X% to down the XX% We XXXX, we to versus X still to X% quarter, XXXX. down be full versus expect X.X%. down be were X% approximately

expected new for for producers fourth the performance-based our our meet being strong amongst full strategic agreements to driven we continue quarter, absolute program, pay will Our from as payouts margin goals, costs a the to our and labor expect to financial year. increase number by third of entirely the including top and

related or and expect higher X-point to points XX% related the quarter, X of the anticipated costs CASMex headwind during payouts We this and agreements. be program labor to are staffing approximate quarter. strong to new X are complements up capacity PVP to structural approximately XX% our in points lower an

Turning to fuel.

crack While quarter, and oil some be moderated over spreads the prices volatile. continue elevated and elevated to have remain they both

We expect for gallon to price to fourth $X.XX per the quarter. be $X.XX fuel

to million. of a program $XXX this significant hedging Our expected is benefit around year provide

to full be the to For we now year, ex XX% expect up CASM XX%.

with performance costs operational now are expect month those However, results X% to considerations year that are outlined industry-wide. success prioritizing being continue are unit going securing adjusted pretax we shift as the Group. financial close the labor deals foundation we will X%, growth solidified deliver to company. and the operation margin our foundational we leveraging our to to the quarter, long-term productivity levels our of of we to reiterating returning of guide XXXX to pretax and reliability, to They year cost were also reduce a full focus forward. and higher leverage the across and a reliable top other in Last of Air Having above to of able

and business a XXXX productivity will continued year drag next first in also some half the year, a the costs be plan reduction first capacity include transitions will for the unit our half of our XXXX return in during will of and year-over-year. to there include While from size fleet

the and we and And back map significant on much well your forward XXXX business to updating until for aircraft benefits Alaskan ultimately, already commercial map Investor of levels to at These leveraging from has of with While QX Horizon are utilization road beyond. from specifics we further in won't let's are our upside all that, continued call, March fleet road share the XXXX believe AXXXs single guidance and to higher very that benefits I we with is at shared go producing the consistent of XXX-Xs and looking with in along questions. improvement positioned in our we are Day here, and XXX-XXs. our

Instructions] comes [Operator Linenberg question our from Deutsche first Bank. And from Mike

of this contracts is completely kind are on an what And of million? you Has done, the sort seen you an and lot Can airmen into we trainers? check year. having number Ben, you both now the of to have a appropriate move mention attrition of to pilots the and the and side? you are that your us there's You pilot of where both respect a training done did give QXXXs be $XXX of have to enter as ready going as that you it off new with you, update

we're the for side deals yes, are of what us retention both really the business. both Mike, the really pleased these on contracts with mainline side. side on regional attraction And great the and

some tell, seeing the mainline In little side. terms for both a regional on early are attrition, seeing we but of it's to benefit what are, indications early and we're

So I us going really plans. to in term is for us. It's really growth pivotal long of this think help terms

to Arman, pilots goal lot the of In terms of improve our schoolhouse you producing need in spring. check the we've Check seen We're but that we right follow-up. have out of executing or plan garment if Anything, that confident have both XXX. the mainline on ahead, the a per are -- a Mike, training want the being we to us throughput, -- on a deliver and the of pads on go you side, increasing to and output, track improvement We're terms going add now we're since the Joe, we with month the help month number regional XX pilots, forward. about pretty of

our from next [Operator Evercore Instructions] comes Duane meantime, Pfennigwerth from In question the ISI.

back half XQ? refresh kind in us There comprehensively points. recovery just that capacity hit half something of terms to Is it half? is in rate you about of Can and you'd like a of said the sort in on was first in XXX%? there Or the what a guidance first you first of lot the

the I'm first sort early or confidently first it's quarter to we'll finalizing of the of think be sometime second XXXX of our the -- size we're latter Gen not of But back middle half I year. Feb plans. likely still in be to Yes, the half in quarter.

in a But half of With get it second will ultimately back like aircraft can demand online. lot the the bit to it comes the there, year. the transition little in sort the the size, year of be above and got how we terms and capacity take XXXX of then of there's excited for training, half coming through we're the feel that first a of choppy we've us

can stream, you delivery that on on or deliveries your environment? through And just and of given sight confidence line those next what year us expect you walk just the

airplanes it's MAX we're got the is Dane, year, the cetera. we're we projecting hit going by X miles Boeing constraints, road, they're XX. Nate. airplane understand XX of targets. with them and that We've now. the us our give down end to to need and we we meet And obviously delivery to et think weekly deliver to next capacity have confident

from Syth James. comes from Raymond question Our next Savi

Just a pilot and on follow-up the cost -- training on the of the elevated and just some costs. staffing

guessing of just of curious size elevated of a I'm off that staffing, XQ much how kind kind or will costs of you see moderating the how training kind do much then back XQ? of will XQ. a to drag still -- pilot of the historical kind the early there levels? kind of what that I'm after And drop drop-off Just of is when be? in

context It's it. about to -- around just put

and similar-ish is in QX, X will completely CASM QX. over gone likely of guide. QX start end it overstaffing to or to X.X year-over-year be then and QX, the our of about and year CASM transition training For taper points the by be It's

-- costs Both

Correct. Correct. Yes.

with things deliveries the that. just Okay. and it. follow-up -- And then Got Boeing of the on a

here that. know of and a CapEx down of view I XXXX. CapEx Just financing on little revised 'XX the the any XXXX, bit kind Can in came CapEx? on thoughts

One I hearing the Yes, shifting you're I'll and every would are everybody, not it's of it have update. on sort from we're right. item and Emily to but on just say, buying aircraft, intuitive, thing capital things know I only

are think elongated chains still. supply everywhere I

are taking a New longer. bit taking SIMs longer. equipment GSE little is

can to plan we now, right they're buy. just some what to in It things but longer more like Emily on give totals. get you the taking seems So

Yes.

it pretty covered Shane think well. I

saw our about down came You $XXX guide XXXX that for million.

shift numbers said give You gave we'll our from to most should you the XXXX. originally billion which refresh of expect guys when for that was around into we we we you had Day, XXXX XXXX. full $X guide, at And Investor year

little So bit. I go expect that to up a

thoughts the any debt Emily, is is or the side? financing financing that cash or And on

Savi, to it's continue We be still Xx airline. of It cash. run not. more will than to the amount the need all hold we liquidity

thing is possibly best So do can pay for airplanes. cash we

of Our from next comes Bank Andrew from question America. Didora

a XQ lot the for in on and CASM the unpack year. to Shane, front

will of And Just get as break CASM kind move like your unit think of to trying your potential Can stepping back Just of Like of 'XX? feel just a out kind are we is repeat that you rate network what not onetime much us XXXX CASM XXXX. not we for up this when that having fully XX% XXXX from up year versus of how costs. XXXX? into restored? good the for you items run the

in QX, were the for as Yes. and all that we We Andrew, to made No, industry COVID not obviously, biggest in by take wanted big out. is want deals. folks deliberate in drag question, and I guide, or thing And updated for summer headwind we the for Seattle we as is new made exactly entire had -- during January. hold deliberate X, the and. I snowstorm year one, well a into to it, tracking Andrew. drug had X, to QX to. that producing full a We us you points cost hit impacted decision had by schedule as during terms the here it us prioritize that on changed to operational waves very a only capacity X the pull originally. lower to stability it down labor to But just the Number the the the expected that's Everything of remind we year then, is CASM else we ASMs this appreciate

terrific more We and great really feel growing rates. begin to levels Now staffing back performance. complement that We've fill of the much new growth-minded role that and classes We're completion got our company. get the productivity good we're getting our to every in about leverage to and on-time with sort to year. across comes we've next goodness got ability ready stable,

XX productivity. norm As know big below historical I going that a year, for our still we'll back one chunk data big don't we'll point, of coming all next points I sort we're think that of of get make that but to back a -- get we're next year.

So that's really the labor biggest thing. Everything real else -- is change the only the structural deals.

right I be having first think won't been we're to done. deal very I unique we long. pilot for the the get now, suspect mainline unique

relative And been we we'll that to have so will industry a the position really that everybody ultimately historically. And a is as have good in entire on do. versus be something basis,

And it. Got Andrew. second or question a just Ben for

markets? to guess frame scale on California I SFO those having your look, to scale get performance. solid Portland. hubs you'll in really that have a do of up I your it know as you thoughts you your how you think build kind over in margin tailwind of time. margin as I out think or the I the never take overall geographies Northwest, But up LAX Seattle that you build should have -- time share I there the and the think, see long driver as those you there, of Pacific you in will Any think really, in

Andrew. Thanks, Yes.

I is back our and give year more growth, we on next that answer that better move we into we I all guidance growth think as California. are the to would returning

our about with we have American. global And I we the and think him Northwest Pacific those I lot Company, head really traditionally we that discipline every frequency I'm down about up there there. as all and the depths where month. and have where California really feel focus both [Indiscernible] as the excited focus are, about of down we of connections a we markets. And the along, here. a we we've I And It's serve. meet markets with good partners it's unlocking shared with think OneWorld about

get things. next the years. don't So I the overall see there, you're expect scheme do over few overall, think to But change we to in a of down fully going and stronger do what I material better

Our McKenzie next question Global. from comes from Seaport Dan

your is think, are earlier Shane, to And seeing I back aside XX% XX% earnings XXXX from in capacity least year? can you XXXX XXXX. does some to, of improve pretty margin your earnings we just tie comment, goals into out big pretax we recovery to it back online, goal, a an guess choppy peers related on going as And lay to setting comes margin your choppy that this, I at next that here? as move the what's conviction pretax

basis, Yes. going I comp earnings choppiness XXXX. it year-over-year to next by just on A don't way, had think to year. portends year, lot much we've base we're of And schedule sort the recovery. of like this a the comp, a choppy so be the will unexpected pull down

so year. will I trajectory improve backdrop. next necessarily it think margins think trajectory, really confident Really the demand follow I don't capacity our fine. earnings the be And we of will strong can return

things outperforming on productivity. on that getting doing made we've I fleet and the lot industry. really to currently then think the commercial participating to side around the and decisions take we historical do of advantage of single we go a good norms back And job strategic to got that in a of backdrop team cost is the need

so the think to year. next improved major think ability -- we I get about a I if pullback, And margins our feel good really economic absent

we in $XXX turning revenue from premium products outlined I think fleet from about the we fleet here. at revenue given the that million Investor revenue say, question loyalty today, the initiatives discounted versus of network second percent the to Andrew, you, Terrific. is leisure? how alliances, premium upgauging. into Day, what target so move guess, can -- What of XXXX, And transformation? revenue percent as

Yes.

all-in my head, and think coupon you first upsells just businesses each are and top the both size of I of think I off give billion-plus $X rough premium magnitude. to a

and importantly, upgrades. to our products. believe think won't as my seats, increase most premium our the good looking and show believe out importance But And recognizing the first-class demand, which XX-plus opportunity get to of at we care the leads we're strong opening significant We're new the we other space. our continue things upsides. we in things, more there challenge fleet some channels. But go up is is given we to get is expectation in today. transition. also taking continue overall, We're of I percent premium continue our upgauge always, from distribution still and product to we see into of I We

from Our Wolfe Scott Research. next question from Group comes

is the -- we quarter, clarify date of you deal. Or CASM is -- from this have costs? guidance of deal from I only pilot with made -- the thought X then in of deal the coming the these just comment it ratification? And up you do change full you pilot QX just the a impact said X-point I Can in the full a CASM But pilot headwind -- but fourth there's the points. new year it's is the that

not just I'm just it's following. I'm So feels it more than sure labor. Maybe like --

baked I structural sort current deals is with we're point. going real forward into sort labor to headwind mainline prior is to. incorporated. the No, the say that ratably that the what fully -- and the between pilot at is deal year in change fourth -- Yes, terms full so guidance not the of of this guide being sure. the and go speaking number labor of would guidance deals, I Yes, the just Those quarter we've are been X-point think CASMex

don't to deals as we you labor As we're know, guide negotiating.

performance-based Because category that There this X our our on we it is And of financial went bit, so that's bring other was end be a that had to our better and as And what closed we full to the took up CASMex through of do many expect pay. year guide. a larger we we quarter. X targets well.

so up, up, next you then And When of some maybe go down of year, versus have quarters is all we CASMex 'XX guess, think when more you we'll or will labor have, which that up inefficient help the add would the should away. about 'XX. I think capacity it

will Yes. No, it down. be

CASMex in to business be 'XX? plan I 'XX in have my in versus reduction As our said will a script,

question Our from Jamie next comes from Baker JPMorgan.

quarter. following pilot So up fourth in impact the question, that last Shane, the on

So on and $XX,XXX and to for first respectively. there's back officers, $XX,XXX X a Captain look wages then and the bonuses September

the in guide. that's So

You're correct? Is not a take that quarter. to going the fourth as that in one-timer

to of not is well, quarter the back they're those in X was not adjusted bonus the -- result look they're third through that the the number. ratification as in adjusted the sort the payments, quarter P&L recorded So the sum special in September in were lump

Yes.

it. got Okay,

Software? really hate until stupid is a bidding questions. So But we question then it mean, the clean April does just And I and it's that. to fourth of like of guide Why on asking it I second, And take go go. here isn't preferential system. quarter XXXX live?

it may be Yes. before that. Yes. And

your dead have We exhaustive So the outside that drop to date. our need reader live of is Jamie. -- That by that. we agreement, go

negotiate We have union our to what with live. day would a counterparts, last the line agree time we go just and

it only do to the of line. the and know, Jamie, try them I peak there's to demand these to on avoid -- Our would season. much couple like do have well, Ben, other have so hope as it get to they providers you you There's systems in much just then, for only sooner. a drivers, And real is sooner.

So to live. there's year you of in that months a handful a actually only go want

December, want peak in it You don't don't doing it doing to be to you summer. want be it in

end So that's a little why up they suspect everybody bit longer than should. these taking would

apologies. does it thought a ex be basis. to a on -- that peak would a do haven't you I'm well identify if sure basis, you modeling just to CASM the it season think live, margin level wondering expect Do materiality those it on When the about something and for aspect. I was go to question, on sure it's But we win. Okay. I'm the final of rises you of I'm company. fuel matters able guys, an us

Yes.

be know. the benefit, pilots for up starting the and you'll can question I once inconsequential there, to drops, as it's hear really going be live, at you to of sure I'm get significant It it's speak the probably of specific think to both and and company the we're benefit. it's give but a basis. have you'll for to sort transitions a And see a ask conflict that us us detailed and least it on the benefit something when to not of cleans productivity we number month-to-month

from Barclays. comes next from Oglenski question Our Brandon

your Can we analyst meeting go back to targets.

long-term You XX% you us, guys remind just than coming higher to inflation Can that and margin, that. XX% peers. is said industry little pretax above I'm assuming in a bit

guys envisioning So what here? commercial are some the that assuming favorable it's of are relevant, still you offsets

Yes.

on instance, paid cards, along on inflation every give talked swipe, impact its are swaps -- credit we've just we up and inflation we're all $XXX of think certainly about mean, course, I for as X% the has million, take. those or for I get alone,

our from that things efficiently the look I really that about we come and that, at labor really this can And up with comes I into from an and to that think is to initiatives, tell struggled really this We're a on think and to it, say, like as is from come that that, be set is the we a versus hard but going next I'm ourselves that what reconfigure the to this come Shane excited that update year all you what we hit give to airline is Swiss airplanes, worked would continue as going what going efficiencies watch. I goodness good revenue going commercially most outside to overall, airline to been year business, operate we're I this operating you of on being. that huge.

it Obviously, and still about Is along X%, higher of base I well? think Okay. do talk you those guys about above this capital cost right How year. higher guess higher that, I you the moved that your the has of especially cost to appreciate to as X% lines, Andrew. target with business earning long-term the capital. growth been? And did cost

Yes. on can Ben jump in this.

sort equity I over equity fortunate we'll the valuation cost we're have the think to time Brandon, is. think, see of of what I

of On we And position, our a cost of very, cash we very soon. anytime capital because still markets the capital. low have side, debt don't need access to

sound the to think ourselves I we going side, incredibly of the feel in on finance ability So forward. debt terms

us. highly our still in And demand it's there's accretive feel can we plan. of we should sort sheet that could lot I know and Ben if capital, returns longer-term core but like a of investing, think story above You of be in our cost like be can anybody taking markets the are of that terms balance speak to

Yes.

I grow think plan long-term still until our XXXX. to is

from We plan execute. have to great we a order Boeing, book which

what said. exactly think I So Shane

on long-term the track about good we're that and growth. feel think for I

Cunningham Conor Melius Research. question next from Our comes from

you in oneworld think quarter. is way. particular, in fair major initiatives don't would the XQ, talked see international you like And about in coming that a alliance about would much bit Just and back benefit I heard this I a a huge given I that just assume from

So if at you're with of kind you just us where update could that.

the for thanks Nath Conor, question. It's Pieper.

the globe or go, ability on they mileage else's. -- our eager that in you benefits, Oneworld their why our get it's offer joined Alaska sure, and go in that. to participate our so status to back I place to on the think their carry be were either wanted and international airplanes why to loyalty guests to flows any somebody carry do program to we And able on and

have whether those because as market that come we're and our sell our family, using to anymore that. a we're as loyalty Northwest not important the I it's Oneworld partnerships. status, And losing we've back, airplanes passengers, that P&L within XX% here got guests, tangible critical in global most their our from most network competitors a to to on benefit from we or which Pacific partners domestically their contribution our it, Alaska think seeing the is especially in it's can up our own. the real really these Europe, traffic we're benefits see has second the And keeping Year-over-year, perspective so guests from important international harder is

Great. then noise different highly has the employees. on. about I'm always world stuff. I I lot on last. of probably The labor the really to productivity mean when now. And not the about get in it's think The structure, trying changed going cost just a Alaska productive is But historically,

Or something to of levels Like you to So capacity? productivity on at is I'm there that else just high a function you historically. get play curious me, back how it is just really had there?

every things I if that were staffing folks through seen. high every Yes. But then or which think thanks. a get that as not. we drag were sort and And had normal we of transient A having COVID and time airline to than and were really Connor, had seen those normal we and to new training, all one ever reramping, there's relative our has posture. is we've a hire will larger couple tell of unique volumes has industry to attrition, incredibly

X we in sort go -- time we of our year. we XXXX levels training I or stable half for and And to And the in over reduce for as or system took get the for second didn't carried us, of the mentioned through stabilize things, X overall a so of back at and staffing I place though those had economy X sort think staffing normalized today. even beyond. -- the my of all we think, X then we're script, out terms points And much more the I complement of in you more as

of a good hiring still do lot There's we've next need this of the because but to has of were So we be just we to place. that trying then we're got year. COVID and year, happen meet to last attrition, a really people growth we in lot hire to operate. in And hit time and the absent new get would sick we capacity. Whereas couldn't people wave and with the a

get in the we're productivity it's to XXX air We're and more growth the a carrying to into we, and we in from like going the year as next beyond. have if that. much than the And productivity. a get on get today don't enjoy don't that. totally time others ASMs benefit like of we I I now new and know industry we go there's people know than and if but done better the to we'll so need be pre-XXXX back are absenteeism, normal

just done we But And company want I that we're productivity targets building add, company we -- company low deals go this setting where of now into going has high us. overhead on this build drag behind Conor, up a X and I for is cost, budgets. year. into We're mindset. done the We're us deals like low-cost back the the this just labor we're this fleet in to to single we XXXX, getting were low there's XXXX. -- terms to going a budgets productivity, mean But the where labor heading to got mindset. capacity

Cowen from Becker Helane from comes & question next Company. Our

the fourth Like are as where So guidance few thinking revenue you that you're maybe about a for think years? the next you you and and can quarter your over reporting do record go How see think can target for that new about about you where you have thinking the revenue you're XX%. how number.

at and a I think Yes, just as team RM on learned more revenue the different I we lot think And I did. learn calls, said works much place. about I've we think we together COVID. during my as lot network We is a Helane, previous way think our team I can specifically thought a

we're corporate I think different on the in a side, place.

very I focused lot more and the in are on We're on the generating working we a again, different And revenue. distribution. think, initiatives on place. We're a and alliances partnerships. very,

still on think be fully I a this, a the especially, think I but be That's what I and natural, products, well personally and upside to I the we airline. goodness we're do, going untapped our don't of going think products our do and believe I card to the at -- our of all side, that, on And we is growth positioned lot there's look that loyalty of there types to as we're there. both capacity growth.

side. go revenue going step these mostly and going that a absolute all basis, get in be will there know because to labor, So on the on costs we're we of an that forward things change

better. And a revenue we've well Helane, a focus environment you highly things or need change benefit revenue on in to productive. still We not-so-good environment. the add regardless what what revenue environment think it what do X efficient, a done does, for of I is, I'll is highly for and operation decades the Those good so low-cost will

everything we're those Andy makes said and Andrew, sense. course, things back getting So of that are to

And Susquehanna Financial our last Group. question comes from from Stathoulopoulos Chris

new the deals. to I margin X -- these want just the contract X% to new guide pretax pilot So X% or with

for confident us the could book. XX% year guide? the But ASM So the also, any around on you're it are the versus X you mix help fairly moving does change next the perhaps some of Or leverage operating now referenced at deals year? X these new the level the there And stage? half you more sustained you with to right new that X last importantly, that frequencies, if of yields like XX% as your the order X% benefit first markets. that Are how you just pieces or sounds square X of planning delays, utilization -- to momentum of in outlined the in returns

Yes. I'd make sure those. of I try each answer to

guidance they year, them what when appropriately deliver delivery next believes Boeing for stream. will we for may you on what for tell you we give On capacity to buffered be can deliver. plan guys I'll do it versus the

the assume add even build do and hit delivery to day, they on be to actually to the telling not they're benefit we'll a that. going every dates we hard We're so system give in that upside exact us the and would us, trying ASMs. ability if comes delivery us some overstress that though incremental the to they're would know And

next to really be in ability guys operate confident that year. we tell to So our going you we'll the we're schedule

I think it's both.

we for a the to yes, environment costs different than now, be the we look of the back which period revenue time. do direction, I right tailwind to primarily, going right I cost to expect think sort be structure will big a think get of moving pre-COVID down, get margin. in And

structurally, getting revenue relative constrained think think, do to of good in continues pricing there's be and teams continue or appropriate to and the I supply job I the to demand, our it. a GDP understanding and yields size environment

coming of laid drive targets, So us. we strategy together guys a of commercial were the both term. talking put and labor ranges had where We to Investor really, cost make could And specifically we term in. market. stuff sort when the I to knew We on a both get we think we was to help lot you inflation out we side knew And sense at prior of reset. long to going. long we going to it are were was sure that those Day in a But this going where our the into

changed going Day nothing margin what us we these from to We're So has for to Investor at and you told deliver that get guys perspective. targets.

X The the base structural piece. a here. side, is just just follow-up Okay. on points rate labor the And that

PBP and year into bonus assume ratification then I or look back would see that the for think September should in that XQ you -- B, we and Part we elevated for accruals XXXX. said full

rate points X to I of the Yes. think We What the in labor EVP think employees question? was we date. do increase believe producers our being lot industry, the reminder, a tell. commitment margin the that, if Dexter. back deal pilot the sort The is And of a one special. mean our of to just second drives PPP for mainline to we've it lump September Too XQ, all done to and part wage X in sum bonuses deals a we the program. in soon do the OpEx, I represents as strong through we alignment. benefit should have best the in of

little through achieving. number it's of folks of goals, so were it's I to next year strong and get come a next those do the and proven to will the But as is we on sets year, appropriate where that working goals years, think be My and they the to hard than the that's that recognize over them. they of for know have to early year. harder tougher end and they're been year, to inclination we'll when work we'll out too out Board get a sort this

everyone. you, third marks the end quarter That of our Thank earnings call.

Thanks, everybody.

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