Alaska Air (ALK) 25 Jan 242023 Q4 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Alaska Air Group 2023 Fourth Quarter Earnings Call. [Operator Instructions] Today's call is being recorded and will be accessible for future playback at alaskaair.com. [Operator Instructions] I would now like to turn the call over to Alaska Air Group's Vice President of Finance, Planning and Investor Relations Ryan St. John.

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

morning, Group reported loss million. $X Air a net This of fourth quarter GAAP

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

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

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

and XXXX. another Alaska good Airlines Thanks, everyone. out closed morning, Ryan, in year great

those travel to on board Before X they deeply cancellations. have all everyone to get of our and address sorry X fleet. XXXX by their I those I for MAX January of grounding to seen experienced Flight what XXX we plans to recent disrupted am the results, on who want

We from you returning us. are looking to expect forward service know and to the reliable

safety. Our #X value and is and our always be priority will absolute

our impact the impacted business so followed fleet. operational know, approximately we grounded XXXX by on financial for proactively following grounding. the operators may accident, directive capacity FAA of U.S.-based with of a a This by the was As by our material X/X to aircraft, all you which and January our [ had the ] do

be deliveries further likely X% year believe between that our would and which we several Additionally, full is initially over it levels. X% which anticipated would XXXX aircraft capacity plans, affect we

again. and our fleet. working Boeing We alongside the safety people remain now FAA focus guests the and NTSB, diligently aircraft to ensure our of primary safely Our to never committed right service our happens to is return and our this

we own relationship oversight hold As committed accountable. FAA to but done confidence valued utmost as our with fully intend Boeing better the the this to work There we for and be is have as will a emerge as want to quality employees to partner, also but to them longtime we aftermath. Boeing, remain with our well manufacturer. take with also and improved I that a event our a its processes safer to thank response moment

our the continue are for Safety and standards people and heart of a been highest the of care since professionalism demonstrate I of and in challenges the us. to years It everything to and demonstrate rallying They at each this and and each do, caring to at long we of and every any be Spirit employees few day. XXXX, guests resilient has front amazed difficult other. continue put team our meet Alaska

our turn let's Now to results.

in XXXX, impact of our to competed X.X the transitory are once margin goal again business, believe not we As consider for Coast over fuel have margin, close XXXX had am I We both a posted from which the margin I costs, and in demand international refining point impacts industry. higher would of West accomplishments totality, it industry's the year. and in to achieving surging we're best our proud for I company's the its this been highest

paid for above performance-based that proud people bonus our target Given great receive strong approximately program. we or $XXX year another pay we will of to performance, our million [indiscernible] announce will our pay I'm as out

year, that X.X% end we was XXXX. throughout December cost the communicated while worth originally the was X did at not. of It's in higher the year-over-year. result Our the of we guides in unmatched better delivered the industry first of revised guided down majority cost execution as result our noting best CASM of the range the industry, course This

in as in durable throughout and We critical well the of transition completion me peers discipline a remains the DNA Airbus advantage surpassed company's ran the in term, of fleet. and prioritize ended XXXX, as completion cost culture, year a competitive have business. proves summer. the we operation We we record area pre-pandemic our with levels over our reliability over of an out the flying hitting will successful It this even to embedded excellent the finally continue XX.X% rate rates long manage to, we

every a expect, playbook Our [ to to fleet operational operator delivered guests MAX be we X continue XXXX We have expectation to service. works. our ] in premium returns and best-in-class the have come process-driven to experience our once

strongest the Xx balance repurchases target in in our the with reaching remains long-term sheet row. year one dilution. below leverage We the annual net of second share industry in and X.Xx of a for XXXX restarted Our

conversations and -- stronger available. we including HSR Our the differentiated of foundation as they from case antitrust and strong acquisition and a held over we pursuing years, our the will look of continue. DOJ a balance we've our initial as process with have our update, Airlines. And has and sheet proposed obtaining provided JetBlue forward filing by updates submitting expansion initiated growth become Hawaiian quick the providing believe process to the for this Spirit clearance and the We

our XXXX program global put billion $XX.X from in our a loyalty partner Much work the and comes XX% generated billion portfolio into ancillary brought carry into cash from to we XXXX. hard $X in bringing in our new we which ] X record will loyalty and premium We total revenue, XX%. [ partners of added Lastly, of revenues.

premium our structure. a our carrier experience commercial and a focused one, in to maintaining brand initiatives deliver safety the and on yielding culture; investing priorities only a people two, comprehensive remain three domestic-oriented competitive as and on elevating cost offering Our with

what Absent a event, significantly are were first can the The under combination grounding durable drive we versus about heading which XXXX. begun this but difficult foundation quarter for XXXX optimistic year. know financial improved we circumstances of we has to performance. result provides accomplish very we the

As the XX% I last first we progress in Last to or committed that in I million began and and better this year $XXX believe we year, of tangible this track results April on stated drive to we've effect. we we the toward a made changes quarter, goal. period, year, returning in breakeven are improvement made were lost to network as taking

are and years, our model sound XXXX, it been creates over And our for all more long for is efforts durable that positioned fundamentally returns through stakeholders. premium great and our business We that on endures do much XXXX. a preference run. over for As through has well that, to I'll to Andrew. to concentrate and we goal resilient airline experience turn our is made with a in financial progress cycles in the building One it

early revised excellent revenues and holiday revenue Ben, to everyone. of along quarter trends. Capacity a put We Today, up Fourth out and XX.X%. of quarter with support the full in weather up performance results, year-over-year, good $X.X my year ahead nearly in guidance quarter midpoint and with finished the events Thanks, December. the limited December comments slightly operational X% finish coming the QX morning, to billion, focus will on reached we fourth saw in travel. year strong

traffic X%. revenue record and in up coupon resulted This

down versus For our year approximately improvement resulting capacity in marked unit in in up a year-end down in XXXX in August revenue. Unit The XX% to year, of through on X% unit improved we we X%. full generated revenues strengthening full record billion revenue down $XX.X revenue showed revenue, the in XX.X%, X.X% a saw this from was core December.

underscoring Notwithstanding consistent is managed we X more with capacity year-over-year. from what travel, shared strengthening international X-point our normalization to we're environment demand realities. On grew demand we've improvement, and post-COVID before, August than is December continued a recovery. steady a slow points seeing industry and of a business that belief adaptation pricing This

a and our strong recovered. see and in higher notable revenue X% example, professional growth revenues year-over-year fully QX. of are with year-over-year Overall, XX% respectively, now levels on in services, lag the industries yields. XX% most exceptions fourth tech volumes still industries other For within did XX% The but revenue and quarter, are growth, saw which business XXXX portfolio

Premium XXXX. cabin solid continued revenues in their performance also

the on in At XX% will a our clear substantially focused core nearly to peers, respectively, point revenues provides be First, orientation and our of come. differentiation continuing which product class continue XX% for revenue premium premium a main revenue. finished cabin XX%, us total domestic of for outpace up to advantage years year, against competitive to

the bank hit cash loyalty, full year, bringing $X.X new also XX% for billion approximately up year-over-year. record, Regarding in a remuneration

XX, XX new of our on also We approximately portfolio of extensive which loyalty XXXX, now alaskaair.com. our we total we and which X build and in added value programs our partnerships through thoughtfully bringing total revenue. to In alliances, partnerships domestic airline our partners, X% international sell continue of to

believe, us. selling unlock to Our be a pivot we alaskaair.com, big will partners on for

XXXX, platform than award expect We add X never website significant from to in our redemptions. in British other including direct benefits. have selling Airways our who build Selling sold we direct for has a further out partners our significant

as in booking utility domestic through website providing change our expanded and valuable for becomes trips. increasingly step First, shop one-stop a guests international options a both for

channels. our accrual generous is policies, partners and loyalty. change on guest fees, which sell revenue all as And When it for itineraries incremental book such importantly, cabin directly, full guests further from it available main partners third, alaskaair.com, Second, other to through mileage they on our and rewards Alaska's benefit not no above through drives Alaska. we

day double of attributable In tickets sell an per we we is segment. to plan Alaska what on approximately alaskaair.com sold December, operated was revenues on flights, in partner which to XXXX. XX% XXXX, partner sold X,XXX In

alaskaair.com, partner grow improve operated our we own As revenues. will we sales on also

outlook our to turning Now guidance. and

expect return capacity over of gradual down the capacity for during to points X January, canceled through quarter. our first quarter MAX being of mid-single a February, digits which we fleet in will the result impacting year-over-year first of Assuming X week by flights have the X,XXX service

back able of seasonally time rebook guests to demand impacted from flights. been half is we've Alaska low those cancellations given a of over However, by the year onto standpoint,

more horizon attrition flights. rebook at allowed their them us operation This capacity to to due to regional resulted has our XXX lower pilot and XX,XXX unscheduled Additionally, get has their impacted over in flexibility carrier guests of than destinations.

we quarter. Ben were an first excellent the trajectory As for mentioned, on revenue

improving to trajectory with to week sight of points unit grounding, from of 'XX. unit had yields in line X to This is year-over-year single-digit X the in X% per low significant on to year. growth XX-point a start held up performance MAX revenue we X% X change to QX Prior the revenues

sold we yield and X% ] daily As is March here this [ positive with up yield past sit week. today, marginally held for February

strategically our utilize assets COVID to our Clearly, more from to reshaping are learnings our benefits network demand realities, post adjustments capacity optimally. seeing we new and applying the

where capacity California, improving are reduced We we are with digits revenue into seeing markets performance frequency well And environment then in bookings of our markets from business strong performing general backdrop along new fare the lastly, gate. Several competitive also markets. right unit capacity our highest is in out double the and the year-over-year.

X growth on a in towards single-digit For QX, are high yield basis competitive held up year-over-year. fat single the our the in second factors this past capacity near was flat daily point ahead for intakes time, digits, in but At load low QX positive trending of months, quarter. remain

beyond. all together, QX good business we MAX X very absent Taken outlook from impact for the our and about the the core feel grounding, in

And and we years revenue the we ago. franchise, same $XX not billion company few were closing, a now in a are are

including cater seeding support performance come, diversified on across financial Yet is all global of fleet, robust product preferences, premium our Shane. have over future a the mix And and to implementation a elements and excited We premium will building and profitable place opportunities, are to help premium which to upsells, to network both of all to better evolving our Xs first and of of and growth. I'll there long-term on more class guest continue seats and with merchandising partners that, XXX% Boeing a the optimizing in it increasing NDC our we program. through number pass lounges, Xs, and strong loyalty and

and Thanks, everyone. morning, Andrew, good

full and will I that grounding information results impact remain MAX quarter #X and X on provide Alaska. for I additional of the priority the year is and Before fourth discuss our the will safety reiterate

and we people Our safety results performance. for considerations financial our above guests our to that concern place are always will and secondary

Unit $X.XX above adjusted for initial the costs was which an recent adjusted For quarter. margin quarter, economic versus cost $X.XX. was our while of and EPS down fourth most fuel X.X% X.X% both XXXX, our guide our pretax per was gallon ended the on

of Coast the Our the country. rest fuel on impacted by refining to costs remained elevated margins the disproportionately West relative

higher Coast $X.XX higher. U.S. of margins As the were costs margin West spread held Gulf than reminder, refining our Coast refining were a $X.XX quarter That most fourth margins. where

and fourth U.S. did the improvement although temporary, our are we phenomenon results. quarter late today, first Coast. been and We believe in of we to into material This back see $X.XX Gulf within the has

year have refining would full Our had behaved points been profitability better pretax X.X normally. more margins

full was for margin was EPS year economic and X.X%. gallon and $X.XX. X.X% were the down Unit adjusted $X.XX costs year was for the adjusted Our per pretax cost full our fuel while

in his balance sheet mentioned remarks, strength opening Ben the of our remains As intact.

leverage a stood cash EBITDAR. liquidity our approximately flow while inclusive billion closed cash And from $X.X undrawn a of billion. of to investment-grade debt $X.X level with at an we and credit generated ranges the operations total We in on-hand XX% to Moody's. and year, from Our the quarter, healthy during X.Xx year lines target long-term the cap rating during net at debt received credit

payments to again more our year once be are million offset the were million repurchases. We XXXX. the at than this share intend still Debt quarter least program, repurchase in to expected in continue dilution million for in million share quarter. offset With with and dilution $XXX $XX we existing current under over $XXX $XXX first to approximately

cost completion to improvement and CASM the to quarter the below to with production have as and teams guide the ended well Fourth continued continue targets milder execute ex our helped finish costs, performed while X.X% we down better our more well billion. full December $X on ASM our cost year. the than we the against and weather ex adjusting of for and during year half to winter guide second Moving down outperform CASM of year at quarter. rates strong through midpoint and X.X%, Even at X% ended X%. higher of original guide our within of better nonfuel to our down $XX latest of capacity, X% notable, X% Even a end million were original base down

in our flying cost at We our management achieved to to and even and reality so significant XXXX clearly years back rates completion absorbing this increases. pre-pandemic in continue competitors clear wage operation beyond inflation believe versus that confidence provides maintain been recently. cost a relative ramping industry the costs result amidst record the doing the was of will as levels, while our and ahead, versus our has differentiated we I industry a

growth to strategy at upgauging only per on clear. and We ASMs benefits efficiency will nearly grew and Attention year and measured headwinds full lower on the matters XX.X% context fuel at improving improved remaining were to cost growth in The X%. Alaska, gallon, in from also our efficiencies continue capacity detail X.X% XXXX. within work departure of cost us to we

opting only. guidance impacts grounding, the are we provide fleet the Given to of year EPS full

flow like also versus the shifting We and to metrics. of cash unit focus idea margins

the assumes full our be fleet from million to year to a $X, per grounding. expect We impact negative earnings share which $X $XXX

have this on we that process, guidance. details of While have not do incorporated be we the into share grounding, profit to our we whole fully nor impact expect for to made the today

midpoint, $XXX the approximate a XXXX improved flat impact, implies the million EPS versus our Excluding slightly XXXX. guide in result to at

or capacity had We expectation XXXX. in come expect grow X% our end year to of below the been our what full to original to lower X% versus at

hence, by comparison in disproportionately baseline XXXX. industry delayed, Our may of X them. and X. for fleet deliveries MAX some the XX be not do provide more cost these on deliveries entire we year, and to anticipate the year-over-year be this will growth. we tougher A for X believe mainline remaining We is precision are MAX plan XX called inability XXXX There headwinds facing impacted

a this. portion are of Wages large

$XX which million in is year approximately $XX wage will lapping pilot incrementally full step-up We for the and XXXX. implemented in the million September, be

our in with agreement we soon, resumed well. an them our are hopeful have agreement flight we're a We technicians, principle TA with reach attendants to have anxious and for a as and and with tentative negotiations

As we remain unchanged. priorities outlook look forward, and our

managing in road on commercial in our we productivity to the deploying to demand is continue operation, continue network will offerings. our and strong emphasize a the that premium map prioritize will market responsive competitiveness a our way and drive We product recovering prepandemic of focus and are costs ensure to

industry have deliver business our goal of about that, with optimistic configured are to the ability industry's the And on our compete go and model with a to to let's We anyone best continue in delivering to questions. your margins.

And Instructions] from [Operator our Morgan Ravi Stanley. first today come will Shanker question with

So what be think the this. And you kind can don't obviously, expected, really terms can of there? that in blame damage I max seeing of for seen lingering kind of start you may issues or brand in I know the and scores NPS year But share you of in of forward anything you've curve than your impacted you're any by promoter also this? booking terms anyone

of is, just What our Ben. I And get loyalty so employees I it's overwhelmed been will fill with over a wait back I've anticipation well our the we can't to they And for to to when and it's can the say years. gaining Ravi, in customers. support is think service us who've airplanes. full been tribute our

maybe as quick a follow-up. just And

to You there. said kind of might to info you're share share don't any something Any Boeing when you have to looking hold there? have and accountable idea

XXX%. Well, and fleet X schedule get back our service Ravi, is my MAX get priority as into back know, first to our up you to

us quality is factory priority work number the the whole. well one. that's So as at essentially accountability with making on Boeing. We'll on raising the The standards accountability as

be a our safety that and focused quality to schedule. Right fleet secondary. on and But we're full getting will now, back

luck job everyone. good and Good good. Very

come James Savi will Financial. with Raymond question next Syth Our from

and think of of year of especially to kind your you kind deliveries on up kind Ravi's follow questioning well. next year this of kind maybe as Just as of

kind of of -- your on outlook what thoughts terms of deliveries? on kind or in based maybe any XXXX is Just

all? views any forward? going guide here changed know a And you for I at Has kind just on that 'XX gave of CapEx

it's had just We wish impact. don't. so It's Shane. the . Savi, detail. early more I Thanks question. for understanding the we in

mentioned, the schedule focus getting the safely. real Ben flying the that's X fleet back As is grounded MAX

we started going forward, MAX to aircraft X fleet meant We Xs MAX and have about take XX were think Xs. plan the to year, XX this

don't that is tell how to to will I schedule very fly we of long. selling. fleet selling is we'll those out to you enough aircraft have careful suspicion know we the fly and delayed, make we're get we're our enough what there sure can What but And be many today, we've got for

-- $X.X we mentioned CapEx year. think $X.X I December, from in last of billion to billion down

think I to it's not going that. more than be

My it And will that either or is we'll suspicion next as by more less. at provide call be an X-K mid-quarter? becomes the updates clear,

Makes front. on just And sense. the cost

quarters you it or Just talk through headwinds curious if there any of about that if as we some think we greater comp could any go of in are as the kind year. the kind of part views of through year, the are kind

be that And kind also kind you contracts guide? any of of currently curious that have considered if just labor negotiating in you might

didn't We like cost we a put out. -- Savi. Thanks, guide

predict ASMs stream the full but significant a going hard we not wanted year, the like. lost to what less is number it's of think material in I QX. have and delivery look the We obviously to to QX to knowing carry

much a initially we I to thought. growth think we're rate have than had going lower

We the out haven't system today. managed costs that for of

ultimately to the decide grow. company given to we of And need how what decide we size still sort to

others, we're to our with certainly them. XXXX, with there's said were of that hope similar costs. the to I very what both And TA heard you've the script, get annualization technicians, close, cost are are pilot anxious facing as I which think I getting wage from agreements in ratified for we pressures

attendants. an have principle agreement with and in flight We our

and costs, the to and to get need maintenance both of very throughout done pressure costs those which competitors, those. year on then are there's airport similar We

I what our to industry, and year mention to relative think competitive this would washes this structure I to all more peers and rest competitive I the as through it year. just of be out the we as close go legacy cost is also is when out, think going relative

rate, growth position to relative cost cost be though even because in think once So the better out. XXXX is going we be else pressured our the a to of I core unit close might structure everybody

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

Thanks.

there seeing is book guys -- So $XXX be just that I that you I impact? Are you the -- And that? is million inclusive away cited, any then want of sure. any was to

you've be the X% just stuff about to half of but rebooked down imply like than you to moving lost talk to RASM you model. X% pieces better capacity initially I QX, the digits just want were the of when for. in mid-single planning now actually is So sort than for that does understand the that going

For QX.

there refund, Yes, tickets number operational some think break really time airlines we've the of we cancel long-term to have certainly be $XXX over stress There's had go break to and million strong core through. the very a and to and tickets rebook costs some there's had going on couldn't costs mid-winter we've reaccommodate. we're spring is essentially like we that buying to in just other book that to that Are season. no away able still

just we've close mentioned, weeks close-in to us. next the get and wait to up. even can't because from won't been have and back our loss travel with back that Ben pick guests, business some flying I leisure from fly fleet the it's As that's to and come few probably so in certainly we revenue There's again hearing

don't there's next long-term the a about small we a you just we'll could that. away we brand book portion brand-related few there's And expect call don't impact, when, but weeks, related so obviously, if a that see over think I talk

network we're a were about But of a us. that the that We digits. felt Andrew first good fact ASM. quarter. we done. I on quarter, bunch down the losing trajectory. back lot We the team revenue we're the Capacity think right the guests about really expect is of his had great felt come into first we reshaping losing great also advances in a Yes, unit our was mid-single look, point to now, making I revenues think, to

quarter that So nets as all could once positive be the we revenues out. think close I out still

the Okay. or with success just if for you And JetBlue curious, does of I'm when some us. cash the burn your approval ruling how everything there, just laid just that's all Lion? Helpful. change Hawaiian in sort Spirit on of proxy, And incorporated views through of color the then out go on you any the thoughts

you. It's Scott, Ben. thank Yes,

these view low-cost business different. completely limit that blocked networks Spirit it are Alaska, case, are are Hawaiian essentially would The similar and our is the The JetBlue deals Our judge was X competitor. In a very models. by between because these very, very complementary.

when only you networks, combination. combine routes fact, through In the there's XX the overlap

So the and customers pro also United expansive more very have Hawaii customers financially have to West in internationally, on consumer, options an Coast it's our international. and to and Hawaii will to very network will it's to fly pro-competitive States the

it's the network. very strong And with bit larger airline against international become a deal a Spirit. network after stronger domestic now the a look, the strong to have So network JetBlue from different would compete and little carriers we

we'll case So through and our we that differentiated, process. is the feel work on DOJ

quick Hawaiian the very mention since behind burn there's value an cash asked principally in want. -- out, really we've we first just note to tied I'll Scott, that burn that is stream. And that. on cash It's about the delivery I has And asset everything laid that you also

in the is Amazon as recovers. cash as really of negative get years comes that, recover so think next going is significant And and or the we're up cash The they over right the we now. X funding couple operating to losses. back And flow about that CapEx up Maui and material Asia not business

Awesome. Appreciate it.

question with ISI. next Duane comes from Your Evercore Pfennigwerth

the you ultimately other Can are maybe you that talk little more could that deliveries for bit where pieces about end there could cancellations. Light Or influence think just what you a up year? shift?

think I this at the it's deliveries. point, Yes, capacity, Duane, on really

some I a think just of and did have we some have really XX it refurbish when get down yesterday, to had MAX-X fleet we operating got the to comes we the back full deliveries. We retirements, guidance given we work allocation and can some for the interiors. planned good sense

and flex pieces some to got parts capacity of sort we get the moving to number. So we've can right around

going at well But had it to could as X% as was look we at it X%, very of mentioned, be to originally day. the we well below range it's which we the the thought, end today, and below X% be

hiring? And any you respect this relatedly, you changes resulting training just from made to you paused Have hiring? then with have Have paused event?

growth mean, to attrition, Ryan. profile We hiring I on relative the already with summer some, required, not We've is the to year our some low but that of this schedule. any got of a some course, sort table. into much to months came optionality more decisions we've the backfill make Duane, on given couple left

next capacity. in spring. obviously, So any maybe last we'll be if of we some few the don't talking them available about that got those months, still But the delays there's if if find delivery we or classes need anything, we've training the them need can we

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

be the clear quite there, on $XXX could what know quite any but I'm -- helpful. clarity I it's impact. million to lost revenue has versus not provide actually don't Sorry go not clear back headwind, would if you to cost that

again. Yes. Conor, this is Ryan

are we've schedule imagine, of significant on can lot of of would new are revenue flights, we incurred to wash operational a over as the time kind $XXX So you a that. like and the the working million and canceled our passenger saved remuneration majority going, fees. employees keep obviously, all is fuel as things But say, cost, I because that around clock landing the

we the challenges So March, small booking as we're back in it's some mentioned, But sort mostly we're the for of there. Shane as assuming February trend get by of revenue. assumption original fleet operating. maybe mean, been sort on I back

because at breaks of But much the streams amount pretty small February. being date that it's it's it's to delivery point capacity down as much kind to impact in that. what mostly And it pretty the that's impact further any plus So cancels booking might obviously, $XXX changes revenue. or of least million

I got you.

it actually seems That's Okay. what mentioned changes profit on And you that like long-term some guys. you just can what's you pretty impact you a And driving XX% the network significant provide helpful. for then improvement Because the means? on just details XQ. change? -- Can in

So there great. any be would help

other it's reshaping then of Yes. due significant certain very in routes. of it's have network. change some double-digit I and Conor, sun destinations high the just mean regions business lack last performed a the of Essentially, behavior. very we network, increases some to year which of our poorly in our in and have we growth Andrew. And double-digit the core

it's just 'XX an So interesting in demand a is place. and the year huge -- with surge normal now we're really obviously all

it, at is looked flying we've the it's getting the seasonality, of Northwest. week revenue demand reshaping as and and -- So California better really where just versus day It's Pacific driven.

So results. with very happy we're very, the

I'm remember, Conor, goal and going our to reduce add that, QX breakeven better. get or in to losses And is to

that So is long-term the objective.

question with Research. Global will from next Didora our And Andrew BofA come

It's days since the the in this very comments week. Media but early today National instance

what to fleet where your single point? rethink your at Just relations after along guess this? you type this does to And needs happen make

stand flight Thanks for your XXXX all. should where is I happened. Andrew. Well, have question, should look, at happened have never never It

long-standing on them But not So We're happened. I the we're accountable and going like on quality going hold raise deep we Boeing. it's with said, what have a acceptable bar Boeing. relationship to to

that airline quality out conversations. airplane candidate has factory been of tough come of CEO of that to higher having the We're it's is relationship. that the And comes every my a in this out have we to going goal reliability So past. degree with and for

the the of and relationship tough we've our it's can And continue. with. were We sensing, XXXs MAX. we that been the until got think happy XXX have conversations, happy with virtue we the relationship maintain that these I So

of we XXX are order XXX ex airplane network. well network have believe us. suited We The network We with configuration is Boeing we have, coming is, our had, Hawaiian. is the the for configuration to on course, this that

So fire the to to get we're plan, going Boeings make that but that good feet is we hold out the long-term airplanes to that sure of factory.

then question for my And second Shane.

You XXXX. have worried say year, growth were to the think domestic capacity bit of calls industry over a most course you the about last like of I certainly

outside January XXXX and in here back of of MAX getting sit we As X running? up you, the most for

normal been there's alluding across observers tiny COVID. a analysts at But be about predictions I demand to of end. the lot coming management Andrew, Andrew up a been it, it's think out bit you what new just -- and of the and cut of -- would was teams across yes,

respond I our think We were and pre-COVID back guess, all trying anybody's all year. bit it also trying were the best levels, information get to operational had made which to sense. was we to a to last companies little we

And The so into in quarter XXXX tail started carried seems like a at is, lot XXXX well of that year. demand first summer. sort seem the holding it of good and news through is demand very the this of to that huge come surge the end

across airlines that to pre-COVID, probably the a did little all different starting the it as looking are I than thought been. is but understand as might board have demand think we it different not

the still team there's and a done his ex seasonality as of in responding think lot this that have a pre-COVID. business looks great Andrew the improvement job profile I QX And grounding. that so year like And the evidenced to the by

them we we results like these want fleet. get So we capacity we're current We for maximize had felt sure we've got make the you, do work We really don't planes. to everyone. this good our If the can outlook. year. we feeling them, some about get good to with a plan obviously Thank

And we'll with to Jamie Baker next JPMorgan. move

myself, But really only of actually I'm can Ben, the matter team question for opinion speak I Silicon you well. the first that and MAX the much handling Valley illusion to implosion my been very relates very, to Bank lab. situation have not My actually I under and you. think

time at happy very I XX% But performance. recall unit will performance not to California high-tech that relation Jamie, revenue remain you with been softness. we've California this system year what opportunity network, There We to already you're a I in was testing in significant. from was take the XX tell it my California memory -- that our and average. here. outperform the

We've margin to system. from it the our continues seen profitable fact, whether and gap it's in close

the continuing So California and really we feel refinement of good our strengthening about franchise.

you ex do a flight on you contract? the questions after for guide revise fuel have CASM And Okay. will attendant accruing just then my be been question quarter, But quick assuming earlier Most this guidance. addressed. of

Jamie. Thanks,

way I would It been us inclusive foresee do of hasn't changing I are coming when don't to our we guide think our that prepared start don't the we're practice we that we I the and accruals. costs all practice. think that this will think year. in so past, of

Okay. Helpful color.

TD Our next Becker Coweb. question Helane will come from with

And who a do be sophisticated you plane? One think you the Or MAX that X think X service, do to of have observer? fly you'll So into have you back about think customers? may plane-to-plane a -- as is not discount questions customer back into you the a I encourage to here. MAX just do them kind to to think coming coming you'll have

of goal no trust Helane, done MAX as company. and put to X before, the our a our to our first. love we flying. people to it's condition Ben. everything are communicate airworthy X reenter MAX particularly right But They it with MAX service said They who employees, can our confidence has Alaska put we what Like safety that the lot There's give customers and has us. X reliability guests. they're and have attention, now and looking an crews, safely back we know we just our in our doubt the that

I through. some -- back people get an have they reach back are any, process but to service will X our concerns if first, that of the And to certification course, went the this won't out the directly just think into all are to anxiety ago after the we years put some aircraft confidence like they on over will in But questions, did or the aircraft when aircraft And to airplane. us, time, assure have unsafe. believe them any at I safe. crews, deep

quick of concern. And reliability. been and in might the been really days the we've that back we'll sort that's from expect an schedule just But have deployed I fully seeing real add X in now, just what And is completion on our they fully to our Helen, and going so safely they go to be when right our guests our that on to back time go get need on where goals, to can they're Alaska, back rates book that to assured X%, to we time.

Okay.

course, was I from There a can went times if that like that move just and it in of I've and wrong, a was? that say me. where I'm Hawaiian off case back caused to aircraft what the something question tiny it in few an that's market guys overland where the out the are something problem So the the just if happened, and wrong, indicator push bit you Is tell fine, and you happen. indicator reports read, did was of flying didn't tell

that you're that should how think maintenance mean, when checking I it it goes out. in was your about people faulty. is check on thought because you Or car it

you maintenance hat the time glad take to old engineering little I'll a making bit you're I'm the asked operations on. on want straight of on, glad back question my record and I put which I'm on me love And and I probably set because this. back putting and it

right to So here me were it the I'm unrelated. if completely some say I'll start, And explain issues leeway. going why from you give the

pressure mode. X got mode went alternate manual we to pressure ultimate the in and it's automatic line was on backups. mode got a It of an It's switching got operation. perfectly that's X had And an the with What about pressure What automatic a has mode. and controller And has issue. controller primary controller. the mode. that modes X was Talking It's

never is it maintenance was going from an over when the issue and is stuff an this abundance we've taken water, reason of was pressurization the restricted on I we caution. So The in airplane. back

can other It's working We'll This land, light have little cautious. and keep over airplanes between it be the bases. it still a maintenance to that perfectly We'll we look, well. keep water. it send went send saying, over more we legal on. over one, so water. we watch We're can It's

issue totally door be totally light unrelated plug. a got were We with the pressurization These to unit. faulty plug door the So I Boeing, just X to want to issues from totally the clear. This or issues. an was

appreciate explanation said, I do. because, I didn't and know, I that Well, as I now Okay.

to next Goldman Sachs. move we'll And Catherine with O'Brien

one for first. maybe you Shane,

grounding guys low Primax be down digits you be the CASM think out you sounds lose up of capacity us math mid-single is to between you X points just single So called ex? for were that like help about expect MAX what that to from capacity about correctly. digits. to going targeting Can you now --

I'm growth be to guessing safe like super ex color versus of a expecting X-point a the rate? about would on CASM say costs there lot it any helpful. the you remain. were fixed Is Or what headwind to there's old

system, puzzle. a you Ryan Katy. additional $XXX food Yes. the bit cost with a know previous fees, is and remuneration it's I wash. lot I managed beverage a didn't Ryan, that are mean a answer, told I -- the haven't costs, some gave sort We of fuel. million costs, the revenue really the any of we premium, really out We've of costs passenger incurred overtime reaccommodation landing certainly saved of because costs and little

didn't more happened there's net business no we headwind was of it cost So there January time any out the X, the in and cost react. to quarter, and other obviously, take because

going like then almost But get to need QX to the to future. what full haven't we looks a and if the to impact was like it's can to. one-for-one -- around certainly, do choose this give guide we we thought what to we in guided also So quarter. the year so certainty a just go We feel we

for then, then help lagging, those tech X And corporate you for quarter drags anything in while enough. the Can quarter. are Fair the trending some us you Andrew, of X fourth Okay. from you your well. and want size to unit Maui, else highlight maybe items to the into as first you how revenue

One boost driven of part the called competitors tech. out by start of corporate and your in year recently a at the

how XQ. just hear would of into the maybe to some XQ of I in drags kind love So trending

Yes. Catie. Thanks,

had down, quarter. Maui on in real quarter, the already down XX% touch We more the capacity adjusted it's I quick. to even first think, XX%, like our Just in fourth

aligned in our demand So somewhat like capacity with we've got we feel Maui.

in shared QX, One were of X to anything in of was in we the seeing MAX unfortunate severely the momentum from course, X I good the as travel, days by impacted XX challenges January. corporate

business for hard continue. why see bit comment good don't fares that us on again, see continued and side. in not have little would a to But it's the average we for to So travel, I business momentum

Deutsche with Linenberg Mike from Bank. come will question next our And

appreciate ancillary, the around premium all the color of I some Andrew, gave loyalty, you data.

perspective, sure it or maybe be in I've what goal do that does in was do it that you think aspirational can And premium I how change to and other. event out thought actually and was. and a higher I than seen that From get calling that an XX% domestic lie-flat that where your thought markets? aspirational decide the would for think you number bit also ancillary you before, not of some I'm that?

Mike. Thanks,

a of So things. couple

for and of premium how side go. We to good it. marketing both on with a to upsell also, our opportunity have product And still manage lot we we see demand and are revenue continuing the team, the

X premium added adding still role expect there. our our We're additional a and premium I we'll good class. on XXX We our strength in some So reconfiguration. be with our X -- also -- additional of class

full good is making balance and we that Of like top-tier don't feel squeeze our received out sure there. cabin, challenge always completely course, the leads the we a from we've front

environment look continue our especially see premium we strong. remain what to our and cabins, our seats we But densification and continue to overall, at to network and and look given cabins we if and continue this of right at to we are the look at continue the

again, Mike, simply your and without tailwinds margin as headwinds Delta, just question, premium because yet your our more it a because little was, as margin shine of close Again, of international I X.X% our want with to question. on fuel a and the we high United had light a was offering. And pretax the of to

competes network model with the business carriers. Our

are domestically competitors. differentiated We our with

stood are premium, program, miles lounges. loyalty with XXX% airplanes the up way in the Our with our business fully again, configured with

we'll when more reason the acquisition. even So success we domestic international. shift there's a with and have it Hawaiian see And success is again, between why

that. to on bit shine light just a of a So wanted I more

sort be you've you just refer And you're some the least what starting any be making about of great. demand out call your of should I'm where that of part comment the any end, realities. a which maybe just that sort and notable meaningful sort of would it you Great. capacity, maybe low acknowledge in markets seeing as industry competitive follow-up there next to from this Any question, Andrew, that at markets, of you want seen to benefit? to your on are curious, post-COVID to what color to shift And really these leads

Yes.

is less at also I add look think capacity our when we -- the at average Mike, and only I and markets, trend look it, color that's -- and getting we I'd less. there, in a probably just we weighted see

the We East some and all who reduce to work more industry sure their their carriers play as looks have seen the their on revenues margins are Coast costs the West sure into make capacity. move Again, strong to Coast, and healthy. make that and

is right see the the we construct X industry for positive. now that's So

And our with next Citigroup. comes Stephen Trent question from

answered. Most of been my questions have

or you really quick rating for in X or or Moody's. up you does moves negotiate guys other extent for and guys card meaningful as go moves fuel what and one. entities X difference When counterparties your that with Just X have This similar make X X very co-branded might down, be think credit To about a you, hedge good Shane. you do

hats the It's great of I from agency getting question as just [indiscernible] heaven. wear many not is Stephen, Treasurer a question. one ratings and

Moody's investment-grade negotiate is source external capital core an cetera, sheet as we into look terrific that very been say. the It hit markets, as long. leases, we investment-grade story that commentary, rating just go got go as We've fuel that gave it's us from for strong. when so whether for we helps excited Really really story good rating the certainly contracts, affirmation you you. thank a et our cost has operation. at execution, So his Balance us Ben in through And

it seeing acquisition parties from gives also the external confidence is as and the Hawaiian recognition us moving with strategically sound. Alaska And that forward, really story

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

is guess Andrew. I question for So first my

to more be Going come back to that's to the script and going course, here. my the question comment, of

is bookings I that, then at guess, and GDSs many Alaska merchandising, to has much this So to related today? optimizing cut better over how upsells, on revenue third-party And how point. first, NDC NDC,

rate the might alaskaair.com. third-party of really And on look upselling take and today at percent upsell to I that just what I'm on is guess get is GDSs like what trying tickets Alaska

Dan. Thanks,

this unlock big 'XX a something for Just we we're -- to in NDC. APIs like that are us. out year building XX fully is short, There's

a number and have up on like We hopper. folks of modules already running

small good of and for going it, going we're but the So us. be it's really be is now, percentages to to XX% it's right us, actually of for year benefits seeing NDC the

We're saying? piping you're That's what the building this year.

that the Okay. transition help to size Has Alaska little I cloud? could also bit level on shift? you another a Understood. if that of the IT. something And that's on savings And question at, cost And you're us elaborate guess from timing? looking begun

Dan. Thanks,

to for transitioning through starting a X, transition. ] platforms been Virgin [ have X We while ago the modern years

technology stack to folks IT as and partners Northwest here well cloud. our fans sort We but into more core e-commerce are the We're Microsoft, of of up starting as Pacific of move our other our big of in more them. we also the commercial use

cost a And cost I years. I think initially increase many, to ultimately years think come. need is then CapEx the big many it's thing efficiency the it's you a going to well in and increase. for scale over to many, It's bode

of of that. are to partner intelligence, focus lucky We're is thing world up We've with are from working on this really Microsoft AI. The one go the a of up who going on tech street. artificial sort team we a capitals in stood stuff great to the be benefit of the full to other

with gone for today is I time you. the would over anymore X not So on because or minutes have

Investor company the talk of to AI you guys of benefits appreciate we'll want going it all question an we're front and the year, up. then together in wrap year. when have to technology get I we we and to and this about Day But this later get everybody's

for on our much. Thanks us Thank joining you so call.

MAX you We to much, talk updated with on you our the progress and and thank will next time. so you X keep

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