Q2 2023 Alaska Air Group Inc Earnings Call

July 25, 2023

Good morning, ladies and gentlemen, and welcome to the Alaska Air Group 2023 second quarter earnings call.

At this time, all participants have been placed on mute to prevent background noise.

Today's call is being recorded and will be accessible for future playback at Alaska Air Dot Com.

Our speakers remarks, we will conduct a question and answer session for analysts.

I would like to now turn the call over to Alaska Air Group's Vice President of Finance planning and Investor Relations Brion St. John .

Thank you operator and good morning, Thank you for joining us for our second quarter 2023 earnings call. This morning, we issued our earnings release, which is available at Investor Day, Alaska Air Dot Com.

Today's call, you'll hear updates from Ben Andrew and Shane several others of our management team are also on the line to answer your questions. During the Q&A portion of the call on.

This morning Air Group reported second quarter, GAAP net income of $240 million, excluding special items and mark to market fuel hedge adjustments Air group reported adjusted net income of $387 million.

As a reminder, our comments today will include forward looking statements about future performance, which may differ materially from our actual results information on risk factors that could affect our business can be found within our SEC filings. We will also refer to certain non-GAAP financial measures such as adjusted earnings and unit costs excluding.

Fuel and as usual we have provided a reconciliation between the most directly comparable GAAP and non-GAAP measures in today's earnings release over to you Ben.

Thanks, Ryan and good morning, everyone. Our solid second quarter results reflect the strength of the leisure demand environment to date as well as our team's unwavering commitment to operational excellence on reliability I am thankful for their focus which has helped us capitalize on this busy travel season to produce these great results.

Our 18, 3% pre tax margin will likely lead the industry coming in above 2019 margins, despite higher fuel and structurally higher costs, our earnings per share of $3 with 83 cents higher than 2019 levels, bringing us above 2019 on a year to date basis.

And beating consensus by 11%.

The strength of demand this quarter was evident on June 30, when we flew the most passengers in a single day and air group's history.

And at a 99, 5% completion rate we ran one of the best operations in the country as we continued to prioritize completing flights and serving our guests with care.

This was one seven points better than 2022, and 0.3 points better than 2019.

Heading into the busy summer period, we have planned and prepared our airline for peak flying and our teams are executing.

For the fourth of July weekend, we led the industry in completion rate at 99, 8% and on time performance at 85, 1%, while flying a 90% load factor.

As we approach the rest of the year and beyond it is clear our environment is evolving as domestic leisure fares have recently started to come down from their peaks delivering on our targets will not be without challenges, but we remain focused on restoring the tenants of our resilient business model driving improvements in efficiency and productivity.

<unk> and controlling unit costs to continue to deliver strong financial performance, we remain confident in hitting our financial targets this year, including our adjusted pretax margin of 9% to 12% and earnings per share of $5 50 to $7 50.

Now turning to an update on our business priorities and progress.

We have chosen to prioritize reliability and are running a strong operation like we have historically done.

Not only do our guests deserve this level of commitment and excellence, but it is imperative to restoring stability improving predictability capturing revenue and building a foundation to drive further improvement to the business.

Our investments in training aircrafts and staffing have enabled us to meet a higher level of flying.

Higher completion rate performance has surpassed our initial expectations driving approximately half of the $3 increase of capacity.

Our full year guide.

Productivity is also improving as we adjust to new work behaviors amidst a more stable operating environment and work to close the gap to 2019 levels.

Boeing has also continued to be a great partner delivering according to expectations. Despite continued disruptions within their supply chain.

Earlier this month, we welcome our 53rd Max enter the fleet the up gauging benefit of these aircraft are significant while the purchase were down one 3% year over year this quarter higher gauge coupled with mainline utilization exceeded 2019 levels by 4% at 11.

Five hours per day, and drove capacity up nine 9% year over year as we continue to leverage our fixed cost assets as much as possible as.

As we transition to a fully Boeing fleet at Alaska. The sufficient growth has helped us derisked our growth plan within a constrained industry operating environment.

Given our expectation of continued strong operational execution adequate staffing and efficient growth. We have raised our full year capacity guide to 11% to 13% versus 2022 as.

As we work to restore all areas of our network that pre pandemic levels. We are confident in our resources to meet this higher level of flying and balance our growth aspirations with our consistent commitment to excellence.

Our business is configured to compete and we've doubled down on these core advantages to reinforce our foundation for profitable growth.

We are returning to our historical strength as a single fleet operator and have rebuilt our foundation of operational excellence, we continue to push incrementally more on productivity and costs and still expect to be one of the only in the industry to drive unit costs lower year over year, even when factoring.

In our industry, leading performance based pay which several of our peers exclude.

We are executing on our commercial roadmap and making progress on revenue initiatives, our balance sheet remains unimpaired coming out of the crisis with leverage well within our long term target range and we have line of sight to full year earnings per share on par with 2019, despite structurally higher labor costs and at least.

30% higher fuel costs.

For decades Air Group has adapted and we will continue to do so to produce consistent profitable growth as you well know this industry is challenging.

We remain focused on the drivers of our long term success, restoring and strengthening our competitive advantages operational excellence cost discipline and high productivity and a consistent and measured way, we will continue to position us well now and far into the future and with that I'll turn it over to Ann.

Drew.

Thanks, Ben and good morning, everyone.

My comments today will focus on second quarter results as well as our revenue outlook for the rest of the year.

<unk> produced very solid second quarter results.

What high revenues of $2 $8 billion were up six 8%.

This is the second quarter of 2022.

And above the high end of our guide driven by strong leisure and close in demand.

Closed out the quarter on June 30, we recorded our second best revenue day history, only give you outperformed by the Sunday of Thanksgiving last year.

<unk> for the quarter was up nine 9% versus the second quarter of 2022, and our planes continue to fly full with load factors increasing from 85, 5% in April to 86, 4% and nine and 89, 1% in June .

Second highest monthly load factor in our history.

Turning to unit revenues changes a noisy on a year over year basis down two 9% given both volatile pricing and capacity in 2022.

However, when compared to our more stable 2019, we saw improvement in unit revenues up 23% for the quarter with June up 25%.

Still expect July to produce the highest total revenue of any months in 2023, which is consistent with pre COVID-19 trends.

For the second straight year June has supplanted July is the peak yield month for us.

Adding product strength and premium cabin revenues continue to support our revenue momentum.

Launched the style of exit row seats in mid March and I'm pleased to report sales have been strong right out of the gate.

Including exit rows first and premium class revenues were both up approximately 12% year over year.

Outpacing nine Kevin by eight points.

In the second quarter, 31% of total revenues came from premium class products up from 2022 and up seven points from 2019.

On the loyalty side performance remained strong.

With bank cash remuneration.

Versus the second quarter of 2022.

Outpaced system revenue growth rate by two weeks.

As always we continue to prioritize delivering value to our guests through our loyalty program and we are proud to have been named the number one best airline rewards program. The 2023 2024 from U S news earlier today.

Lastly, we announced selling nine of our partners on Alaska.

And anticipate bringing on a partner this full.

Phase one is to sell and service main cabin tickets, but later this year, we will add the ability to sell premium cabins on your website, helping us to achieve our vision of providing guests seamless ethane capability on our portfolio of global partners with access to any major region of the world.

Now I'll turn to our outlook and forward looking guidance.

Demand remains very strong even as we come off the peak of historically high phase at trends, we knew would happen at some point notwithstanding this evolution yield is still meaningfully above 2019 levels on industry capacity that has now surpassed 2019 levels by an estimated 6% for the second half.

A 2023.

For the third quarter, we expect revenues to be flat to up 3% on capacity that is up 10% to 13% versus 2022.

This implies unit revenues down approximately 9% at the midpoint.

Our revenue guide is based on the environment, we see today with 67% of third quarter revenues on the books.

When comparing our Q3 revenue guide throughout Q2 results. This implies a six point sequential deceleration in unit revenue performance.

Of that six points roughly half is directly related to the pricing environment. While the other half is a combination of domestic industry capacity growth.

<unk> to be up 10% year over year.

Stage length growth and holiday timing shifts.

As a primarily domestic leisure carrier this summer presents a unique situation with the unprecedented surge in international demand.

Similar to the domestic surge last year.

We believe pent up international demand has had the effect of a larger pool from would be domestic travelers that has historically been the case.

Long haul international seats off the West coast are up 31% year over year. This June .

Loyalty members alone in June as evidenced by our pool and redemption activity with filling the equivalent of 18 780 Sevens on a daily basis across our international partner network.

Over 50% year over year, while our lounge has experienced a 68% increase in visits from guests traveling internationally.

While we believe this will ultimately normalize there has a disproportionate impact on our realized domestic fares in the third quarter, which we estimate could impact our Q3 revenue performance by approximately a half to 1% which is reflected in our guide.

Close in demand as another important dynamic to address.

Having improved recently the percentage of passengers booked and flown within months during Q2, <unk> post 2022 and 2019 levels.

This is particularly significant when compared to 2019, given our stage length has increased 7% with passenger is skewed to more advanced booking patents and business volumes remain down 25%.

Although currently not in our forecast if this trend persists. This represents an additional 100 basis points of revenue upside to our current third quarter guide.

Lastly, as it pertains to manage business travel, we have not seen any meaningful change remaining around 75% recovered by volume with both California and the technology sector.

Accounting for the largest gap to full recovery. However, we have seen more return to office efforts at major tech companies and incrementally more optimistic that we might finally bite through the 75% recovered ceiling.

Although we have not by any of this into our guidance. We will continue to watch this closely as we move into the fall.

For the full year, our revenue guide remains unchanged at up to 10% versus 2022, but on higher capacity growth of 11% to 13%, while our capacity is taking a step up in the third quarter and full year in part due to strong operational performance. It is primarily driven.

<unk> gauge and stage growth as we benefit from the replacement of the Airbus fleet with larger more efficient Max aircraft. As a reminder, by September 30, we will have replaced all 72 Airbus aircraft at an average guidance of 150 seats with brand New Max Nines that have 28 more.

<unk>.

The benefits of up gauging are clear in our June results as gauge has grown 7% year over year.

Load factor was only down four tenths of a point year over year from what was the highest load factor ever flown in our history at a system level, we have restored ASM in the second half of the year to approximately 103% of 2019, but there are still areas within our network, including Portland in California.

Yes.

Fully restored.

The West Coast is still the least recover geography across the industry and we are focused on restoring our pre pandemic network, especially where we have opportunities to provide feed for international partners.

In a period of historically high demand and yields the right economic decision has been to fly and maximize <unk> within our fleet and crew capabilities that said, if we identify pockets of relative softening, we will adjust as needed to deploy our capacity thoughtfully.

While the industry continues to normalize and work towards a new more predictable environment, we have confidence in a commercial plan with business travel is still below historical levels and the west coast lease recovered. We believe there is more upside to come as we head towards 2024.

Focused on pursuing and implementing our longer term strategic drivers of profitable growth specifically.

Shipment, one world and the West Coast International Alliance.

Premium products and that loyalty program.

<unk> proposition is significant our.

Initiatives tangible and our product well suited to travel needs post pandemic positioning us well to continue to serve guests and build on our strong results going forward.

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

Thanks, Andrew and good morning, everyone as both Ben and Andrew shared we saw continued strong demand throughout the second quarter carrying a record number of passengers bolt to end the period and into the fourth of July holiday. Our teams have done an excellent job. This summer delivery in a safe reliable operation in the midst of full flights and.

Very busy airports.

Now that we've restored operational excellence, which we viewed as our first priority. We now look forward to added focus on driving consistent improvement to our unit cost profile.

Ultimately operational excellence leads to cost efficient operations and coupled together they will allow us to continue to deliver strong relative financial results within the industry.

Turning to results, our balance sheet and liquidity positions remain healthy and a core strength of ours.

Debt to cap finished the quarter at 48%, while our net debt to EBITDA remains below one turn and better than where it stood in second quarter 2019 at 0.9 times.

Debt payments were approximately $50 million for the quarter and are expected to be $100 million in the third quarter with the strong demand backdrop and startups summer travel we generated approximately $600 million in cash flow from operations during the quarter.

Total liquidity inclusive of on hand, cash and Undrawn lines of credit remains very healthy and within our target liquidity range at $2 8 billion.

Also our share repurchases for the year have reached approximately $60 million year to date and our trailing 12 month return on invested capital reached nearly 12% this quarter.

Turning to costs and capacity results as I noted our operation has been running extremely well for the second quarter capacity was up nine 9% versus Q2 2022 above the high end of our guided range, which was primarily driven by higher completion rate than we had originally planned or.

Our completion rate has been 99, 7% over the last few months and given this we've assumed higher completion for the balance of the year, resulting in slightly higher capacity forecasts for the third quarter, which we expect to be up 10% to 13% and for the full year, which we expect to now be up 11% to 13% versus 2022.

Moving to costs, our second quarter CASM ex was up two 4% year over year within our guided range, albeit on higher incremental capacity, while we did not miss our range. We of course expect to be at midpoint or better when we outperform on capacity.

The drivers away from midpoint or better are predominantly not structural they are relatively small misses against what we know were aggressive cost and productivity targets to.

To be clear our cost profile continues to improve both sequentially and year on year.

And in comparison to the rest of the industry. We believe we have the best cost trends, especially given we are growing at a somewhat slower rate than many of our primary competitors are.

Areas, where we saw elevated costs relative to expectations remain related to running a solid operation, including staffing levels modestly higher than plan and elevated overtime and premium pay.

But then in our leadership team have been cleared with the company the operational excellence and consistency is the first priority and having now established that we will incrementally focused on working these cost areas down appropriately.

We also have slightly higher than forecasted crew costs associated with our transition out of the Airbus fleet, we assumed higher levels of attrition from the fleet and are as expected and create significant training cost related to transitioning Airbus pilots to Boeing.

Turning to unit cost guidance, we expect third quarter CASM ex to be flat to down 2% for the full year, we still expect to see unit costs down 1% to 3% year over year.

As a reminder, our CASM ex guide includes profit sharing and we anticipate that we may be the only airline that will achieve unit cost reductions year over year.

We will do this on less incremental capacity versus our peers.

Finally fuel trended positively following below our previously guided range and finishing at $2 76 for the second quarter based on current trends, we expect fuel price per gallon to be $2 70 to $2 80 for the third quarter.

While this offers a benefit compared to last year fuel prices are still up approximately 30% above 2019.

To wrap up it feels like we are finally getting back to normalized operations. After over three years of unprecedented challenges, we have work to do and opportunity to improve further but we are delivering results within our guided ranges as Ben mentioned, we are still tracking to deliver our 9% to 12% adjusted pre tax.

Margin this year with visibility towards an EPS restored to 2019 levels at the midpoint.

Higher fuel and structurally higher labor costs.

I look forward I think we have a very solid set up we've got arguably the best absolute cost trends with further opportunity to drive unit cost down next year, we believe the west coast. The lease recovered region in the U S. But also believe it will continue to recover including business travel, which will provide future revenue tailwind we believe.

Once pent up international demand is run through there will be a normalization in the international versus domestic demand mix further providing pricing support in our network.

And we have further opportunity to drive our commercial initiatives.

So even as we expect to compete for the industry's best margin again in Q3 and for the full year 2023. We know we also have the opportunity to further improve our margin performance in the years ahead.

And with that let's go to your questions.

At this time I would like to invite analysts who would like to ask a question Depression Star then the number one on your telephone keypad now.

We'll pause for a moment to compile the Q&A roster.

And our first question comes from Jamie Baker from Jpmorgan. Please go ahead Jamie.

Hey, good morning, everybody. So the RASM guide in the second half is clearly disappointing you mentioned Seattle South.

West Coast.

The least recovered.

If we parse your network into four buckets Hawaii.

Seattle, North Seattle, South and then Seattle East.

Could you rank order them in terms of year on year RASM change.

Looking forward.

Not the second quarter related to the guide.

Hey, Jamie Andrew.

It might be a little complicated off the top I think.

Excuse me what I would say is there's a lot going on in our network, but.

Essentially we continue to see California, improving.

Both our margins versus 2022 and 2019.

But it's the leach recovered, but it is getting stronger as far as the Pacific northwest.

Where most of our growth is gone and again, we've seen really good unit revenue strength, there, but I would say at the end of the day as.

As we've said in our prepared remarks overall, we are coming off the high across the network across the system.

From historically peak unit revenues.

That said our planes across the board is still extremely full and.

And again as we talked about a lot of the things that we've got there.

In our guide Havent been fully baked in and.

Fortunately if you look at the recent results from the other big guys essentially they had a deceleration from Q2 to Q3 of four to five points.

Which they're anywhere up to half international which is extremely strong and we were only down decelerating six points. So on a relative basis, we feel really good about our performance.

And second you spoke to 2024 X fuel CASM.

<unk> declining.

What level of capacity growth is required to get you into.

Yes.

Pushed down ex fuel CASM measurably next year.

Hey, Jamie it's Shane Thanks, Hey, good morning by the way.

I think our we'd want to be in our sort of long term target range of 4% to 8% to have line of sight to that it's really early obviously in terms of thinking about capacity next year, but.

It is completely our intent to continue to drive it down and to see.

Our year over year reduction in 2024.

Okay understood. Thank you.

Thank you thanks, Jamie.

And our next question comes from Andrew <unk> from Bank of America Global Research. Please go ahead Andrew.

Hi, good morning, everyone.

So Ben Andrew just maybe ask you about what seems to be a little bit of a change and will change.

Change in strategy here.

Exchanging trading yield for more capacity I know you explained it is a little bit more completion factor, but why is now the right time to do that given the domestic international share shift and would you consider cutting capacity in the back half of the year fares remain soft.

Thanks, Andrew Yeah couple of things I, just want to be clear on the capacity side and a three point increase from the guidance. None of this is new flying it's been in all types for some time.

50% of that or is it already.

Timing in the first half of the year and we were a little bit style in the guide.

We've exceeded our completion rate and we've been very conservative so half of that increase capacity is technically for the rest of the year and again. It's all buried in completion rate, which has been extremely strong and also our Boeing and Airbus deliveries.

We've firmed those up and we have excuse me.

Retirement of Airbus and Boeing deliveries and we firmed those up and we have feel much better about.

The rest of the year. So that's really what's going on in the capacity side. The other thing is 80% of our capacity growth in the back half of the year. It's all staging gauge, it's very highly efficient and with these high load factors and strong demand we feel good about our position yes, Andrew it's been I think another factor is when you compare where our <unk>.

Passengers compared to 2019, we're just getting back to 2018 levels of capacity.

And then just to put another point.

Point on what Andrew just said, our departures are actually down one 3%.

So we feel like we're in the right place for capacity.

Got it.

And then just second question just if I were to take the mid points of your capacity and revenue outlooks for <unk> in the full year three Q RASM seems to be the trough this year with <unk> a couple of points better.

What is driving your thought process on this is it that domestic international share shift or anything else you are seeing in your booking curve. Thanks.

Yeah.

Thanks for that as we shared in the prepared remark there is.

The deceleration about half of that is indeed to the coal pricing.

But there's also <unk>.

Increasing capacity and our stage length, and a little bit of a shift.

In holiday, but if you look to the fourth quarter, we are showing it accelerate just a little bit if you just do the math and again.

Have a lower base in the fourth quarter last year, and we've tried to be conservative and while we're not giving any guidance today on the fourth quarter.

A couple of things like business travel and the abating of this international versus domestic.

Demand that may actually come to fruition in the fourth quarter.

Got it thank you.

Thanks, Andrew.

And our next question comes from Helane Becker from TD Cowen. Please go ahead Helane.

Excuse me, thanks, operator, hi, everybody.

Thank you.

Then I thought you were really optimistic and positive on both the quarter and the outlook and yet your stock is down 12%. So obviously people don't think it's that positive.

Yeah.

And I know that sounds kind of I'm not sure, but my question really has to do with capacity.

The pushback is too much capacity growth in the domestic market, that's not really growing as rapidly with pressure on fares and b to Andrew's last point.

For a shift away from international to more domestic later this year.

I'm not sure I would agree with that just because of the pent up demand that exists for <unk>.

<unk> continues to exist for Europe , and Asia. So just kind of wondering how you're thinking about that.

A disconnect between what youre seeing in saying in the stock price.

Look it's a great question I just wanted to put.

Things are little in perspective, we had.

Fantastic Q2 quarter with will likely be industry, leading pretax margins were still going to have a strong Q3, we're guiding to reiterate our 9% to 12% pre tax margin for the fourth quarter, but I think demand. When you look at domestic demand domestic demand is still strong and as you guys have.

I've done your calls with other airlines Youre seeing this massive surge in international travel similar to what we saw domestically about a year ago. So our view is that's a great thing for the industry to have international come back and we're putting a lot of our loyalty members on our partner's metal, which is a good thing, but we do see strengths, though and the.

<unk>.

Market and we do see this normalizing towards at the end of the year into 2024 when it comes to capacity as you know airlines just can't switch put a switch on and.

In terms of turning on capacity turning turning it off you kind of have to have a plant you have to execute the question is the issue is we are executing extremely well from a completion rate perspective, and again I am optimistic about our business. It is solid across every every lever and and we're dealing with is the surge of international demand right now.

Which we think will.

Well normalized towards the end of the year. So that's how I'm looking at it Helen.

Okay. That's very helpful. Thank you.

Just kind of a follow up question on California, I have noticed that there have been some capacity shifts as people have shifted.

Other airlines have shifted some capacity out of California, but you guys have shifted into some markets.

Can you just talk about the thought process there.

Thanks, Helane I don't know, if youre, referring to San Francisco, Burbank, or anything more general than that but essentially we are always looking at our network.

We are we leaning into Latin honest, Mexico Costa Rica.

And that good stuff and we continue to round out and build out our California network, which as I shared earlier is still.

25% down from 2019 levels, but there is no major shifts or changes there and our recent market entry as a top 20 market out of San Francisco and that was an area that we felt we needed to be in.

Got it okay. Thank you.

Thanks Helane.

And our next question comes from Conor Cunningham from Melius Research. Please go ahead Connor.

Hi, Bryan Thank you.

On the full year capacity and the reiteration of the CASM ex guide I'm, just trying to understand why there isn't more leverage is there some sort of incremental cost level near term that you're going to see oil maybe a productivity offset.

In the fourth quarter it seems within the Guy Theres, a pretty big step stepped down.

Accident year. So just curious on the moving parts are there. Thank you.

Yes, Hi, Connor Shane good morning, No Theres no real callout in terms of the cost category that that is off trend or op expectation in terms of the go forward I think I mentioned some of it in the script.

Number one we tend to and I think you guys know this to be pretty aggressive with ourselves on costs and productivity.

<unk>.

We are getting closer to our 2019 productivity, it's our goal to ultimately get as close as we can do it but we're a little bit short of what we had wanted to be at the summer.

The good news is those are all things, we can control and that we will continue to work on as we get through the end of the year. We've had some other things just move around the Airbus retirement, moving up several months pushed.

Significantly more of the transition training cost into this year and into Q2 and also into Q3.

And like we're carrying a significant amount of surplus.

Surplus pilots on the Airbus, We we were really.

Deliberate about trying to retain folks onto that aircrafts. So we werent doing a lot of training of new people into the Airbus and I think that program was successful.

And we've got a.

A lot of pilots, who we just need to get through the school house and over to the Boeing So.

I'm feeling good about where we sit going forward I think we need to do a little bit better job on executing aggressive cost targets, but to be clear sequentially. We're getting better I think we expect to also get better relative to Q3 and Q4.

Year over year were better.

And both of those periods I think we're set up well for next year, we will lap or our step up in maintenance costs, which we talked about earlier in this year. The 900 <unk> engine deal will have all of our Airbus transition costs materially in this year and not with US next year.

And we've got a stable operation and we know that long term high completion rate high on time performance operation, we can leverage into a better cost performance. So.

Yes, you guys I know, we will continue to pressure us on this we're going to pressure ourselves and I feel good about how we're going to perform over the next several quarters on costs.

Okay, maybe as a follow up pressure push.

On the training cost headwind can you provide some context to how much that is.

I mean, I think that everyone understands that you guys got a pretty good cost plan going into next year I'm just trying to make sure. We have the magnitude of the moving parts right. As we think about next year is it.

A noticeable amount within your full year guide I guess 23, specifically thank you.

Yeah, I mean, just for the quarter in Q2.

It was an extra $3 million relative to what we would have anticipated we're carrying as many as 75 extra captains on the aircraft right now relative to what we would normally need to fly 10 aircrafts. So it's not insignificant we've had to train.

And we will get that number to you kind of outlined I just don't have in my head multiple hundreds three or 400 pilots. This year are more 500 pilots this year from the Airbus to the Boeing those are not training events that we would normally have in the system.

And those are those are treated events that not only provide cost drag, but but growth drag as well. So it should be a very significant change next year once we get through this.

Okay perfect. Thank you.

Thank you.

And our next question comes from Brandon <unk> from Barclays. Please go ahead Brandon.

Hey, good morning, and thanks for taking the question.

Ben I just wanted to ask about volatility because obviously the stock is reacting today and I know this is day to day, but you guys did look back on the first quarter and say Hey look off peak, we wanted to manage to something different and going forward, we will but it looks like you are adding capacity in the back half and just not getting revenue for it. So is this just the case maybe you over earned.

<unk> <unk> and you are kind of normalizing your earnings base in the back half of the year or what more can you talk to us.

Yeah, Hey, Brandon.

Maybe I'll start I think it's fair to say like Q2.

Was very strong I think every airline.

Has there been putting out our guidance I think we did as well.

We're excited that we were I think going to be at the top of the industry in terms of margin. So it is a really high base that we're comparing ourselves now going forward.

I think.

One thing we haven't mentioned yet, but we should is fares, while they're off of there.

Unsustainable peaks of last year. They are still very high relative to 2019 and were still filling planes up at those fair level. So I think.

I think yes, Q2 could prove to be a high watermark for the industry, but I don't I think that our business is healthy and strong and we have a good setup as we move forward both on the cost side and a lot of opportunity on the revenue front as we continue to see this region recover in business travel recover with it.

I appreciate that chain and then Andrew you did talk to.

Half of the the impacts from the sequential deterioration RASM being pricing, but I think you also said like another third from industry capacity could you just expand upon that a little bit.

Yes, Brendan basically characterized this six points half of it being just call.

Pricing coming down off the peaks and then three elements remaining which were essentially.

Our own and industry capacity growth.

Our stage length growth, which is up quite significantly.

And then also there was a more of a minor shift.

In the fourth of July , but those made up the balance of the difference Brandon. This is John I'll, just unpack that for you because I think I know what you might be asking we have a normal capacity growth to RASM reduction model that we sort of assume it's pretty consistent over the years, what we're saying is the pricing reductions that slightly.

Higher than that model would suggest and that's what Andrew is attributing to coming off the peak pricing impact.

Okay. That's actually helpful. Thank you Bob.

Thank you.

And our next question comes from Savi <unk> from Raymond James. Please go ahead Savi.

Hey, good morning, everyone and thanks.

A little bit again going back to the cost side I was a little curious on what youre seeing from Boeing and your confidence in being able to kind of exiting this year and going into next year being able to kind of deliver on that capacity and if you look at if you could Shane just at a high level again, what are the big chunks.

On the headwinds and tailwind next year on the cost side.

Yeah, Thanks, Savi Boeing's been doing a phenomenal job for us this year.

In fact, if we were to blame him for anything it would be that they have given us all their planes on time and so we've added capacity to the schedule a little bit.

Which people are questioning today, but but they've really been good.

Delivering on schedule I don't think we've had one aircraft come.

After it was scheduled to be in service. So they've continued to do a really good job we have a bunch of.

Liveries in December December is always a month, where things can slide around a week or two so there might be one or two units and up in January of next year, but we're not concerned about that at all I think they've recovered very well from both the quality escape.

Spirit.

<unk>.

Period that they went through recently so we're feeling good about the fleet plan going into next year.

I think we're anxious for them to get the dash or the Max 10 certified whenever that happens we don't know when it will but I can't wait to fly that airplane and take a lot of those.

But Boeing has been.

Just really really good this year in terms of getting back on plan for deliveries.

Just on the major buckets there.

The next day.

I liked the first question I forgot about the second one yes.

Look I think on the sort of tailwind side I've mentioned a couple of these we have $100 million of cost step up on the 900 ER engine deal this year that will be fully lapped.

Vast majority of contract costs.

Currently lapping we do have.

Deals that we need to get done with our flight attendants, and our mechanics, which we're anxious to do and we're actively obviously working on those I would expect and hope that some of those costs are captured this year, but there will be some additional.

Additional lapping to do those deals next year I'm not going to talk about sort of amounts.

And then the Airbus transition costs will be fully behind us, which will be another really good positive tailwind.

And then like I said, it's with.

Our job now is to take and translate our really strong operation.

<unk> is performing well and making sure that we're doing that at the most efficient cost structure possible. So those are lots of little.

Opportunities throughout the company, but we're going to be really focused on leaning out.

The cost structure next year because of our operational excellence.

And can I clarify just quickly on the there's kind of a fair softness when.

When did you start to see that I think the other kind of question that investors are going to have is obviously is this the start of further declines is there something a new level that you've seen stabilized just a little bit more on on that.

When you saw that fair and then what Youre seeing today.

Yeah, Hi, Savi as you know our quarter's buildup.

Orders beforehand, but I think.

As we were coming into the summer a little while ago, we started to see.

The third quarter.

Couple of months ago, just starting to see that there might have been peaked in.

<unk> coming down a little bit off there again I don't know if I'd say use the term softness I do think it's that finding that fine balance between demand and supply.

But again as you know is the street's been reporting as well over the last six to eight weeks, there's been coming off of the high and we saw that a couple of months ago and said if you remember the demand is still very strong on the domestic side, our load factors, where some of the highest we've seen.

And it's really due to the surge in international.

I think if you really look at it international is going to be strong from maybe June through September October , but as kids get back to school.

And things start to normalize.

I do think this thing is going to find its equilibrium so.

Yes.

I just wanted to get just a little more context on how we're seeing it.

That's helpful. Thank you.

Thanks Savi.

And our next question comes from Catherine O'brien from Goldman Sachs. Please go ahead Catherine.

Hey, everyone. Thanks, so much for the time.

I know you spoke a little bit about this last quarter and you touched on the prepared remark Jane but.

Unit costs coming in at the midpoint on higher than planned capacity is not.

Traditional Alaska performance I guess.

You expect to be able to squeeze some of those labor costs tied to showing up operations.

Exit the year or is that really more of a 2020 for opportunity.

Yes, Thanks Katy.

It it's probably more of a 2024, you sort of need.

The volumes to be there.

And even though.

Q4 capacity is growing year over year, it's still down sequentially from Q2, and Q3 not that we wont be focused on it but the other thing we have to get through this.

Paul Airbus transition and all of the pilot training.

One other potential tailwind for US next year I didn't speak too much about but we will be bringing on a preferential bidding system with our pilots sort.

Sort of early in the year, maybe April it'll take us a few months to get our feet under ourselves there, but that should also be.

Marginally helpful on the just the cost efficiency and productivity front.

Okay. That's great. Thanks, and then Andrew you gave some stats on loyalty members flying on partners uptick in international travelers going to your clubs.

How does all of that.

How does Alaska benefit from that does that hit your P&L.

How do we think about that.

Obviously, you guys are a primarily domestic carrier.

But just wondering if theres any piece of the business the benefits of its international shaft.

Yes, Thanks, Katie actually it's extremely exciting for us.

It shows that we have our members that our global loyalty program really works there using the benefits and more importantly, as we move more and more partners to sell directly on Alaska Air Dot Com and just really opens up the utility that we can provide for our members that you really can fly globally with Alaska Airlines, So it's actually proving.

Out the thesis and I am very excited as we move through the rest of the year.

Hi, everyone.

Thanks Katie.

And our next question comes from Michael Lindenberg from Deutsche Bank. Please go ahead Mike.

Oh, Yeah, Hey, good morning, everyone.

I wanted to get back to your point on the.

Flight attendants mechanics deals yet to be done.

Have you considered accruing for those agreements and the reason I ask is you know there was a time where actually all the airlines do crew for labor deals and then I think we got to the point, where it was just southwest.

And now we're seeing United accrue for their pilot deals what's your thinking about that the philosophy does that makes sense then.

Why not start it now and then I have one more.

Yeah. Thanks, Mike we haven't considered accruing we're not.

We're cognizant that some others have done that I think.

The levels.

Those contracts represented.

Kind of makes sense, but it's never since I've been here had been something that we've done and I think it really just goes to the uncertainty around timing and.

Wed like to keep those discussions between ourselves and the union leaders.

The property or not.

Really be talking about what the economic impacts could be which.

Other companies have been a little bit more willing to talk about that in the open we think it's a better.

Approach to keep all of that stuff between the parties and then once we're done.

Let folks know what we did.

Okay.

That makes sense and then just my second question to Andrew and I realize this is more of a later this year early next year, but you do have some pretty meaningful route changes seasonal changes and I know this goes back to.

A few quarters ago, maybe a quarter or two ago, where you sort of came out and said we have to run a better airline or from a from a margin perspective.

The winter.

What is historically, our seasonally weakest timeframe as I think of that later this year early next year. It does seem like a good portion of your ASM will.

It will be new routes and it feels like it's been some time, maybe since probably the Virgin acquisition, where you will have that much of your capacity in new markets.

I don't know correct me, if I'm wrong any anything that you could.

Shout out since it's still early on things that you are sort of planning to do and maybe what address my question about how much of it is new flying versus historical.

I feel like there's a few questions in there so yes, Mike I'm glad I'm glad you asked because it's actually a really important question and point.

All scheduled to start to reflect that not being reflected but we moved about nine points of our capacity around.

First quarter. We've also got extremely laser focused on the makeup of the first quarter, which is really three distinct seasons for us coming off of the Christmas and the holidays than a very difficult period, and then of course, you move into March and the spring you've seen a number of new markets from us those obviously reallocations you see us leading leaning hard into <unk>.

Latin were trying some things like Mexico from.

Las Vegas Sands, Unserved, Nassau and all of those things but.

Honestly the bigger impact on our capacity is just reallocating a cross sell network.

And that's sort of the nine points of which some of these new markets op model, but we're getting more disciplined how much we're flying to New York City during the depths of winter those types of thing.

Great. Thank you.

Thanks, Mike.

And our next question comes from Duane <unk> from Evercore. Please go ahead Duane.

Hey, Thanks, good morning.

Just firstly anything in the <unk> comp from last year.

You could call out for example was there any travel credit breakage above trend that you could quantify it.

Hey, Duane it's Shane good morning, I don't think there's anything sort of materially worth calling out the <unk> comp so certainly not on the brake and stuff.

Yes.

I think we had already gotten through most of that prior yes. The only thing in the third quarter last year, obviously coming off the back of some operational challenges in the pilot pipeline, we had some closer and pull downs that impacted summer and specifically, California in a large way, but other than that.

And you mentioned some some holiday shifts could you just elaborate on that.

Yes, that's just the money the fourth of July fell on a Friday.

And so we think which was June this year versus July last year. So there is a little bit of movement into the month of June I think just interestingly as we noted.

Two years running now the unit revenue in June is the highest of the year and that seems to be continuing.

Thanks, and then just I think another comment you made which was interesting in the quarter for the quarter bookings.

Could you could you put a finer point on that.

As it relates to the booking curves are these.

Within a week within 30 days and does.

I know youre not baking that trend continuing but does that imply that you now enter a quarter with lower visibility than you historically had.

Yes, I think I mean kudos to the revenue management team I think when you look at what Youre, referring to is the amount of bookings we take in the month to fly in the months.

When you look at our sold too soon as last year, we've had really good improvements this year on Hawaii mid con into California.

Even the transcon southeast and essentially what we're saying is we have availability.

And the demand is there and we're filling the airplanes and you see that both in the higher load factor.

But interestingly, even with business demand down, especially for June we saw more closely and then within 2019.

So sorry, you said.

Not baking that into your guidance, but have you seen any change in trend as it relates to this closing and showing up.

I will just I can sit here today on the 25th of July and tell you that I'm continuing to see that closing strength. This month.

Yes, thank you very much.

Thanks Duane.

And our next question comes from Stephen Trent from Citi. Please go ahead Steven.

Good morning, everybody and thanks for taking my questions.

Just one and I know it does not.

Secondly, pertain to you but.

Considering that you have.

American Airlines its going to do the.

Unwind of the northeast Alliance did that in any way kind of lead you guys to pivot.

Your your eastbound strategy.

Steven It's Nat Pieper, thanks for the question.

Couple of things just to distinguish our partnership with American <unk>, we're pleased with it and be reviewed and approved by the <unk> in 2020 and the good thing about that partnership is it's very much a traditional airline alliance. It links we link our complementary networks with Codeshare.

And we offer reciprocal loyalty benefits that really resonated with guests. So we see plentiful opportunities with American and continuing to link our networks in places of weakness for each of us and offer more utility for our joint customers going forward.

Okay. That's super appreciate the color and just one very quick follow up which I know is also not directly.

Related to you guys, but.

Mentioned.

Some potential perking up.

The tech industry travel.

Any sort of specific signposts, there like I think I heard something about Microsoft turning on corporate travel again.

Or any sort of return to office initiatives Youre hearing from from your Tech partners.

Customers are not there yet.

Steven.

We did make the comment that we might break through the 75% ceiling as we move forward I just a couple of interesting data points, but <unk>.

10 of our top 20 corporate accounts are actually recovered revenues and over 2019 levels right now.

But we are seeing high variability within those accounts, we are still seeing some high tech companies.

Very low not recovered, but we're also seeing some high tech covered companies that actually are fully recovered. So I think what I would say to you is that I.

We're starting to see a thorium that's not.

All of Tech sit down now we're seeing some really start to pick up and I think that's why it gives us a little bit of hope that there might be some green shoots here as we move through the rest of the year.

Okay I appreciate the color. Thank you.

And our next question comes from Dan Mckenzie from Seaport Global. Please go ahead Dan.

Oh, Hey, thanks, guys I.

I guess a couple of questions here Andrew.

Wondering if there's been a change in the composition of revenue by advanced purchase bucket. So more discounting further out firmer pricing closer in than in <unk>.

And at least in kind of what your reference to your close in strength today and I was just wondering if.

Current forecast for the third quarter is predicated on strong close in demand throughout the quarter.

Yes, Thanks, Dan.

Youre spot on like the structured fares on what they are but.

But what we are seeing in the style phase there.

There sort of a little down than they were this time last year is in lower but the close in zero to 13 Diphase are actually up then.

And then they were last year so overall.

Seeing that softness on the <unk> side, and we have not baked into our forecast.

Continued close in booking strength.

Yes, perfect Okay.

And then going back to the commentary on business travel potentially coming back later this year and next I know, it's not in the outlook for this year, but are there conversations with corporate travel managers to lead you believe it's it could come back later this year or is it really just a view that California weakness.

<unk> has to reverse at some point.

Yes.

A lot of people say, they're going to do things and then what they actually do might be different I think what we're just looking at us.

Our cross sell corporates who's doing what and I do think there is there is a thorin from from what I see in an upward momentum in a number of these and so again, while I, we need to make sure obviously and looking at the business fares in there they are holding up quite well it just depends on as they move through and I've always.

<unk> had the philosophy.

That a lot of this is driven by budgeting by our good friends. The Cfos in these organizations and you really you're not going to see a material change in re budgeting until 2024. So.

What I see and then it's been you got to remember on the West Coast. We have some of the biggest companies in the world headquartered here on the West coast, both in Seattle, and the Bay area. So.

It is a more difficult time for them, but theyre going to come out of this again.

Again, we are optimistic about come out of it towards the latter part of the year and into next year and it as dry powder for us is it going to be tailwind for us and <unk> heard.

I heard the biggest companies in the world and there should be a lot of upside.

Yeah. Thanks, Thanks, guys appreciate it.

Thanks, Dan.

And our next question comes from Chris that the Lopolith from Susquehanna Group. Please go ahead Chris.

Good morning, Thanks for taking my question.

So with the capacity raise.

It's entirely on completion rate, but could you remind us.

Think about the mix of frequency gauge and stage that you outlined last year.

How this how 2023 is shaping up and then also you spoke about in your prepared remarks on prioritizing reliability.

Normally I would think if you're trying to prioritize that or building buffer.

To your capacity guide would've come lower so just wanted to better understand here the moving pieces here.

Or the composition of capacity as we think about.

In the back half of the year. Thanks.

Yeah, Hi, Chris it's Shane.

We set at <unk>.

70% of the 90% of the sorry, 70% of the growth I think what stays engaged like two three quarters and I think thats. What you saw in the second quarter I think that was reflected in Andrew's commentary.

And that will start to abate as we get towards the end of the year and lap some of that impact when we started.

Aggressively getting out of the Airbus line.

Good question on reliability being a priority how do you how do you do that and then guide up not down.

What I can tell you is with the planes and the people that we had.

This year, we could have flown even more than we are now telling you we're going to fly and so.

We put a significant amount of buffer into this year I think I talked about it last quarter that we were outperforming many of those assumptions both on the delivery side from Boeing our own completion rate and so we're just sort of squaring up now with the fact that we've been over performing on a lot of those assumptions, but.

Yes.

We thought it was prudent given the last couple of years to assume a much lower completion rate than normal and we've outperformed it which is a really good story and now we just need to kind of normalize the company around the completion I think we are.

Achieving today.

Okay, and then on 2024 I realize it's still early it sounds like you are suggesting that we could see.

Unit cost down on a kind of a 6% or mid single digit type.

Growth here, but.

And you do have the benefit of gauge here of course.

There is the slight miss with respect to forecasting, but if we think about RASM for next year and the ability to grow in excess of that.

And sort of the moving pieces here as we think about the debate. This pool of international travelers that are being or the pool of travelers here that are being consumed by international certainly a debate on the duration of how long that lasts and there is concern out there that the domestic capacity is going to continue to grow so.

Is it fair to think that.

Kind of holding load factors here constant.

For this year that you can grow your RASM in excess of.

CASM next year. Thank you.

Hey, Chris.

I think we're pretty.

We have a pretty standard practice not to speak about next year.

These types of calls, although I totally understand and appreciate the question.

Look it's a little too far forward for us to predict what the economic environment is going to be what everybody's capacity is going to be I think generally across the industry you've seen capacity guidance come in from where they were originally sort of talking about so I think there's a lot of.

Open questions on what people are going to fly next year I would point to the fact that Andrew just spoke about.

Really.

Focus on Q1 and sort of re <unk>. The network. So we've got opportunity to do better in Q1, and then we've got these other tailwind with with this region of the country improving with international demand normalizing at some point and yes, it could be a little longer than we were thinking but it may not be.

In business travel recovering plus a lot more that we can push on the commercial initiatives. So there are some other things other than just pure growth that should drive the top line of the company next year and obviously, we're going to be talking to you guys. A lot more about that in the next couple of calls.

Okay. Thank you.

Alright, everybody. So our time is up so thank you so much for dialing in and we'll talk to you next quarter.

Okay.

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

Yeah.

The host has ended this call goodbye.

[music].

Good morning, ladies and gentlemen, and welcome to the Alaska Air Group 2023 second quarter earnings call.

At this time, all participants have been placed on mute to prevent background noise.

Today's call is being recorded and will be accessible for future playback at Alaska Air Dotcom.

Our speakers remarks, we will conduct a question and answer session for analysts.

I would like to now turn the call over to Alaska Air Group's Vice President of Finance planning and Investor Relations Brion St. John .

Today's call, you'll hear updates from Ben Andrew and Shane several others of our management team are also on the line to answer your questions. During the Q&A portion of the call.

Fuel and as usual we've provided a reconciliation between the most directly comparable GAAP and non-GAAP measures in today's earnings release over to you Ben.

For their focus which has helped us capitalize on this busy travel season to produce these great results.

Our 18, 3% pre tax margin will likely lead the industry coming in above 2019 margins, despite higher fuel and structurally higher costs. Our earnings per share of $3 was 83 cents higher than 2019 levels, bringing us above 2019 on a year to date basis.

<unk>.

And beating consensus by 11% the.

The strength of demand this quarter was evident on June 30, when we flew the most passengers in a single day and air group's history.

And at a 99, 5% completion rate we ran one of the best operations in the country as we continued to prioritize completing flights and serving our guests with care.

This was one seven points better than 2022 and.

0.3 points better than 2019.

Heading into the busy summer period, we have planned and prepared our airline for peak flying and our teams are executing over the fourth of July weekend, we led the industry in completion rate at 99, 8% and on time performance at 85, 1%, while flying a 90% load.

<unk>.

<unk> and controlling unit costs to continue to deliver strong financial performance, we remain confident in hitting our financial targets this year, including our adjusted pre tax margin of 9% to 12% and earnings per share of $5 50 to $7 50.

Now turning to an update on our business priorities and progress.

We have chosen to prioritize reliability and are running a strong operation like we have historically done.

Our investments in training.

Aircrafts and staffing have enabled us to meet a higher level of flying.

Higher completion rate performance has surpassed our initial expectations driving approximately half of the three point increase of capacity.

Our full year guide.

Productivity is also improving as we adjust to new work behaviors amidst a more stable operating environment and work to close the gap to 2019 levels.

<unk> has also continued to be a great partner delivering according to expectations. Despite continued disruptions within their supply chain.

Earlier this month, we welcomed our 53rd Max enter the fleet the up gauging benefit of these aircrafts are significant while the purchase were down one 3% year over year this quarter higher gauge coupled with mainline utilization exceeded 2019 levels by 4% and 11.

Five hours per day, and drove capacity up nine 9% year over year as we continue to leverage our fixed cost assets as much as possible as.

As we transition to a fully Boeing fleet at Alaska. The sufficient growth has helped us derisked our growth plan within a constrained industry operating environment.

Given our expectation of continued strong operational execution adequate staffing and efficient growth. We have raised our full year capacity guide to 11% to 13% versus 2022 as.

As we work to restore all areas of our network to pre pandemic levels. We are confident in our resources to meet this higher level of flying and balance our growth aspirations with our consistent commitment to excellence.

Our business is configured to compete and we've doubled down on these core advantages to reinforce our foundation for profitable growth.

In our industry, leading performance based pay which several of our peers exclude.

30% higher fuel costs.

For decades Air Group has adapted and we will continue to do so to produce consistent profitable growth as you well know this industry is challenging.

We remain focused on the drivers of our long term success, restoring and strengthening our competitive advantages operational excellence cost discipline and high productivity and a consistent and measured way will continue to position us well now and far into the future and with that I'll turn it over to Andy.

Drew.

Thanks, Ben and good morning, everyone.

My comments today will focus on second quarter results as well as our revenue outlook for the rest of the year.

We produced very solid second quarter results.

Record high revenues of $2 $8 billion were up six 8%.

Versus the second quarter of 2022.

And above the high end of our guide driven by strong leisure and close in demand.

The quarter on June 30, we recorded our second best revenue day in our history only give you outperformed by the Sunday of Thanksgiving last year.

<unk> for the quarter was up nine 9% versus the second quarter of 2022, and our planes continue to fly full with load factors increasing from 85, 5% in April to 86, 4% and nine and 89, 1% in June .

And highest monthly load factor in our history.

Turning to unit revenues changes a noisy on a year over year basis, and down two 9% given both volatile pricing and capacity in 2022.

When compared to our more stable 2019, we saw improvement in unit revenues of 23% for the quarter with June up 25%.

Still expect July to produce the highest total revenue of any months in 2023, which is consistent with pre COVID-19 trends.

For the second straight year June has supplanted July is the peak yield month for us.

Regarding product strength and premium cabin revenues continue to support our revenue momentum.

We launched the style of exit row seats in mid March and I'm pleased to report sales have been strong right out of the gate.

Including exit rows first and premium class revenues were both up approximately 12% year over year outpacing nine Kevin by eight points in.

In the second quarter, 31% of total revenues came from premium class products up from 2022 and up seven points from 2019.

On the loyalty side performance remained strong.

With bank cash remuneration up 15% versus the second quarter of 2022.

Outpacing our system revenue growth rate by two weeks.

As always we continue to prioritize delivering value to our guests through our loyalty program and we are proud to have been named the number one best airline reward program. The 2023 2024 from U S news earlier today.

Lastly, we announced selling nine of our partners on Alaska Dot Com and anticipate bringing on a partner this fall.

Phase one is to sell and service main cabin tickets, but later this year, we will add the ability to sell premium cabins on our website, helping us to achieve our vision of providing our guests seamless ethane capability on our portfolio of global partners with access to any major region of the world.

Now I'll turn to our outlook and forward looking guidance.

Half of 2023.

For the third quarter, we expect revenues to be flat to up 3% on capacity that is up 10% to 13% versus 2022.

This implies unit revenues down approximately 9% at the midpoint.

Our revenue guide is based on the environment, we see today with 67% of third quarter revenues on the books.

When comparing our Q3 revenue guide to our Q2 results. This implies a six point sequential deceleration in unit revenue performance.

That six points roughly half is directly related to the pricing environment. While the other half is a combination of domestic industry capacity growth track.

Tracking to be up 10% year over year.

Our stage length growth and holiday timing shifts.

As a primarily domestic leisure carrier. This summer presents a unique situation with the unprecedented surge in international demand not just similar to the domestic surge last year.

We believe pent up international demand has had the effect of a larger pool from would be domestic travelers that has historically been the case.

Long haul international seats off the West coast are up 31% year over year. This June .

Loyalty members alone in June as evidenced by our pool and redemption activity with filling the equivalent of $18 780 Sevens on a daily basis across our international partner network.

Up over 50% year over year, while our lounges experienced a 68% increase in visits from guests traveling internationally.

Close in demand as another important dynamic to address.

Having improved recently the percentage of passengers booked and flown within months during Q2, <unk> post 2022 and 2019 levels.

Is particularly significant when compared to 2019, giving our stage length has increased 7% with passengers skewed to more advanced booking patents and business volumes remain down 25%.

Although currently not in our forecast if this trend persists. This represents an additional 100 basis points of revenue upside to our current third quarter guide.

Lastly, as it pertains to manage business travel, we have not seen any meaningful change remaining around 75% recovered by volume with both California, and the technology sector still accounting for the largest gap to full recovery. However, we have seen more return to office efforts at major tech companies.

And incrementally.

Q2 2023 Alaska Air Group Inc Earnings Call

Request a DemoDemo

ALK

Alaska Air

Earnings