Alaska Air at Bank of America Conference: Strategic Growth and Challenges

On Thursday, 15 May 2025, Alaska Air Group (NYSE:ALK) participated in the Bank of America Industrials, Transportation & Airlines Key Leaders Conference 2025. The company presented a strategic overview, highlighting both its growth ambitions and the challenges it faces. While Alaska Air is optimistic about expanding its loyalty program and international presence, it remains vigilant about cost pressures and competitive dynamics.

Key Takeaways

• Alaska Air is integrating Hawaiian Airlines to enhance its loyalty program and network.
• The company is focusing on expanding its international reach through the OneWorld alliance.
• Financial strategies include accelerating share repurchases and maintaining a strong balance sheet.
• Boeing’s improved delivery performance is positively impacting Alaska Air’s fleet strategy.
• The airline is optimistic about the recovery of corporate travel, especially among small and medium-sized businesses.

Financial Results

• April’s load factor slightly surpassed last year’s figures.
• The largest booking week since March occurred recently, signaling strong demand.
• Corporate travel is stabilizing, with small and medium business travel up double digits year-over-year in Q1.
• Loyalty initiatives are projected to contribute $150 million in net profit by 2027.
• A new premium card product is expected to generate over $90 million in net profit and loss value.
• The loyalty program currently accounts for 15% of total revenues.
• Share repurchases will exceed $250 million this year, with a $1 billion program planned over four years.

Operational Updates

• Alaska and Hawaiian Airlines networks are now combined, enhancing connectivity.
• The Seattle-Tokyo route is attracting significant bookings from east of the Rockies.
• Alaska Air aims to operate 12 long-haul intercontinental destinations from Seattle.
• Connecting traffic through Seattle has increased by 15%, with future bookings in Portland up 200%.
• A new premium card product will launch in August.

Future Outlook

• Alaska Air plans to boost national awareness of its loyalty program and integrate Hawaiian’s network.
• The airline is exploring seasonal opportunities in European secondary markets.
• Premium seating will increase to 29% following the retrofitting of 737 aircraft.
• Cost synergies from the Hawaiian integration are expected to mitigate cost pressures.
• The company is committed to reducing leverage to 1.5 times by the end of next year.

Q&A Highlights

• Capacity changes from ultra-low-cost carriers have been favorable in the short term.
• There are no significant changes in Seattle’s international competitive landscape.
• Alaska Air is focused on integrating Hawaiian Airlines and achieving synergies swiftly.
• Boeing deliveries are ahead of schedule, aiding fleet expansion.
• Seattle rebanking is complete, contributing to a 15% rise in connecting traffic.

Readers are encouraged to refer to the full transcript for a detailed understanding of Alaska Air’s strategic initiatives and financial outlook.

Full transcript - Bank of America Industrials, Transportation & Airlines Key Leaders Conference 2025:

Andrew, Analyst, Bank of America: Thank you for coming. Final final day of the Bank of America, industrials transport transportation and airlines conference. Happy to have Alaska Air Group here with us to kick off this this final day. With us from Alaska is Brett Catlin, the VP of loyalty alliances and sales for Alaska Air Group. And we also have Ryan St.

John up here with us who is the VP of planning and investor relations. So, guys, thank you for being here.

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: Good to be here.

Andrew, Analyst, Bank of America: And, you know, for the audience, you know, I have a bunch of questions prepared, but if anyone, you know, over the course of the next, you know, thirty, thirty five minutes has any questions, just feel free to raise your hand. We’ll get a mic over to you if needed. So I guess, you know, maybe I’ll just start out with the, you know, couple kind of near term questions. I know there’s a lot to get through, a lot going on in Alaska these days, but I’d say the general tone so far, you know, over the last few days of the conference is just, I’d call it stability. I think, you know, most of the airlines that’s been been at what kind of they’ve been talking about in terms of the demand environment.

Yeah. But over the last, you know, week or so, we’ve had some ULCCs, you know, Allegion talked about, you know, a little bit of a near term pickup. You know, Frontier was saying yes yesterday that they were, you know, beginning to raise fares a little bit. Just curious what you guys are seeing in terms of, you know, demand. Are you seeing any, you know, near term near term improvement?

Any comments there?

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: Yeah. I would say that things are still tracking in line with what we had guided to. You know, volumes have been very good recently. And I think, again, we’ve probably talked about this a little bit, like volume currently is not really an issue. I think we’re gonna fill up our planes as much as we did last year.

April load factor, I think, actually was slightly ahead of last year. So there’s clearly a ton of people who wanna travel, and it’s really more of the question on the yield side as to where ultimately things land. But yeah, like last week was our largest booking week since March. So we had a lot of good volumes come in. And as you can imagine, I think we’ve said this before, June is probably the most pressured on the yield side.

There’s just a lot of industry capacity. Yeah, lot more growth than in April. So that’s still the case. But I think we’re pretty confident that we’re gonna be able to fill up our aircraft. There’s obviously a lot of demand for travel.

So, sort of similar commentary to what we said on the earnings call, but there’s six weeks to go. So there’s a lot of opportunity. Hawaii has still been looking very strong, even close in has been very good in Hawaii. So we’re feeling good about that. Obviously, now that the networks truly are combined and we’ve, you know, rerack the schedules as of April, you know, things are looking very good there, which isn’t surprising to us.

Andrew, Analyst, Bank of America: Interesting. And also on the call, think you you you called out corporate maybe not as bad as what you were seeing earlier in in one q. Is that, you know, still a fair assessment? You know, I guess what what have you seen across both corporate and leisure, you know, particularly as maybe some of the equity markets have recovered and maybe some of the real draconian, you know, draconian scenarios have, you know, eased a little bit.

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: Yeah. On on the corporate side and thanks, Andrew. Good morning, everyone. Nice to to see you all. March was an interesting month.

I I would characterize it as choppy. So we’re coming off that base, which we would have spoken to during their earnings call a few weeks prior. The timing of Easter does introduce noise.

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: Yeah.

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: And so I think we’re cautiously optimistic with what we’re seeing. The data stability that the term you used is probably reflective. I will say though it’s mixed across the industry. So on the West Coast, over a third of our corporate demand comes from tech. Tech has some interesting characteristics at the moment.

Some are rather strong, others are comparatively weak. So that’s a sector we’re watching pretty closely. The other thing I’d note is small medium business in q one that was up double digits year over year for us, which is really encouraging. That obviously plays well to our network and how we’ve configured things. It’s also an area we’re investing in.

Later this summer, we’ll launch a new booking platform incentive specific to that sector. So we’re really excited about the momentum we see on the small medium business side. And I’d say we’re optimistic on the corporate side that we’ve found kind of a a bottom, if you will, and are starting to

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: move back off that. Interesting. Can you maybe

Andrew, Analyst, Bank of America: provide a little bit of color? Obviously, given your geographic exposure, tech is a big part of your your corporate corporate program. What are the some of the other big, you know, industry groups that you’re levered to?

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: Yeah. It’s a professional services, of course, is a material one for us. You get into industrials as well. That’s more specific to Seattle with Boeing. And then then you kinda have a long tail that would be reflective of the rest of the the national market.

Got it. Okay.

Andrew, Analyst, Bank of America: Brett, maybe kind of moving on a little bit, maybe getting into the first part of your title and in terms of loyalty. At Investor Day, I think you presented $150,000,000 in incremental profit from just program improvements across loyalty. Can you maybe walk us through some of the buckets that you you know, that drive that hundred and 50,000,000 kind of where you stand in those and maybe kind of a timeline to when those can can mature? Yeah. No.

Absolutely. Thank you. So we laid out

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: at Investor Day was essentially a hundred and 50,000,000 net profit from loyalty initiatives out through 2027. There were four categories that comprise that one fifty. I’d say two of them were the lion’s share, just the function of timing of once the cash flows come in and when we actually recognize them in the p and l. So the two that were most consequential over the next couple of years, the first is around program changes that were announced last year then implemented up through April. We’re now done implementing those.

And when I say in in q one, like, relative to budget, like, our expectations, we we exceeded plan there. So we feel really good about the trajectory of what the changes are doing to actually drive a shift in behavior. A couple of examples. So we’ve more closely linked card spend. So we’re, of course, partnered with Bank of America, linking that to elite qualifying status.

That’s that’s absolutely been accretive. We’ve also introduced more status tiers. So what we call them milestones, and that has we’ve seen an effect of that engaging people more before tiers, within tiers, and then beyond tiers. So we know we have splitters in a market like Seattle folks that are loyal to Alaska, but once they they were popping out in the elite ladder, they were maybe more of a free agent. And we’ve addressed some of those dynamics, which has seen a read through in some of the loyalty performance.

So that’s a big driver. The second is, of course, synergies. This is also one where in q one, out of the gate, super strong, above expectations. I think what we’ll see though is this August, we’ll combine this in the loyalty programs. And so we wanna see if we can sustain that momentum on the loyalty synergy side, and we’re, of course, optimistic that we can.

But so so so far, the the signs are really encouraging in terms of the combination of Alaska and Hawaiian. It unlocks a lot more loyalty utility. Just this past Monday, we started flying Seattle Tokyo. That’s a huge inducement for folks to go out and get the credit card, spend on the credit card, and ultimately engage with the program. So I feel really good about that.

Then the final two items and the cash flows for these may hit before ’27, but the p and l tends to be out 2028 and beyond. The first is our new premium card product that will launch in August as well. We teased it a bit at Investor Day, did a bit of an early sign up, had a hundred thousand people express interest. We think that run rate is gonna be north of 90,000,000 of of net net p and l value. So that’s a product we’re very excited to get in the market.

We think the timing, the demographics mix, particularly on the West Coast, that that product will do well. Then the fourth, and this may be a topic we come back to, is just expanding the reach of our program, which has historically done very well, Pacific Northwest, West Coast, now Hawaii, to have more national relevance. And so again, we see that being longer term, but obviously an important attribute of what

Andrew, Analyst, Bank of America: we wanna accomplish. And actually two follow ups on that. I guess, first, you know, in Hawaii, I’m sure the Hawaiian card had some pretty good penetration in into that market. But I guess what you know about your sign ups and your your your exposure in Seattle and, I guess, the Alaska market, is there, you know, room for further improvement within Hawaii on the on the card program? Any you know, from a penetration standpoint, or is that pretty much, you know, maxed out right now?

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: Yeah. It’s interesting. When you look at the Hawaiian market and we, of course, did this in diligence and now post close being caught nine months in, we’ve we’ve dug in quite a bit deeper. What we see in Hawaii is you had a a lot of local love for the brand. Hawaii residents tended to be loyal, but the problem is Hawaiian couldn’t get them everywhere they wanted to go.

And so they might love the brand, but then when it came to getting to Washington DC or Orlando, they may end up flying on a competitor. We can obviously serve those needs now. And so more specific to your question, Andrew, what we saw as a result of that was penetration wasn’t where we expected to be on the card. But we see upside in terms of getting penetration levels, not to state of Alaska for a kind of a comparison, but say closer to Pacific Northwest. So absolutely upside on acquisition.

The other is on spend because the points didn’t have the same utility. Hawaiian’s legacy partner network was much stronger. Their own operated network was much weaker rather. Their own operated network was also weaker. People weren’t spending on the card because the points weren’t as useful.

And so a big opportunity for us, it’s reflected in the synergy numbers is driving incremental card spend on that product portfolio.

Andrew, Analyst, Bank of America: What would would you say your share is in the Seattle market? So there’s a few

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: different ways to look at it. You can look at card swipes, spend, acquisition. Think how we tend to view it is overall volume of cards that we have in the market, which is exceptionally strong. We go and look at Visa benchmarks that has one comparison. And in Seattle, we we tend to over index pretty much every comparison.

Andrew, Analyst, Bank of America: Okay. Got it. You mentioned the national awareness that was definitely on my my list of questions here. Yeah. I I think at Investor Day, you spoke to kind of 50% growth targets in terms of of active members.

I guess when you think about national awareness, you know, how are you thinking about, like, what markets are you targeting? You know, is the network already built in into those markets or does the commercial team have a lot of work to do in order to help help drive the national awareness of the card program?

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: Yeah. It it’s a fantastic question. As I kind of alluded a moment ago, like, the West Coast, historically very strong for us. Pacific Northwest, we see a material opportunity in California to continue to grow. We’re eight years into the Virgin America acquisition.

There’s still room for us to bring more people into the program. Hawaiian was actually very strong in California. Now they couldn’t serve the needs of every Californian, but people aspire to go to Hawaii, and they had a decent base. So building on that as a key opportunity. The the the second piece is more around kind of that the national to to your question, Andrew.

And it’s probably less about our operated network and more about the partners that we have in our portfolio. So both airline partners, that’s, of course, important with One World, but also our nonair partners. So trying to drive more ubiquity. I’ll give you a fairly narrow example, but Lyft. We’ve worked with Lyft for a number of years.

Of course, you can if you take a Lyft in Manhattan, you’ll get points in our program. And so trying to lean into those kind of programs, which they’re not gonna be nearly as profit accretive to say our Bank of America co brand relationship, but it’s massively important to getting people into the funnel. And we know if we can get them in the funnel, people love the program, and ultimately that drives more co brand acquisition. So I think what you’ll see is it’s probably less about the network we operate and more about who’s in

Andrew, Analyst, Bank of America: our partnership stable. Okay. Interesting. Like, loyalty today is what about 15% of of total revenues. I guess, Brett, when you think about, you know, the next five, ten years, you know, you you integrate Hawaiian, you grow national awareness.

Where do you think that 15% can go?

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: Yeah. So historically, 15% of revenue that comes through loyalty, when we look at benchmarks, it’s very strong. It’s something that at Air Group we’re really proud of. It’s of course something we looked at on the Hawaiian side pre combination, they were high single digits. So kind of step one for us is we want to get the legacy Hawaiian network in that base of members up to legacy Alaska standards.

So call it that 15%. So that’s where we’ll begin. And we think about how do we go beyond 15%, there’s a couple of levers we’re really focused on. One is what you might call like an expansionary points policy. We wanna get a lot more points in the system.

Now these aren’t points from flying, they’re points from engaging with our partners, principally on the co brand. So we can grow the number of points that are outstanding, ultimately, that’s gonna allow us to pump more through the system and increase that number. The second is around what you might call the velocity of points. So points that come in and then sit dormant for a couple of years. We actually want people to use their points, see value in the currency, and then go aspire to get more points.

And so we’re really focused on how do we drive that flywheel. And we’ve done things like lower the entry level cost of a redemption. So before it might’ve been 10,000 points, now it starts at 4,500. And so just trying to find ways to make the the currency more ubiquitous, more interesting, and ultimately, I think that’s gonna drive the flywheel of people wanting to to spend more on the card and to get more points. The third thing I just note is how we ultimately look at redemption inventory and availability.

There’s a lot we still think we can do on that front to ultimately fill seats that might not have been been filled with redemption passengers and just ways to optimize the margin.

Andrew, Analyst, Bank of America: Got it. I guess lastly on on loyalty. We’ve heard a lot over the last few months, some of the ULCCs are changing their loyalty programs. Southwest is making some changes as well. Do the changes that they make kind of influence the way you think about loyalty or do not worry about that?

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: Yeah. It’s a great question. I’d say we’re we’re we’re curious and interested, but we also look at the moat that we have around global and premium. And then we look at card attachment, loyalty attachment. A lot of it is a function of, especially now, can you get me overseas?

Like, I may only go to Tokyo once in twenty years or once in a lifetime, but the idea that I can go to Tokyo, that’s a very powerful inducement for me to engage with the program. Similarly, do you have a lie flat product? Do you have a premium front product? That becomes a really strong loyalty inducement. Now people may very well use their points to get to Lubbock, but the fact that you could get them in a lie flat bed to Tokyo, that matters.

And ultimately, we think that’s what makes our program a really powerful competitor. Yeah. Okay. Yeah. I think back

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: to the national relevance. I think we talked about this before, but over a quarter of our bookings on the Tokyo flight are coming from East Of The Rockies. You know, our theory of Seattle’s position and the connectivity over Seattle being a much better itinerary than other cities, you know, a lot of people in the Midwest, we have an opportunity to go convince them that this is the local program for them even if they only fly Tokyo, you know, a couple times every decade. But Yep. We’re now getting in front of a lot of people that we probably wouldn’t have gotten in front of otherwise.

Andrew, Analyst, Bank of America: You know, that’s definitely an interesting stat. Right? Are those people that have flown Hawaiian Alaska before, or is that are those just brand new consumers seeing what you’re offering?

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: It’s a good question. I don’t know the exact breakdown, but some of these cities, I would guess they probably have really ever flown this before. If I had to guess maybe some of the larger metros, maybe they have, but I think it’s just more eyeballs to get in front of, you know, with the credit card offers and things of that nature.

Andrew, Analyst, Bank of America: Got it. But maybe moving on to some of the the alliances. What do you think your partners in One World are most most excited about having you part as part of the program?

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: Yeah. We we obviously spent a lot of time with our partners joining One World in 2021. That was transformative for what we could do for our guests, where we could get them. Our relationship with American Airlines, I think, is a mainstay of our membership in one world and what we’ve been able to do. Specifically, when you think about The Pacific, which is where we as Air Group think we have a right to win a potential advantage with the Seattle market, The two larger alliances of STAR and SkyTeam, they operate about 25% of the capacity US to Asia.

You look at OneWorld, it’s about 11%, call it 13 once Hawaiian joins next year, so half the size. And so the opportunity when we talk to our partners is no different than the opportunity we see when we talk to ourselves internally, which is why one world could have a much more powerful proposition into Asia. And there’s no better place to connect people into that market than Seattle. We operate the largest hub on the West Coast, 3 50 daily departures, more than a hundred nonstop destinations. We’re already banked for the things that Ryan is talking about with bringing people from Kansas City or Denver to Tokyo.

And then we can do it in a way that leverages our partners, say JAL in Tokyo. Our first market, it’s no coincidence, it’s Narita because that’s where JAL operates and we can get beyonds there. We’ll do SOL later in the summer, early fall out in September. And so I think what you hear from our partners is excitement because this isn’t cannibalizing one world traffic. If anything, it’s enhancing the proposition that we can offer to our guests more broadly.

And so a lot of enthusiasm for what we’re doing and desire to partner more closely around how we provide great options for guests.

Andrew, Analyst, Bank of America: So being part of the alliance, obviously, massive international opportunities for you. How does that how do you think about potential wide body growth from here? Is that does that become more of a priority for you, or is it just leveraging your partners within OneWorld in order to get your Alaska consumer, you know, around

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: the globe? Yeah. There there’s a couple of dimensions to it. I think what what we’ve seen and I alluded to a second ago is you start with your partner hubs, that that’s a great place to build connectivity. In a market like Tokyo, it wouldn’t be unreasonable for us to have a third of that lift going beyond JAL over time.

Yep. And so that that that’s a really natural place to begin. And then I think you can learn. Depending on where that traffic is going beyond, you can contemplate, well, is there a seasonal opportunity to fly to a secondary market? Are there opportunities to add frequency?

And so I think we’re kind of going down that very disciplined orderly playbook. I think we’ve said publicly, we want to fly 12 destinations long haul intercontinental out of Seattle. That takes time. And so you start with what makes, you know, the the the the most sense, and flying into partner hub is a fantastic place to begin.

Andrew, Analyst, Bank of America: You’ve spoken a lot about international into Asia, right, in terms of Japan and talked about Seoul. What would it take to get across the get across the Atlantic? Does does One World allow you to maybe get into making a market like London or Paris quicker, or how do you think about the timeline of that transatlantic opportunity?

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: Yeah. It’s interesting. So when we look at the the the global mix, particularly on the corporate side coming back to an earlier point you raised, London out of Seattle, it’s the largest corporate market by three x. Tokyo and solar are number two and three. But if you wanna effectively serve corporates in Seattle, you have to get into markets like London over time.

And now having partners that that sit in London and have a lot of scale, that helps.

Andrew, Analyst, Bank of America: Yep.

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: It helps potentially for getting access. It helps for getting beyond, which are critical to fill it. I’d say we’re also mindful though of the seasonality of some of these markets. Our network already tends to be somewhat seasonal. And so the beauty for us of Asia is it’s pretty level across the year.

And so you can fill the plane effectively in January, maybe not with the same yields as July, but there’s demand that’s gonna come throughout the year. And so how we think about Europe is a much a function of seasonality as it is serving the top business markets and our partner hubs that have that beyond connectivity.

Andrew, Analyst, Bank of America: Got it. Maybe changing gears a little bit, maybe bring Ryan into the mix a little bit. Yeah. Look. I know outside of the stability theme at this conference, you have continued outperformance of premium has been has been one as well.

We began to see in your one q results how you can out outperformed on RASM. As how do all these initiatives, I think, position you on a relative basis versus versus the industry in terms of premium revenue growth?

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: Yeah. Yeah. I think, you know, just on the number side that we talked at investor day, I think we wanna grow the percentage of our seats that are premium. We’re doing that today on the seven thirty seven fleet with an extra row of premium and first class and some of our aircraft. So to get much closer to, say, you know, the network carriers in terms of percentage of seats, obviously, the mix will be, like, a little bit different.

We don’t have as many wide bodies. So that’s a future opportunity as we talked about, whether it’s more live flats upfront, especially on the a three thirty fleet

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: Mhmm.

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: A true international premium economy. You know, I think, like, all the changes we’re making should move us closer and closer looking more like a network carrier, you know, just more regionally concentrated. There’s still a ton of opportunity there. I think, like, as Brett alluded, you know, there’s the demographics on the West Coast, especially with the premium credit card. There’s a lot of folks who demand, you know, premium type offerings, but that, of course, extends to things like lounges.

We’re building another lounge in Seattle. We’ll essentially have like an international lounge for the first time in Seattle that will be specifically for front of cabin folks. Like a lot of carriers do, you know, we’re beginning work in San Diego. So that’s an area of opportunity. So I think just net net, you know, we’re trying to up level our overall premium sort of offering experience beyond just additional seats.

But clearly, we know where the high bar is in the industry. And, you know, whether or not we can get there someday is, you know, one question, but I believe we’re just continuing to inch ourselves closer and closer and, you know, further away from sort of the traditional low cost carrier that we’ve always been known as. Remind me, what’s your percentage of premium seats today versus the percentage you’re gonna have, call it,

Andrew, Analyst, Bank of America: in two or three years’ time?

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: Yeah. Today was about 26, although it’s changing by the minute because I think we have Yeah. Forty, fifty, 60 aircraft already retrofitted out of the 200 we’re gonna do, and it’ll be 29% when we’re finished with the seven thirty seven. And that I think when we really get into the wide body opportunity, you know, that can push us into the 30 and beyond, especially as we’re taking new aircraft too. Okay.

Helpful.

Andrew, Analyst, Bank of America: As we just finished up airlines earnings earnings season, one thing I I was pleasantly surprised with is that given all the macro uncertainty, you just heard a lot of, you know, a lot of airlines talking about cutting capacity in the back half to better match demand. You know, one could argue it’s not fast not coming out fast enough, but, you know, they’re they’re talking about it. I don’t anything, you know, you know, anything topical that that you noticed over the course of of earnings across the industry? You know, how are you seeing competitive capacity in in your markets going forward?

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: Yeah. Yeah. I think we’ve seen a lot of these announcements. We haven’t necessarily seen the schedules change yet. You know, to your point, a lot of it is coming later in the year, so it’s a little early to see exactly where things are gonna be shifting.

So a little bit of a wait and see. There’s been some near term capacity changes, particularly from the, you know, ultra low cost carriers, which have been positive, I think, in our network. But beyond that, it’s kinda status quo across the board. I think, you know, through the summer, it sounds like most things are gonna be, you know, originally as planned, which, you know, is driving a little bit of the pressure on the yield side of the equation, even though we know we’ll probably fill up our aircraft as much as we would have wanted to. But, yeah, I mean, we’ll see when things start to solidify in the back half of the year.

Obviously, as we’ve talked about, we’re not growing very much at all. A lot of the growth is Hawaiian and its utilization. And so the Alaska fleet is not really growing. So we feel pretty good about where our capacity is. And we’re not quite yet into sort of the fall booking window to know if even the changes that have come out yet are having material impact.

But all things being equal, if the back half of the year is much lower growth across the industry, even just system wide, whether it’s in our markets or not, there’s sort of a ripple effect across every one industry.

Andrew, Analyst, Bank of America: Yeah. Curious. Are you seeing any change in competitive behavior in Seattle now that you’re launching the the international destinations?

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: Nothing like too direct from what we can tell. I mean, there’s been no real frequency changes or anything that I think we can see, you know, maybe some gauge changes, but some of those things look to be more system wide with some of those carriers all across the West Coast rather than just Seattle. So so far, no real big change, I think, the competitive landscape internationally, at least in Seattle from my view.

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: Yeah. I I’d add up. Seattle’s obviously our hometown. Yep. We just launched Tokyo on Monday.

We’ve had a number of community events that amount of enthusiasm for Alaska to fly long haul. People have wanted us to do this for decades. We’re confident that we’re very well positioned in that market to ultimately win. And there haven’t been pronounced competitive action, like, we’ve always known that this is an industry. There’s other opportunities for folks to come and book capacity if they want to, but we’re gonna come out ahead as our point of view given the the depth of our our loyalty and the history we have in that market.

Andrew, Analyst, Bank of America: Any questions from the audience before we move on? A little quiet this morning. Maybe moving on to the balance sheet. Right? It’s definitely a a strength, you know, definitely a a strength of Alaska’s.

I guess the buyback, there was a lot of discussion about that on on the call. Yeah. It seems like given the the macro volatility, the team feels comfortable kind of accelerating that buyback in the the near term. It’s an it’s a nice tool to have. I guess how do you think about the ability to kind of keep maybe a higher pace for for longer?

And, you know, how do you think about, you know, overall capital returns in this environment? Yeah. Yeah.

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: I think, you know, we talked about accelerating what we had planned to do this year, partly just given, of course, where the stock has been trading, which, you know, we feel pretty strongly is way below where it should be trading. Obviously, there’s been a little bit of rebound in the past couple of weeks, so that still hasn’t changed. It’s still down from where it was post Investor Day. You know, I think the Investor Day story was great. Mean, obviously, it created a lot of excitement.

But, of course, when it comes to share repurchases, you know, you’re getting less bang for your buck at the prices it was at. So I think when we saw things change in the last couple of months, it was an opportunity to maybe go a little bit faster. I think you’ll see us go faster kind of through the part of this year, and then we’ll pause and kind of see how the back half of the year shapes up. But when we did all the math on it, you know, there’s really minimal impact to overall net leverage, especially debt to cap. It doesn’t really put our goal of getting back to one and a half times leverage by the end of next year in jeopardy in any way.

And so it just kind of seemed like a no brainer. Yep. Our board is convicted on it. So is the management team. So, yeah, we’re currently going through that right now and, you know, buying a little bit more than we had planned, which, of course, at the current prices, at the end of the day, will be a lot more market cap more than we thought three months ago.

Yep.

Andrew, Analyst, Bank of America: I guess when you when you think about the de minimis impact on the balance sheet, do you think the total dollars dedicated to the program, could that increase versus your plan at Investor Day? No.

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: I think, you know, we had said we’d probably spend at least 250,000,000 this year. I think it’s gonna be, you know, north of that by some amount. We’ll see where it ultimately lands. But, you know, we’re committed to getting through the billion dollars that we had announced, you know, or at some point over the next four years, and then we’ll kind of reassess from there. So I think currently, we’ve got a little bit of a near term plan that we’re executing against.

Then again, we’ll sort of pause midyear and kind of take a look around and see what we want to do for the rest of the year and beyond just given, you know, where things may shape up in the back half of the year.

Andrew, Analyst, Bank of America: Got it. Know you’re digesting and integrating an acquisition right now. But, you know, despite many other attempts, you’ve been the most acquisitive over the past decade or so with Hawaiian and and Virgin. Do you feel like the industry needs more consolidation?

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: You know, I think we’re just focused on what’s in our control right now. We’re focused on integrating Hawaiian and doing it right. We’ve obviously got a lot of initiatives in front of us. We’re an ambitious company. You know?

We’ve added a lot to our plates. I think we’re just focused on doing what we’re doing right now, getting through that. I can’t speak for the broader industry. I think we’re just excited about our opportunity in front of us. And, you know, we’re always gonna make decisions that are in the best interest of the long term future of the company.

And so, you know, all options are always on the table. But right now, we have, you know, plenty on our plates in front of us that we wanna execute on to improve the business.

Andrew, Analyst, Bank of America: Got it. I wouldn’t dig any further on that one. I guess last from from me with about, you know, five minutes or so left. I tried asking this on the earnings call, but Shane didn’t really, it so I’ll I’ll bring it yeah. Bring it back up.

I’ll bring it back up since I have you on stage here. But with your cost cadence over the course of 2025, seems like 4Q is going to be closer to flat. I know you don’t wanna start talking about 2026, but when we think about that baseline out of 4Q, maybe some of the the puts and takes to think about from a a cost perspective off of that that baseline. Yeah.

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: Yeah. It’s a little early, obviously, even though we are currently scheduling our 2026 budget meetings right now. So we’re already thinking about it. But I don’t know. It’s it’s a little tough to say.

I think, you know, capacity growth more than anything in the last couple years has been the bigger driver of CASM, I think, across the industry. I I think the typical pressures will continue to exist with airport real estate costs and such. Obviously, the flight attendant deal we got this year was sort of the last big deal. And so we won’t have to, you know, absorb something like that through next year. We are, of course, though, going through joint bargaining with our union groups at both Alaska and Hawaiian.

And so at some point, hopefully in the future, you know, sooner than later, we obviously want to integrate them as fast as possible. We’ll ultimately see what the economics of those are. Going into next year, you know, we will have a tailwind on cost synergies, which should help offset some things. You know, a lot of those really ramp up kind of in the fourth quarter this year. So, you know, three quarters of next year, you’ll get the effect of that coming through.

There’s a little bit more maintenance I know next year, especially on the engine front that we’re working for. I don’t know the size of it, but so there’s some decent puts and takes, but I think, like, the cost synergies is one of the bigger opportunities. And then ultimately, what, you know, our growth trajectory looks like next year, which, you know, will be a little bit of a function of how demand does.

Andrew, Analyst, Bank of America: But Sure.

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: Obviously, we’ve in the last two years, our growth has been a lot more constrained than we had anticipated, which of course is pressuring the CASM front just because we’ve got all these integration activities happening that we need to get done. And so there’s not room to cut those types of things. But you know, I think on average, the next couple of years, we should hopefully have an opportunity to do better than the industry average on cost just given some of the synergies and things of that nature that we’re doing.

Andrew, Analyst, Bank of America: Great. And what’s the timing in terms of getting the labor groups combined? How long does that take?

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: Yeah. There’s no set time. These are just regular labor negotiations, you know, just slightly different than normal. But with Virgin America, I think the fastest deal we did was twelve months post acquisition, and then the the longest one took thirty six months. So probably nothing this year.

I mean, I could be wrong. It it would be nice to get something across the finish line this year if we could, but, know, there’s a chance for some of them to happen next year, and there might be some of that take a little bit longer. But we’re currently in bargaining with three of the units right now. So we’ve already started the process and kicked that off, which is good. Okay.

Andrew, Analyst, Bank of America: Last question for the for me for this morning. Heard over the past few days, I mean, Boeing’s kind of getting back on track from a narrow body delivery perspective. Maybe a little bit less so wide body, but, obviously, you’re all narrow body order order book right now. Any you know, what are you what are you seeing on Boeing? Yeah.

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: I think similar commentary. I I think it’s been good. You know, I think we’ve unfortunately been in the habit of adding a lot of extra buffer to when we believe we’re gonna get airplanes the last two years. And currently, they’re delivering ahead of some of those buffers, you know, the time we think we’ll get it versus when we put it in schedule. So all good on that front.

I actually think on the seven eighty seven, things have been good there as well, and we have two more to come this year. So at least for the ones that we’re taking, things have been going well. So, yeah, I think that that then Paul, and obviously, we we are only twelve minutes down the road from where they build the seven three sevens, and so we’re on-site a lot. We met with them last week. And so there’s a lot of great progress that we’ve seen over them for the last eighteen months, which is great

Andrew, Analyst, Bank of America: to see. Great. And it’s it’s refreshing that up thing not having to ask an airline about tariff impact. So, yeah, don’t don’t have to worry about that with you guys. Yeah.

But unless there’s an a question in the audience, we’re about a, you know, a minute left. If there are no questions, we can do you have one?

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: That’s with the rebranding. Hey, guys. Maybe if you could just give an update on the rebanking progress at Portland and Seattle and some of the the wins and what you’re seeing there.

Andrew, Analyst, Bank of America: Yeah.

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: Yeah. I think I think we mentioned it on the call, but the Seattle rebanking is effectively done, I believe. We obviously had already banked Seattle a lot over the years. But connecting traffic through Seattle is up 15% as we speak. You know, some of that probably is coming through on these Tokyo flights, which is great.

And then Portland’s actually a really great story. A lot of that banking is starting to come to fruition this quarter. But future bookings on those flights are up 200% with connecting itineraries. And so Portland obviously had a lot of opportunity. Portland was a pretty flattened schedule previous to this.

So it’s going from being a flattened schedule to a true banked hub and, you know, the early returns are great, which is good. I, you know, we’ve talked about Portland’s being a relief valve for Seattle, moving more domestic connections over Portland to free up Seattle for either local or international connectivity. So so far so good. I mean, I don’t know what our goal was, but 200%, that’s a pretty big number.

Brett Catlin, VP of Loyalty, Alliances, and Sales, Alaska Air Group: Yeah. Think importantly, you’ll really see the benefit come into the troughs. Like, we’re gonna fill planes in the summer from the Pacific Northwest. And so the power of banking comes in January when you have the brand, you have the network, and you can add those points of load factor that would have

Ryan St. John, VP of Planning and Investor Relations, Alaska Air Group: been difficult on a local basis. Yeah. Maybe we’ll take some of those Kansas City people going to Tokyo to Hawaii in January. Exactly.

Andrew, Analyst, Bank of America: There you go. Good. Great. With that, thank you for joining us.

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