The operator welcomes listeners to the Alaska Air Group 2024 First Quarter Earnings Call and introduces Ryan St. John, who provides an update on the company's first quarter results. The company reported a net loss of $132 million, with an adjusted net loss of $116 million. The call will include forward-looking statements and will refer to non-GAAP financial measures. Ben Minicucci mentions the accident involving Flight 1282 and the grounding of a third of the fleet for 4 weeks as the most significant event of the quarter.

Despite the challenges faced by the grounding of the MAX aircraft and the DOJ's investigation into their proposed acquisition of Hawaiian Airlines, Alaska Airlines has been able to achieve their goal of reducing losses in the first quarter and even turn a small profit. This was due to careful planning and optimization of their network, the return of business travel, and strong demand for leisure travel.

The company is pleased with their Q1 results despite the challenges of the MAX grounding and has revised their full year adjusted EPS. They are confident in their Q2 outlook and remain committed to their strategic initiatives. They have received compensation from Boeing and have a strong partnership with them, but will hold them to high standards. The company has regained their reliability and has seen strong demand from guests since returning their entire fleet to service.

The company has worked tirelessly to restore operational excellence and has seen a 99.5% completion rate in February and March. They give credit to their maintenance and engineering team for bringing their MAX lines back into service safely. They have high expectations for Boeing and anticipate a decrease in planned deliveries for the year. The company is focused on delivering a high level of service and profitability in the second quarter. They acknowledge the hard work of their team and are optimistic about the future.

In the first quarter, the company achieved record revenues of $2.2 billion, despite losing $150 million due to the grounding. Capacity decreased by 2.1%, but would have increased by 3.5% without the grounding. Unit revenue was up 3.8%, but would have been up 5% without the grounding. The outperformance was due to better reallocation of flying, an increase in business travel, and growth in managed business revenue.

In the first quarter of the year, tech companies and professional services saw significant revenue growth, with managed business revenues fully recovering and tech revenues at 85% recovery. Business travel is expected to continue without any setbacks in the second quarter. The restoration of schedule reliability and close-in leisure demand also contributed to revenue growth, with premium cabin performance showing a structural shift towards higher demand. Despite the grounding, first and premium class revenues saw an increase, with paid premium capacity improving significantly.

In the second quarter, we expect a 5-7% increase in capacity, with a focus on premium guest experience and loyalty program results. We have extended retirements of older aircraft and added more capacity on the regional side. June is expected to be the most profitable month, with added flying focused on high demand markets. Bookings for the second quarter are looking positive, with yields remaining healthy but slightly moderating due to industry capacity. The yield and booking curve is expected to continue strengthening as the quarter progresses.

The company had a strong start to the year, despite the challenges faced, and is well-positioned to continue performing well in the coming months. The team has shown resilience and prioritized safety, while also delivering a strong network plan and meeting their long-term target. The adjusted loss per share for the first quarter was $0.92, excluding compensation received from Boeing for the MAX fleet grounding. The impact of the grounding was $162 million or $0.95 of EPS and 7 points of margin.

In the first quarter, the fuel price per gallon was $3.08 due to West Coast refining margins. The company's total liquidity is $2.8 billion, with debt repayments of $100 million in the quarter and expected to be $50 million in the second quarter. Unit costs were up 11.2% year-over-year, with 6 points attributed to the fleet grounding and $30 million in operational recovery costs. Labor rates for employees are a major driver of cost increases, and the company has recently finalized seven labor contracts. Productivity has improved by 2% year-over-year, and a new preferential bidding system for pilots will be implemented in May to further improve productivity and align schedules with pilot priorities.

The company is focused on maintaining a strong margin profile and relative cost advantage over its competitors. They have outperformed Delta and United in terms of unit cost performance and have closed the margin gap with their largest peers. The company expects lower capacity growth and CapEx due to delays in Boeing deliveries.

The company expects economic fuel costs to be between $3 and $3.20 per gallon in the second quarter and is taking steps to mitigate the disadvantage of high West Coast fuel costs. These steps include discontinuing their hedging program and changing their fuel tender process. Despite a $0.35 year-over-year headwind from fuel, the company is optimistic about their outlook for the rest of the year, with a projected EPS between $3.25 and $5.25 for the full year. They attribute this optimism to the expanding economy and their focus on safety, operational excellence, and commercial initiatives.

The company is focused on competing and maintaining its advantage in order to deliver strong financial results. They are not providing guidance on CASM, but expect to see an improvement in unit cost in the second quarter due to slower growth in the back half of the year. They are also balancing capacity and unit cost to maintain margin health. The percentage of corporate revenues is not disclosed.

The speaker discusses continued improvement in strength in their Corporate position and the increase in business travel, particularly on the West Coast. They also mention that June has become the strongest month for travel and they are adjusting capacity to accommodate this trend. In terms of Alaska, there is some fluctuation in industry capacity, but the speaker does not mention any significant impact on their market share.

The speaker discusses the strong demand and stable environment in the second half of the year for the airline industry, with no signs of demand slowing down. They also mention that fuel costs have increased, but this will be offset by strong business demand. They also mention a new commercial initiative, Alaska Access, which aims to broaden their products and services.

The speaker discusses the technology changes that will help increase the company's revenue and mentions their excitement about it. They also mention the strength of their close in and double-digit increases in unit revenues in April, and expect Q2 to continue to be strong. They also note that their network is well configured and their premium class and ancillary revenues are performing well. The speaker also mentions that the West Coast may have a slower business recovery compared to other regions.

The speaker discusses how the company's performance has improved in the first quarter and attributes it to their success in meeting demand for premium products. They also mention that they expect their unit revenues to continue to be strong, while their unit costs may improve in the second quarter. They also touch on the situation in Hawaii and mention that they are seeing a competitive market there.

Andrew Harrison and Duane Pfennigwerth discuss the performance of Hawaiian Airlines in Hawaii and the impact of the COVID-19 pandemic. While the overall performance of Hawaii is within expectations, Maui is still struggling and will take some time to recover. The airline is adjusting its capacity accordingly. Shane Tackett also mentions the company's plan to self-supply fuel in order to improve margins and compete with other airlines. This is a strategy that has been used by other airlines and will take some time to implement.

The speaker mentions that they will be implementing a plan to save money on gas later this year and into next year. They will provide more details as they solidify their plans. They also mention that around 10% of their capacity is regional and that the regional businesses have been profitable. The speaker also discusses the positive performance of their regional partner, Horizon, and the strong corporate momentum, but does not provide specific details on how corporate patterns compare to pre-COVID.

During the first quarter, trip duration has been elongated and there has been a significant increase in demand. The company will have a better understanding of the impact of these changes on trip duration in the next quarter. The revised full year guide has a $2 range, which is mostly due to habit. Fuel is the main driver of changes in EPS. The company is expecting double-digit RASM on 3% capacity in April.

The speaker is responding to a question about the company's guidance for the second quarter. They clarify that the first quarter is typically weaker and the second quarter is stronger, and that there is a good setup for the back half of the year. They also mention that they have some plans for their loyalty program that they will share at a later time.

During a recent conference call, Alaska Airlines executives discussed their plans for the future, including potential changes in revenue and loyalty programs. They also addressed the possibility of a merger with Hawaiian Airlines and how it may affect their exposure to West Coast refining costs. Additionally, they mentioned their goal of obtaining an investment grade credit rating from all three agencies. However, their current focus is on the proposed acquisition of Hawaiian Airlines and raising funds for it.

Shane Tackett, Chief Financial Officer of American Airlines, discusses the company's debt and credit metrics and their efforts to be reconsidered by credit agencies. He also mentions their discussions with Boeing and the need to stabilize their delivery stream, potentially with a focus on the MAX 10 aircraft. He notes that a proposed transaction may impact their current order book and they need more time to determine their future skyline and its potential impact on CapEx and free cash flow.

The speaker is asking about the spread between Premium and Saver fares and how the company plans to manage inventory in the future. The company has seen success with the Saver Fare and is now focusing on yields and pricing in all cabin classes. The speaker believes there is only good news to come from this approach. The next speaker asks about the evolution of close-in leisure during COVID.

The speaker discusses the impact of last minute bookings on the airline industry, noting that it has become a bigger category due to the COVID-19 pandemic. They also mention how the company had to adjust their cabin and demand strategy to accommodate more last minute bookings. The speaker also hints at upcoming changes in their loyalty program.

The speaker discusses the company's loyalty program and its potential changes, but does not provide any specific details. They also mention that they have hired additional staff in preparation for expected aircraft deliveries, but do not anticipate being overstaffed. They are in discussions with Boeing about potential compensation for any cost burden due to delayed deliveries.

The speaker asks a question about Alaska's plans to purchase sustainable aviation fuel (SAF) and its potential impact on margins. Diana Birkett Rakow, the speaker from Alaska, responds by stating that SAF will account for 1% of their total fuel in 2024 and there is currently a green premium over the cost of regular jet fuel. She also mentions partnerships and efforts to grow the SAF market. Shane Tackett adds that there will not be a noticeable margin impact this year but it may become a consideration in a few years as SAF becomes a larger part of the supply. The next question is from Chris with Susquehanna Financial Group.

Shane Tackett confirms that the previous comment was excluding freighter costs and discusses the current and future size of the freighter fleet. Ben Minicucci expresses confidence in the supply-demand balance and forecasts double-digit pre-tax margins for the second quarter based on strong demand.

The speaker states that their company had a profitable quarter and is well-positioned for the rest of the year. They thank the participants and end the call.

This summary was generated with AI and may contain some inaccuracies.