Alaska Air (NYSE:ALK) Group reported strong financial results for Q4 2024, surpassing both earnings and revenue forecasts. The company posted an adjusted earnings per share (EPS) of $0.97 against a forecast of $0.43, and revenue of $3.53 billion, exceeding the projected $3.41 billion. Following the announcement, Alaska Air's stock rose by 4.46% in after-hours trading, reflecting investor optimism about the company's performance and future outlook.
Key Takeaways
- Alaska Air exceeded Q4 2024 earnings and revenue forecasts significantly.
- The company launched a new $1 billion share repurchase program.
- Stock price increased 4.46% in after-hours trading, signaling positive investor sentiment.
- Alaska Air completed the acquisition of Hawaiian Airlines, enhancing its competitive position.
Company Performance
Alaska Air demonstrated robust performance in Q4 2024, with adjusted EPS reaching $0.97, more than double the forecasted $0.43. This marks a significant improvement from previous quarters, showcasing the company's successful execution of strategic initiatives. The acquisition of Hawaiian Airlines and expansion of international routes have positioned Alaska Air favorably within the industry. The airline's focus on premium services and loyalty programs is expected to drive future growth.
Financial Highlights
- Revenue: $3.53 billion, up from $3.41 billion forecasted.
- Earnings per share: $0.97, exceeding the $0.43 forecast.
- Full year 2024 adjusted EPS: $4.87.
- Full year adjusted pre-tax margin: 7.1%.
- Share repurchases: Over $300 million in 2024, with a new $1 billion program launched.
Earnings vs. Forecast
Alaska Air's Q4 2024 results significantly outperformed expectations, with EPS at $0.97 compared to the forecasted $0.43, a surprise of over 125%. Revenue also exceeded forecasts, coming in at $3.53 billion against a projected $3.41 billion. This performance underscores the company's strong operational execution and strategic initiatives.
Market Reaction
Following the earnings announcement, Alaska Air's stock rose by 4.46% in after-hours trading. The stock's increase reflects investor confidence in the company's ability to surpass expectations and deliver strong future performance. The current stock price remains within its 52-week range, indicating resilience despite broader market volatility.
Outlook & Guidance
Looking ahead, Alaska Air has set an ambitious EPS target of over $5.75 for 2025, with anticipated capacity growth of 2-3%. The company plans to invest $1-1.5 billion in capital expenditures while aiming for positive free cash flow. Strategic initiatives include expanding international routes and integrating Hawaiian Airlines into its operations.
Executive Commentary
CEO Ben Minicucci expressed confidence in the company's direction, stating, "We are confidently shaping the future of our company." CFO Shane Tackett emphasized the importance of customer loyalty, noting, "Our job is to go drive loyalty." These statements highlight Alaska Air's focus on strategic growth and customer engagement.
Q&A
During the earnings call, analysts inquired about the integration of Hawaiian Airlines and the expansion of international routes. Alaska Air executives provided a positive outlook on network integration and highlighted improvements in inter-island and Hawaiian network performance. The company remains focused on cost management and capturing synergies from recent acquisitions.
Risks and Challenges
- Integration challenges with Hawaiian Airlines could pose operational risks.
- Fluctuating fuel prices may impact profitability.
- Global economic uncertainties could affect travel demand.
- Competition from other airlines in key markets remains strong.
- Potential regulatory changes in aviation could influence operations.
Full transcript - Alaska Air (ALK) Q4 2024:
Conference Operator: Good morning, ladies and gentlemen, and welcome to the Alaska Air Group 20 24 4th 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 alaskaair.com. After our speakers' remarks, we will conduct a question and answer session for analysts. I would now like to turn the call over to Alaska Air Group's Vice President of Finance, Planning and Investor Relations, Ryan St.
John.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group: Thank you, operator, and good morning. Thank you for joining us for our Q4 2024 earnings call. Yesterday, we issued our earnings release along with several accompanying slides detailing our results, which are available at investor. Alaskaair.com. On today's call, you will 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 and A portion of the call. This morning, Air Group reported 4th quarter and full year GAAP net income of $71,000,000 $395,000,000 respectively. Excluding special items and mark to market fuel hedge adjustments, Air Group reported adjusted net income of $125,000,000 $625,000,000 Our comments today will include discussion of Air Group reported results, inclusive of Hawaiian Airlines since the closing of the acquisition on September 18. 4th quarter and forward looking guidance are compared to prior year pro form a results as if Alaska and Hawaiian were a combined company for the full periods referenced. Lastly, as a reminder, forward looking statements about future performance 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 cost 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.
Ben Minicucci, CEO, Alaska Air Group: Thanks, Ryan, and good morning, everyone. Just 6 weeks ago, we shared our strategic plan, Alaska Accelerate during our Investor Day. This plan is focused on driving scale, relevance and loyalty by connecting our guests to the world through remarkable travel experiences rooted in safety, care and performance. With a clear vision and a strong path forward, we closed out the year with growing momentum and that momentum has only grown stronger since. We're picking up right where we left off at Investor Day, excited to share our strong results.
For the Q4, we delivered an adjusted EPS of $0.97 and for the full year 2024, dollars 4.87 both exceeding our guidance. We reported a full year adjusted pre tax margin of 7.1 percent and had it not been for the 4 week 9 MAX grounding, Legacy Air Group would have posted the best margin in the industry. To cap off the year, we aggressively repurchased $248,000,000 in shares during December, bringing full year repurchases to over $300,000,000 and fully exhausting our existing program. In January, we launched our newly authorized $1,000,000,000 share repurchase program and will continue to leverage repurchases to underscore our confidence in our business. Before diving further into our business update, I want to take a moment to reflect on the pivotal year we had in 2024.
Just a year ago, following Flight 1282, a third of our Alaska fleet was grounded, operations were severely disrupted and uncertainty loomed. Yet our teams rose to the challenge with an unwavering commitment to safety and restored Air Group to the safe, reliable operation we're known and trusted for. I want to extend a heartfelt thank you to all our employees for their dedication in helping us deliver another strong year. Their commitment to excellence, care and service sets us apart. I'm excited to announce that due to Legacy Air Group's outstanding financial performance, Alaska and Horizon employees will receive a record bonus payout this year.
We expect to distribute over $300,000,000 equivalent to 6 weeks of pay. This is the largest payout in our history and we believe the highest in the industry. Investing in our people and our culture is important and we hope to have our Hawaiian employees participate in this plan in 2025. In addition, we couldn't be happier that we reached an agreement in concept with Alaska Airlines flight attendants earlier this month, and we look forward to beginning the joint collective bargaining process with all our unions this year. 2024 was a defining year in which we embarked on the most exciting transformation in our company's proud history.
The most significant and foundational piece of that strategy was closing our acquisition of Hawaiian Airlines in September. This combination strengthens Air Group with several key strategic assets, including a leading position in a top 25 U. S. Hub, an incredibly valuable brand, a mix of wide body and narrow body aircraft and a legacy of operational reliability and exceptional customer service. Moving to 2025, our work now is geared towards delivering on Alaska Accelerate, our vision for the future and it's off to a great start.
The underlying trends in our core business are improving. Our legacy Alaska assets are on track to deliver slightly positive profits in the Q1 despite the recent rise in fuel prices. Our Hawaiian assets outperformed expectations in the Q4 and while we expect them to be unprofitable in Q1, from the Q2 on we anticipate a small pre tax profit as recent network changes take effect and synergies materialize. Over time, we aim to improve Q1 performance similar to the progress made with Alaska over the last 2 years. We are confidently shaping the future of our company, building on our strengths, enhancing our business model and elevating our competitive edge through a strategy centered on maximizing our proven approach as a larger company and unlocking new opportunities across our business.
First, we're leveraging the power of our combined network, which Andrew will share more on the benefits we're already seeing. Our Seattle and Portland hub banking strategy is taking effect and early data from the launch of our first Seattle to Tokyo international route is progressing as planned. This is helping us build our international gateway in Seattle while strengthening our relevance and loyalty across our West Coast hubs and beyond. 2nd, as Hawaii's trusted airline, we're capitalizing on the combined strength of both networks, One World, a powerful loyalty program and the Hawaiian brand to become the airline of choice for both domestic and international flights in Hawaii. 3rd, we're focused on meeting all our guests' needs, including expanding our premium products and experiences at every phase of the travel journey.
And lastly, diversifying our business, including growing our cargo business through the combination of Alaska and Hawaiian. Combined with a constructive industry environment, my confidence in our plan and our ability to deliver results has only strengthened. This includes our EPS target of more than $5.75 and no margin dilution in 2025. Additionally, we're set to unlock $1,000,000,000 in incremental pre tax profit over the next 3 years through a combination of commercial initiatives and at least $500,000,000 of synergies. Integration is progressing as planned with the goal of achieving a single operating certificate by the end of 2025, followed by the transition to a unified reservation system shortly thereafter.
As we shared at our Investor Day, this is just the beginning. Our track record and future potential reaffirm our position as industry leaders, driven by clear strategies and the courage to take bold steps. And along the way, we're delivering value to everyone who depends on us, our people, our guests, the communities we serve and our shareholders. And with that, I'll turn it over to Andrew.
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Thanks, Ben, and good morning, everyone. With the 1st full quarter including Hawaiian, I'll focus my discussion on the strength of our core business trends during the Q4 and where we are headed for the Q1. Our business is transforming, and I'm excited to share what we are seeing in our network along with the encouraging initial results on the strategy we laid out last month. That is delivering $800,000,000 in profit through a combination of commercial initiatives and synergies over the next 3 years. In the 4th quarter, we achieved a record $3,500,000,000 in revenue, up nearly 10% year over year on limited capacity growth of 2.5%.
This drove unit revenues up 7% year over year, continuing an improving sequential trend and up 6 points from Q3. December, in particular, exceeded expectations, driven by a combination of close in strength from corporate demand, higher load factors and strong operational performance as we connected the Hawaiian and Alaska Networks with codeshare. Regionally, areas of strength during Q4 included North America to Hawaii, which represents approximately a quarter of our capacity and saw revenues grow 15% with unit revenues up 7%, and that's without having fully connected our networks. Alaska and Latin America improved on better alignment of supply and demand, while neighbor islands showed marked improvement with unit revenues up double digits. We also continue to see strong demand for our premium cabins.
1st and premium class revenues were up 10% and 11% year over year, respectively, on 5% capacity. Paid first class load factor was 75% for the quarter, up 3 points with yields up 4%. For the full year, total premium cabin revenues increased by 10% with unit revenue increases of 6%, exceptional performance and we expect that premium products will continue to outperform our main cabin product in 2025. As a quick update on our premium class seat expansion for the 900ER and the MAX-nine, 19 aircraft modifications have been completed to date and we're on track to have 79 done and ready to fly during the busy summer schedule. Our loyalty programs generated $2,100,000,000 in cash remuneration in 2024 with exceptionally strong Q4 results from promotions along with several exciting announcements we've made that continue to create more value and choice for our guests.
Our new premium credit card announced mid December and launching this summer has had strong initial demand across different geographies and demographics, giving us confidence in our trajectory to achieve our targets and expand our loyalty footprint outside of our current geographies of strength. Huakai by Hawaiian, our new loyalty benefits program for Hawaii residents modeled after our successful Club 49 program in the state of Alaska also continues to gain traction. In the 2 months since launching this program, we've registered over 150,000 members and card acquisitions are up 30% in the state of Hawaii year over year with accelerating card spend since close. And finally, managed corporate business travel has shown strength all year and really spiked in December with revenues up 35%, helping drive overall 4th quarter corporate revenues up 8% year over year. As we've seen in prior quarters, the technology and professional services sector led these increases, up 15% 13%, respectively.
For the full year, our managed corporate revenues were up 15%. We continue to see upside from several of our largest accounts, but as we discussed last month, an even greater opportunity for us will come from international business travel. And with the launch of our first international widebody service from Seattle to Tokyo Narita this May, we are eager to begin servicing this demand. Now turning to our outlook. With continued leisure demand strength, healthy corporate travel demand and a constructive industry backdrop, we're encouraged by the setup as we head into 2025.
We expect our capacity to be up approximately 2.5% to 3.5% in the Q1, while industry capacity is expected to be stable, up approximately 1.5%. Our advanced bookings are shaping up well, with held managed business revenue up 20%, continuing to support close in booking strength. In the Q1, we expect unit revenues to be up high single digits. Our legacy Alaska assets are building positive loads and yields year over year in January February. And like trends in the Q4, North America to Hawaii and neighbor islands are holding solid unit revenue increases year over year for January February.
International, namely international travel to Hawaii is challenged as it has been for some time, although it remains in line with our expectations and we're starting to see modest improvements given our network changes and synergy capture. As you'll recall, the 2027 targets unveiled in our Alaska Accelerate plan do not assume any material improvement in either Neighbor Island or Hawaii International Flying, with any recovery providing more upside for our business. The combined Alaska and Hawaiian network provide the foundation for significant revenue unlocks over the next few years. And while changes to our combined network begin in earnest this April, we're already starting to see our network strategy materialize. Code sharing across the legacy Alaska and Hawaiian Networks began in December and represented double digit percentages of operating carrier bookings for both Alaska and Hawaiian flights during the month, highlighting the power of selling our combined network through both platforms.
The connectivity benefits of our hub banking strategy are also beginning to materialize. Our bank schedule in Seattle began in early January, and our connecting passengers via Seattle are up nearly 20% in February with minimal displacement of our local traffic. We just loaded our banked Portland schedule a few weeks ago and early results point to a doubling of connecting guests. Initial bookings on our 1st Seattle long haul route to Tokyo Narita shows strong core demand in Seattle with 56% local traffic. But importantly, approximately 25% of flow traffic is coming from East of the Rocky Mountains beyond our core.
As we laid out at our Investor Day, with efficient itineraries and a great product, we become a top choice for more travelers across mid continent geographies. And lastly, 55% of booked traffic comes from our loyalty members, demonstrating the deep support and demand that we know our members have for our international service. Although a relatively small 5% of our total revenue, our international flying is a key element of our strategy to meet our guests' demand and continue building relevance in Seattle and beyond. I want to close by reiterating that we are building out the commercial engine of Air Group to an extent we have never done before. We're capitalizing on our momentum and 25 is looking strong.
As we look forward, our managed corporate revenues continue to strengthen, our premium cabins continue to perform, our hub banking is already showing positive returns and our synergies from the network are being realized. We are well on our way to achieving the plan we outlined as part of the Alaska Accelerate to unlock $800,000,000 in incremental profit over the next 3 years, including $300,000,000 in synergies. And with that, I'll pass it over to Shane.
Shane Tackett, CFO, Alaska Air Group: Thanks, Andrew, and good morning, everyone. As you know, we finished the year with a successful Investor Day in December, where we had the chance to speak to the future we are focused on creating at Air Group. And while we are in the early stages of building toward the vision, the strength of our Q4 results are a fantastic way to get started on that future. And while 2024 Delta is a tough start with the fleet grounding negatively impacting our results by approximately $200,000,000 we closed the year strong. And absent the impact of the grounding, Legacy Alaska posted the industry's best adjusted pre tax margin.
This result speaks to the strength and resilience of our company, our people and our business model. December closed particularly well for both Alaska and Hawaiian. In fact, Hawaiian posted its best absolute adjusted pre tax profit and margin in the month of December. We are now focused on our Alaska Accelerate plan building on our fundamental strengths, safety and operational excellence, cost discipline and balance sheet strength, as well as building a strong commercial pillar that we believe is required for longer term success in this industry. In particular, we will be focused on building scale, relevance and loyalty across our network.
We are highly confident in our plan and our ability to execute and already are putting into action initiatives that will enable us to deliver on our financial targets. Turning to Q4 results. Our adjusted earnings per share were $0.97 approximately $0.50 above our guided midpoint. $0.25 of the EPS outperformance is directly attributable to the strength of our core business. We also benefited from a renegotiation of certain interest payments and from a true up of our tax liability for the year.
For the full year, we reported earnings per share of $4.87 similarly above our previously guided range with an adjusted pre tax margin of 7.1%, which was driven by continued underlying strength in the legacy Alaska business model and an improving trajectory of Hawaiian. Our total liquidity inclusive of on hand cash and undrawn lines of credit stood at $3,400,000,000 at year end. Scheduled debt repayments for the quarter were approximately $65,000,000 and are expected to be approximately $155,000,000 in the Q1. In October, we raised $2,000,000,000 in the capital markets, borrowing against our valuable mileage plan program and achieving amongst the tightest spreads compared to similar debt issued previously by industry peers. In Q4, we used those new funds to repay $1,600,000,000 of higher rate debt acquired from Hawaiian.
Together with the renegotiation of interest payments, our debt raise and prepayment activity have improved the interest expense profile of the combined business. In 2025, we expect non operating expense to be about $40,000,000 per quarter. To end the year, our debt to cap stood at 58% with our net debt to EBITDAR at 2.4x. As we outlined last month, we expect to return to our long term target of less than 1.5x leverage in 2026. As Ben discussed in his remarks, we also repurchased $312,000,000 of ALK stock in 2024 as we remain confident in our outlook and the value we're poised to drive for the business over the next few years.
With these purchases, we more than offset dilution and reduced our outstanding share count to 123,000,000 shares, resulting in a share count now on par with 2019 levels. We have begun executing our new $1,000,000,000 share repurchase program in earnest in January, which we intend to fully consume within the next 4 years. Our ultimate repurchase pace will be dependent on the margin profile and cash flow of the business over that time. 4th quarter unit costs were up 8.6% year over year, coming in slightly better than guidance despite higher performance based pay accruals. Normalizing for bonus pay, our core unit costs would have been 2 points lower.
The teams across Alaska, Hawaiian and Horizon did a great job managing costs all the way through the end of the year. For the full year, legacy Alaska unit costs ended up approximately 7% year over year despite the grounding and Boeing (NYSE:BA) strike that reduced planned capacity materially and drove an approximate 2 point full year impact to CASM ex. Turning to our outlook, while we've moved away from granular unit metric guidance, there are a few specifics to keep in mind for 2025. Our full year capacity growth of 2% to 3% assumes we will receive approximately 14 737 MAX Aircraft and 3787 Aircraft from Boeing this year. We expect flat growth across our Alaska assets given assumed delivery timing and retirement of our oldest 730seven-nine hundred aircraft and expect a material increase in Hawaiian asset utilization, particularly within the A321 fleet.
We expect 1st quarter capacity to be up 2.5% to 3.5% year over year. We expect unit costs to be up low to mid single digits in Q1 with greater improvement in the back half of the year as productivity improves, synergy capture begins to ramp materially and we lap the extremely low growth rate for the second half of twenty twenty four. A notable cost item for the year we expect will be the pending new contract we reached initial agreement on with our Alaska flight attendants. While it will be several more weeks before we learn if flight attendants approve the deal, the costs for the new agreement are assumed to be effective beginning January 1st and would represent approximately 1.5 points of unit cost pressure for the year. For 1st quarter earnings, we expect a loss per share of $0.50 to $0.70 This seasonality is, as you know, normal for Alaska.
However, represents our expectation of a material improvement on a year over year basis. While we will increasingly focus our commentary on combined results, I will note on today's call that our legacy Alaska assets are expected to breakeven in Q1, consistent with the goal we set for ourselves 2 years ago. And our Hawaiian Airlines assets are expected to improve by over $50,000,000 in the first quarter compared to 2024. To summarize our guidance, in the Q1, we expect capacity to be up 2.5% to 3.5%, RASM to be up high single digits, CASM ex to be up low to mid single digits and a loss per share of $0.50 to $0.70 For the full year, we still expect to deliver EPS of more than 5.75 dollars on capacity growth of 2% to 3%. We also expect $1,400,000,000 to $1,500,000,000 of CapEx and to generate positive free cash flow this year.
We've closed another strong year and have entered 2025 with more momentum and confidence than we felt in a long time. We have a playbook to win in the industry in the years to come, including significant profit unlock from synergies and initiatives, which we have already begun executing on. And all of this is against a constructive industry backdrop, with many airlines increasingly focused on returning to threshold margin performance and guests who are increasingly loyal to airlines that can deliver better and more premium experiences end to end. We have a clear strategy of where we want to go and we're looking forward to delivering on our future vision from here forward. And with that, let's go to your questions.
Conference Operator: And our first question today will come from Brandon Oglenski with Barclays (LON:BARC).
Brandon Oglenski, Analyst, Barclays: Hey guys, good afternoon or good morning. Thanks for taking the question. I guess, Ben, it seems like everything is firing on the right cylinders here. As you look at the network reallocation this year, like what is most important? Because we hear a lot of moving pieces here, like launching an ARITA flight out of Seattle, but then also I think the bank structure at Portland and Seattle as well sound pretty important.
So can you maybe elaborate more on that or maybe that's a better question for Andrew, I'm not sure.
Ben Minicucci, CEO, Alaska Air Group: Well, maybe I'll start and then I'll just get Andrew. I think overall, you're right, Brandon. It's a great question. We have a lot going on and fortunately I have just an outstanding team across the company. We've got an integration that we're doing.
So we've got to keep our eye on executing a single operating certificate this year and a unified reservation system. But along that, we've got all these synergies coming through. And so connecting the networks is extremely top of mind for us. As Andrew mentioned, all the synergies that come from that. International flying, getting the operation really focused on not missing a step is where I'm just keeping the company between the guardrails.
But Andrew, just a little more color on that.
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Yes, I think hi, Brandon. As you see with our guidance, our capacity growth is very low this year. So what we're really focused on is moving our aircraft around and positioning them in the best way possible. I think with the re banking again just moving our aircraft around and being very deliberate about what connects to what and we've seen significant goodness there. The last thing I will say is that we launched 19 new markets in December January of this year to replace capacity in the Q1 that hasn't been performing.
And I think that's a big part of what we've done, all but one of those markets is seasonal. So again, we're trying to use our assets that we have today to unlock the synergies and to be very purposeful about where we fly and how we fly.
Brandon Oglenski, Analyst, Barclays: Well, it's definitely a great outlook. And Andrew, really quick, I think you mentioned corporate travel up pretty significantly in December. Can you maybe elaborate on that and the trends that you're seeing here in January?
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Yes. The corporate travel was up about 8% in the Q4 and we see a lot of shorter haul West Coast traffic, business traffic coming back in that that's why it drove yields were higher growth and passengers for the full year was 15%. And as we sit here today, our held corporate revenues managed are up 20% as we go into the Q4 here. And there is still a number of clients in other areas of the managed corporates that we think will continue to grow. So it's a really good outlook right now.
Brandon Oglenski, Analyst, Barclays: Appreciate it. Thank you.
Shane Tackett, CFO, Alaska Air Group: Thanks Brandon.
Conference Operator: And our next question will come from Connor Cunningham with Melius Research.
Connor Cunningham, Analyst, Melius Research: Hi everyone. Thank you. Maybe just sticking with the banking situation that number on Seattle of up 20% was obviously a lot. Is that are you already benefiting from the network connect of Hawaiian to legacy Alaska? Like is that what's driving that?
Or is it just the changes that you've made to the legacy Alaska network that's really been
Shane Tackett, CFO, Alaska Air Group: the needle over there?
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Yes, hi Connor. I mean it's obviously both but I think there's significant part you got to remember and our load factors have always been a challenge in January February. So there's plenty of room on our airplane and we've just reconfigured the flights to maximize our connectivity
Andrew, Analyst, BofA Global Research: and the team is
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: getting much better at that. In fact, I'm excited sitting here today that we're sitting on just above 80% load factor for January, which has always been our goal and we've struggled to do that and we're sort of there this year. So it's just really exciting to see. And Andrew, we have 3 50 flights
Ben Minicucci, CEO, Alaska Air Group: a day up to 400 in the peak in Seattle. So that's just a lot of flights coming in connecting. Okay. That's helpful.
Connor Cunningham, Analyst, Melius Research: And then not to get ahead of myself, but obviously a really strong start on unit revenue in the Q1. There's some noise from the MAX situation last year. But as we look at the calendar and all that stuff, your own capacity plans, like it would suggest that you're going to get a little bit better from here. So I know it's early, but if you could give any indications on how spring breaks kind of your expectation there and how things are booking and maybe anything you're seeing on spring trends in general, that would be helpful. Thank you.
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Yes. Thanks Connor. I mean spring is still just starting to come into the window and the teams actively managing that. So I don't have anything exciting to report there. I think what we're really focused on is the continued network synergies with the Alaska assets and the Hawaiian assets and bringing those together.
And as we've mentioned in our prepared remarks, the North America to Hawaii and neighbor islands are all continuing to improve. But I fully expect to have a very strong spring break, and that gets more into our higher demand period, but things are looking really good as we sit here today.
Connor Cunningham, Analyst, Melius Research: Great. Thank you.
Ben Minicucci, CEO, Alaska Air Group: Thanks, Connor.
Conference Operator: And we'll move next to Scott Group with Wolfe Research.
Scott Group, Analyst, Wolfe Research: Hey, thanks. Good morning. Wanted to just follow-up again on the high single digit RASM. Maybe if you can unpack it a little bit more between what you're seeing in legacy Alaska versus Hawaiian. How is cargo that's really, really strong right now contributing to that?
And then maybe just with that, like I remember last year after the MAX issues, March ended up being like a really strong RASM period for you. Do you feel like you've that month, do you feel like you've captured like the comp getting tougher later in the quarter in this?
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Hi, Scott. Yes, just to check through a couple of those. Both the Hawaiian assets and the Alaska assets are performing well on a unit revenue basis. There's just a lot of noise that occurred last year. You had rollover impact from the Maui fires.
You had flight 1282. We had a very different network. We didn't have the combined network and co chair. And as we've shared in the past, January February are always the most opportunity for us to improve and you're seeing that and that's being done. March and spring break, I think, are always good for us.
I think we have a better setup this year as far as our network and what we're doing. And just to reiterate, we have all the goodness of the synergies and connectivity coming through. So we are very excited about how this season is shaping up.
Scott Group, Analyst, Wolfe Research: Okay, great. And then maybe just Shane, I think you've got a slide in the deck looking at like the lumpiness of capacity. Maybe like help us think what that means in terms of CASM as the year goes on. Does CASM improve? Maybe does it get worse in Q2?
And then does it get better in the back half of the year relative to the low to mid single digit you're doing in Q1?
Shane Tackett, CFO, Alaska Air Group: Yes. Hey, thanks Scott. Well, the simplest way to answer your question is yes, pretty much. That's going to be the contour. We have the lowest rate of growth in the year probably in the second quarter and the hardest comp because of our growth rate and performance last year on costs.
Second half, we're going to start to see the real benefit of synergy capture, of really starting to get utilization up on the A321 fleet and benefit from the productivity that we'll sort of be able to drive from those two things. And so I think we're going to have a good quarter this quarter with unit costs. Our hardest comp is going to be next quarter. And I think we're going to then flow through the rest of the year in a really nice trajectory and exit well. So I think the thing that we've continually talked to you all about since December is we do expect RASM to outperform CASM throughout the year and we're excited about how we can perform this year.
Scott Group, Analyst, Wolfe Research: Helpful. Thank you guys. Appreciate it.
Ben Minicucci, CEO, Alaska Air Group: Thanks Scott.
Conference Operator: Our next question will come from Andrew Didora with BofA Global Research.
Andrew, Analyst, BofA Global Research: Hey, good morning, everyone. First question maybe for Andrew. I know it hasn't really been long since Investor Day, but have you noticed any sort of changes in competitive capacity or competitive behavior after outlining your plan and starting all of your re banking efforts?
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Hi, Andrew. I would say very little. There's some things around the edges. There's some equipment changes by some carriers here and there. But on the whole, what we've seen is the industry continue to play out and seasonal schedules get trued up further on.
But other than that, pretty the same as what we were seeing when we met with you 6 weeks ago.
Andrew, Analyst, BofA Global Research: Okay. Makes sense. And just for Shane, well, thank you for clarifying the CASM comments earlier and nice job just resetting your debt stack since the close of the deal. I'm sure all the heavy lifting is done here, but just in terms of balance sheet, are there any ways to be even more opportunistic on debt pay down from here or again are kind of the big opportunities now behind you? Thanks.
Shane Tackett, CFO, Alaska Air Group: Yes. Thanks, Andrea. I think like the major opportunities are behind us. We acquired double digit rate debt when we closed the deal with Hawaiian and we knew we wanted to move quickly to restrike that and Emily and her team have done a fantastic job. We'll continue to obviously watch the environment.
We've got nothing that would prevent us from continually buying down our rate if we could. And we've also done a, I think, a nice job of sort of the aircraft ownership side of the business. There's opportunity there as well as we go forward on the leased part of the Hawaiian fleet, but that will take some time to work itself out.
Andrew, Analyst, BofA Global Research: Maybe I could sneak one more in. Any thoughts on kind of potentially what you could do with the payroll release loans as that resets, I guess, later this year on the first tranche? Thanks again.
Emily, Finance Team Member, Alaska Air Group: Thanks, Andrew. This is Emily. So we are looking at those PSP loans that as they come to convert to higher interest rates starting here in 2025, it's likely that what we will do is use some of our planned debt repayment to just get ourselves out of those loans. But it's also possible that if we find some compelling finance opportunities that we would just replace them with more favorable rate debt.
Ben Minicucci, CEO, Alaska Air Group: Thanks, Andrew.
Conference Operator: And we'll hear next from Jamie Baker with JPMorgan.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group0: Hey, good morning, everybody. So I'm not at all trying to detract from your momentum, but I think I have a fair question to ask. As you now understand the Hawaiian franchise inside and out, what if anything and there has to be something, I hope, that has surprised you to the downside? And let me give you an example, because you may recall I asked this question shortly after the Virgin integration kicked off. And one of the things you cited then were aircraft leases.
Virgin had really good economics, but a lot of duration in those leases. So that sort of thing. Anything you can call out that has disappointed you?
Shane Tackett, CFO, Alaska Air Group: Jamie, thank you for the question. Honestly, certainly not aircraft ownership. I think we feel good about the fleet we acquired. And I think just one difference is I do think while we spent a lot of time in due diligence on the Virgin acquisition, we spent multiples of that on this acquisition. So I would have expected fewer surprises, not to say there aren't things ahead of us.
But from a just core understanding of how that business was working, how they where their cost structure had moved over time, where the soft spots in the network were coming out of the pandemic and some of the challenges that they faced that really weren't that they're doing like the wildfires in Maui and the GTF issues. I think all of those, Jamie, we have not seen a material difference in what our expectation was. I appreciate that you noted that we have complete command over the 2 companies. We've maybe not I don't think we would quite say that yet. I think we're racing to get there.
But we've had the company for a single quarter. And so there's still much for us to learn. And maybe Ben on people and culture and those sorts of things, which I think have been positive too.
Ben Minicucci, CEO, Alaska Air Group: Yes. You know what, Jamie, it's a great question. And I keep looking for things that we didn't we missed during our due diligence. But like Shane said, with our Board, we because we went through this before with Virgin America, so we were experienced at what to look for. There is nothing coming at us.
In fact, I would just say the opposite. There's just it feels like it's better than what we had thought. Things are getting stronger. Again, they are Hawaiian produced a profit in December. They're going to be profitable from Q2 to Q4.
Q1 is better. So I think it's again the same theme. Things are better than we expect. But like Shane said, there's still a lot to come together. There's still a lot there's a few more layers of the onion that need to be peeled off and you'll be the first to know if we find something.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group0: All right. I appreciate the thorough response. And just as a quick follow-up, Ben, you mentioned in your prepared remarks, getting the Hawaiian franchise to 1st quarter getting the Hawaiian franchise to 1st quarter profitability somewhere down the road by applying some of the, I think you said lessons or best practices learned at Alaska. Can you remind us in your mind what you think are the largest building blocks or moving pieces that need to be addressed that get Hawaiian to a future Q1 profit? What's standing in the way?
Ben Minicucci, CEO, Alaska Air Group: Just one of the things that we did with Alaska is just we want to have the right amount of capacity for the demand that's available in a weaker Q1. It's putting the right airplanes in the right markets. It's staffing, it's productivity, it's all those things that we've honed over the years that we're going to duplicate on our Hawaiian brand. And I think there's just a lot of opportunity there. We've learned a lot on the Alaska side.
And I think you're going to see some of that experience and discipline be forced onto that network.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group0: Okay, terrific. Thank you very much everybody.
Ben Minicucci, CEO, Alaska Air Group: Thanks, Jamie.
Conference Operator: Your next question will come from Catherine O'Brien with Goldman Sachs.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group1: Hey, good morning everyone. Thanks for the time. Maybe first just two quick follow ups on the unit cost trajectory question earlier. I guess first is the 1.5 points of flight attendants incremental costs from the proposed contracts, is that in the 1Q guide and the full year outlook? And then second, understand second quarter sounds like CASM gets a bit worse because some of the comps there.
But just trying to understand how much better cost could get in the second half based on the tailwinds you're talking about. I guess the first half overall is maybe a bit worse than this 1Q guide. Is second half good enough for full year CASM to be better than the 1Q inflation you're guiding to? And I realized that was not too quick follow-up. So thanks for the time.
Shane Tackett, CFO, Alaska Air Group: Thanks, Katie. The flight attendant contract should it ratify? Yes, that's in our guidance for Q1 and it's fully represented there. So it wouldn't be incremental once it ratifies, which we hope it does. Yes, I don't want to get into like back half of the year guidance at this point.
I think one thing I would say is we're not going to grow as much as we have in the past, I think 2% to 3% for the full year. And we talked before about unit cost trends at those growth rates. They're likely to be more than flat. I'm actually pretty excited about where we can get to this year as we start to ramp the synergies and the utilizations. And so I guess what I would say is we're hopeful and optimistic about the back half of the year having a really good strong cost performance there as we get into the real work of getting the 2 operations together and getting synergies and productivity up.
And I know you're looking for more specifics in terms of the guide, but just know Q2 is our hardest comp and we're not really fully ramping synergies or utilization until we get into Q3 Q4. But I think we're going to have a nice cost performance this year.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group1: Great. And then maybe just one more, if you don't mind. You've noted a material improvement in inter island will be upside to your outlook. I guess, were you expecting Hawaiian to see inter island RASM up double digits in the Q4 and hope for Hawaiian overall to flip to a pretax profit in 2Q? I think that's the first time since the pandemic.
When you kind of set these targets in December, just trying to understand like how things have performed since you set that $575,000,000 plus? Thanks.
Shane Tackett, CFO, Alaska Air Group: Yes. No, maybe I'll feel this because it may be more of a like against forecast question. Certainly, when we looked at the Q4, we saw that there was an improving trend in Neighbor Island. I think what we were articulating in December and as we've talked to folks, when we sat down and looked at the potential of combining with Hawaiian, we just made no estimates around an improving Neighbor Island franchise over time. We certainly expect it to do that.
Our job is to go drive loyalty, which I think Andrew and the commercial team have done a fabulous job initially with the Huakai program and all of the sign ups, 130,000 or 50,000 people already in that program. And I think we're fully intending to be the carrier of choice in the neighbor islands and for Hawaii residents. And I think we've got a nice start to that strategy and over the long term. I think the last thing I would just remind folks is we had also remarked that the business, Hawaiian had already improved in our line by at least $130,000,000 relative to their first and second quarter result last year as they lapped some of the things that weren't really in their control like the GTF grounding and lapping the wildfires from Maui in 2023. So that business was on an improving trend.
I will say that it did better than we thought even in December. I thought I think the demand was really strong and stronger than we thought in December, which is why it ultimately moved to a nice profit for the month of December, which we were excited to see.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group1: Great. Thanks.
Ben Minicucci, CEO, Alaska Air Group: Thanks, Katie.
Conference Operator: And we'll move to our next question from Tom Fitzgerald with TD Cowen.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group2: Hi, everyone. Thanks so much for the time. I'm wondering if you would mind touching on the cargo business for a little bit, just any new updates since Investor Day and company wide, but also specifically on the Amazon (NASDAQ:AMZN) for flying? Thanks so much.
Shane Tackett, CFO, Alaska Air Group: Sure. We'll have Jason take that question.
Andrew, Analyst, BofA Global Research: Hi, Tom. Great to hear from you. It's still early days as we mentioned as we work together to get these 2 carriers integrated to a single selling platform. And a lot of the performance you've seen in Q4 was really the 2,737 freighters we brought into the Alaska network and the new Amazon business starts to generate energy. It's where we flew 6 freighters in Q4.
We hope to have all 10 by April and then we'll really see the kind of the full engine running by that time.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group2: Okay, thanks. That's really helpful. Appreciate that, Jason. And then just as a follow-up, would you mind maybe just, I don't know, maybe for Andrew, just touching a little bit more on California. San Diego was a big focus at Investor Day, as well as just curious how the inter California markets performing as well as maybe TransCon?
Thanks again. Congrats everybody.
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Yes, thanks Tom. We actually had a fair bit of growth in San Diego this year and as in 2024 and it's absorbed it very, very well and so we're very happy about that. The very unfortunate situation with the L. A. Fires, we've seen intra California down a little quite a bit as a result of those and Burbank, but the rest of the LA stations are continuing on a somewhat normal trend.
Overall, I think TransCon, especially for California and the product that we have, the MAX 9 have been doing well. So again, I think across all tides here, we're really pleased. And again, these synergies are all impacting both the Pacific Northwest and California. So again, as we move forward, those areas of our business continue to get stronger.
Scott Group, Analyst, Wolfe Research: Thanks, Tom.
Conference Operator: And our next question will come from Ravi Shanker with Morgan Stanley (NYSE:MS).
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group3: Good morning, everyone. So I know you guys already just got started. But when will you know if you can bring forward some of the timing on the integration gains, especially the combined booking system, the loyalty program and such. Is that something you'll know right out the gate as you start? Or does that kind of come in innings 5 and 6?
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Yes. Hi, Ravi. Yes, there's a very clear and definite timetable for that. We'll start the single loyalty process this summer and it'll be fully complete including the launch of the premium credit card by the way by October. And then a single passenger service system by April.
These are sort of hard dates that we and the teams are very focused on because both those unlock greater synergies from where we are today and we're on track to meet those deadlines.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group3: Understood. And maybe as a follow-up, I know this industry is kind of moving away from giving specific fuel guidance and that's probably a good thing. But you guys had probably more fuel noise than most kind of with the crack spreads and such. But how do you think about kind of how we think about that relationship and maybe kind of the volatility kind of coming down between jet fuel price and your all in price through the course of the year?
Shane Tackett, CFO, Alaska Air Group: Yes. Thanks, Ravi. Look, we're sort of tracking towards something like $2.65 for the Q1. That's what we paid to date. We, as you know, suspended our hedging program, I think, 18 months ago.
It's been a while. It has a long tail because you're buying out into the future. And so I think this year will have very, very minimal actual recognized hedging expense, which is good. That's obviously something that we had planned for a while ago and it's nice to see the benefit of that now. We'll probably get to talk to you guys about fuel more than we would refer to or you would prefer us to because Hawaiian does have a very different cost structure and profile on their fuel as they get supplied from Singapore and they enjoy a beneficial rate most of the time relative to West Coast or Gulf Coast.
So, anyhow, it's oil has gone up a bit in the last 10 days. I think it's relaxed in the last few days. And it looks like it's sort of stable right now and nothing really more exciting than that to report.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group3: Understood. We would love a specific guide for a few quarters until we kind of get into the swing of things just FY. Thanks for the time.
Shane Tackett, CFO, Alaska Air Group: Thanks, Robbie. We'll put it on the list of requested guides.
Conference Operator: And we'll move next to Duane Pfennigwerth with Evercore ISI.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group4: Hey, thank you. I don't know if you should be adding anything to the guides. It's what you're doing seems to be working. So anyway, on the transition of wide bodies into Alaska hubs, can you just remind us where we are in the ramp of that? And when are the peak seasons that we should be watching as that spools up?
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Hey, Duane. So we have 2 787s right now. We'll have 3 more next year. This year. Yes, in 25, excuse me.
So 5 through the end of this year and then another 3 next year. What we publicly announced is obviously Narita starting this May and Inchon this October. Those will both be year round markets and we're working at the time at the right time we will announce the further growth out of Seattle. As we shared on Investor Day, we're looking to have 12 markets launched by 2,030.
Ben Minicucci, CEO, Alaska Air Group: And the 1st markets, Andrew, will be on 330s to launch. Eventually, we'll be moving to
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: 787s in
Shane Tackett, CFO, Alaska Air Group: a full year. Yes.
Andrew, Analyst, BofA Global Research: I guess just
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group4: to follow-up there, are there is there seasonality to those markets? Are there peaks? Are there off peaks? I understand they're going to be full year.
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Yes. I mean, Europe, we haven't started yet. We don't know there's peaks, although we hear from others and see this getting some traction in some of the winter holidays there. I'm not really in a position to talk to the exact seasonality of all these things. What I do know and would remind folks is the Narita we're reallocating from Honolulu to Narita with and that has a very material economic upside to us.
But these market specific are a little bit more steady year round, but again, we're going to learn this and we feel really good about the bookings to date.
Ben Minicucci, CEO, Alaska Air Group: And Duane, maybe just directionally, some will be all year round and some will be seasonal. I think that's it. It will depend where we fly. We've only announced 2, but when we get to the full 12 plus out of Seattle, you'll see us keep some all year round and you'll see us move some that we need to move based on demand. So you'll see us do a mix.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group4: Thanks. And then maybe just for a quick follow-up, just on competitive capacity and I'm talking here more OA capacity cuts. Where do you think you're seeing a bigger benefit right now? Is it on the Alaska side or on the Hawaiian side? And I guess how do you see that evolving 1Q, 2Q versus the trends that you were seeing in the back half of the year?
Thank you for taking the questions.
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Yes. Thanks, Duane. Just sitting here, I'm not seeing anything abnormal or unusual. And I think as being well documented that industry growth period is extremely low. Industry capacity growth is only like 1.5% in the Q1.
So I don't think there's anything in our networks. We're seeing some relief in the Neighbor Island starting in April, but other than that I think, it's fairly stable.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group4: Okay, very good. Thank you.
Conference Operator: And we'll move to our next question from Mike Linenberg with Deutsche Bank (ETR:DBKGn).
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group5: Yes. Hey, good morning, everyone. Congrats on some really solid results and a great outlook. I just I want to go back to some of the connecting commentary, Andrew, that you brought up. I mean, doubling in Portland, up 20% in Seattle, obviously impressive numbers.
But I have to think it's off of a pretty low base, which obviously lends itself to more potential upside as you become more of a connecting carrier. If we look at Seattle or Portland today, rough numbers, local versus connect, what are we, seventythirty, eightytwenty? If you could just provide some color on that?
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Yes. I think those numbers are in the ballpark. And I suppose I should remind folks again, these volumes in connecting traffic are at our low periods of time. And I think the whole plan was to have a wider catchment area. As we get into our peak spring breaks and summers, our airplanes are very full.
So we're going to be revenue managing that and being very careful about the traffic we take. So I would not expect to see these level of connectivity obviously continue at this rate, but in the low seasons it's been hugely beneficial for us.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group5: Okay, great. Helpful. And then just second, I hate to ask a modeling question, but I think it is going to have some influence on how we think about CASM ex through the year. Your freighter costs year over year up 100 percent, more than 100 percent and I know that that gets cut out. It was $37,000,000 in the Q4.
What's a good run rate? Like how do we think about your freighter costs? Are we going to be looking at like $40,000,000 $50,000,000 $60,000,000 a quarter in 2025 so we can get to the right CASM ex?
Shane Tackett, CFO, Alaska Air Group: Yes. Thanks, Mike. I think the Q4 we had the full Alaska fleet of 5 freighters operating and we had 6 of the 10 Amazon freighters. So there's 4 of 10 to go. We can sort of follow-up and if we give more specifics, we'll give it to everybody.
But I think it's almost all the way there in the Q4, a little bit to add here in the in 2025. And then we're pretty much at steady state unless we add more units at that point.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group5: Okay, great. That's helpful. Thanks.
Scott Group, Analyst, Wolfe Research: Thanks, Mike.
Conference Operator: And our next question will come from Dan McKenzie with Seaport Global.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group6: Hey, thanks. Good morning, guys. Andrew, maybe a couple of questions for you. Thanks for the perspective on international revenue. Just given the number of new markets, what percent of revenue could international represent say end of the year versus say in 2 to 3 years?
And I'm curious how you'd characterize the contribution from OneWorld as you start to ramp up that international flying?
Andrew Harrison, Chief Commercial Officer, Alaska Air Group: Yes, I think the international when I'd say that is there's long haul internationals like about 5%. So, we're sort of adding 3 aircraft a year. So I think for the next few years it's going to be a small percentage of our total capacity. I think a lot of it for us too is just the huge loyalty and utility play for us out of Seattle and the world that we can offer directly on Alaska Metal. As far as the alliances go, I think they're continuing to track along very well.
We're very happy with the setup that we have with our partners. And again, we're looking at as we grow, what can we do to strengthen these relationships and partnerships over time.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group6: Okay. And then I guess a second question. I'm wondering what you can share about the IT initiatives that you're planning to roll out later this year, at least I believe you're planning to roll out some. I'm wondering if there's an opportunity to improve merchandising, first of all. And then if so, if that would is currently embedded in the guide?
And if not, what could that upside potentially look like?
Shane Tackett, CFO, Alaska Air Group: Yes. Thanks, Dan. Look, everything that we envision being able to go execute and deliver on is contemplated in the full year guide for EPS. Certainly, we'll be excited and happy if we can deliver faster or better and we fully intend to try to do better than what we've put out there. But all of those efforts on the e commerce side are embedded in the guide.
They have a really big lift integrating the 2 reservation systems and also just bringing sort of conformity on the merchandising practices between Hawaiian today and Alaska tomorrow. And they get to do something unique that we're excited about, which is manage 2 brands or 2 front doors into our network. And we're still working through how to optimize all of that. So I think I appreciate you're asking the question. We're excited about our approach to distribution and merchandising and e commerce.
And I'm certain we'll be able to talk to you guys more about this as we get further into the integration.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group6: Okay. Thanks for the time you guys.
Conference Operator: And we'll move next to Tom Wadewitz with UBS Financial.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group7: Yes, good morning. So it may be a bit of a high level question, but you beat by a lot in 4Q, industry backdrop is pretty favorable, maybe not different than you expected. But I'm wondering why you didn't where you chose not to raise the 2025 guide. Is that just, hey, there's even more upside versus the guide than we thought before? How do you think about that just in light of the pretty big upside in 4Q and a good industry backdrop?
Shane Tackett, CFO, Alaska Air Group: Yes. Thanks, Tom. And just for a note, this will be our last question. But I think we were just with you all in December and I think we outlined a plan that we're certainly excited about, confident in and we feel a lot of momentum right now. But there's a lot to go execute on, a lot to go deliver on.
We did acquire a network that wasn't making money and we've got to go make sure we shift assets around and drive synergies and drive productivity and utilization. And if everything goes right, then like we're going to have a really, really great year from a financial performance perspective. And like I said to the last question to Dan, I'm hopeful that we are able to do even better than what we've guided to. But this is the number we were confident we can go deliver this year. No dilution of our margin, a nice increase to our EPS in the 1st year of an integration is unique in the industry and we're excited to go drive it in a way that I think others haven't been able to in the past.
And certainly, we look forward to upside from there, but not fair to provide a thought on how much upside there could be.
Ryan St. John, VP of Finance, Planning and Investor Relations, Alaska Air Group7: Okay. No, that's fair. What about just the kind of how we build on the good news in 4Q and 1Q? Were there items that you'd say, hey, I mean, I know you've mentioned a lower tax rate 4Q, but were there any other items that you'd say, oh, it was kind of idiosyncratic to 4Q, we're just like temporary for 1Q? Or should we say, hey, the kind of cost in 4Q and the revenue for 1Q, those are continuing things?
Shane Tackett, CFO, Alaska Air Group: Yes. No, I think, look, the core business, and I said this in the prepared remarks, drove $0.25 or half of the outperformance, which is pretty significant relative to a $0.40 to $0.50 initial guide for the quarter. So those trends that we saw in the Q4 relative to revenue and cost management, I think we feel like those are continuing into the Q1. The other half of the beat were probably more one time in nature, good work by the treasury team on the non op side of the business and then truing up tax rates. But certainly the core business beat, I think is something that we don't feel like was one time in nature.
We feel like we've got that tailwind with us at least into the Q1. Again, lots to do, lots to go execute on certainly on the cost plan, but we feel good about where we
Andrew, Analyst, BofA Global Research: ended the 4th quarter and how it
Shane Tackett, CFO, Alaska Air Group: sets us up for the beginning of 2025. Quarter and how it sets us up for the beginning of 2025.
Ben Minicucci, CEO, Alaska Air Group: Thanks for joining us everybody. We'll talk to you next quarter.
Conference Operator: This does conclude today's conference call. Thank you for attending.
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