Good afternoon, everyone. Thanks for joining us today. I know folks are still filtering in, so feel free to grab a seat. We're very excited to have you here today at Alaska Air Group's 2022 Investor Day. My name is Emily Halverson. I'm the Managing Director of Investor Relations. I feel like this day has been a long time coming. We've had two years of mostly virtual meetings with folks, and it's just very exciting to have you all in the room here today. I have to admit, prepping to stand on stage feels a little bit more exhilarating than prepping to turn on a Zoom to talk to you all. It's really nice. You know, we've been looking forward to this moment for quite some time. It reflects that we're in a better state than before in terms of the pandemic recovery, which is very exciting. Alaska also has a really wonderful story to tell you today, and I'm excited to have our executives come up here and join you on stage to talk about that today. You're gonna hear from our CEO, Ben Minicucci, and several others. Our Chief Commercial Officer, Andrew Harrison, will join us on the stage. You'll also hear from Nat Pieper, our Senior Vice President of Fleet Finance and Alliances. Sangita Woerner, our Senior Vice President of Marketing and Guest Experience, will join us. And then Shane Tackett, our CFO, will also be speaking. We have a guest presenter today, Dean Athanasia from Bank of America will be on later in the program as well. For those of you who are joining us over the webcast today, you'll be able to listen in to all of our remarks and the Q&A session at the end of the event. The slides and videos will progress for you in sync as they do here in the room. Our materials will be available for download later in the day. You can see our agenda up here, all of the speakers that I just mentioned to you. We'll start with about two hours of prepared remarks, and then we'll take a 10-minute break for those who need to step out of the room or clear their plates or anything like that. We'll have a Q&A session for just under an hour with our executives. We also have several of our management team here in the room, so when we're doing that Q&A session, you may hear folks chiming in from other parts of the company. It's also really nice today, we've got several folks from our frontlines and our crews. We've got some pilots here, some flight attendants, a mechanic, a CSA, and several different folks. I think you'll get a good flavor from around the company, which is great. Real quick, before we move to the rest of the presentation, I do have to call out our safe harbor slides. Our comments today will include forward-looking statements regarding our future performance and our actual performance may differ from that. Information on our risk factors that could affect our business are available in our SEC filings, and we will refer to certain non-GAAP measures today, which you can find reconciliations for also in our SEC filings. With that, I am going to invite Ben up on stage, and he is gonna kick us off. Great. Do I need the clicker? Yes. Well, good afternoon, everyone, and welcome. You know, I wanna start just by thanking Emily and her team. For those of you who know, this takes a lot of work to put an Investor Day presentation together, and I think I spoke to some of you. This is way better than the Roosevelt. Emily, thank you to you and your team. You guys just did an amazing job. It's great to be back in New York. The last time we did Investor Day was November of 2018, almost three and a half years ago. Way too long, but it's great to be back in New York City. It's great to see so many familiar faces and so many new faces. I hope by the end of the day you get to know Alaska a little more, a little better than you did when you came in. I wanna recognize some key longtime partners that have been with us. These partners have been key to our success over several decades. They've been with us a long time. You know, I wanna call out Ihssane Mounir from Boeing. He's the Head of Sales. Ihssane, where are you? Right there. Ihssane from Boeing, longtime great partner of ours. From Bank of America, we just signed a renewed deal to go to 2030. We have Dean Athanasia, who's the President of Regional Banking, and Mary Droesch. Dean is right there. Where's Mary? Mary, where are you? You're on the other side. There's Mary. Mary Droesch Heads Commercial and Small Business Products for the bank. From GE, again, a longtime partner that powers our amazing engines, we have Jason Tonich, who's the Head of Sales and Marketing. Thank you to you guys. Without great partners, you know, our success would not be there. We just wanna thank you for being here. You know, I also wanna point out Patricia Bedient. Patricia, I just saw you. Patricia Bedient is our incoming Chair. She's replacing Brad Tilden as Chairman in May. We're excited to have Patricia take that position. You know, speaking of Brad, this has been a year I've been in the role now, and when I took over, Brad kind of patted me on the back and said, "Hey, it should be all downhill from here. It's all good. That was two variants ago, and oil was at $58. Seriously, it's been a challenging year, but love being in the role. It's been an amazing experience and I've enjoyed it immensely. Today we're just excited about sharing our story about Alaska. You know, our goal for today really is to make the case of why Alaska is a great investment. We'll show that we have a proven track record, a resilient business model that works in both good times and bad times, and we believe we're better positioned than any other airline. You know, I wanna share. For those of you who don't know me that well, I wanna share a bit about myself and my background. I'm the son of Italian immigrants. My parents immigrated from Italy in the fifties. It was after the Second World War. It was poor, and they needed to create a life for themselves and get work. My parents, my father was illiterate. My mother only went to fifth grade. The one thing about my parents is they had this amazing, strong work ethic, which they instilled on their kids, my two brothers and sister. It's what I remember, the strong values and the work ethic. The one thing I remember my dad saying is, "Education is key." He would tell me, "I don't want you to be like me working outside in the elements. You know, I want you to go to work in a suit," he would say. You know, I don't go work in a suit. This is friendly. That's his version is I don't want you to work with your arms and your back. I joined the military academy when I was 17, got my master's in mechanical engineering and spent 14 years in the Air Force, on the maintenance side. Leading maintenance squadrons on deployments all over the world. It's where I learned a lot of my leadership and maintenance background came from there. I had a short stint at Air Canada for seven years and then joined Alaska 18 years ago, and I joined the maintenance and engineering division and then took on the Seattle hub or turnaround at the Seattle hub, which was an amazing experience. I was Chief Operating Officer for over 10 years. I did the Virgin America acquisition, which was always fun doing an M&A. Of course, now I'm in this role right now. What I can tell you, the reason I'm here at Alaska is because, and I have the values up right here, is the values of how my parents raised me and the values of this company about a strong work ethic and delivering on performance and doing the right thing, it just resonate with me, and it's the reason that keeps you at a company. Our values are strong, and it's so aligned how I was raised. You know, Alaska is celebrating its 90 years of service. 90 years. I kid with Sangita, and I said, "Look, just 'cause we're ninety doesn't mean we're gonna be old and stodgy." You can see we're trying to get a new vibe for Alaska, a new vibe for our brand, a vibe that's bold and fresh and that's energetic. I wanna act more like we're in our twenties, responsible twenties, not reckless twenties. The one thing that does remain true about our brand is that our DNA is founded on care. You see it with some of the campaigns we're doing. It's, you know, we care a lot and if you've flown us and you experienced us, that's what you feel is this caring. Just on a couple of values I wanna touch on one and especially with the Chinese accident, it just reinforces in this industry why safety is so important. We tell our employees all the time, whether you're an employee at Alaska or whether you're a vendor employee, you know, you have the ability, you're empowered to stop the operation. If you think something's not right or if you feel something's not right, pull the red cord. Stop the operation. It's the most important thing. You know, being kind-hearted, again, it's one of the things that I love about our culture. I love about our people. We hire for kindness, and it's something that Sangita is gonna talk more about, but you're gonna hear more about care and our culture of care. Shane told me, "Don't talk too much about the fluffy stuff. These are investors. They wanna hear the hard financial facts," and those are coming. I promise they're coming. There's one value here that even with the fluffy stuff is this team delivers on performance. This company delivers on performance. That's the hard value. We deliver operationally. We deliver financially. We are focused on delivering on our performance, but with care wrapped around it. So that's what we believe. You know, it's interesting. A lot of companies today are talking about, you know, serving all their stakeholders. When I joined the company 18 years ago, some of you will remember and know Bill Ayer, our CEO back then. We were going through a transformation. Bill brought up. It wasn't the exact graphic, but it was something similar. He called it the virtuous cycle. The point I'm talking about it, 'cause we've been talking about this at Alaska ever since I've been there 18 years. The point I'm trying to make is that we've always had a balanced long-term approach at Alaska. We wanna take care of our people. We want our people to have a good job, good pay, good benefits. We've never been bankrupt. We've never flushed our pensions down the drain. That's something we take a lot of pride in. We wanna take care of our customers. We pride ourselves on providing great, caring service. We wanna be good in the community. This goes back to our roots in the state of Alaska, where we connect communities that don't have roads. They wait for our airplane to come in with groceries and food and medicine. We take that, you know, that value, and we bring it down to the lower 48. We wanna connect with our communities. Of course, the last one, of course, we wanna be good stewards, good financial stewards and provide strong financial returns. It's something that I always credit Bill for being a pioneer and a visionary way back when 18 years ago, 'cause he set us on that track. You know, this leads to our commitment to sustainability, and I'm proud of our ESG journey, but I will tell you we still have lots of work to do. We wanna run this business responsibly and for the long term. I think what we're doing on the ESG front, though, is just a little bit different than everyone else. The reason I say a little bit different because we're holding ourselves accountable to these aggressive goals. We're just not putting aggressive goals and saying, "I hope we hit them." We're putting goals that we're gonna hold ourselves accountable to and put skin in the game. Let me give you an example. For our climate goals, we have two goals. We have our long-term goal of being net zero carbon by 2040, but we also have a short-term goal of being the most fuel-efficient airline by 2025. This means about changing the culture of efficiency with our 23,000 employees at Alaska, which means single engine taxis. It's about not having the APU on when you come to the gate, so you have external power. It's about electrifying our ground fleet. It's about our dispatchers using AI and ML technology to do flight planning. It's all of those things. We have a carbon impact goal by revenue ton mile that's worth 10% of everyone's bonus. For 23,000 people. We used it last year, the board approved it again this year. We've got a plan to reduce our carbon impact for RTM, and it's tied to our bonus program. That's an example of skin in the game. On the DE&I front, it's the same thing. When you know, the tragic events happened with George Floyd and Ahmaud Arbery and Breonna Taylor, it impacted our company immensely. We said, we gotta make a difference, we gotta make some commitments. One of our commitments is, a third of our workforce, about 30% of our workforce is BIPOC, Black, Indigenous, and people of color. But only 15% of our senior leadership was BIPOC. We made a commitment to say, "Look, we got to close that gap. We have to have the same percentage of senior leadership match our front line." Another huge goal setting. Our employees said, "Well, how are you going to hold yourselves accountable to it?" We did two things. One, which is very emotional for us, is we created what we called our commitment airplane. This commitment airplane was a livery with the faces of 14 Black children of our employees that are painted on the airplane. It has two quotes on the airplane, one from Nelson Mandela and the other one from Martin Luther King. It's always the right time to do what's right, and education is the most powerful weapon you can use to change the world. Because we believe the path to racial equity is through education. The second part of our commitment, we have the airplane. Every time I see the airplane, I call Andy, who heads our HR. "Andy, how are we doing on that goal? Are we making progress?" It's a visual reminder. The second thing we did is we tied 20% of our exec comp related to equity to achieving that goal. So again, more skin in the game. So aggressive goals, but with accountability and skin in the game attach them. I think that's where Alaska is differentiating. On the last point on board diversity, we have a phenomenal board. I am so grateful of the excellence of our board. 42% are female, 50% are racially and ethnically diverse, and we're proud to have a female board chair, which I just found out only 4% of S&P 500 companies have a female chair. So, again, we have work to do on ESG, but I think we're on the right path. A couple days ago, we were preparing for this conference and Diana calls me and I'm on the phone, I can barely hear her. She says, "Ben, guess what?" I say, "What?" "You're kind of Global Airline of the Year." I'm like, "What?" We are Global Airline of the Year. It was such amazing news for me because what our employees have been through in the last two years, and our leadership team to get through this pandemic, this is validation for all the hard work. I just want to take a moment just to thank the 23,000 employees at Alaska, the leadership team for doing. You look at the criteria, for executing the criteria that we have. This is what we've done, and you're going to hear more of my team on this criterion of what it takes to be recognized as the Global Airline of the Year. I'm so proud and we believe our airline is special, but when you get external validation, it means a lot more. I want to thank all the employees that are here and all the other 23,000. Results like this don't happen without a strong leadership team, and I'm incredibly proud of this team. They're experts in their field. They've got 20+ years of experience, either Alaska or they have industry experience. They just have a solid track record. I have worked with people like Shane and Andrew, and Constance and Andy and Joe for my entire career at Alaska. We know each other well. We don't hesitate to push on each other. We argue with each other. But I will tell you one thing about this team. This team puts Alaska first. They don't put their self-interest first. We put Alaska first in everything we do. That's why I'm incredibly proud of this team. They're a good-looking team too. The other thing I'll say about this team is they are primed to go execute the next chapter for Alaska. I want to spend a moment on our competitive advantages because I think it is these advantages that have given us our proven track record and allowed us to get through the pandemic and are really forming the foundation of what we're going to do for growth going forward. You know, your competitive advantages get tested really in bad times. We've had some bad times in our history, but recently with the pandemic and now the shock of oil prices, I look at these competitive advantages and they work. Low cost, high productivity is not a popular thing to say all the time in your company. We're going to focus on low cost and high productivity because it's hard work. If you look at our CASM advantage of 50% over the industry, we're closing the CASM gap to low-cost carriers. This is a major differentiator in our ability to produce results. I said I spent a long time as chief operating officer and operational excellence to me is something that we have to do every day. We don't do it by You guys heard me before at other investor days, we don't buy our performance. I don't want excessive block times. I don't want excessive ground times. I don't want low utilization of assets. I don't want low productivity of people. I want to get those results with an efficient operation. When we couple the two, the way it works, the way we couple low cost, high productivity or operational excellence, we have our financial team. I think we got Ryan St. John, who's our head of FP&A. He models this financial. There he is right there. He models what this airline needs to look like with low cost, high productivity. He just doesn't throw the spreadsheet over the wall to Constance. You got Ryan from FP&A, you got Constance from ops, you got Brett Catlin, who looks at our network. We create a network that our operation can execute with low cost. It's a three-legged stool. We have to have operational excellence with a schedule that generates the revenue we need, with low cost and high productivity. That's how it works. Now is there tension, is there fighting on the three? Yes. I'm happy when there's fighting, 'cause I know if there's fighting, they're gonna calibrate and get to the right point. I don't want one person winning. I don't want the schedule winning, and then the operation goes to hell in a handbasket. I don't want a budget that's not realistic. I want this thing calibrated. The three points of calibration that again have allowed us to perform in the past but again is one of the things we're doing going forward. The other two go hand in hand as well. This powerful loyalty program we have, this fierce loyalty. You know, one of the things that's just enhanced with the deal with Bank of America. But the powerful loyalty program is not just in the Pacific Northwest. Approximately 50% of our Mileage Plan credit card holders are in the Pacific Northwest. The remaining are spread across the country. That's a really amazing fact. That's for Mileage Plan and credit card holders. Then when you marry that up with our people, whether they're on the phone, at the airport, or on board, that deliver this great, remarkable caring service, this culture of care, these are the durable competitive advantage that have allowed Alaska to win, that build a foundation of our growth plan going forward. I feel strongly about these. It's something we talk about a lot every day. These are some proof points of our business model. If you look at 20 years of pre-tax performance, the key takeaway here is that over the past 20 years, our business has outperformed our competitors in both good times and bad times. As we exit the pandemic, we've outperformed our peers. If you look at 2021, we have a 15% CASM advantage over the industry. You look at our second half 2021 pre-tax performance [that] far outperformed the industry where everyone lost money. This includes two variants and some unfortunate snowstorms in Seattle in the back half of December. This would have been way better than it is right here. We're gonna be talking about growth next. A lot of questions we have is, you know, can you grow? Can you make money when you grow? Can you have a great operation? These are just some proof points historically. From 2014 to 2019, we grew three times faster than the industry. If you look at our operation, it's growing the operation. You saw our historical pre-tax margin making money, but also running a great operation. We believe we have to do all three when we grow. You cannot do one in absence of the other. We believe our growth plan needs to execute this. When we had our last planning session last September, this is exactly what we talked about. We're gonna grow. We're gonna grow with our fantastic Boeing order of 145 airplanes coming in the next five years. We can grow up to 40% over the next four to five years. 40%. That's aggressive growth. We're gonna do it profitably, and we're gonna do it while taking care of our people and our customers. That's what you're gonna hear from my team. This is our agenda for the rest of the afternoon. These are the five pillars of growth. Andrew, Nat, and Sangita are gonna talk about the commercial side, the first four pillars. Then Shane, you'll get a ton of hard facts here coming in the next little bit. Shane is gonna bring it home. He's gonna talk about the strength of our business model and really the metrics that underpin our management philosophy. You're gonna get all this stuff from the team. Before I want to hand it over, I just wanna leave you with some thoughts. Again, I just wanna press a few thoughts. We have proven over the years that our business model outperforms the industry. We've emerged from the pandemic stronger position than our competitors. When you look at our balance sheet back to pre-pandemic levels, when you look at our pre-tax profitability, we've emerged stronger than our competitors. What you're gonna hear from my team is the further actions we're gonna take to strengthen the company and continue this outperformance. I'm very confident as CEO that we're gonna be able to execute. I have the team, I have the people at the airline, we have the culture, we have the values, we have the business model to go out and execute. With that, and I'm not gonna hand it to Andrew yet, we wanna show you a cool video that Sangita and her team put together. Why don't we roll the video? Well, good afternoon, everybody. It's really exciting to be here as Ben has shared. I'm gonna talk a little bit now about the commercial. Clearly, Ben has set the bar extremely high for the rest of us as far as what we're gonna have to deliver, so we're gonna walk you through that today. You know, it's the first chance. Really, what I'd like to do in this section is to really be able to bring you up to speed on where we are today, given acquisitions and pandemics, to really set the new chalk line. This is really the first chance I've been able to do this. My so-called colleague, Shane Tackett, he benched me in 2020, in case you didn't know. I was not permitted on earnings calls anymore. Something about if you're not part of the solution, Andrew, you're part of the problem. But then again, as it was in charge of revenue, I would've benched myself anyway 'cause it wasn't performing. But reality is, it was a very important period of time for us in 2019 because we were poised as we were putting the Virgin America acquisition behind us, we were starting to really get our stride. I remember we ended 2019 and we had a 4.5% pretax margin for our California franchise, which was continuing to steadily improve. I remember in January and February, our load factors were multiple points higher than the year before. I mean, this was gonna be the glorious year of all years. Then, you know, 'cause it was really the beginning of seeing all the hard work of three years of putting Virgin America and Alaska together. Then this thing called a variant came out, which I boldly told my team, "We don't need to worry about no variants. Let's just start the marketing machine, Sangita. Let's get some sales going on. Let's get some emails going. We'll take control of this." Yes, well, within a month or so, we'd put 80% of our fleet on the ground, and we were flying 5,000 passengers a day. Ben often, you know, encouraged me during that period. That was a very, very difficult period. He's like, "Andrew, demand is gonna come back." As a commercial team, we started to focus on, okay, so demand will come back at some point, and that's when we started to work on let's spend this time, we didn't know how long it was, to make sure that when we came back out, we were stronger than ever. Shane and the finance team were getting the finances, you know, and getting our cash under control. There really was no revenue to speak of. That's what we worked really hard for. What I'm gonna share with you today, pretty much all of it was done during the pandemic that we put into place. That's why I wanna really connect for you what we've done through the acquisition and through the pandemic, so that you can feel confident that as we move forward, we're gonna be in a very strong position. I'm gonna share with you $400 million of incremental revenues that we have built and got ready during the pandemic that's going to start now over the next number of years. We're gonna talk about that. We're gonna talk about the network. I think this is probably the first time we've ever done this, but I'm gonna give you a real clear look at our hub strategy. I get asked about it all the time. You know, Brett and I have worked hard on this, and it's like, we're gonna be bold, we're gonna share this with the world, obviously, but we're gonna have a clear hub strategy. What we're gonna do is we're gonna walk you through our growth. We're gonna talk about a number of things. We're gonna tell you how much that growth is through 2025 on average, the range. We're gonna tell you the nature of that growth. What does that growth look like? We're gonna talk about the allocation of that growth, where is it all gonna be, and the infrastructure that's required to support that growth, so that you can see clearly that we have all the pieces in place to actually start to execute on what we're talking about. Nat is gonna get up, and he's gonna talk about the fleet. The fleet's very exciting, a lot going on there, and I'm gonna let Nat unpack that for you. Really from a revenue perspective, there's really two key things that I do wanna make sure you take away from that section. That is firstly with all the fleet retirements and the orders and all the things that he's gonna share with you, the fleet and the gauge and the type of aircraft will be very much matched and fitted to the network that I'm gonna show you here in a second, and so that we will maximize our revenue, maximize our cost efficiencies to really make this airline hum like we did back in the day in 2016, when we had a single fleet. Secondly, as many of you know or have heard, really premium cabins, especially domestically in the United States, have been a very big success story. You know, we've shared many times on earnings calls the significant increase in occupancy in our First Class and Premium Class cabin. With all of these fleet changes, and Nat will share with you the economics, the uplift of revenues from a Main Cabin to Premium Class. Back in 2016, we only lifted 3 million premium seats. That's PC and First Class. We only lifted 3 million seats a year. This year, we will lift over 15 million Premium Class seats, and the loads, occupancy rate have never been stronger. That's another part of the success story that we're gonna unpack for you. Then Sangita's gonna do the heavier lift for us today. She's gonna do two of these pillars. The first one is on our product. Two things to take away there. We talk a lot about product, and we've done a lot with our product over the years. But one thing, like in our cost DNA we have, is that we never get our cost advantages from taking from our guests. That's something that we talk about a lot. It was a big mantra of Brad's, Bill's, and a mantra of Ben's as well, is that to get low cost doesn't mean we're gonna take things from our customers, give them that little bit less of a cheese plate, shrink the pitch in that aircraft, you know, all of those types of things, so that's really important. The other thing that you may not know, but if you take the big four airlines, our stage length, our average stage length coming up to this summer is 30% longer than all of our major competitors. That means you're in our aircraft 30% longer than you are in theirs. That's why the product, the pitch, the environment, everything in that Boeing aircraft, that really is a magnificent aircraft. Everything in there is gonna be suited and fitted for longer haul and also revenue premiums that people readily pay for longer-haul flights. Sangita is gonna talk about the brand, and we are really, it's a big objective for Ben is to... Sometimes we're a little bit too quiet about our brand, and we're gonna start to really talk more about that, and you're gonna hear about that and our loyalty, and you've heard Ben talk a little bit about the distribution of our loyalty program. I think the things that Sangita are gonna share, I think she is gonna surprise you with the growth rates and the strength that you see outside of the Pacific Northwest. Then, of course, there's the bank deal, which is, you know, Mary is here, obviously, and Dean, you're gonna hear from, but Mary and I have become great friends over the last six months. You know, there's a couple of big things I do wanna mention, and Sangita will walk through the details. You know, we went to the bank, and we said, "We need your help. We are trying to rebuild our business for the future." We still had four years to go on our agreement. It didn't take Bank of America very long at all to say, "Let's do this. Let's do a comprehensive new deal." Then we went to work on it. I think the other two things there are before 2030, that the cash flows from our partner Bank of America will exceed $2 billion a year. That's what I expect to see. All good stuff going on there. Let's get into some of the details now. I know many of you have been waiting for this, the $400 million of revenue. It's really broken up into three areas. The fleet upgauge doesn't need a whole lot of explanation. Network and alliances, we get asked a lot of questions about what does oneworld do for you? What does the West Coast International Alliance do for you? What we've tried to do, 'cause we like to hold ourselves accountable, and Ben actually wanted to see the spreadsheet on this one. But we said, "We can't have this noise, so let's be very clear about how we're gonna measure some part of the success." It actually is beyond this number. There's a lot of other economics, but it's hard to separate them out. What we've done is $135 million there, three components. First one, which is over half of that number. It is the traffic that oneworld and American put on our networks when they bring traffic into us. The other part of that equation is traffic that we sell on our metal that connects to globally, you know, oneworld and American and also domestically. That's the first part. It is gonna drive volumes through our network that we really didn't have before. Second is corporates. Corporate customers. One of the great things about the West Coast International Alliance, and of course, the, you know, the big Microsofts and Amazons and all the big companies, they have to invite us in. But over 90% of all the major corporates have invited us in and said, "Yes, we want a joint deal that combines Alaska's network and American's network and corporate deals as one single unit." We've made huge inroads there. Of course, as business travel starts to come back, you're gonna see goodness from that. The last element is a little unusual for us, but we focused on the card, and we said sort of everything from Texas, you know, to the East, let's measure the growth, let's measure the swipes, let's measure the engagement on how much that will grow given our expansive relationship with our partnerships. The last area there is loyalty. Obviously, the bank deal is in there. You may have remembered an older number. I had $300 million that Shane said was not good enough for him, so we've taken it to $400 million. We've revised, and we've got new things in there, merchandising, and we're gonna unpack this with you as we go forward. I will say these revenues, as you get through this presentation, these you can take to the bank. Much of this is real. It's already happened. There's real agreements, and there's real things happening. There's five, you know, points of unit revenue here, that we're going to be working on to delivering, over the time that we've got, to bring that to pass. This is a picture of our network. Sort of I like this slide, that's why it's up here. It's really something that we're really proud of. You can see the expansiveness of that network. 1,400 daily departures this summer. 120 destinations. In the past two years, Brittany's team have quietly, systematically added 50 new markets to our network. Only about eight cities, and I'm gonna talk more about that, but what we're really proud of is no discontinued cities. It's about communities. It's about having a balanced, you know, structure, just like we have in the state of Alaska. What I'm gonna do now is walk you through our hubs, which we sort of haven't really done before, but I really wanna give this group a firm understanding of where we are today, what we've been doing, and how we're gonna do our growth. We have five hubs, you know, just to define that. Of course, our hubs are a little bit different in nature, maybe other than Seattle than some of the big guys. These are the five key ones that we're gonna be looking for, okay? The first one there is Seattle. Obviously, that is the epicenter of Alaska Air Group and our network. In fact, it's not often talked about, but Seattle is the largest single airline hub of any carrier in the United States on the West Coast. Our Seattle hub is bigger than any other carrier's hub in San Francisco or Los Angeles. It is truly a very significant hub, 350 departures, 60% market share. We used to be in the 40s%, 45s%, 50%. We're now at 60%. You can see there eight points since 2016 and obviously the number one carrier there on any measure. Portland has been another critically important airport for us. You can see there again, we've grown market share. That 50% is a really important number. They talk about S curves and all that sort of fancy economic stuff, but at the end of the day, once you have over half the seat share, good things start to happen, and you become relevant to a lot of people. We've grown our share there since 2016 as number one. Of course, Anchorage, that'll always be near and dear to our heart, but again, we've continued to grow our market share there. Let's put up the last two here, which is California. Since before the acquisition, we were about 190 departures a day. We're at over 360 today. We have grown California. As I shared earlier in my remarks, we were well into profitability. 4.5 is not exactly, you know, in our range of acceptability, but it was on the move and headed north. You know, as we look at this San Francisco, if you sort of do the math there, you can see there that we're 17% of the market share. We are number two, and we have a decent network there, but we've increased by 13 points. That means we were only 4% of the market. Now, that is not a winning score for anyone in my books. We were really nobody, and we flew up to Portland and Seattle, and maybe we did a little Mexico, and that was about it. We have significantly grown, and we'll talk about infrastructure in a minute on San Francisco. Then Los Angeles, of course, is very important to the West Coast. It's a gateway for global, and every carrier calls it a hub. Again, for us, Los Angeles is key not only for the West Coast, but our partners. oneworld, West Coast International Alliance with American Airlines. That is going to be another important area that we continue to work on and grow. Let's talk about growth. I wanna walk you through that real quick. 4%-8%. Through 2025, that's sort of the range that we wanna sorta look and hold ourselves. Now, we might grow 9% one year. You know, this year we're gonna sort of grow at the bottom end of this, and Shane will giving you guidance here shortly. This is what we believe is good, solid, sustainable growth that will drive profitability, efficiency, and good use of capital for this airline. You might ask, "Well, okay, Andrew, that sounds great, but where are you gonna grow?" We're still, on average, gonna put 70% of that growth into the Pacific Northwest. I'm gonna show you why we think we can do that, and I also think that just continues to strengthen the economic engine that we've built over many, many decades and the people that have gone before us. A third of it in California. A lot of the other things you're gonna see with fleet and brand and all the rest of it are all gonna be very helpful for us. We wanna do California in a measured, solid way, but we think this is good growth, and building upon what we have already built there. That's how much we're gonna grow. That's where the growth's gonna go. Let's talk about the nature of this growth. 90% of it is going to be in existing markets, frequency. You might say, "Well, Andrew, why is that?" Well, the reality is we have a very broad network. What we need to be doing is going from, in a specific market, from 1 flight a day to two and from two to three and from three to four and from four to five and so on. That is good for many reasons. It's good on utilization of assets and airport assets. It is fantastic for business travel, frequency. It helps with IROPS, where you can accommodate on other flights versus having a very, very thin schedule. There is a lot of efficiency and a lot of up the S curve. Just like you have an S curve for an entire hub, you can have an S curve for a market. Frequency. 15% of its aircraft gauge. That's gonna walk you through how the gauge story works. Again, this is highly revenue accretive at low cost and does wonders for our unit cost. Then stage length. As I shared with you earlier, we have the highest stage length in the industry as it relates into the United States. Again, this fits well with our premium seat product and the efficiency of what we do and how we fly. Of course, the last 10% there is new markets. Of course, we'll do those opportunity where we can, but really the story is thickening the spokes on that network I just showed you. Let's talk about oneworld for a minute. Of course, with global travel being sort of nowhere, it's been hard to really see, you know, what's going on there. But let's talk about Seattle firstly and why oneworld is important. First thing is that just with oneworld and our partnerships, in addition to oneworld, you can see there that we've got to 11, and there's a partner in there, soon to be partner, long-haul carrier that's gonna be coming to Seattle that we'll announce imminently, and you'll hear about that. My point there is that people wanna come to Seattle now. I can tell you on our oneworld partner side, they have embraced us like they have never done before. Again, I wanna, you know, thank the leadership of oneworld and also American Airlines who sponsored us into oneworld, and they have joint business arrangements with pretty much the majority of these oneworld carriers. It's opened us up now to be able to connect traffic more than we've ever done before, and of course, the elite reciprocity has been huge. One of the biggest issues that Ben reminded me of constantly is, "Andrew, we still have an international problem in Seattle. We have an international problem in Seattle." By doing oneworld and the West Coast International Partnership, that all happened during the pandemic, we've solved that problem now. You can see there, we're now number one in seat share, departures, and destinations. This is only going to go grow, I believe, and get stronger. The one area that we had a bit of a weakness and a chink in the armor was our global reach. We've resolved that now, and we are very excited. The new international arrivals facility at SeaTac is fantastic. It's also not just the Pacific Northwest, but also let's talk about California. What we've seen here is global partners and even American. They have increased the amount of code, which is essentially a fancy term for marketing our flights in California. They've increased it by 20%. I wanna give you an example here, just to see what this looks like. You can appreciate Brett gave me one of his better examples, but anyway, nonetheless, it proves the point here is that if you take an Alaska focus city in California and you take American Airlines' focus city, not one of their hubs, but just a focus city, by this codeshare partnership, you can see there that the daily seats that Alaska flies in this market has increased 30%. Guests are up 50%. The partner-enabled guests have grown by 90%, and our profitability has gone five-fold. That five-fold required to be happening 'cause it's helped boost the market, but what that's gonna help us do is grow further. It's gonna help us reduce fares. This happens day in and day out across markets across California. I think that's gonna be another really important leverage point for our partnerships as we move forward. These are my last few slides, and we don't talk about these near enough. The next two years is going to be one of the largest unveiling of airport capital in the history of Alaska Air Group. There is currently right now $2.3 billion of capital programs that are being undertaken in our four large hubs here, and they will all be coming online in the next couple of years. We're investing. Again, these facilities, just like flight crews and airplanes, they actually don't come first. If you do not have the infrastructure and the facilities to fly, you don't buy the airplanes, and you don't hire the workforce to do that. Seattle, we've gone from 32 gates in 2018 to 40 gates today. You can see the increase there. This is the beautiful North Satellite. It increased in size by one-third. One of the really exciting things you're gonna see is our technology and innovation. We are going to literally gut the lobby of our largest hub in SeaTac and replace it with state-of-the-art technology, self-bag drops, iPad Pros, moving a lot of stuff to cell phones, you know, mobile apps to get you out of the airport. It's gonna be an entirely new experience. What's really cool about this is we are going to be able to double the throughput in Seattle through this technology. So the peak times aren't gonna hold us back, and we have huge up gauging opportunities in Seattle. We have Charu Jain here, who's our Senior Vice President of innovation distribution. I would encourage you to ask her questions because there has been a step change in our investment here. That's Seattle. Let's quickly talk about the other ones here. Portland. This is gonna be one of the most beautiful airports in the country. Again, a major job going on now, stitching all these buildings together, and creating an entirely new lobby. Again, we're gonna have state-of-the-art check-in facilities and guest experience. What you see there is gonna be a very large, beautiful new lounge. We already opened a new B concourse there for our regional operations, that's just fantastic. We have pretty much the entire south side of Portland, and we have a fantastic relationship with that airport. San Francisco. You know, this is something that, you know, when we acquired Virgin America, we got desperately needed gates and infrastructure in Terminal 2. But Terminal 2, you're landlocked. Also, oneworld is in the Harvey Milk Terminal in Terminal 1. We're gonna be moving. We've issued that in the last day or so. We have an agreement with San Francisco, so we will be co-locating with the oneworld partners in Terminal 1. Again, that's gonna result in high efficiency, high connectivity, and really help us continue to be relevant both globally and domestically in San Francisco and, of course, Los Angeles. I was just there this weekend, and there's a lot going on there. Gates are gonna increase by 20%. More space. They're doing, you know, carpets, everything is gonna be renovating that airport again for us to be able to grow. When I look at this in summary, we have the network through hard work of acquisition, through hard work of growth and reframing our footprint during the pandemic, we have the network we want. Our growth will be efficient, and it will deepen that network and bring all sorts of good things. Lastly, we have the infrastructure and the partners and alliances to actually execute on this and to make that work. Anyway, that's sort of the high level where we are, and now I'm gonna ask Nat to come on up. His title, Senior Vice President, Fleet, Finance & Alliances. He's one VP, but he does the work of three VPs, mark my words. Nat, over to you. Hi. Thank you. Great. We do kinda need the airplanes to make this execute. It's funny, Ben introduced the leadership team and how tightly knit it is. I'm kind of the interloper here. I've been here two and a half years, 2024 in the industry, but I feel like through the pandemic, two and a half feels like 2025, so I think I get credit for that as well. It's great to see so many familiar faces and catching up with you during the week. Just great to be together, great to have in-person Q&A, actually be able to react, not worry about your web connections, not see everybody's basement walls. It's super to be in person. My job today is to share with you, in essence, the fleet, the strategies behind it, our thinking and our plan. Never let a good crisis go to waste became one of my favorite phrases in the past two years. It's really hard to believe that two years ago, we were floundering, trying to find a path to sufficient liquidity. How are we gonna get through this pandemic? There was also a period where we were wondering if humans were ever gonna fly on airplanes again, but, you know, those days we got past relatively frequently. Once we found that path to liquidity, executing our first ever double EETC, great assistance from the U.S. Treasury Department, we shifted our focus to the future. We examined the structural areas of our business and identified where can we take hard decisions now during this period of great volatility to set us up to outperform in the future? Andrew referenced oneworld. That was one of them, and the second one we did was fleet. Our fleet plans that I'm gonna take you through are really based on two tried and true plays that many other carriers have done throughout the industry and certainly in my time I've seen it. First is single fleet, and second is upgauge. Single fleet, we'll start there. Simply, it strengthens our competitive advantages. Alaska Air Group is gonna drive to single fleet for our mainline operations in our regional operations, and we think that's worth $75 million in cost savings a year. I find it ironic that I'm actually up talking about the benefits of single fleet when arguably in a previous life, I was one of the architects of the most complex fleet plan in industry history after the Delta-Northwest merger. I think in our heyday, we had 10 or 11 fleet types, 35 or 40 variants. We had 11 different 757 types. You wanna talk complexity, that was it. For that network and for that airline, it was the right thing to do. I'll tell you this is a heck of a lot more sane and satisfying to execute, and a bit easy. Simply put, single fleet is the best answer for Alaska because it fits who we are. As Ben talked about, low cost, high productivity, part of our DNA. Operational excellence, part of our DNA. I won't go into detail there. What I would like to talk a little bit about is strong relationships. Ben introduced Ihssane and Jason from Boeing and GE, respectively. If you think of Alaska, where our position is, we're never gonna be the biggest airline in the industry, but we wanna be the best. There are some specific places where scale matters. The Alaska strategy to counter that is we need to over-index in these partnerships, find our key suppliers, find our key relationships, work with them, and get them to the point where they are as vested in our success as we are. Jason, Ihssane, both of you, we're thankful for your partnership. We'd never be in position where we are today without it. Mainline single fleet by 2023. This is an acceleration from our original plan. Coming out of the pandemic, we were thinking 2024, but we learned during the pandemic the best financial and operational decision we can make is to get to single fleet as quickly as we can. We'll do that focusing on Boeing. Talk a little bit about our Airbus exits. Our ten at the time Alaska bought Virgin America, 73 Airbus airplanes came with that deal. The 10 A319s died in the pandemic and certainly never came back. We'll have the A320s out not later than early 2023 and maybe a little bit sooner if we can push it. That leaves the 10 A321neos, which Shane and Ben have both put on the top of my to-do list to find an answer to get those airplanes out by the end of 2023. I think many of us have claimed, and I even said at an ISTAT conference a few months ago, that those are the 10 worst aircraft leases I've ever seen, and I've seen a lot of them. We're gonna take a good run at it. It'll be the last cog to get to single fleet, and we're so committed to do it that we're gonna find a way. We could only be so confident to get to single fleet if we had the faith and the willingness and the desire because of our Boeing 737 MAX order. It's our anchor fleet moving forward. We took our first MAX in 2021. We've got 17 now. In fact, took two airplanes on Tuesday of this week. My team and Constance's team kinda made the case of, "Are we gonna have these two airplane days going forward?" We're like, "No, no. It's just an exception, but super happy to take them." We've got 76 more firm to come through 2024 and then 52 options 2024, 2025 and 2026. Ihssane pointed out to both Ben and me last night that real airlines take 200, and I told him it was a little early for that. In time, we'll see where we go. We're really pleased with the performance of those airplanes. Our guests love them, our team loves to fly them, our ops folks think they're great. Frankly, most important to me, the math behind the airplanes are really great. I'll spare you the details there, but thumbs up. On the regional side, we're gonna drive the regional fleet to single by year-end 2023. Most of you know that Air Group has two regional operators. SkyWest flies E175s on our behalf, as they do for a number of airlines. Then we have wholly-owned Horizon, who flies both Q400s as well as E175s. In sum, 62 E175s flying for Air Group today, and we have another 20 on order that'll come through the end of 2023. By the end of 2023, we will phase out all of the Q400s, and again, fleet simplicity, anchor on the E175. That's it for fleet simplification. Let's move to the upgauge, tenet number two. I've executed a lot of upgauges in my career, and some of you will go down airline memory lane on these. DC-9s to 737-900ERs, 50-seaters to 717s, and frankly, my personal favorite, DC-10s to A330s. Sorry, Ihssane, but I bought Airbus airplanes too in my past. The central tenet to all of those successful upgauges is you've got to be able to fill the airplanes. Before Alaska jumped in with both feet on the upgauge, we hired some external resources, worked a lot with our internal network, assessed our current footprint. Here's our footprint. Where are we gonna fly? Let's forecast out into 2030. Add in oneworld, add in the American partnership, demographic changes throughout the country. What does it look like? We concluded that to maximize our profits, we needed to get bigger. About 50% of our fleet today is what we would call large airplanes, 175 seats and above. We wanna get to 70%-75% to really generate the most profitability that we can out of our footprint. The four things that that delivers, number one, greater revenue opportunity. Second, more premium seats. Andrew talked a bit about that. Thirdly, lower cost per seat, which Shane and I love. Lastly, what we all love, better environmental profile. We will leverage our 737 MAX order book to upgauge quickly. We're taking airplanes in a really rapid period of time, 145 aircraft. We envision if we take all 145 of those aircraft, 130 are gonna be the large 737-9s and 737-10s. Each 737 plays a unique role for us. The -10 will be our biggest airplane with the lowest seat cost. The -9 still has large seat capability with a little bit better performance. I like to think of the -8, which we'll take our first next year, as our utility infielder. It's got the best performance capabilities for hot and high airports, short runways, and it's also great for medium-sized markets. This is the essence of what single fleet is all about. You've got three different airplanes, one cost base, and that it can only work with that. We're very thankful there. As Andrew referenced, more premium seats. We've grown our premium seat allocation from 7% in 2016 all the way to 25% in 2023, and you can see the premium fare advantage that's inherent there. The opportunity is especially robust on the regional side as we grow from the Q400, which is single class, to the multi-class E175. The benefits here are attractive to Alaska, even though we're traditionally lower with business mix. Premium leisure is another concept that many of our competitors and we are seeing as well, outgrowth of the pandemic. This is a strategy to go direct and capture that revenue. I'll leave you and wrap up on the upgauge section with one real-life example that we're actually seeing today. Replacing a 150-seat A320 with a 178-seat 737-9. This just exhibits the four big benefits that I referenced earlier. Greater revenue opportunity, 19% more seats, more premium revenue, four more first class seats available to sell. Thirdly, 14% lower seat costs, and then lastly, 25% lower fuel burn per seat, great environmental profile. You roll all of this up, we get 19 more seats—19% more seats for only 2% higher trip costs. My mother, the algebra teacher, loves this, and so do we. I'm gonna wrap up with, you know, fleet evolution over the seven year period. Two rules in the airline industry. Number one, you cannot give a presentation on a fleet plan without pictures of airplanes. There have been 13 for those counting at home. Second, without actually showing a fleet plan. Here's ours through 2026. You'll see that we're going to single fleet on main line and regional by 2023. We're gonna continue our upgauge as we retire Airbus and take our firm and option MAX airplanes, and the results speak for themselves. Our gauge is gonna grow 1% annually. Our premium seats, 62% more in our fleet by year-end 2026. Most interesting about this from my perspective, our fleet age over this seven year period is flat. If you do the math in your head on that's pretty amazing. 332 airplanes, they obviously, like all of us, age per year. To keep that flat over a seven-year period gives you a sense of how many new airplanes we are injecting as we move forward through this. Then lastly, newest technology airplanes, only 3% in 2019. The MAX as a proportion of our fleet is 41% by year-end 2026. I'm really confident that we're gonna be able to deliver on this for two reasons. Number one, again, these are tried and true fleet plays. Go to single fleet and upgauge, can totally do it. More importantly, it's classic Alaska. It's a simple plan, it's a straightforward plan, and it depends on execution, and I'm super confident that we can do that. With that, we're gonna end in essence. I'm not sure how the finance person got into the commercial section, but that'll be corrected, I'm sure. What'll save all of you is that Sangita is gonna talk to you about brand and much more interesting things, and we won't make the finance person do that. Thank you. Thank you. Okay. When Shane asked me to speak at Investor Day, I thought, "Great." I had to pause for a minute. I'm like, "Crap, I have to put on a suit, put on heels," and it's. I'm very uncomfortable right now. I'm excited to be here, and I propose next time we do jeans and hoodies. Shane, if you can make that happen for me, that'd be awesome. What? That's fine. Yeah, there you go. Okay. Andrew talked about the strength of our network, and Nat talked about our fleet plan that will efficiently deliver against that network. My job and our team's job is to deliver the best possible value proposition for our guests and to build brand love. We believe both of those teams, both of those things continue to drive growth for Alaska. Let's start with our guests. We have a wide range of guests, everything from the suited-up flyer to the dollar-driven flyer. We've come a long way since 2015. We had first class and main cabin, only two cabins back in 2015. In 2016, we launched Premium Class, and in 2019, we launched Saver. We now appeal to a broad range of guests, and we have a fantastic value proposition. We offer a high quality product at a competitive fare. One thing I've learned in my seven years at Alaska, we are obsessed with low cost, and you've heard about that from Ben as well, and you'll hear about it from Shane. We're very strategic and deliberate about investing in that guest experience. We never make a trade-off when it comes to the guest. Let's start with our premium cabins. Look at that gorgeous first class cabin. I think this is Andrew's second favorite slide behind the roadmap. It is a great first class cabin with that 40 inches of pitch, which leads the competition. Comfort matters, particularly for that suited up or that high flyer. Over 60% of our capacity is deployed in markets with flights over four hours. Think Bay Area to Hawaii. That comfort really the 40 inches of pitch matters, the cup holder, the armrest, the fresh, hot meal. All of those details make a difference in comfort and for enjoyment for that flyer. In PC, we sit at-- Ooh, sorry, wrong slide. PC, we sit at 35 inches of pitch. 35 inches of pitch, which again beats out the competition. When I first started working for the airline, we were going through layouts of the cabin. I thought, "How much does an inch really matter?" I stand at 4 ft, 11 inches tall, and let me tell you, every inch matters in that cabin. It really does make a difference. Again, a fantastic Premium cabin. I'm really proud of our Guest Products team. We actually compete with the big guys on a quality product offering, but we also have some really cool key differentiators that actually outpace the competition. Let's start with our lounges. We're the only lounge program that allows access to paid first class passengers. We also can have one of our lounge concierges make you a handcrafted Starbucks espresso beverage with our barista station. Our elites have access to a global lounge network through oneworld. When it comes to entertainment, our philosophy is our guests can bring their own device and enjoy their favorite movies and TV shows, but we make it really easy for them. We have conveniently located power right at eye level. We have a device holder that can hold your tablet or your phone on that seat back. It's a really great experience for our guests. When it comes to connectivity, we partner with Intelsat, the largest multipurpose satellite operator in the world. Pretty soon, in the coming weeks, we're gonna have a very exciting announcement around that our guests are going to love. Finally, I'd like to just close with Boxed Water. We launched Boxed Water back in November 2021, and it tackles the biggest source of in-flight waste out there, which is plastic bottles. We eliminate 1.8 million pounds of plastic a year with the launch of Boxed Water, and our guests are loving it. We've gotten fantastic reviews, particularly from folks in California. We've been leaders when it comes to onboard sustainability. We're the first to launch onboard recycling, and we're also the first to eliminate plastic straws on board as well. Our value proposition is really clear. We offer a quality product with some really cool differentiators at a competitive fare. What I want to leave you with, I think the two most important things that really set us above the competition, above anything else, it's our brand of care that Ben talked about, and it's our loyalty program. It's those two things why customers come back to us time and time again, it continues to drive to a stronger bottom line. Let's start with our brand. All right, probably not many of you maybe grew up in the Seattle market. When I moved from Chicago to Seattle back in 2010, you would meet people, whether it's at parties or in the neighborhood, and people would randomly say, "I love Alaska." I would have to clarify. I'm like, "Okay, you mean the state or the airline?" No, no, they meant the airline. Again, so many people would say, "I love Alaska." To me, that's just incredible deep loyalty. We share the stage with the—this is brand love in Washington. We share the stage with some of the most loved brands in the world. It's phenomenal. I actually worked at Starbucks for almost five years, and when I moved over to Alaska, I was incredibly proud to say that I worked for Alaska Airlines. The brand love is phenomenal. But what is it? What is it that guests love about Alaska? Ben talked a lot about this as well. We boil it down to one single word, and that's care, and we're gonna own the heck out of care unlike anyone else out there. I really believe we care more than any other airline out there. We can really genuinely own that for sure. We defined care. We created a one-page brand DNA to be super clear about what do we mean by care? How do we define it? It's really two things. It's kind of that emotional side of how our front line treats you, how you feel on your day of travel. It's providing joy, empathy, and ease. This is truly our secret sauce. We have a survey system called Alaska Listens, where we survey, we get 25,000 survey responses every single month from our flyers to understand their guest experience. Consistently, over 90% of those guests rate us as excellent or very good in terms of how well we took care of them on their day of travel, which is phenomenal. We had a reception last night and met 100K Elite flyer based here in New York, and I said, "What is the one thing you love about Alaska?" He's like, "It's your people. It's how you make me feel on that day of travel." That is truly what care means for Alaska, is how we make them feel. It's also the value. The value is super important. We talked a lot about the value in terms of the quality product that they get, the nonstop routes, but it's also our loyalty program, which you'll hear a little bit more about in a second. To deliver care, we're gonna continue to invest in our people. Our employees genuinely do care. Ben mentioned it's our ninetieth anniversary, and we're known and recognized for our tremendous service. We are hiring 3,000 people this year, so we need to continue to nurture and raise the bar in care. This fall, we're gonna launch an in-person workshop called The Care Retreat, and we're gonna bring all of our front line through, and it's gonna do two things. One, codify our secret sauce of care, but also enable us as leaders to reconnect with and realign with our employees after two years of being in pandemic. This kind of service training isn't new for us. We actually led the industry back in 2015 with what we call Beyond Service. Every three to five years, we have an in-person employee workshop just to reconnect with our employees, build our culture of care, and make sure we're all aligned to deliver against our growth plans. Our employees are gonna show the care, which they always have, but we're not gonna be so humble anymore. We're gonna actually start to really shout care and own that outright. We launched a major marketing campaign in the Bay Area, just launched last month, and we're gonna go out there, and we're doing TV, print, radio, out of home, and really shouting care. Our vision is for people across the country and for my dad, who lives in Detroit, Michigan, to know what Alaska actually stands for, and we wanna stand for care. We wanna be known as the most caring airline in the world, and that's our mission. I really believe we're again the only airline that can genuinely deliver against that. We know that from our experience in the Pacific Northwest. We've built care in Pac Northwest, and that's why people love us and come back to us time and time again. Okay, now on to the most exciting part of my presentation, which is our loyalty program. This is the single biggest source of value to our guests. We consistently get recognized in awards for our loyalty program. I wanna be really clear, we're very deliberate about investing in our loyalty program, making sure our guests get more value from our loyalty program than anyone else out there. We could easily be less generous. We could give less bonus miles. We can make it harder to hit elite status. We could give less complimentary upgrades, but we don't do that. We really invest in making sure our guests feel that loyalty and feel that value. We're very purposeful about that. Let me show you the value. This is actually a seat back card that's actually on the aircraft right now. If you flew with us tomorrow or today, you'd see this on the seat back. Let me walk you through the Mileage Plan. You can earn at least 30% more with our Mileage Plan program. We actually took a trip. We took SFO to Boston round trip. You can compare Alaska versus the other airlines. It's the same trip, same fare, and you get 54% more miles with Alaska versus the other guys. Credit card. Our competitive set is not only the other airlines, but it's also cashback cards. You add up the value. If you take a round trip, spend on average, you know, every year as well as two free checked bags, you can save an annual value of $440 a year. That is nearly triple the value of a cashback card. It's tremendous value. The most valuable thing on this list is the annual companion fare. I cannot tell you how generous that is. People love it. You can go to Hawaii and take a companion for $99, and there's no blackout dates. It is the most lucrative benefit in the competitive set of cards that is out there. The other thing too is we know the investment in our loyalty program does pay off. We actually took the annual revenue, the revenue from a Mileage Plan member versus a non-Mileage Plan member, and we get three times the revenue from a Mileage Plan member versus a non-member. They truly come back to us time and time again, and they book directly on alaskaair.com. A significant portion of our Mileage Plan member base is going directly to alaskaair.com to book on us, which is very beneficial for us. Okay. Ben mentioned this as well. Nearly half of our Mileage Plan member base and our credit card base is outside the Pacific Northwest. We are very geographically diverse in terms of our mileage plan members and cardholders. Which is super interesting is we took ASM growth since 2016 and lined that up with Mileage Plan growth and credit card growth. For every 1% increase in ASM growth, we grew 9% in Mileage Plan members outside the Pacific Northwest. What's also really interesting and more valuable even for Alaska is the credit card growth. Again, when we grew 1% of ASM growth, we grew 10x of credit card growth outside the Pacific Northwest, and that growth is phenomenal. Which leads me to my next slide with continued growth in our new deal with Bank of America, let me walk you through some of the highlights. It goes through 2030, which you've already heard. We're gonna meaningfully expand that already highly valuable card with some more guest benefits that we'll be announcing later this year. We have a significant increase in marketing technology funds to continue to drive growth up and down the West Coast. We've enjoyed a 12% annual compounded annual growth rate from 2016 to 2021 for our card portfolio. With the new deal, what we can share is we'll have an increase of 30% in total bank compensation from 2021 to 2022. That leads me to our special guest of the day. We could not be more excited about not only a new deal with Bank of America, but a renewed and deeper partnership with them. We wanna continue to offer highly valued benefits to our current cardholders, but also get that card in more people's hands in the geographies we operate in. To underscore that commitment to deeper penetration in the geographies we operate in, we're extremely happy to have Dean Athanasia, President of Regional Banking from Bank of America, to come on up and share a few thoughts. All right. Thank you, Sangita, for that introduction. Where's Ben? Ben, thank you. He may not be here. Oh, there he is back there. Ben, thank you. Sorry, I lost you. I thought you were over here. But thank you for allowing me to come speak today. It's quite an honor, and I really appreciate it. I know our colleagues here do appreciate it as well. There's a lot of Bank of America folks here in the audience, so thank you. For those of you that don't know me, I'm not usually this tan. I look more like Andrew. I flew in from my vacation this morning 'cause I thought this was such a fantastic opportunity to be here. This is a I don't know if you guys know, this is a three decades partnership between Bank of America and Alaska Air. Three decades. I've been at Bank of America 26 years. I think I'm the older person on the team. This relationship predates me. You know, they're one of our best clients as well on both the commercial and investment banking side. We do a lot of business with them. As you heard Sangita talk about on the consumer side, with our co-branded credit card. A phenomenal client, and we're happy to partner with them. We're happy to back them in any way, shape, or form, and they have all of our resources behind. That's sort of what I'm gonna talk about today. One thing I did notice, you know, when I listened to Ben talk, and I listened to Sangita talk, and everyone, Andrew talk today, there is one thing I noticed about the organization, and you'd notice the same thing at Bank of America if Brian Moynihan was up, our CEO speaking. There's this intense care around our clients. That's two things. That's why I think we partner so well together. At Bank of America, it's all about the client or the guest, as you call them. Everything. We're not organized by product groups. We're organized around client segments. Everything is for the clients, products, services, anything's design. We invest. We don't care. It's all about client care, retaining clients, growing clients. If you come here, I think our, you know, I would say our cultures are exactly the same, and they line up. We're ecstatic, and we're excited about extending the co-branded relationship out to 2030. It's gonna be a phenomenal partnership for us as well, and I wanna convey two things today. One, just what this partnership means to me and Bank of America. For us, I mean, there's a lot in it as well, and we're happy to back it, and we're happy to spend money. We're happy to see it grow, and we're committed to that. I'm gonna shed some light on those growth opportunities and just give you a little bit of value, a lot of things that Sangita talked about, but just the pure metrics, the pure client bases we're talking about, the resources we're talking about to get that growth. I don't have any slides, so it's just me. I am the entertainment today. All right, Ben, I swear I didn't put this in, but just a little bit of history. Like Alaska, Bank of America has a true West Coast. You know, we were founded by A.P. Giannini as a Bank of Italy back in 1906 after the San Francisco earthquake. I don't know if people know that, but just helping people recover and businesses recover from a disaster, you know, similar to what we've done over the last couple cycles. Back in 1939, I believe I have that date right, we moved from being Bank of Italy to Bank of America. We still operate with that national bank charter number that we had from the origin. We are just like Alaska. We have all of our roots out West, and that's a huge, huge market and franchise for us, and I'll hit some of the numbers on that. Since then, Bank of America has grown to be the first true coast-to-coast bank, financial centers across the coast. We were the first ones to do it. I know there's others now, but we did that a long time ago in our history. We do business with one out of every two households in the U.S. We have leading market positions. If you look at the top 30 markets that drive about 87% of the U.S.'s GDP, we have the most number one positions. In fact, we have more number ones, I think 14 or 15. We have more number ones than number two and number three combined. That's how big we are in consumer. We have 66 million-67 million clients, and all those resources we bring to bear and help Alaska Air out in any way we can. In California, I know we talked about that, but we have particularly strong positions in California and the West Coast. Number one market positions in L.A., San Francisco, Portland, Seattle. We have over $400 billion in deposits and over 11.5 million clients in California alone. Just a huge growth market for us. Again, that's why we match up. That's why the synergies are there because as you can see, we give Alaska Air access to all those clients. Using that as a foundation for growth, last year was a record year for us in 2021, helping our clients emerge from the crisis, standing behind them, helping them repair their balance sheets, whether that's a commercial client or a consumer client. You know, we helped clients recover. We saw the highest level of retention, the highest level of client growth. Since I've been here running it, we now have 67 million consumer clients out there from across the country. You know, we serve them in a number of different ways. 4,200 financial centers. Our phone centers, text and chats on the phone, and then also digital. We actually have out of the 67 million, 54 million or roughly 80% are digital and interact with us every single day. Our clients log in to our mobile or online app over 10 million times a year. Think about that. The reason I mentioned all of our distribution is because, you know, Alaska Air has access to that. Think of somebody logging in. If they're right for this program, we are putting up value-added offers in front of them. We're advertising Alaska Air. We're trying to make that work. We're showing them the value of being a guest at Alaska Air. I'll talk a little bit more about that, but you get it. The distribution system is there, and we're pointing it, and it's all behind this program and helping them out. Our plan is to grow in the West Coast, and to grow in all markets, and that's why Alaska Airlines, it's the only airline headquartered on the West Coast, a perfect partner for us. You know, you've heard all the numbers. They dominate air travel, 50% market share in air travel in the Pacific Northwest. The incredible and the loyal guests and clients that they have. Their distribution system is phenomenal as well. If I get these numbers correctly, Mary, 85% of the sales of that credit card and that program go through the Alaska Airlines' or from the Alaska Airlines distribution, whether that's digital, online or on the planes as well. We're trying to get behind that. We're trying to add our distribution network behind that and accentuate that and grow it and add our part to it. That'll help growth, and that'll move it along. Then they have features that as a bank, you just can't replicate. I think the last thing that Sangita talked about, the companion fare, incredible. The free baggage, the access to lounge, all those things that we cannot replicate on our own cards, Alaska Airlines can offer that to clients, and we can add that to the value of our distribution. We all share a common goal to expand in California and the Northwest. We're committed to making this co-brand even stronger and adding to it. All of my resources, all of my expenses, it's not about that. It's about client care. Once you have client care, you can grow your client base. You can continue to acquire. We're committed to serving Alaska Air clients like they're our own. That's our commitment to them. We're committed to making any product a service enhancement on behalf of the clients. We're also committed to attracting new clients to the program. The timing couldn't be better. If you look at what's going on, and we look at, you know, all of our consumers, there's one out of every two households. Consumer spend this period this year- to- date, is up 21% year-over-year. Think about that. What's driving it is this return to travel, return to services. Spend on credit cards for travel is up 95% year-over-year. We are hitting this just right. We're getting in front of it with a phenomenal program, and we're gonna capture and ride that growth all the way up. The opportunity is immense, and I'll sort of end what I think are the five business opportunities. Again, these are from Bank of America's standpoint, right? 'Cause Alaska Air is running their program. They're doing great. Here's the five biggest opportunities, I think. One, this is a commitment too, any of our Bank of America clients that fly Alaska Air, but don't use the Mileage Plan card, we're gonna get offers in front of them. Every day. Think of that. You log in, you're ripe for that program. We know who you are. It's not intrusive because you know, there's a great value to it. We're getting them in front of that program. Any Bank of America client purchasing tickets on rival airlines, not mentioning who, but we'll go after them, and we'll get the card in front of them as well. Right? That's our commitment. Advertising and marketing for the Mileage Plan card in all of our financial centers, in digital and everything we do, we're committed to get that out there, making sure we get the offers to the clients that we talked about. Then for Bank of America, obviously, us being able to-- You know, if they don't have a checking account with Bank of America, they're not online, they don't have digital, you know, opening up, showing the value of Bank of America, partnering that up, 'cause then you get even more access to that client. That's a huge opportunity as well. Last, I'll say five, 'cause you really can't talk about everything we're gonna do. I have such. I heard again, Sangita partnering with. I also run digital and marketing for the company, David Tyree. Mary Hines Droesch is here, who runs products in the company. You heard her introduced. They're very creative people. We'll look at it, we'll innovate, we'll get in front of clients in different ways. There's things that we didn't think about, but we're constantly innovating, constantly working with our Alaska partners to make this partnership even better. I'll sort of end on this last slide that I can see, but you can't see. When you think about it, you know, 'cause there are a number of different programs that banks and airlines run together. What makes this one different, and how do we differentiate ourselves? You have to, you know, sort of know what partnership's all about. Partners, good partners for any program think alike, right? It's all about the clients. It's everything for our clients, spend for the clients, client care, guest care, absolutely imperative at both companies. That's why we have, you know, such a great bond just to start. Second is we have similar cultures. You know, we care about our clients, communities, and our employees, right? All three of those. If you went to Bank of America, you would hear that over and over and over again, and it's similar to what Ben showed in his slides. We have similar goals. We wanna grow in our core markets, the West Coast certainly being one, but all across the country, right? We can partner up on that to help each other achieve them. Good partners, they don't care who. It's a win-win. We look for the win-win, right? It's not about we win, and they lose. I'm happy to pay the revenue out that Sangita talked about, happy to, 'cause that means we're growing. If they're growing, we're growing, we'll commit all the resources to it, and together we can grow this portfolio, access more clients, and do more business together. I guarantee once we get clients into the program. They love it. They stay there forever. It's a great retention vehicle as well. Where we started, the partnership is real. It's been successful for three decades, and I'm not gonna mess it up, trust me. I may not be here for the next three decades. I'm looking forward to that, but I know I'll be here for the next year, for the next eight years up to 2030, and we're focusing on that and making this the very best program out there in the market today. Again, Ben, thank you. I appreciate it. Sangita, thank you, and it's great working with you and your team and Andrew and everyone else. Thank you. Thank you, Dean. I wrote myself a note. It says, "Bench Andrew," and he comes back with $400 million of revenue. Lesson learned, Andrew. We'll do it next time, too. I'm gonna close this out, get us over to Q&A. Could not be more excited to see you all in person. Had a chance to chat with some of you out in the lobby. It's a great space, by the way. I think Ben mentioned that. I think it's a step up from where we have been in the past, and it's been fun to get back out into New York and see it busy with life again. I was here in May of last year, and it was just starting to come back, and then it sort of went back down, and it just feels like normal New York now. So I'll tell you this date, we were sort of going back and forth. Do we do this in December? Do we do it in January? Do we do it in March? We couldn't really decide, and we finally said March, a long time ago, six months or so ago. It really has served as an important date for us for a number of reasons, not only to get back in front of you all and share what I think is a really compelling story, and that's mostly what I wanna talk about is the investment case for Alaska. It gave us a chance to at least regularly go look long-term at the business. We've been dealing with, it seems like, a weekly crisis, you know, for the last two years. Every time you thought you were sort of taking a step out, and we were gonna be able to go and stabilize things and look forward, something pulled us back into another, you know, near-term crisis. I don't know what the rest of the year is gonna be going to look like. I don't know what the geopolitical backdrop, if everything's gonna be stable or if there's gonna be other, you know, variants. It's been really fun for us to start thinking about what we can deliver for guests and for owners and for our employees over the next several years. Airlines, you know, we're here to take people around the world and connect people. People don't fly for unimportant reasons. That's why we all love what we do. Nobody gets on a plane for something they don't care about, right? We're excited to see full planes again. Our flight out was phenomenal. We were on my first trip, believe it or not, on a Dash 9 Max aircraft. Phenomenal airplane. You should get out and take a ride on one of ours with our credit card companion fare. You can take somebody with you. Am I doing good on the marketing stuff, Sangita, so far? All right. Anyhow, it's just really fun to be back in front of people. I'm not gonna belabor it. I will say, and I wanna underscore it, you know, we at Alaska, we know our success is in large part due to the fact that we have partnerships with some of the best companies in the world. Not only that, but they want us to succeed, and I hope that's what you've heard today. That's why we wanted GE here and Boeing here and Bank of America here. We know that in order to do all the things we want to do, we need people who are bigger than us and who are experts in their field to also support our strategies and plans and we're very fortunate to have these partnerships. I'm gonna mostly talk about the investment case for ALK. I think we're very well positioned to outperform. I think I'm gonna sort of take you through a few proof points of that. The one thing I would say, and it's probably intuitive, but our biggest goal through the pandemic, once we stabilized the business, we had raised enough money to and the CARES Act came through, and we felt like, okay, we weren't at risk of failure or having to have 80% of our planes on the ground for a long period of time. We've really thought about what do we want to be as we emerge from the pandemic. What is the position we wanna be in? We've tried very hard to make all of the decisions and choices that we felt like we needed to position us to capitalize on a recovery cycle. I think you all know those of you who have followed us for a long time, we've done well in recovery cycles. We've typically used downturns to rethink our business strategy, recommit to the things we knew that worked, make changes to things that weren't working as well. When demand came back and the economy stabilized and things in this case got opened again, we were going to be out of the gates first and able to capitalize on a recovery better than anybody else. I think we've done a fair job of that, and that's what I wanna share with you today. If I were an analyst, which once upon a time I thought maybe I wanted to be an analyst, and I was looking at this industry, I'll tell you a funny story later about putting airlines in a Markowitz portfolio in college. My finance professor didn't think it was a good idea. Is the punchline. I would be like, "Okay, I wanna see a company that has durable competitive advantages." Ben shared some of those with you. Ours have been there for 20 years. We really haven't changed them, and we've doubled down on them multiple times, and they've continued to work for us through every cycle, every challenge we face, competitive incursions, economic sort of downturns and cycles, financial crises, you name it. These competitive advantages have worked for us time and time again, and so check the box on that one. I'd want to know that there's a leadership team that was capable of delivering over the next several years, that they were seasoned, they'd been through cycles in this industry, and they've proven that they can make the decisions and go and execute. I think Ben already shared the team with you. Many of us have been in this industry a long time. We've been a part of the Alaska story through those cycles. Check the box there. I'd want to see an airline with an already strong financial position, and I think we've got that. I'm gonna show you the balance sheet again because we are happy where it's at, but we have the most prepared balance sheet in the industry already, and we did it without issuing equity, which we're also proud of. We're coming from a very strong foundation relative to our competitors. I'd want to see a improving competitive position. I'm gonna show you, I think we're on a different trajectory relative to our competitors on costs. I think that we are going to close some of the small yield gap to the industry we've had over the last several years given our revenue portfolio. I'll talk more about that. I think our competitive positioning in our network, and I'm gonna share some data, it's relatively less intense, the competitive backdrop we're facing as we emerge from the pandemic versus when we were sitting here in 2019. If you got a better cost structure, a really good revenue story, and a better competitive positioning in terms of the competitive intensity in your network, those just algebraically are gonna work in your favor. I think we've got a really solid setup. If that wasn't enough, I'd go and say, "Hey, is there a track record of performance here?" We've been an industry margin leader for a long time, Ben shared some of that before. Have they actually made the strategic decisions necessary to go unlock value? We are trying to keep it simple. I think Nat did a phenomenal job simplifying the fleet, upgauging the fleet. These are tried, tested, true ways to drive marginal economics in this industry. I'll speak more about the network. I think we've done a phenomenal job reshaping the network to play to our strengths. The new agreement with Bank of America is going to be a significant driver of that revenue story. We've done a lot of the things we needed to do to actually unlock this value. Now we just need to go execute. I now sit here and talk, I just wanna wake up in three years and see, you know, like, oh, it all worked, of course, you know? But we don't have that luxury. We're gonna go out every day and make sure that we now deliver on the roadmap that we've set forth. Let's start with the balance sheet. I'm not gonna belabor this. Many of you know this story. We're already in our target range. We're below 50%, debt-to-cap leverage. We are the most improved or repaired balance sheet in the industry as we stand here today. This is really, you know, a by-product of a philosophy at the company that always starts with the financial foundation, which is our balance sheet. We've been disciplined about it for a long period of time. We're proud to be able to say we didn't issue equity. Notwithstanding many of you in this room pitching equity to me and Nat, we love all of you, many, many times, but we didn't feel like that was the right thing to do. It's underscores sort of our commitment to owners and gives you a window into how we think about our responsibility back to shareholders as really a key important part of what we do as a leadership team. As others sort of go forward, they're gonna have to contribute, you know, some portion of their cash flows to balance sheet repair most likely. We probably will see ours continue to improve and repair, but it's something that largely is already done and we can go focus on growing the company and taking advantage of other strategic opportunities. The second piece, if the financial foundation is the balance sheet, the network is the core asset of an airline, and our network looks phenomenal. Every airline has taken the pandemic as a chance to go reshape where they're going to sort of fly and focus. We, of course, have done that. I think Brett and Andrew and the commercial team have done a phenomenal job really playing to our strengths, as I said before. We are now going to, I think, better mix pure growth markets with growth in places that we already have a natural ability to win and to do very well with. I think our growth can be profitable right out of the gate because it's really focused on core areas of strength that we already have. As you look at what other airlines have done in terms of their network, and this could change tomorrow, these are current schedules, planes can go anywhere, as we know, we're seeing less competitive overlap through our network, and not insignificantly. That's just a really good setup for us to go forward and outperform the rest of the industry over the next couple of years. I talked about cost. I believe that we are widening our cost gap against the industry, and in fact, I think we're improving our cost competitiveness against every single one of our core competitors. I don't think there's one of our core competitors that we're not either widening our cost gap against or shrinking, you know, if we were actually more costly than they were. We've managed cost at this company in a disciplined way. It's been a hallmark of the way we operate. You've heard a lot about it today. We're no less committed to it. We've enjoyed a 14%-15% cost advantage relative to the industry. This is all stage-length like the adjusted total system. We think based on guides that it's gonna grow to as much as 20% by the end of this year. That includes our new guidance that we put out today. Behind these numbers, if we were to tease out LCCs, we're a lower cost producer than our friends here in New York, and they're a great company, JetBlue, but I think we're already on a stage-length adjusted basis of producing flight seats at a lower cost than them. I think for the first time in 20 years, it's been a long road. We've always had this as a goal, sort of in the back of our mind, is to ultimately close the cost gap with Southwest. They're another phenomenal company, but based on guidance out there right now, we think that we'll ultimately be at parity this year, if not a little bit below from a unit cost perspective, which is just a phenomenal foundation for us to then work from as we go out and compete in the next several years and grow. You guys know not every variable in your models are equal. This one should matter a lot. This is how airlines ultimately are able to endure competition. They're able to grow and endure the ups and downs and cycles of the industry. We're long committed to this and you're gonna see that in the next several years as well. I might say, I might go back there. We do have cost pressures, and I'm sure we'll talk about this in Q&A. We are gonna get new labor deals. We have some that are open and overdue, and they need to be closed, and we're anxious to do that. There's inflation in the business. Hard to predict exactly what that's gonna be. We'll have to see over the next few quarters what happens in the economy as a whole. Andrew just shared with you that he's got an unlimited appetite for airport improvements and airport costs, which we're gonna have to figure out how to rein in here soon, but that's gonna be an inflationary pressure in the company too. That is, you know, largely going to be helped by these tailwinds from structural cost initiatives that we announced a year and a half or two ago. What we're talking about today, single fleet efficiencies, which are significant, and the benefit of upgauge. We're gonna fly about, you know, the same number of departures over time, maybe a few percent more, but get a lot more seats on those departures. Super efficient way to grow, and Andrew shared that mix with you. I'm gonna pivot. I was gonna go to revenue, but listen, I wanna talk mostly long term. We've been getting a lot of questions recently on the price of oil, so I thought I would reacquaint folks in the room with where we are on our hedging program. Most of you know, we've hedged for a long time. We view it as insurance. It's $20 million-$30 million a year is what we pay for those options. It's super simple. It's robotic. It's automatic. We start 18-24 months out, and we layer on strips up to 50% of our planned consumption at whatever the spot prices of oil is. Actually, we're now using 20% out of the money call options. We-- You guys are all pretty kind to us, but you do ask us, "Is it worth it? None of your other airline partners or folks in the industry, except for Southwest, do this, you know, isn't it sort of just a waste of money?" We endure those critiques, and we're okay with that. We understand the question, and then we get into a period like this, and we're, you know, always feeling good that we've got these. It's mostly because it allows us time to make informed decisions. We don't have to do knee-jerk reactions. We've got a strong balance sheet, and we're able to, at least in the near term, have a differential position relative to others in terms of the input price of oil. It's been a good program for us. I think it's modestly net beneficial over the 20-year period that we've been doing it, and we're happy to talk more about it. It's been working well for us and certainly it's gonna pay this year to have had these hedges. Getting to the revenue, and I wanna talk maybe about the your right-hand side of the slide first. I just wanna underscore $400 million. A lot of times we talk revenue, and it's like, yeah, is it incremental? You know, is it displacing other revenue? Is it actually going to happen? I'm not gonna give percentages, but I will tell you a lot of this is high confidence revenue. You should put a high level of confidence on it, a low discount on it. You look at the fleet upgauge, that's gonna happen. Those seats are gonna fly. We'll fill the seats. We'll get whatever fares are out there at the time. I think they're gonna be good fares. I don't think they're gonna be low fare, like sort of at the low marginal fare, because a lot of this is gonna go into capacity-constrained airports like Seattle, where they're just out of infrastructure. We cannot add more departures at key times. Every seat we can put into the peaks of the schedule are going to they're going to get filled with really good yields. The loyalty and product, the vast majority of that is the new bank deal, and the vast majority of that number of the bank deal is bank economics. It's not growth. There is some growth in there, but it's relatively modest, and it sort of looks like the growth we've had over the last several years. Most of that is just what we've been able to do with our partners at Bank of America. So that's secured, it's done, it's going to flow through the P&L. Network and alliances, there is more demand coming our way with oneworld, with the West Coast International Alliance. We are going to have more connectivity across our network. We're gonna see some of these markets that were okay or struggling get very good as that partnership really grows and certainly as international begins to open up again. I have a lot of confidence in these numbers. It's why we're here sharing them with you today. If you look at the other side of the chart, and I mentioned this at the top, we've had over the last several years, really starting with the competitive buildup in Seattle and then sort of going through the Virgin acquisition, an industry yield gap on a stage length adjusted basis relative to our competitors. We exited last year, and it's sort of weird because it's pandemic. I don't know exactly what the drivers were, but we exited last year back at parity with the industry on a yield basis. I think that we've got an opportunity with this revenue roadmap to close what was a 7%, 8%, 9% yield gap relative to the industry. We've been there before. There's no reason we can't get back there again. I will tell you throughout those years, and we put it in a box just so I wouldn't forget, like we were still an industry margin leader. We have not really looked at yields as the way to drive outperformance on a pre-tax basis. We're going to continue to invest value in the guests. I don't think our long-term target is to be at the industry average, but I don't think we need to live at -8%, -9%, -10% either. You've got an improving cost competitive position, a really good network backdrop profile, and an opportunity to close the yield gap relative to our competitors. It's not much more in the business than those three things, plus a really strong balance sheet. I think we've got a really strong investment case to make for ALK. I'm gonna ask you a question about that at the very end, 'cause there is a chart I'm gonna show you that sort of puzzles me if you put all of this together. If those things weren't enough on a go-forward basis, I'd say, "Hey, do we have a track record of performance?" Ben shared this with you. I think even based on 2022 and 2023 consensus estimates, we're expected to outperform the industry from a pre-tax margin perspective. You know, when we dipped, which was coming out of the integration work with Virgin, we were still the third-best margin producer in the industry. We could go back to 2005, we could go back to 2000, we've done very well on a comparative basis relative to our peers, and I think we are poised to continue to do so. If 10 years or 20 years of history is too much, we can just look over the last couple of years. These were all important to us during the pandemic. We talked about these with you all on earnings calls. We were pretty vocal about some of our goals that we set forth. We were the first to get to zero cash burn, the first to get to operating cash flow positive, first to profitability, first to get to pre-COVID levels of leverage without issuing equity. I wanted a bunch of other firsts on there, but they were number ones, and we didn't wanna put a hashtag in front of them, so we're going with those four firsts. I think a pre-tax profile that's very different than the rest of the industry. I'll tell you, I think the West Coast has been behind in terms of the recovery cycle. That we've tended to be a little more closed, a little slower to get back to travel. Even though others who have geographies in places that were more open more of the time, throughout the pandemic waves and throughout the recoveries, like, we were able to go produce really outsized margin performance. I just think it underscores what we've got working for us already in our favor. The things that we've done with the business are going to work as demand comes back. Again, I go back to how excited I am about the future and about demand coming back in full planes. Okay, we're gonna talk guidance a little bit. Most of you have probably digested this, and we can go more in detail during Q&A, but I'll walk you through it over the next couple of slides. We updated Q1 guidance. Really no change to capacity. We did improve revenue by 400 basis points. It's been a particularly strong demand environment as we got into March. One thing I'll note to you all, our spring break in our network is largely in April. We have a little bit of spring break in a couple of places in March. Most of the rest of the country is really heavily concentrated in March with a little spill over to April. Most of our spring break is in April. I think we're gonna see a very strong read-through as we go through the next few weeks and fill up for spring break, and I do think planes are going to be full. CASM, we updated slightly, and then economic fuel at $2.62. It looks like that's where it's going to be. Probably a bit higher than that as we sit here today for Q2, but for Q1, that's where we'll end up. 2022 guidance, the one thing I would point to first is that we have included a margin guide for the first time. We wanted to do this. Emily has had designs on doing this for a long time. It's just never been like, you know, is it stable enough to go out and actually give margin guidance? We just thought now is the day to do it. We're in front of investors for the first time in a few years. I think you can expect us to talk about annual margin guidance as we go forward, and we'll update this guidance on earnings calls. It's got a lot of assumptions in it, and we're happy to share some of those as we get to Q&A if you're interested. But right now, we see the business producing 6%-9% margins. I'll tell you that those, there's two things to note. One of those, it includes essentially current oil prices for the rest of the year. It does include some estimate on what we think yields will do for the rest of the year, and it does exclude lease return fleet exit costs. We're happy to talk about those, fleet exit costs, at length if you're interested in them. I think we've tried to be very transparent about the cost to return the A320s, and the A321 fleet. I think the core business is really what we're interested, mostly in getting to, and that's why we're accelerating the fleet exit. We're giving you, both cost and, margin guidance ex, the fleet transition costs. We've got a fair amount of capital ahead of us, as you saw with the fleet order. I couldn't be more excited, to go and get those aircraft into the fleet and the network. You know, even with that level of CapEx, which is elevated from normal, we see ourselves in our target. That's cap rates. We don't see leverage getting back above 50% for any period of time. I think we'll, with reasonable margin assumptions, be able to pay cash for all of these aircraft based on what we've already got in the bank. If we got to, you know, margins that were in the upper range of our guidance and those were stable over a period of time, I actually think you'll see this continue to float down towards 40 and perhaps below. The other thing we wanted to do that's sorta, you know, Q1 update and 2022 full year guidance, we do wanna start talking about long-term metrics again. You know, we haven't been able to do this for a couple of years. I think it was important for us to get in front of you all and start to think about, like, over the next cycle, what do we feel like are achievable targets that we can set for ourselves? It's still early, right, in trying to understand how stable the backdrop is if we're gonna go back into, you know, waves or an economic downturn. I think these could, you know, potentially improve over time. As we sit here today, we've got a few targets that we're talking about. One is, we wanna be a margin leader in the industry. You know, if margins go above this, we would expect to continue to be a margin leader and sort of drive towards the top of the industry. For our current thinking about forecasting, our thought is around 11%-13% pre-tax margins, and well above our weighted average cost of capital. At least 200 basis points. Leverage 40%-50% range. Historically, we've talked more of 25%-50%. This is a change, and I think it's a good change ultimately. I don't really feel like we get value for being below 40% leverage, and I don't know that it creates any more sort of safety net either. I think Nat, in my thinking, is more like in the 40%-50% range. If it went below that, we'd have to think about how to move ourselves back into that target range. Liquidity, 15%-25% of revenue. I know it's a large range. I think the biggest, you know, thing here is we don't wanna carry a lot of extra cash over time. We've got too much in it right now, and we'll use that to buy airplanes. We wanna be efficient with our use of cash. What we did learn in the pandemic is we've got to be able to raise money very quickly, just in case there's an event that's super acute and immediate. Nat and I are gonna make sure we have enough cash in the bank for a while until we figure out, you know, if we had to borrow money, you know, overnight, how would we do that? Because it was one thing that was a real challenge. We do most of our borrowing on a one airplane at a time basis, and when you need $1 billion overnight, it's hard to go transact that many transactions. Anyhow, we'll be working more on how we ensure that there's a safety net behind our cash balance, but I think we'll ultimately bring it down to, you know, between this range and sort of with a bias towards the lower end. Pensions, we are going to fund our pensions. We've talked about this for a long time. We're well over 80% today. I think we're approaching. It depends. The market goes up and down, and interest rates are starting to go up. My guess is we're actually at 95% or better on our pension funding right now. Free cash flow, we want to get back to converting 25%-75% of our net income into free cash flow, and then importantly, giving half or all of that back to shareholders over time. We can talk more during Q&A about that as well. All right, we're gonna wind this down. This is the slide that I don't understand. I sort of try to make hopefully a compelling case for ALK. I think we've got a lot of things in our favor. I think we've been doing well. We're positioned to outperform relative to competitors in the industry. It just doesn't seem to be reflected yet in the valuation of the company. This is my question to you all. You can tell me what we're missing or doing wrong. This is a chart that we wanna see ultimately change. I think part of it, and Emily are gonna work on this, maybe we don't tell our story well enough. We'll get out more, especially now that we're able to go in person, and get in front of investors and potential investors as much as we can to share as much of this sort of story as we possibly can. It's one of the reasons we were excited to get here today to start that process. I know I've had a chance to get out to a couple conferences lately too, and we're gonna be out as much as we can to tell the ALK story. Good. Okay, I'm gonna pivot. I've only got two more. I think this is one in a slide that I'm not even gonna speak to after this. Ben mentioned this at the top, but it just wouldn't be appropriate to close the presentation without coming back to this ESG issue. It has become, you know, gone from an important issue to the company to a top strategic issue to the company and the industry and all of society. It's, I know, on the minds of investors. I know a lot of our bank partners want to know what our plans for decarbonizing are and ESG are. Really the purpose of bringing this slide forward is to tell you that we have an absolute commitment to working these issues. We've put very aggressive goals out in front of us. We never put goals in front of ourselves without intending to go and hit them. That's what we're actively working on now. We are engaged on these topics all the way up through our board. They're highly engaged in this area. We're working increasingly closely with our partners in order to get line of sight to being able to accomplish some of the targets that we've set out in front of us. I would imagine as we go forward in a couple of years and get back together for that investor day, that not only we'll talk about, you know, all the things we executed on and the success we had, but this topic will take on more of a, you know, a larger share of sort of what we're talking about and thinking about. We just didn't wanna close the presentation without readdressing this and conveying our commitment to it. We're gonna end there. I think 1 minute and 45 seconds. I gotta wait 'cause we're not wanting to end early. No, we're good. I'm not gonna go through this slide. We're gonna take a quick break here, get back in here for about an hour of questions. You guys, I think, know us. I think you know our personality. We like any topics, fair game, any question you guys wanna ask, aimed at mostly Andrew and Ben. We like the tough questions, and we want to share as much as we can with you. We want to let you guys know more about our thinking. If there's areas that we've touched on that you want unpacked, just ask away. You guys are never shy, so we're looking forward to that. I just wanna say thank you again for being here. Don't escape. We really wanna see you back in here for the Q&A session. We'll keep it fun and lively, and maybe we'll try to be back at, like, 1:40 P.M. if we can. Thanks everybody for coming. Can I talk? All right, everybody. We are gonna come back into the room and get started on our Q&A. We're gonna invite our speakers back up on the stage, and we'll have mic runners around the room. Please just raise your hand if you're interested in asking a question. As I mentioned earlier, not only our speakers, but others from our management team at Alaska may chime in and answer on some of these questions. Speakers, please come on back up to the stage, and we'll get started. Yeah, I'm amenable to you turning that back a little bit. Yeah, they're gonna stick it to it financially if they're like, "Oh, I can place it. Great. Let's go do that. Good. We got Nat. Fair enough. Just that I'm gonna hit it to Esau. I'm just gonna basically- We don't have Nat back on the stage, but let's get started. Go on over here, and then. Okay. Thank you. Ravi Shanker from Morgan Stanley. Two questions. Maybe first one for Shane. I can't tell these guys, right? That was so much fun. There's a lot of firsts on that list. That was so much more fun. What about first to shareholder return as well? Oh, God. When are we potentially looking at that? Yeah. Maybe second question to Andrew. I was really struck by how confident you guys sounded about the, you know, the new revenue initiatives. They're in the bag. You know, we've got them like we have visibility here. Just given everything that's happened the last two years, kind of, you know, what more can you tell us in terms of how in the bag is it? Was it like deep down in the bag or Ravi, I don't think we said in the bag. I hope he didn't. He's gonna get fenced again if you say in the bag. I'm gonna be in the bag if Ravi asks. Let's do that one and then come back to shareholder returns. Yeah. Go ahead. Yeah. I think the point and I do have a lot of confidence, as Shane said. Maybe in the bag, but you know, a lot in the bag is essentially these decisions are real. They're real commercial decisions. While we can't control the ultimate environment and the ultimate fares, but these are very real new incremental time-proven levers that I believe will increase revenue. Obviously, the bank deal, that's just a no brainer. The fleet is another no-brainer. The alliances, I think you could argue there might be some question there, but I think that the infrastructure and what we've set up. Unlike others, where you might have certain, you know, well, we're gonna do some upsell. We're gonna put in a new revenue management system, and good luck proving that that ever did what you said it was gonna do. These ones are much clearer, cleaner, and time-proven for airlines. The other question was on shareholder returns, right? You said first to get to shareholder returns. Is that the question, Ravi? Yeah. We might actually ask, Patty, our incoming Board Chair, to share some perspective on that 'cause, we do need to go and have a good discussion with our board about that. I'll say before she jumps on, our entire mindset has been we wanna position ourselves to be able to be first. We've never committed to being first. We'll do it when it makes sense, to us. I think we're approaching that financial foundation that gives us the potential to get out there and do something, relatively soon. Patty. All right. Well, first of all, good afternoon. It is great to be here with all of you. I would just say I couldn't be as a board member and speaking for the rest of my board member, as well, of how excited we are about this team and about this story. I think as many of you know, we are precluded from returning cash to shareholders until September, I think September 22, but who's counting? Yeah. Shane did a nice job of setting up the foundation that will put us in the position to be able to deliver on that value proposition for returning cash to shareholders. I'm not gonna make an announcement about the when, but I can tell you it is a lively topic of board discussion, and we are very much looking forward to delivering on that part of the value proposition. Again, thank you all for being here today, and thanks for letting me answer questions. Thanks, Patty. Good. Next question. We get the- Yeah. I think come up here. I think Dan was actually first. We'll get to all of these. Hey, good afternoon, guys. Thanks for the presentation. Dan McKenzie, Seaport Global. First question is for Andrew on revenue here. One of the charts that stuck out to me was the premium fare you get on a first class seat relative to coach. In the back of my mind, I'm always thinking that chart should say 3x-4x, and I think yours was 1.3 or something like that. You know, a couple questions just tied to that. One, what is the revenue upside if you were just to benchmark yourself to the industry? You know, I know you guys have a history of capping fares. I don't know what the cap is actually today. If, let's say, you know, you were to just revise that to something like, say, you know, 25%. You know, take a Costco approach, right? 25% less than whatever the highest average fare is out there, you could still sort of claim victory. What kind of revenue upside does that imply? Is that a lever you'd be willing to pull, you know, to help hit your margins? Yeah. Thanks, Dan. That's a complicated question, but I think a couple of things I will share on that. It's actually, we're public about it, is my RM team have limits. They know in the main cabin they have a cap, and the first class fares on nonstop basis, they have a cap. They're not permitted to sell above that. It's really a lot like loyalty, Dan. As I said, tomorrow, we have the lowest elite tier- Threshold ... threshold of any other carrier. We could take that, you know, we could up that tomorrow, give people less miles. We believe it's an investment. Much like Costco and our previous CEO, you know, was very much of that mindset, is just because you can charge it doesn't mean you should charge it. There is upside, I will say. We've actually upped these caps, you know, probably a good number of years ago now. If you go to our website, you won't really see a fare on a nonstop basis above $1,000, $999, and you won't see a first class ticket above $1,500, on a nonstop basis. I think for us, as Shane has been talking, it would be easy to just let that go. We wanna focus on the cost and how we run the business and have value for money. Every time a customer gets on an airplane and says, "Good grief, what a rip-off," that hits our brand, that hits our loyalty, and that hits confidence. There could be upside, and we may move them down the road, but where we are today, we feel really good about that brand proposition. If I could just follow up. The loads that would accompany those fare caps, are you targeting a load factor in the premium in the first class just given that load cap? Number one. That's the follow-up. I believe, Shane, you were saying you wanna pay cash for the planes that are coming. You know, the one thing we know about shocks is we've got to park 20%, 80% of the fleet overnight. If you could just sort of talk about how you're positioned to handle that next shock. Sure. Yeah. The beauty of fares, obviously, is you have many, many stages of increases over a period of time, and so we really manage the loads up to, and target loads are mid-80s% and above- Sure ... is what we really like to do. When we get to that real end, if we spill, we spill, but we take a very measured approach and do that. Nat's gonna handle this other question. I just don't know if you told the story, but just before the pandemic, when I was coming into the role, I was like, "Hey, Nat, we have to appoint a treasurer. Why don't you do it?" He said, "Sure. No problem." Then he had to go raise billions dollars three weeks later. He'd never done it, by the way. Just like, he did a phenomenal job. That was the edited part. The unedited part was this conversation took place via email, and it concluded about three days before the first Monday in March- Exactly right. ...when all shit went. Yeah. I know, whatever. People know me well enough. I don't cuss as much as Ben, but you'll see. But no, working together on that. I think on the next crisis, two things to it. Number one, we are holding 2x the amount of cash we think we need to run our business today, so gives us a nice pad with what I would say 50/50 margin generation, we think we pay cash for everything through 2023. However, we are sitting on about $1.3 billion of unencumbered assets right now, independent of the loyalty program, paying cash for airplanes. Through 2022, we'll have $2.7 billion of unencumbered airplanes by the end of the year. One thing we did learn through the pandemic is that aircraft hold their value. It may be in sale-leaseback, which I hope in our duration we never have to do one, 'cause I hate the economics on it. In terms of raising cash quickly to manage, you could do that. I think the second thing on it, take off treasurer hat, put on fleet hat. If we were in a situation because of fuel, because of some factor that said we need to put down a bunch more capacity, you might then decide we need to try to get to single fleet even faster. Let's park more Airbus airplanes more quickly and then just move on forward. Again, it's a short-term decision that pays off really well in the long term. Let's take a question on this side right here. Are we right here? Let's kind of spread the questions a little bit so we don't forget one side of the... Sure. David Vernon from Bernstein. Thanks for taking the question. The last investor event you guys hosted, I think you were talking about a 4%-6% sort of growth rate longer term as kind of where you wanted to be in the sweet spot. Today you're telling us 4%-8%. I was just wondering if you could talk a little bit at a high level what makes the market opportunity more compelling now than it was five years ago, four years ago, whatever that was. Andrew, why don't you start, and then we can get Brett as well. Where's Brett? Brett. Do you wanna take that, Brett? Sure. Can we get a microphone to Brett? We're coming. We're coming to you, [inaudible]. Hey, David. Great question. Brett Catlin. Nice to meet you all. Thanks very much for coming. I think a couple things that we learned in the pandemic gives us the confidence to grow potentially at the top end of that range, closer to 8%. One is the depth of our loyalty in Seattle, which we've spent decades building. The key learning for us is when we had seats available in the depths of the pandemic, we ran load factor gaps versus our next closest competitor that were 10, 15, 20 points behind. In essence, we were spilling in Seattle, and we need to put more seats in that market. The way we do that in the near term is with 737 MAX 10s, 189-seat aircraft, more gauge. That does drive the growth up above 4%-6% in some years, primarily because of the gauge benefit. I'd say, look, departure growth, as Andrew mentioned, is modest and our sweet spot in a lot of it will come from gauge and investing in Seattle, where we think we have a lot of runway. Thanks, Brad. How about a question now back in the middle? Who Helane. What's that? Helene. Helane. All right, Helane. Of course, Helane. Thank you very much. I'm Helane Becker with Cowen. When we walked in, there were these pilots outside picketing, and I don't want you to have to, you know, negotiate out loud, but you're growing up to 8% a year, which means you have to hire, I think, for the MAX, it's what? 14 pilots per plane? 12. 12. Okay. You have to hire pilots, you have to replace in an environment where the rest of the industry is hiring each at 10,000 a year too. You know, how should we think about your ability to attract, to retain, and still maintain your competitive advantage without salary structures getting out of hand? Yeah. Then separately, the A321, I would think is a highly attractive aircraft to somebody. I would think you should be able to get rid of those fairly easily. Completely unrelated No. Thank you. Well, you know, I just wanna say we have just an amazing group of professional pilots at Alaska. These men and women are skilled. They keep us safe. They keep us on time. We have just a tremendous amount of respect for them, and we're working to get an agreement that respects their contributions in terms of pay and benefits and work rules, as well as, like you said, balance the side of the business model. Because, you know, we have a low cost, high productivity business model. Low cost does not mean paying well. We wanna pay well, but it's a high productivity business model. We're working to get a contract. We're in mediation. I'm confident, and I'm committed to get a contract with our pilots. These are just great professionals. In terms of just the industry, you know, pilots and attraction and retention, I'm excited about the announcement we made, you know, a few weeks ago with a school in Oregon. This is Hillsboro Aero Academy. We're gonna start, I think, here in April. It's gonna produce 200-250 pilots a year. Then together, Joe Sprague is working hard on this. This is gonna feed 200-250 pilots a year to Horizon. We're trying to create a pipeline of pilots to Horizon and then the pathways from Horizon to Alaska. That's the kind of virtuous wheel we're trying to create. Create the pipeline and the pathways, and a diverse one. We're trying to provide scholarships and low interest loans to attract people from all walks of life, not just people who can afford it, because we gotta bring the cost of pilot tuition down. It costs $80,000-$100,000 to get certified as a pilot. So we're trying to bring that cost down and open it up to a wide range of people out there who are interested to have a great pilot career. Helane's follow-up? Yeah, I thought we were friends. You're just kinda ganging up on me. Easton, cover your ears. Actually, the A321's a great airplane. We like it. I think just driving to fleet simplicity, and you're right. People are trying to get new aircraft from Airbus. Airbus is struggling with production, so I think there'll be a pretty good market for it. Yeah. Thank you. Who do we go up? Back on. Paul Roman, U.S. Global. I have a question on M&A. Looking back at Virgin America, since you have hindsight, how do you feel about that deal? Did you look at either Frontier or Spirit, and could you do something else going forward, big? Okay. You got a few questions there. Let me hit them one. Absolutely, the acquisition of Virgin America was the right thing to do. You know, our view in 2015 was we needed to expand the geographical footprint, and that's exactly what we did. We had a presence in California, and we wanted to grow it, and this is what you saw from Andrew's geographical map. That was exactly the right thing to do. In terms of your second question about M&A, acquisition was the right thing for us to do in 2015, 2016. When we look at now, when you look at this fantastic Boeing order we have of 145 airplanes, it's a 4%-8% growth rate. We can maximize it to eight over the next four to five years. Organic growth is the right thing for us to do right now with the Boeing order we have getting to a simple fleet. We don't really have an appetite for acquisition right now, and what was your third question? Did we look at Frontier and Spirit? We did not look at- Okay. Frontier and Spirit. Yeah. We wish them the best. It's hard to do acquisitions. They've got. They're good companies. They got a good business model. I'm sure it'll work out for them. Okay. Chris, you're now in charge of choosing. I'm not gonna choose anymore. That's right. All right. Linenberg's had his hand up for a while. Sorry. Chris knows all the players in the room. That's why, yeah. Thanks, Chris. You might give him a tip if you want. Yeah. Michael Linenberg, Deutsche Bank. I got two, I guess, one to Andrew and then an ESG question to you, Ben. Maybe this is also to you, to Shane as well. Just the guidance, the pre-tax margin for 2022, 6%-9% underlying, I think it's $2.80 per gallon jet. Obviously jet's a bit higher today, but we're still early in the year. Historically, what have you seen in your ability to sort to recapture that higher fuel price? You know, some airlines will say two to thee months domestic, three to six months international. But then some would also sort of throw in the qualifier that certain conditions have to be met, right? We need to either have the consumers doing well, GDP has to be fine. What is underlying? Are you assuming that you do capture 100%? I presumably you're assuming a good GDP number for 2022. That's where the street is right now. Sort of two- Yeah. Maybe I'll take that. I think historically we've been more in the three to six month sort of general camp, but with those qualifiers, so there's gotta be sort of a backdrop in the environment that allows us to take a little bit more price to offset fuel. I think as we sit here today, especially with our hedge portfolio and the strength of demand, I think we're probably offsetting most of the increase in costs, if not the entire increase in the cost of fuel. We didn't put necessarily a full offset into our forward model. If we were to see the type of strength in yields we're seeing today carry to the back half of the year, we could be at the higher end of that range or better, if oil were at $280. I think we've tried to be reasonable with the assumption set. As you know, like, oil is one thing, and then the refining spreads are also- Yeah. ...going all wacky now. It could be, you know, it could go the other way, too, if refining spreads continue to run the way they are right now. Second on just the ESG. Ben, earlier your point about being the most environmentally, I guess, efficient airline by 2025, how are you measuring that? I mean, you know, there will be other carriers that will claim that they'll be there, but, you know, either before you or they're already there, but, you know, they have 239 seats in an A321neo and, you know, that's something that that's not the path. That's a great question. They're gonna take since you care about your employees and customers. Diana leads our sustainability strategy, and she's worked really hard on this. I'm gonna ask Diana. Diana, how do we measure it? Back, I promise. Diana. Thanks for the question. You're just behind a pillar. Hi. We benchmarked ourselves, like, using the ICCT report, the International Council on Clean Transportation. We were number one in that ranking for a number of years, for about seven years. After the acquisition with the fleet mix, went down. We're using their data as well as our own assessment of CO2 per RTM, and setting targets sort of progressively over the course of years. That's the data that goes into the performance-based pay target that Ben talked about. We're developing an internal management system to help us understand sort of how far we're progressing and then the impact of different initiatives on that target. Great. Thanks. That's helpful. Thanks, Mike. Got another question. I think we'll go to Scott right here. Thanks. It's Scott Group from Wolfe. A few things. The 11%-13% pre-tax margin, when do you think you can get there? Can you get there in 2023? Within the capacity guidance, how does next year look? Is it higher than that 4%-8%? And then just lastly, when you talk about closing the yield gap, is that just the $400 million, or is there sort of any underlying assumption on pricing relative to others? Got it. Yeah. Maybe we'll have Andrew do the yield question. I think 11%-13% if all else equal. I think 2023 is in the potential set, but it's an uncertain environment is all I'd say, just with oil and the economic backdrop. If the economy holds and oil settles down, and just sort of what we see in terms of forward guides on capacity, I think we've got a good setup to, you know, approach those numbers. You got it. I think as Ben mentioned, second half of last year, absent the storm, would have been close to- Yeah. ...10%. That was still with variance going on and, you know, some series of mitigations and closures in the market. I think that's a fair sort of timeline to be thinking about. You asked one other one. I wanna make sure I hit it. Capacity next year. Yeah. It could be. We're not guiding to next year, but just mathematically because we're reducing capacity this year, so it's a lower base, it could be at the high end of that or even a little above. We'll be talking more to you guys about that probably in a couple of quarters. Do you think about 4%-8% as starting at the end of this year, or is that from the end of last year? Like, what's the base year for that 4%-8%? Yeah, really starting from the end of this year. Okay. I just asked about closing the yield gap. Yeah. Yeah. Nice to meet you, by the way, and welcome. While Shane showed something that's, you know, very important is it doesn't help you very much if you have a 15%-20% cost, you know, benefit against your competitors and your revenue is also down 20%. We went through a very difficult period there, we were expanding. We acquired Virgin America. The planes were all configured wrong seating, no premium compared to what we had. Our goal and again, earlier to Dan's point, is to really get closer to industry average. The $400 million that I shared with you, again, wasn't around coupon revenue. It was around bank revenues, corporate share increases, gauging revenues. To the extent that we can get back to 5%, 6% industry versus industry yields, I think that's more goodness and that's more upside. Mostly the Q400, closing that gap. Yeah. Not underlying price. Where are we going? We should do a little bit of the back of the room, too. Okay. All right. We'll do Catie and [inaudible]. Catie's, she's- Front and center. Front and center. Sorry. Catie O'Brien from Goldman. Thanks for the time. First one maybe just coming back to the long-term margin target. I believe at a previous investor day or conference, you've spoken to something a little bit higher than that. I think it was 13%-15%. Obviously, a lot of puts and takes over the last couple of years. When I think of the positives since then, I would assume aircraft ownership COPs, given when you were ordering airplanes, probably a little bit better than you would have expected. You have this new Bank of America deal that we're talking a lot about today. You know, there's obviously on the negative side, inflation, labor costs going up. How do we just net those two? I guess, you know, you kind of alluded to, Shane, that that might be a bit of a conservative look, but would just love some commentary there. Maybe to bail Andrew out a little bit on the airport investment. You know, it sounds like we should see returns off that investment, you know, more gates, faster throughput, better productivity in the lobby. Can you just talk a little bit about the offset? Yes, I like these. I like these a lot. These are good questions. Yeah. Yeah, look, it's, you know, coming out of $2.3 million-$4.5 billion of losses and trying to predict, like, what a margin range is gonna be over the next five years. I think we were, we just wanna be thoughtful about it, and we wanted to set a target that, we think would be a really good achievement, and we'd be able to do all the things strategically that we want to with the balance sheet and- Yeah ... fleet orders and ultimately get to shareholder returns. I think that number would allow us to do that. You know, if the environment is better, as I said in the sort of prepared remarks, we would anticipate, you know, being able to get over that and 'cause our goal really is to be at the top of the industry over the cycle. It's really as much about uncertainty and lack of stability informing that as knowing that that's going to be the right long-term target. That's something we will continue to update as we feel better about the backdrop that we're operating in. Yes, efficiencies. Yes. Throughput. Yeah. Charu, maybe if you can come on up here, but I will just say, Catie, on the, you know, the airport side, as the reality is the U.S. airport infrastructure is dated, it's old, and airports need to spend money to get them back. Yeah. We've got to a really good place where the money that's being spent is directly benefiting us. We're paying for things that actually benefit us, which is really good. I think, Charu, why don't you talk a little bit about the unlock here as well with technology? Yes. Good afternoon, everyone. I'm Charu Jain. I lead our guest-facing technology, distribution, merchandising, and innovation. We've stood up our innovation program, and we've really looked at it through the pandemic and have real accountability towards innovation and the lobby, and the airport is a big environment and is a big part of that. As we're investing in all of these lobbies, making sure that they're the most productive, the most efficient, and the seamless guest experience is very, very important. A number of our innovations that we've been working on the last few years, we're now testing at multiple airports, including San Jose. We just announced San Jose as our tech incubator. All of those innovations then can be taken to all of our hub lobbies that we're gonna be renovating. A lot of time spent on how do we increase throughput by preparing guests to do things before they get to the airport in a very fast self-service experience through the lobby, so they can get to the gate. Within that, our agents can really spend time with guests that need the help versus with everybody. You have a choice to do it yourself, or you have a choice to have the guests have our agents help you, which they do in a very caring way. Very focused on innovation in the lobby. We published a couple of articles this week about it, so if you get a chance, please do read about it. Thank you, Charu. Next question right there. Hi, everyone. It's Connor Cunningham from Melius. I think you said 30% of your capacity growth is gonna be allocated outside of the Pacific Northwest, but it's also the largest opportunity from a loyalty perspective. Why wouldn't you actually be over-indexing more or maybe 50/50 growth towards that? Why is that a good number? Yeah. It's a good question for Brett to answer. Thanks, Connor. It's a great question. I think there's a couple of things. One, staying within that 4%-8% growth rate that we talked about. We see the Pacific Northwest is offering disproportionate upside in terms of opportunity to deploy that growth in a responsible way. A lot of it is coming from deeper frequency, which is lower risk. Ultimately, growing within those bounds, the allocation for California at 30%, it allows us to take the network we've built over the past couple of years, inclusive of Virgin America, and then really to deepen that network versus adding forward. Certainly, there's a longer-term opportunity in California, but over the next couple of years, we wanna have strategic discipline to make sure we're focused on competing where we can win in the interim, and we're not doing things that are destructive to our margin performance. Okay, thanks. Just to pivot back to the long-term margin target. To be clear, are you expecting labor deals within that? I think your Horizon contract actually isn't up until, like, 2024 or something, you know, way out there. Why shouldn't we? I mean, this is probably not what you wanna ask, but, like, why shouldn't we expect an off-cycle pay increase there to get the pilot situation in better situation? Sure. Yeah, no, our long-term targets include some assumptions for new labor deals and wage inflation in the business for sure. I don't know, Joe, maybe if you want to take the IBT question. Yeah. Thanks for the question. On IBT, it's our pilot union at Horizon, and we actually it's a long-term contract. You're right, it doesn't end till 2024. It actually called for a midterm wage adjustment, which we did last year. Less than 12 months ago, we did an adjustment already. That's information that we've shared with the market. I will tell you, it's probably never been a better time to be an airline pilot, if any of you are interested. I'd be happy to take your resume. Ben described it. We've got some great programs to get folks flowing into Horizon and then on to Alaska. It's a very challenging time to be a regional airline right now. I think every regional airline is feeling the pinch of this pilot attrition, pilot hiring situation, but we've got a good plan to deal with that and good connection with our pilots. Where else are we going? [inaudible]. Yeah. Hey, thanks. Thanks for the event today. Good to see you all. Duane with Evercore. Just a question on fleet, for you and your partners. As you think about your order book- Mm-hmm You know, how much of that is built? You know, when might production rates kinda come into the consideration set? Longer term, maybe into 2023 or beyond, like, what approvals, regulatory approvals do we need to hit? What milestones should we be watching? Again, maybe a question for collectively you and your partners here. We're not gonna put Ihssane on the spot. We'll put Nat on the spot. Yeah. No, totally fine. I think the first question, Duane, is you've heard us talk about key relationships, having Bank of America, GE, Boeing in the room speaks to that. We meet with Ed Clark, who runs the 737 program for Boeing, once a month. Boeing was bent over backwards for as much information as we want, as close as we want to go to understand what's going on with production, sharing the charts that they look at internally. When does the airframe come in? How long does it take them to build it? When does it go out? We're taking one out of every nine airplanes in the MAX family that Boeing is gonna produce this year. We take advantage of that as much as we possibly can and plan it prudently accordingly. It's number one, why we feel super confident in it, because Boeing has us behind the curtain, and we feel it all the way through. Duane, I always joke with people, the factory is literally 4 mi-5 mi away from our headquarters. Yeah. If we think- Yeah. Hey, you know what? I heard something," Nat jumps in the car, drives to the factory. Yeah. Talks to Ed Clark, everyone's. I mean, that's literally. I'm not really joking. No. They won't give me a badge yet, but it's amazing. I think that's the first part. I think the second, Dash 9 has been great for us, and we're watching, you know, Dash 10 certification and the things that are involved in that. Not gonna put Ihssane on the spot there, but you can imagine how urgently we are pushing and eager to have the Dash 10 become part of our fleet. Boeing's not just making that airplane for Alaska. United, very vested in it, others as well, so there's gonna be a broader thing. Safety is obviously number one across the board, never challenge it. If you ended up in a position where, okay, the 737-10 slides a bit and we end up taking more 737-9s instead of 737-10s, okay, we'll deal with that going forward as we see fit. There's so much goodness in getting A320s out and replacing them with any flavor of MAX. We're gonna help the bottom line and these margin targets and other things, going forward, however that works out. We have a question right here. I actually had an ESG follow-up. Oh, sorry. ESG. Now let's do it. No, good. Because I got some feedback last night that the only one that asks good ESG questions is Helaine. Ah. So- Competitive. I'm gonna try and follow her lead a little bit. I'm sorry. Helaine, I was surprised you didn't ask me. Just be told. Maybe for Diana, can you comment on where you think ESG scoring and ESG benchmarking is lacking today? Where are there opportunities for improvement? Secondarily, if you have any thoughts on, you know, recent news that the SEC is gonna start to, I guess, have their own disclosure? Sure. That's a very good question, Duane, so I appreciate you jumping in along with Mike asking ESG questions. I think that where scoring is lacking sort of is in simplicity, honestly, and then practicability or sort of actionability for a company. I'll give you a couple of examples. Ross and I have talked about there's like tons of raters and rankers out there, and it's just a very complex set of systems that you all might be looking at or we might be looking at. What we did was actually try to look at all of those raters and rankers and try to figure out what metrics actually matter the most for us managing our performance. An example of the second is SASB, the Sustainability Accounting Standards Board, asks for sort of a set of metrics by industry, and it's supposed to be able to show apples to apples comparison between different companies in a given industry. That part's helpful, but a lot of those metrics don't actually help us manage our performance to get better. They're not ones where we have a target, and my favorite example is the metrics around human capital. One of them is what percentage labor organized is your employee base, and the other one is the days of work stoppage or, you know, walkouts, and that definitely should always be zero. We're not, you know, necessarily managing to a new target. What we've done then is set our own voluntary targets for 2025, and we went through a quite extensive process with the board to do that across all ESG areas. We're gonna continue to disclose, and this relates to your SEC question, you know, per SASB or per TCFD, sort of these frameworks that a lot of different entities ask for. We'll continue to manage our performance and disclose our performance annually on our voluntary targets, 'cause those are the ones that in some cases overlap with those other frameworks, but that help us manage our performance to get better. On the SEC question, you know, probably you all saw there was a proposed rule released on Monday that asks for Scope 1 and Scope 2 reporting by companies, Scope 3 in certain circumstances in later years, and then some other elements that largely correlate with the TCFD framework, the Task Force on Climate-Related Financial Disclosures. We currently and have since actually 2009 reported our greenhouse gas emissions. We currently report Scope 1 and Scope 2, and those receive some third-party assurance. This year, next month, we're gonna be doing our 2021 report, and you'll see some TCFD elements in there too. You know, I know there'll be a lot of conversation about sort of where the SEC ultimately lands, but I feel like we're working with, you know, Shane's team and others who are well positioned to meet the demands and make sure we're continuing to hold ourselves accountable and be transparent. Thanks, Diana. Great. Thank you. Andrew Didora at Bank of America. Shane, this morning I know you guys updated your 2022 CASM outlook. I know at points last year you were talking about your goal of getting CASM back down towards 2019 levels. I guess, one, is that still on the table? Two, how do we think about your non-fuel unit costs in the construct of your 4%-8% capacity growth? Yeah, no, thanks, Andrew. Really good questions. Yeah, the further away from 2019 we get, the harder it gets to you know, it's just there's natural inflation in the business. But I think a couple of things. One, there's still a chance as we exit this year that we would be exiting at a rate that's at or slightly lower than 2019, and I would say that's without a labor deal, and I hope that that's not the case. We need to get a labor deal done. If we're at the sort of middle to upper part of the 4%-8%, given all of the other things we've shared about the upgauging, fleet simplification, all the tailwinds, you know, I don't know that we'll be at 2019 four or five years hence, but I think we're going to be on a very different cost trajectory than the rest of the industry. I think we'll be able to manage it, you know, to be very steady over a period of time. We're sort of working through that now that we've adopted the accelerated fleet exit, these sort of growth targets, really looking at our costs over the future so we can be more clear about where we think that trajectory might be. It's not out of the possibility set. It's not off of our mind. We're not giving up on that metric at all. The one thing I was trying to do today with the conversation, just to be transparent, is really talk about the relative positioning that we've got, 'cause I think our relative positioning is getting better regardless of what that absolute number is. A lot of those cost pressures I showed are cost pressures that are shared by the entire industry. I don't think there's a unique thing that's gonna drive our costs worse than the industry. I think we've got a lot of things that will help us drive better. Our track record over time has been able to drive it down when we grow at 4%-8%, and so that's what we ultimately want to do-- Look, there's inflation in the business. There's labor deals that need to be done and we are now three or four years beyond the 2019 date. Anyhow, we've got a different reality we're dealing with right now. Perfect. Thank you. A second one for Andrew. When I listen to your presentation, you speak about oneworld, you speak about adding depth and breadth to the network. To me, that all speaks, you know, for corporate travel. Can you maybe talk about two things? One, about how you think the corporate travel recovery will progress, particularly in kind of a more tech-heavy, kind of Pacific Northwest area. And I guess say more and more importantly, like those oneworld and depth and breadth opportunities, how do you think about corporate share going forward over the next few years? Mm-hmm. Thanks. Yeah, I think one important, especially with the tech companies, and they're now started to get people back in the office in April and beyond. I think especially the Googles and the Amazons and all of these guys, really getting them back to office so that they're traveling back and forth between their various offices and collaborating in a different way will be important. We have seen, you know, a step change in the business travel, as you've heard talked about. I don't have a crystal ball, so I don't know where it's going, but what we have always maintained is that we have a very strong leisure component and that whatever our business component was before, I think we will do better. That's in part of the revenue. We're a part of Amex GBT now and TMCs, and I'm already seeing meaningful changes in our share gap there, in partnership with them. Of course, you know, the rest of the industry. I think the other thing is on the oneworld, really in Seattle, if you're really honest with yourself, you said, "You know what? A lot of our members, they loved us and they traveled with us, but it was domestically. They had to do a long haul. They wanted that elite reciprocity. They wanted all that goodness, and so they would travel on a competitor globally." Now today with what we've done, we can keep them in the family, and I just think that's only gonna increase our ability to get corporate share, for long-haul travel. Andrew, that all kind of fits together in terms of international scope, capability, keeping domestic loyalists from defecting to our competitor in Seattle. We can get you anywhere you wanna go on our metal or a partner. Well, guess what that does to the value of the Mileage Plan and what Sangita can go market. That was kind of the essence of why we were pushing this so hard. It hasn't come as fast given COVID and pandemic and restricting international travel, but we're really excited about it over the nextthree to five years. I just wanna add real quick. The fares that we charge on business are very different than what a lot of others rely on. We don't even need the fares to come back to, you know, at the top end where they were in the industry. We're very, very comfortable at, you know, average fares that, as Dan pointed out, are sort of a fraction of what others do to really get a rich business mix into our yield. I'm optimistic about the business setup that we've got. Okay. Next for Abby. Okay. Here, and then Savi next. Thanks. Christopher Stathoulopoulos, Susquehanna. So just wanna go back and maybe follow up on Catie's question here with the new long-term pre-tax margin guidance, 11%-13%. You know, slight walk back from what you gave us in 2013, not bad considering what the industry has been through. But I can't help but feel that there is perhaps a bit too much sort of conservatism here because you talk about the brand, the loyalty, the fleet harmonization and the dominant share in your hubs there, and a big piece of this $400 million in the bag, so to speak. You know, some of your U.S. peers are dealing with a lot, sort of bigger problems to solve here. Also conceptually, so much has happened here on the coasts during this where there's been this sort of jump ball approach to inventory, which I would think that would present some opportunities for you if perhaps corporate as a whole in the U.S. comes back, but not as much, but with a different mix. Could you help, you know, just- Yeah I understand, because I think we can all appreciate you and what the industry is facing with respect to costs, but I can't help but feel that there's a bit of a, you know, perhaps too much hesitation around closing a yield gap quicker, if you will. Yeah. Thank you. No, it's a astute observation. Look, we've modeled the future a number of different ways. We do a lot of sort of forward forecasting, and there's a case to be made that we can do better than that range. That's what we're gonna go try to do. Again, it's just. It's too uncertain right now. You know, a wave. One wave cost us about $200 million, and those are things that it's hard to recover. You can't recover. You know, Omicron was maybe a little south of that. Delta was clearly at least that much. Until we've gone for a few quarters and there hasn't been another closure, you know, another wave and there's more stability in the geopolitical backdrop, I think we're going to be a little more conservative with those long-term targets. If all that stabilizes, then I think, yeah, we'll probably be bullish, you know, about the future, sort of all else equal, based on what we're seeing today. Okay. Savi? Hey, Savi, from Raymond James. If I might ask Sangita a question on, as you think about the product and you talked about being able to meet different constituents' needs, like, how do you balance that with not being all things to all people? Because that's not a good way to kind of maximize returns either. Just how do you kind of approach that in making a decision on the product and how you market it? Thank you for the question. Sure. Very exciting. I mean, I think it's just great segmentation, right? I mean, we fly all different kinds of guests in our cabin. It's just making sure that we're tailoring or offering the right product at the right time to different guests, whether it's through merchandising on alaskaair.com or on board. I think we have full ability to appeal to a broad range of guests with our product offering. We'll continue to innovate. You know, Flight Pass, for example, can appeal to a broad range of customers as well. It's just making sure that we have that premium consumer in mind and also that main cabin consumer in mind. I think we continue to do well in there. Savi, we talked about this when we did the Virgin America acquisition. We felt under a lot of pressure. Do we do, you know, lie-flat seats or not? Right. We could just go back to our business model. We just talked about we're very clear about what we're good at, and it's about having a great product, a great first class, business class product, a premium product, main cabin, and a Saver fare. We know the segment. You know, we're not gonna get the person, and we did. We lost people that wanted the first class lie-flat seat from San Francisco to JFK, and we said, "Fine." You know, we know we won't get that customer. But if you want an affordable, nice product with great amenities, satellite Wi-Fi, in-seat power, streaming movies, a hot beverage, great service, great loyalty program, we're your airline. Yeah. I think that's how I think about it. That makes sense. I just might ask Andrew if, or maybe Brett, does the $135 million that you've identified, it seems like maybe you should be able to get that from codeshare alone and not necessarily some of the other components thereof. Is there- Savi, what's your math on that? Is there an assumption that there's like less international demand or yields are lower or, you know, some conservatism built in there? Or how are you thinking about in getting to that number? I'm gonna use this as an opportunity that I'm not sure I said in the back during the presentation. Analysts and audience- We heard it from two or three, though, so you know. You know, we've been doing alliances for a long time, obviously. You know, what we've tried to do, I mean, you know, we're sort of conservative. We try to look at this. We look at displacement, dilution. I mean, we try to be thorough and, you know, the 135, if again, as the question, if we're overly conservative where we sit today, what is international demand actually going to do? Is there any real change? We are seeing a point right now where there's pent-up demand and very significant demand, but we've got to get past that. We've got to get into normalcy again to see where this settles. It could be higher, there's no question about it. Right now, with what we see, what we hope and expect, that's where we put it. Mm-hmm. Savi, you've got two components for that too, right? I mean, domestic code share predated, you know, Alaska used to code with both Delta and American in domestic, and so obviously Delta, another story. That's runway, and we've been encouraged so far with the American cooperation. The reason we set the whole thing up with American was the West Coast International Alliance. Given pandemic, some of the other struggles that Americans had as our partner, that hasn't come to fruition yet, and so bullish on it. Eventually, again, getting to the three to five year longer term, domestic gains, frankly, are coming more quickly than we had anticipated. Okay, we probably have time for one more question. One more. Okay, let's do one more, Chris. One more question. Savi, hand the mic to Brandon. Yeah. Thank you. We need the operator. Yeah, exactly. Brandon is the one. Well, I guess I'll ask the tough one. Brandon Oglenski from Barclays. I guess, you know, you brought up your low enterprise value, and we tend to agree, but I think that's the market saying there's not a lot of confidence that this growth can be accretive. Mm-hmm. I guess what might be frustrating coming out of this analyst day is you didn't commit to that margin target in 2023. I guess two points on that. What is not giving you the confidence to commit to generating 11%-13% pre-tax in 2023? Then more importantly, how much patience should you ask shareholders to say, "Hey, look, it could take us a couple of years to get there. Here's the guidepost that we're gonna use to get there." What are gonna be some mitigants if you just can't attain that level of profitability? Yeah. I'll start, and I'll have Shane jump in. Look, the one thing I will say and what we said in the presentation, we have a proven track record. We have grown, and we have produced returns better than our competitors. So that's proof point one. I think number two, we're in a choppy environment, you know, so the load factor at 30% is this is a choppy environment right now. The things you heard that we're configuring the business with single fleet, with the Bank of America deal, you know, just configuring our business model, I think there's a lot of upside, you know. But right now, this is where we feel is a good place to be. I think it's gonna be better than the rest of the industry, and we just feel really confident about where the business is going. I think making overreaching on promises is where we stand today. I don't think that's a wise thing to do. You know, the only thing I add, Brandon, is we're actually making no statement about 2023. We decided not to give guidance for 2023 today. We typically wouldn't, you know, do that. So we wanted to give this year guidance and long-term guidance. I didn't want to infer that we were, like, not believing that we could ultimately get there next year. It's just not something we're talking about right now. Okay. Well, I guess if I can just follow up on that. Yeah. I mean, you are committed to growing, though. Yeah. What would be some mitigants if the profitability doesn't show up? Look, we're anxious and excited to grow. I think we've got all of these factors that drive like a credible story that it's gonna work well. I think the nature of the growth getting sort of back into a good mix between pure new markets and a lot of growth and sort of depth of markets that are already strong. Our fleet plan doesn't require us to grow. We've got a lot of flexibility with it. Yeah. We've always talked about being prudent managers of capacity. I think we've done that really well over time, too. If the backdrop falls apart or the economy goes down, inflation runs wild, I mean, we'll delay some aircraft, or we'll accelerate- Right ... the exit of the Airbus fleet, and we're not gonna put- 70% of the growth is gonna be in Pacific Northwest markets. Yeah. 30% in California. Again, we're growing in markets where we have strength and markets where we have loyalty and markets where we're producing outsized margins. I think we're doing prudent growth. I mean, I get your question. But you know, I think we like where we are in terms of how we see growth. Look, we're gonna modulate it given what's happening in external environment, but I think we're pretty good where we are. Thank you. Thanks, everybody. I think we're gonna wrap up now. The webcast is coming to an end. I appreciate everyone coming. Just as a reminder for those who are here in person, we have a social event out here in the gallery for the next hour. We're really looking forward to spending a little bit of time chatting with you all, hopefully getting to some questions if you had any more that we didn't get up on the stage today. We just really appreciate you coming today. Thanks, everybody. Thank you. Thank you, everybody.