Great. So, to kick off the airline content in the conference, very happy to have with us, Alaska Air Group and, CFO, Shane Tackett. Thank you so much for joining us, sir. Thank you, Ravi. Again, research disclosures, please, please read them. Maybe I'll just jump straight into the Q&A then. Obviously, it's been a pretty interesting year, a lot of scrutiny around domestic demand in particular. So maybe I know you guys gave us an update last week, but maybe you want to kind of share some thoughts on that, and kind of what you're seeing in the domestic environment right now. Sure. Yeah, it has been an interesting year. So, like, first half of the year, super strong. You guys know that. That's all in the books. I think we saw particular strength close in that we hadn't expected just. Mm-hmm Cause it wasn't business, it was leisure. Yeah. That started in April. It carried through May, June, was with us in July and all the way through August as well. So really no change to pattern for the first couple of months of the quarter. I think September has been more normal seasonally. Mm-hmm. A little less strength close in, sort of a more normal environment. Not concerning at all, but, you know, it would have been nice to have seen, you know, the close-in strength persist. I think last year there was so much spillover demand out of the summer. Yeah Into September. It was hard to know what we were going to see this year. You know, I do think some of it is caught up in this international-domestic mix. We're already starting to see that normalize. Too soon to call it for Q4. Hmm But I think our hypothesis was a lot of that international demand would normalize, and ultimately, the rebalance itself towards domestic, and we weren't going to see a structural shift, and we're seeing early signs that that's the case. Mm-hmm. October, November, December are booking exactly where we would have expected from a load, Mm And from a yield perspective. So good start to the Q4 booking curve. Very early, obviously. Yep. But no, you know, nothing that's off-trend from what we were expecting or seeing in the summer. So the one sort of like, you know, issue that we saw, and it's modest, was this September close-in demand not carrying over from. Yep From August. And then last thing, you may ask about it, but we were certainly impacted by the tragedy in Maui, and I think that will be persistent for a little while. It's, you know, a really tough thing that the community's going through there, and so we're more focused on doing what we can to help the community get through it. We'll be anxious and excited once, you know, it's really open for travel again. And it's not a huge part of our network, but it did have a relatively decent effect on the third quarter. Got it. So great color. A few follow-ups there. One is, do you now have a sense of that close-in behavior in hindsight, whether that was an aberration from the pandemic or whether that was a new normal that's just on pause right now because of international or, or macro or something? Yeah. You know, we had said on the call, Ravi, like, I don't think we'll put it into our forecasts, in our guidance 'cause it's, It's a nice bonus. Sure. Yes, it'll be a nice bonus. Okay. I think it was with us long enough through the peak periods that at least that spring through summer sort of travel, I think we would expect it to happen again. I think the real shoulder periods, the Septembers, the Jan, Febs, maybe it won't. Mm A s much. The problem with putting it into our forecast or guidance is if it doesn't come true, you're just- Yeah You can't perform. Yeah. You know, to the guide. By definition, that's the issue with all this close-in stuff. But I do think it's, maybe it's not gonna structurally be as much as we saw this summer, but it felt persistent enough that it could be part of a new normal, going forward, certainly in the sort of really peak travel season. Got it. So when we look at your three-tier guide and your guides going forward, you're not gonna put that in? Yeah. To the degree we can tease it out. Yeah You know, or the revenue management team is able to say, like, "This component would be, like, close-in demand strength," we probably would extract it. Did you see that in, like, certain destinations, certain type of customers or know behaviors, or was it pretty across the board? No, I think all of the markets where we saw strength, it was relatively happening. Okay Again. There were markets, Ravi, we flew, like, 98% load factors in July. Wow Like Pittsburgh, out of Seattle. Nobody would've guessed at that. Okay. You know. That's interesting A decent chunk of that was close in, so it's like. Yeah, MusicFest, I don't know. But that was for a whole month, by the way. Oh. A whole month, like, the plane was full. I think the opportunity is if it does persist, the revenue management team can, you know, anticipate it and do even better on the yield side. Maybe it was the Taylor Swift tour. Yeah, yeah. Well, yes, yes. Um. That came through Seattle. That was quite the event. I can't imagine. And just, on Hawaii, obviously, kind of really unfortunate situation there, but kind of, A, can you quantify it? B, kind of do you have a sense of what that curve looks like going forward? Because I think now they're asking for tourism to maybe start coming back because economically it will be helpful for the area. Yeah. So when do you think that reverses? Yeah. Yeah, so, the rest of Hawaii has been really strong. Yep. Kona, Lihue, and Honolulu. Right now, we heard yesterday that West Maui is gonna open on the 8th of October. Mm-hmm For tourist travel again. I think there's several thousand displaced residents that are in hotels, so I don't know what the answer to that is. I think we're waiting to see what their answer is. We had, like, eight flights a day into Maui on 1,200 or 1,300 a day, so it's not a massive impact, but for several weeks after the fire, we had net negative bookings, lots of cancellations. Right. Very few new bookings. That's turned now. Mm-hmm. We're back into net positive booking territory. I think it's gonna be a couple quarters for it to rebuild its baseline level of sort of traffic and demand. And look, I think, you know, I think there's a subset of people who are gonna, you know, not want to take this aspirational vacation to a place that's still suffering. Yeah. So, I. We're gonna go at the pace that, you know, residents of Maui want to go, and we'll serve the demand once we see it start to come back. But it truly, you know, the economy is very tied to tourist travel, and they do. You're starting to see a, you know, move towards, you know, wanting to go public with inviting people back out there. So, I, a couple quarters, I think it should normalize. Got it. Moving to corporate and the demand side, I have several friends in tech who are being basically forced back into the office. Mm. In fact, some of them are going back to the office at a higher pace than they did before the pandemic. So is this the catalyst, the tipping point that you need for, you know, tech to start traveling again? Because then they want to go out of the office and travel? I mean, if you're doing it, you might as well get on a plane, right? Yeah. Yeah, I think. Look, nothing's changed for us yet, so we're still where we were, you know, six weeks ago. Seventy-five percent recovered by volume, and, you know, it bounces around that number right now. We are. I can tell you, driving in Seattle has changed, so somebody's going back to the office, cause it takes me 20 more minutes to get to work now. Okay. So I think it's early, but yeah, we've always sort of connected the two, that you would see a greater return to the, you know, travel once you got people back into the office. Yep. It's certainly happening in the Seattle area now. You know, I think it's gonna take a quarter or two for it really to, like, fully take hold. And very similar to the close-in demand thing, we've put no business return in our guidance either. Okay. So it's all upside for us, and it will continue to be upside for us. I'm sort of out of the prediction game, when it's gonna happen. I do believe, like... You know, we have large accounts, like most valuable companies on Earth, who are flying at 25% or 30% of pre-pandemic levels. Right. That's not gonna. They're not gonna. That's not their new normal. Yep. You know? I don't know where it goes, if it goes to 80% or something. It's just a matter of when at this point. Got it. Switching gears from volume to pricing, you, in the second quarter, you pointed out deceleration in the travel environment. Was that a little sooner and a little more severe than you expected? Kind of I, in particular, kind of thought that travel would hold up a lot more, given some of the kind of ongoing constraints on capacity, especially over the summer. Yeah. So again, is that largely a function of international versus domestic, or kind of how do you see that evolving? Yeah, I mean, our best hypothesis is that was the biggest driver. It was, you know, a point or two, I think we talked about this on the call a bit. Yep Of missing demand that, that went international that would've been competing for the seats that we were selling. We flew very full. Mm-hmm. And you know, when you're flying at 88%-90%, you're probably spilling traffic, so there may have been more yield opportunity, and that's something, like, our RM team is gonna go look at. Mm-hmm. I think that it was modestly lower, the revenue forecast, than we would've guessed at, you know, a few weeks prior. And I think the only thing that we saw that was really different was disproportionate shift to international. And then, the whole commentary over this Q2 cycle was, "Is that structural now? How long is it gonna persist?" You know, "Domestic's we're out of favor," all that sort of stuff. And we sort of thought people will go to Europe, like, now, and probably not again in the fall. Mm-hmm Or in the winter. A lot of people go to Europe, they don't go to Europe every year. Right. It's not gonna be two of their four trips a year, right? So we do think it's gonna normalize. Like I said, there's nothing in the Q4 data that suggests we're not going to have a relatively balanced domestic demand environment relative to international. If that's balanced, does that help the TRASM sequentially as well? I think it's. Yeah, it does give us more support on the international revenue side, for sure. Got it. All else being equal, there's a lot of capacity. Like, you know, it depends on where we end up with capacity versus demand as well, but yeah, getting more of the demand back into the domestic market is gonna be helpful for us. Well, the other thing that kind of went differently than we expected was jet fuel went a lot lower than we thought. So do you think that had anything to do with it? And, like, is a $3+ jet fuel environment actually good for PRASM? Yeah. Yeah, that was all well-timed, like one week after we reported earnings, you know? The refining margin went through the roof, and then it settled down. The Saudis were waiting for you guys to report. Yeah, exactly. Then the spot price is through the roof. Look, it's, look, we are as sensitive to the volatility of, you know, looking at our own forecast and seeing one input change, you know, our margin outcome by 200 or 300 basis points is frustrating. We typically plan for $3 fuel in almost any environment. If it's $2.70, we plan for $3. If it's $3.25, we plan for $3. I think on average, we're right, in any given period, we're wrong. Yep. But I do think that the higher it is, the more advantage we have. Yeah. We have a young fleet. We've got a fuel-efficient fleet. We've got lots of MAX aircraft with the LEAP-1B, so proportionally, we have a really good setup. And I do think that, you know, there's almost always some correlation between price of fuel and long-dated capacity decisions. It, close-in, it never changes. We're already staffed for our close-in flying. Right. You're not gonna go park all those planes. But as you think about how to plan for next spring, you know, if people are planning for $3.25 fuel, I think you come up with a different network than if it's $2.75. That's my general, you know, belief, and I think it'll probably hold true again. We've spoken a couple times on your conference calls about the potential for a permanent mix shift between international and corporate, and how you maybe adjust for some of the RASM shift there. What's your latest thinking on that, and kind of do you think some of that goes into effect in 2024? The leisure. Leisure versus. Corporate Corporate. Yeah. If that corporate customer never comes back Yeah On the tech side, in particular. Yeah kind of how do you Yeah Put the leisure traveler in front of that? Yep. You know, I think even before, you know, this sort of period, we, as we reshaped the network coming out of COVID, we were reshaping, you know, more towards leisure-oriented markets. So we're flying more, you know, California into Florida, more Seattle into Florida. We just announced Nassau, doing a lot more into Latin. We're, I think, one of the largest carriers from the U.S. into Mexico today. Mm-hmm. And I think you'll see us continue to do that. Those tend to be really our sweet spot. A 5-6-hour flight is perfect for our product. We tend to get, like, the right yield. We get really efficient cost performance. You can fly down and back with a plane and rest it overnight. It's, like, a really good utilization play. And I think you'll see us do more of that. Our core business markets, we still have lots of frequency in, and so if the business demand comes back, they're gonna have lots of choice. We fly, you know, over 10 times a day, up and down the West Coast to the key sort of business markets. We serve lots of frequency out of Seattle to, like, the East Coast, Boston to New York, to the world. So, you know, if we see it come back in a step change, we might be a little behind the power curve, but it seeps in little by little. I think schedule by schedule, we can adjust more of the capacity into the business market. But right now, yeah, I think we've always been more leisure-focused, probably 65-35 is the split today. And, and I think it's working well for us, and that's what we anticipate the mix, going forward will be, give or take. Is leisure still happening, or was that also a COVID-only thing? I don't. You know, I haven't seen the leisure report. Yeah. I still am looking for it from the team. Like, I don't know. I think for sure, anecdotally, people were mixing, you know, trips. Yeah. They were going on a two-day business trip and spending a long weekend somewhere. There's no doubt. Their families here. Yeah, yeah, yeah. I, I don't, I think it's still happening. You know, I, I think as with everything, there's like a bell curve to it. We probably peaked, and it's coming down a little bit to normalize. Mm-hmm. But I, I'll tell you, like, there are companies, I won't name them, but have told us their travel management, you know, departments are actually trying to think of how to make business trips more value-based for the traveler. Oh, wow Get more work done, and also, like, have an opportunity to extend it into, like, some sort of like, you know, one day of pleasure or something like that. But that's, like, a thing on their mind. Okay. Maybe it's gonna be persistent, maybe. Conferences and nice places are a good start. Right. Right, yes, especially in Laguna. Although, I'll tell you, I flew in, and I went for a walk, cause why wouldn't you in California? And it rained last night on me. It was like, "I could do this in Seattle, Ravi." Like, it's supposed to be sunny, but okay. Man, that's some bad luck. Maybe shifting gears here on the cost side, obviously, inflation has been top of mind for investors, and then, obviously, you know, the labor side, you know, training costs and everything else. When do those costs start to lap? When do they start to even subside, if you will, and kind of is there a path to lower CASM -X that does not involve significant expansion of the fleet? Got it. Really key question. I think the sort of biggest spike is behind us. Okay. A lot of that has been, you know, pay rates, both labor we employ directly and third-party suppliers as well. There's still some more to do. We just announced a tentative agreement with our mechanics this week. We still have to get a deal with our flight attendants. Those are both critical, critically important, but I think most of that is behind us now. Mm-hmm. You'll start to see, you know, full lapping of that next year. Yep. I think the rest of the cost structure is in decent shape. A lot of the costs that we have are essentially fixed. Like, a lot of our maintenance costs- Yep A re under, you know, long-term contracts with fixed rates. The area that, like, is probably the biggest headwind for us is airport-related costs. There's a huge CapEx sort of cycle going on the West Coast and a lot of the airports we are, you know, large operators out of Seattle, Portland, others. Those are-- They're tough because they're big step changes in the P&L, but then they don't move for 25 years after that. Yep. So you just gotta sort of get through it. And we've got a couple more years of airport cost headwinds. Having said that, to answer your question, I think if we could grow a modest amount next year in the middle-ish of our sort of long-term target range, we have a good shot at seeing unit costs, you know, flat to down. Not predicting that, we haven't gone through the budget cycle. I do think we're relatively in a good spot relative to competitors. Like, we're very conscious of our cost structure, and what it looks like post-COVID versus the rest of the competitors in the industry. We've lost no ground, and I think we're in a position to be able to gain some ground- Mm-hmm Over the coming year or two. We've got, with the single fleet, a lot of opportunity for more efficiency, productivity. And we're sort of excited to see if we can't get one or two points even more competitive on a cost per- you know, basis versus the industry. I think, you know, we're well below the legacies. I think our unit costs are below JetBlue, and they're as close to Southwest as we've ever seen since I've been at the company. So while the industry has structurally increased, I think we're doing a relatively decent job. You guys know our full year guide. You know the first two quarters actual, the updated guide for Q3, you can impute Q4, I'm sure you have. I think it's a good exit rate if we hit it. So I think we're in a decent spot. Yeah. Got it. Just kind of extrapolating that topic, look, there's a lot of focus on demand right now, the demand environment, but no one's focused on demand in isolation. It's always demand versus supply, right? And that's where there's a lot of concern that on the domestic side, you're seeing a bunch of new capacity come in from the kind of regional carriers, low-cost carriers, ultra-low-cost carriers. How concerned are you? Do you think that this industry kind of is getting to a point where it's not learning from past mistakes? And it's obviously never you, it's always the other guy. Oh, yeah. That's always us. Right? Of course, yeah. Are you concerned about capacity growth going into 2024? Look, yeah. Let me answer it this way. If everybody's current sort of number they're talking about in terms of 2024 growth happens, and there isn't, you know, an upturn in the economy, I think that's a tough setup. Yep. Right? I think all of us, like, the math is pretty simple. It's gonna be a tough setup. Yep. I think a couple of questions to ask though is, is that capacity gonna materialize? Mm-hmm. Most of the revisions, material revisions to capacity guides over the last two years have been down, right? Yep. At some point, that won't be the case, but I sort of have, I anticipate that that may continue to be the case, generally speaking, especially if high fuel persists. Mm-hmm. I don't personally think. Like, it is a cyclical business. You can't do everything for the next quarter, but I don't think most management teams are gonna stare at budgets that say, "I'm gonna go have 200 or 300 basis points of margin go away." Like, I think once you see it is when you start to say, "Okay, I got to rethink where I'm deploying capacity? How am I deploying it?" And I think management teams do wanna have good businesses. I think they wanna repair balance sheets. And I do think there's real constraints on the, you know, the supply of aircraft still. And so my sense is we'll probably see a little less capacity than people are talking about. If we don't, and if the economy struggles or it sort of flatlines here, yeah, it's gonna be a tougher setup from a, you know, a pricing perspective. I do think the one thing I'd say, Ravi, about us, we have, like, potentially unique drivers of, of, you know, revenue. Yep Top line, versus a lot of the rest of the industry. We're doing things now that the industry had done 5 or 10 years ago. An example would be the amount of first class we're selling. You know, pre-COVID, we were selling 40%. We're selling sub 60 today, but up from 40. A lot of our competitors sell 80% of that cabin. I don't think we'll ever go that far. We wanna keep a lot of upgrades in the system for elites, but we could go sell a little bit more of that, and probably will. And that is an opportunity for us to relatively outperform on the revenue side, if it's a more challenging environment. So do you think your peers... I'm not asking you to answer for your peers, obviously, but kind of as an industry observer, do you think it's a little bit of hope and faith, but you are confident that when it comes time to actually deploying this capacity, they will show the discipline and say, "Hey, the demand is just not there"? Or, you know, I mean, if you don't have the plane, there's not much you can do back. Right. Right, right. Do you think this industry will sort of do the right thing, or do you think it. Look, I understand the question. I think you could look at a lot of cycles in the industry and come to a conclusion that, we, like, we all are gonna do the capacity thing to managing the cost down, and then wait until results really- Yep Get you know, materially worse before we change. I like to think that we're not gonna go back to, you know, behaving that way as an industry. If you look at the period of 2009 to 2019, our worst margin, I think, was 9%. And there was a lot of years of massive capacity growth, if you recall, in Seattle. Yeah. Us and a competitor. Mm-hmm. And I don't know, over a 10-year cycle with, like, huge competitive capacity buildup in our key city and markets, both us and that competitor were able to do relatively well, you know? You could argue it could have been better, yeah, but, but we weren't languishing in low single-digit margins or approaching zero. So I tend to have a little more confidence that we're all not gonna race ourselves down to the bottom here. Yep. But I get the question, and I think it's a salient one, and some of these proposed growth rates are high, you know? Yep. I get... Like, if the industry thinks that it can grow capacity 2x the economy, growth, the economic growth, like it's, that's a, that's a tough setup. We need a lot more of that travel and leisure to come. Right. Right. Yes. Yeah, yeah. Any questions in the audience? You, one back there. Can you hear me? Yeah. I was just wondering if you could give an update on some of your alliances, like oneworld. Yep. You kind of talked about international as well. So if you're seeing upside with the international travel through these alliances, and maybe how you kind of measure performance metrics and kind of success in those alliances. Great. Yeah, thanks. So just to remind everybody, like, two big things that we did during COVID, we got into an alliance partnership with American, a renewed one. It's called the West Coast International Alliance. It's very much focused on us helping to feed their international complex off the West Coast. I think the relationship is doing phenomenally well. They're a great partner. We just turned on a bunch of additional code domestically beyond a number of cities. I hope they feel the same way. I think they're getting a lot of value out of the partnership. I know we are. And I think it's a really attractive loyalty proposition to both their core guests and ours as well, and a growing number of guests in some of the markets where we've been more growth-oriented, like California. And then the other was joining oneworld. That was all about giving our loyal guests an opportunity to fly anywhere they wanted in the world, out of Seattle and off gateway cities in the West Coast. You've seen oneworld partners increase service into the West Coast cities. I think you'll continue to see that. We're now selling nine of our partners. I know it seems easy, you should just be able to sell everybody. It's really hard in this industry. So not only do you have to partner, you gotta go out and actually sell their tickets and service their tickets. We're now doing that with nine partners. We'll have a tenth up before the end of the year, and then we're gonna start selling premium cabin. So we're just selling main cabin right now. So then we'll start selling premium, which is. that's where, you know, a lot of the value ultimately accrues. I'd say on the oneworld side, you know, most of the value really should... revenue value should accrue to our partner. We're filling their planes, sometimes not even with a connecting leg on our- on us. It's just a local ticket from Seattle to Doha or something like that. But the value to us is keeping that person in our loyalty program, they keep our credit card, they swipe it more, they're not our competitors, and you don't see that in the period of the P&L where they fly, but you get that impact and effect over time. I think we'll be able to measure that more in the next year or two, as we actually start to see international now having opened up, and how much traffic we're placing on our partners. We'll be able to measure the stickiness and the additional loyalty we're getting. It's too early to do that, it's just started, but we'll be able to do that soon. And then, you know, I think on the alliance with American domestically, you really want to see when we're, you know, selling each other's traffic, that those yields are coming in at system average or better, and they are right now, and you want to continue to see that. Cause if they're not, then there's, like, this argument, could I have sold that ticket myself for something that with that system average? And right now, they're really high-quality tickets. And there's other ways we measure it. Those are the two that we'll probably talk about more over time, but really good initial start to both of these now that international's opened back up and there's a lot of demand, just generally to travel right now, and I think it's all upside from here. Carter, go. You talked a little bit about the concerns around, you know, general industry capacity and why that may or may not play out next year. The news we got yesterday on the GTF positions you particularly well, not having that exposure in your fleet. Have you thought about or quantified the impact that's gonna have next year on general industry capacity growth? Great question. No, not yet. We weren't anticipating, you know, the news that came out, so it's all pretty fresh. I think certainly, our friends down in Hawaii are impacted by this. Mm-hmm. I think most of the impact is East Coast-oriented, JetBlue and Spirit. And, by the way, I. Like, being in airline management, I don't wish this on anybody. Yep. Airlines work incredibly hard to go build their networks and hire people and make these business models work, and to have this, like, nobody's fault, like, the engine manufacturers do the best they can, too, but, like, to have, like, 25% of my fleet that may have to go in early. It's just really hard on those companies and those employees, and I wish they were in a different position. We haven't figured out what the net impact is. Maybe it's more outside of our network anyhow, but haven't really done any analysis on it. Any more questions? Maybe just to kind of wind up, kind of, how are we thinking in terms of just kind of incremental growth opportunities? Obviously, the Investor Day, you had, I think four different kind of new revenue opportunities. Kind of, how is that tracking, and kind of when do you think you can line up and reload that pipeline, if you will, for more ideas and credit growth to come? Yeah. Great question. I won't preview our next Investor Day too much. Yeah. We gotta decide when we're gonna have one. Yep. I think the loyalty side is pretty much done. A lot of that was the new bank deal. We've seen amazing growth on the credit card penetration side, and we've seen spend hold up really well. Mm-hmm. Like, I think our trends are similar to others, you know, and so I don't know if we're ahead or not, but we're doing really well from that perspective. We're just getting going, I think, with merchandising. We are now starting to, you know, do in-path upsells that we weren't doing before, post-sale upsells that we weren't doing before, into premium economy, into first class, and really good early returns. We started to selectively sell some exit row. Mm-hmm Capacity, being very mindful of making sure our elites have access to those seats on the aircraft. And I think you'll continue to see us work on merchandising seat products. And we haven't talked a ton about those, but I think there's a good chunk of opportunity there. Look, the alliance stuff we just talked about, I won't go through it again. Whenever we do another Investor Day, we'll be more deliberate about quantifying and proving some of the value that we see in the P&L from that. And we've got our commercial team working hard. They know, like, structurally, costs are up, structurally, revenue has to be up. And so, whether it's the amount of each cabin we sell versus upgrade, or we look at new revenue streams, we've got them hard at work, building a plan for next year that we think will help us outperform whatever the underlying general pricing environment is, but we're not ready to quantify that yet or talk too much about it. Sounds good. We will wait for the next event. Yes. Yes. Shane, thanks so much for being here. I know it was logistically a bit of a challenge, but I'm glad we made it work. Yeah, me too. Great. Great to see you. Thank you so much.