Andrew Didora

Andrew Didora asked about the company's load factor expectations for Q1, noting that historically Q1 load factors are closer to 80% compared to last year's low base of 74%. He also inquired about potential areas for more cost takeout this year and how to think about CASM and cost opportunities in a 2%-3% growth environment.

Answer

CEO Bob Jordan emphasized that the company is not done with cost takeout, with corporate overhead and headcount expected to be down again this year, indicating a continued focus on efficiency. COO Andrew Watterson reiterated that teams focus on revenue maximization, incorporating incremental upsells into their calculus, rather than managing to sub-metrics like load factor.

Andrew Didora asked for insights into Southwest's load factor expectations for Q1, noting it's coming off a low base (74% last year) compared to historical Q1 averages closer to 80%. He also asked Bob Jordan about potential sources for more cost takeout this year and how to approach CASM and cost opportunities in a 2-3% growth environment.

Answer

COO Andrew Watterson stated that revenue management focuses on revenue maximization, incorporating incremental upsells into their calculus rather than specific load factor targets. President and CEO Bob Jordan emphasized that the company is not done with its transformation, will continue to press harder on costs and efficiency, and expects corporate overhead and headcount to decrease further, though not yet quantified.

Andrew Didora commented on the surprising fuel guidance given the volatile environment and high West Coast crack spreads. He asked CFO Tom Doxey about Southwest's exposure to West Coast crack spreads and CEO Bob Jordan about the levers available to offset potentially higher fuel costs beyond current guidance.

Answer

CFO Tom Doxey stated that Southwest's exposure to West Coast crack spreads is approximately 30%, with Gulf Coast exposure around 50%. CEO Bob Jordan highlighted sustainable cost discipline across all departments, including opportunities in fuel efficiency, back-office automation through AI, and large operational efficiency programs. He emphasized that this broad-based cost work serves as the best insurance against impacts from fuel price volatility, macroeconomic shifts, or government shutdowns, ensuring the company meets its EBIT guide.

Andrew Didora of Bank of America Merrill Lynch questioned the new, seemingly more aggressive liquidity and balance sheet targets compared to pre-pandemic levels, asking how management became comfortable with this framework during a brand revamp and difficult macro environment.

Answer

CFO Tom Doxey responded that the balance sheet remains a key differentiator and the new framework is designed to keep Southwest strongly in the investment-grade category while also being efficient. He emphasized that as the new initiatives generate free cash flow, it will support the framework and allow for returns to shareholders, providing clear guardrails for investors during the transformation.

Andrew Didora from Bank of America asked for clarification on the company's balance sheet strategy, specifically regarding liquidity targets and minimum cash levels in light of the share buyback and significant debt paydowns.

Answer

Executive Vice President and CFO Tom Doxey confirmed the company targets around $4 billion in cash. He highlighted Southwest's significant unencumbered assets, including approximately $16 billion in aircraft, which provide substantial financial flexibility. Doxey emphasized that the company is laser-focused on building incremental EBIT through its initiatives, which ultimately provides optionality for the balance sheet.

Andrew Didora inquired about the restatement of CASM-ex to remove profit chain, asking why the change was made now and how it influences the company's CASM trajectory in conjunction with capacity growth. He also asked what specific developments are needed in 2026 to make the $10 EPS by 2027 goal seem more achievable.

Answer

Shane Tackett, CFO, explained that the CASM-ex restatement was adopted as an industry convention to remove the volatility of year-over-year profit sharing, clarifying that other incentive payments remain. Ben Minicucci, CEO, reiterated confidence in the $10 EPS goal by 2027, stating that the thesis from the December 2024 Investor Day remains unchanged, with the company on track to unlock $1 billion of pre-tax profit from Alaska Accelerate, and that continued positive macroeconomic trajectory in 2026 will solidify the path to the high end of the guidance.

Andrew Didora asked Shane about the CASM-ex restatement, its implications for cost trajectory, and what needs to happen in 2026 to make the $10 EPS goal for 2027 more achievable.

Answer

Shane, CFO, Alaska Air Group, clarified that the CASM-ex restatement to remove power chain is an industry convention and won't change the focus on cost performance. Ben Minicucci, CEO, Alaska Air Group, reiterated confidence in the $10 EPS goal for 2027, emphasizing the $1 billion pre-tax profit unlock from Alaska Accelerate and the need for macroeconomic recovery to fully realize the target.

Andrew Didora sought clarification on the revenue intake commentary, which showed a deceleration from July to September. He also asked about the growth trajectory for the loyalty and cargo businesses in the second half of the year.

Answer

CCO Andrew Harrison explained the commentary reflects booking curves, with closer-in months naturally showing the strongest recent bookings, and he expects farther-out months to improve. VP of Finance, Planning and IR Ryan St. John detailed the cargo momentum, citing synergies from the Narita flight, new freighters in Alaska, and the maturing Amazon relationship as key drivers for growth.

Andrew Didora asked about the potential size of the accelerated share buyback program and any associated balance sheet or liquidity guardrails. He also inquired if the flattish Q4 unit cost (CASM) outlook is a good proxy for the 2026 exit rate.

Answer

CEO Benito Minicucci described the current stock price as a "significant opportunity" to accelerate buybacks. Executive Emily Halverson added that the company could repurchase up to half of the $1 billion program this year with a "de minimis" impact on debt metrics. Regarding costs, Shane Tackett declined to guide for 2026 but stated the goal is to achieve a flattish cost profile with 3-4% growth. Executive Ryan St. John noted that cost synergies ramping in Q4 will provide a tailwind into 2026.

Andrew Didora of BofA Global Research asked about any observed changes in competitive capacity or behavior since the company's Investor Day. He also inquired about further opportunities for opportunistic debt paydown and plans for the payroll relief loans.

Answer

CCO Andrew Harrison noted very little change in the competitive landscape, with the industry remaining disciplined. CFO Shane Tackett stated that major debt restructuring opportunities are now behind them but the company will remain watchful. EVP & CFO Emily Halverson added that the company will likely use planned debt repayments to exit the PSP loans as interest rates reset, or potentially replace them with more favorable debt.

Andrew Didora asked if it's fair to assume 2025 capacity growth will remain below the medium-term target due to delivery delays. He also questioned if the high single-digit unit cost growth would persist into the first half of 2025.

Answer

CFO Shane Tackett confirmed it's fair to assume 2025 capacity growth will be below their longer-term target, noting the MAX 10 delivery timeline is extending. He stated that while it's early for 2025 specifics, the company does not philosophically expect high single-digit unit cost growth to continue, as some cost headwinds will lap and productivity initiatives will continue.

Andrew Didora asked about the strategic timeline for repositioning the Norwegian Cruise Line brand, specifically how long it might take to change brand familiarity with families and reach targeted run rates. He also inquired about Mark Kempa's priorities for the balance sheet after the recent opportunistic refinancing.

Answer

Harry Sommer (President and CEO) estimated that Regent is already at its target, Oceania is about two-thirds along its journey, and NCL has a slightly longer runway, expecting to reach its relative runway by mid-next year, coinciding with GSC's second set of amenities. Mark Kempa (EVP and CFO) reiterated that reducing leverage is the number one priority, driven by margin expansion and free cash flow, and that they will continue to be opportunistic in optimizing the capital structure.

Andrew Didora asked about the strategic timeline for repositioning Norwegian Cruise Line Holdings' brands, particularly NCL's brand familiarity with families, and when it expects to reach its targeted run rate. He also inquired about the company's current balance sheet priorities following the opportunistic refinancing in the quarter.

Answer

Harry Sommer (President and CEO) indicated Regent is at its target, Oceania is two-thirds along, and NCL has a 'slightly longer runway,' expecting to reach its relative run rate by mid-2026 with new brand campaigns and Great Stirrup Cay amenities. Mark Kempa (EVP and CFO) reiterated that reducing leverage is the top balance sheet priority, driven by margin expansion and free cash flow, and they will continue to seek opportunistic trades to improve capital structure and ratings.

Andrew Didora of Bank of America inquired about the sequential decline in air traffic liability (ATL) in Q3 2025, which was less than historical trends, asking if it indicates strong pricing or higher Q4 booking volumes. He also questioned the rationale behind United's significant capacity growth in Latin America during Q3, given the RASM performance, and how it will be addressed.

Answer

EVP and Chief Commercial Officer Andrew Nocella attributed the ATL trend to strong business momentum and good bookings for Q4, indicating United is booked ahead. Regarding Latin America, he expressed disappointment with Q3 results but expects significant sequential improvement in Q4. He noted elevated competitive capacity, particularly in Mexico and Central America, but affirmed United's commitment to its Houston hub and Latin American franchise, stating that underperforming non-core flying would be removed.

Andrew Didora from Bank of America Merrill Lynch inquired about the drivers of the recent acceleration in corporate demand, asking for details on specific geographies or industries. He also asked why industry capacity cuts consistently seem to occur in the post-summer off-peak season rather than earlier in the year.

Answer

EVP & CCO Andrew Nocella stated that the corporate demand strength is broad-based across all hubs and verticals, reflecting a general improvement in macroeconomic certainty, not just a Newark-specific recovery. Regarding capacity, he explained that leisure-focused carriers tend to maximize aircraft utilization in peak summer months to offset lower utilization in off-peak periods, a contrast to United's 'golden hour' scheduling strategy which focuses on prime flight times year-round.

Andrew Didora of Bank of America inquired about the sustainability of Q1's strong cost performance and the rationale behind the 5-point revenue reduction assumption in a recessionary scenario.

Answer

EVP and CFO Mike Leskinen acknowledged the strong Q1 cost performance, attributing it partly to the timing of maintenance events, and stated he expects meaningfully better full-year CASM-ex than previously thought. He clarified the recession scenario assumes an additional 5-point revenue reduction on top of an existing 5-point decline from original expectations, totaling a 10-point reduction from the initial run rate.

Andrew Didora asked for a framework on the loyalty program's growth opportunity over the next few years, particularly as significant product investments like Starlink are implemented.

Answer

EVP and CCO Andrew Nocella expressed high confidence, targeting loyalty revenue growth above the previous year's 12% and aiming to double media sales annually. He cited a 'flywheel effect' from card acquisitions and personalization. CEO Scott Kirby added that the stability and high margins of MileagePlus earnings are a key differentiator.

Andrew Didora questioned the implications of the Boeing strike on United's operations and whether to expect capital expenditures to be at the lower end of the $7 billion to $9 billion range for the next year.

Answer

CEO Scott Kirby emphasized a long-term view, stating he is encouraged by Boeing's cultural pivot towards quality, despite near-term delivery impacts. EVP & CFO Mike Leskinen confirmed a downward bias to CapEx within the guided range due to production delays but affirmed that United wants the aircraft as soon as they are available.

Andrew Didora of Bank of America Merrill Lynch asked about the divergence in 2026 pricing trends, noting that River pricing accelerated while Ocean pricing decelerated since the last update. He also asked what financial metrics the company needs to achieve before considering capital returns to shareholders.

Answer

Leah Talactac, President & CFO, explained that the River booking curve has a different seasonality, accounting for the recent pickup, and emphasized that Viking operates as one brand. On capital returns, Talactac stated the company is committed to a balanced framework, prioritizing its large cash reserve for stability and strategic deployment. While dividends or buybacks are long-term options, she believes there are currently better uses of cash to generate returns, especially being just over a year post-IPO.

Andrew Didora asked if Viking manages its booking curves differently in the current uncertain macro environment and inquired about the company's geographic growth priorities for the next 3-5 years.

Answer

Chairman and CEO Torstein Hagen explained that being booked far in advance provides crucial time to react to market shifts, leveraging their large direct-to-consumer database to generate demand. President and CFO Leah Talactac added that their bookings are sticky. For future growth, Tor Hagen highlighted the success in Egypt and identified the Chinese source market as a potentially significant long-term opportunity, where Viking operates dedicated Mandarin-only ships.

Andrew Didora sought more detail on the booking slowdown related to the Middle East conflict mentioned in the prepared remarks, asking about its scope and recovery. He also inquired about the percentage of customers who book airfare through Viking and the potential for air cost pressure on 2025 margins.

Answer

CEO Torstein Hagen clarified that the slowdown was a brief dip observed around October of the prior year but has since recovered well, expressing confidence in the long-term safety and appeal of the Egypt product. EVP of Finance Linh Banh stated that a good number of their demographic books airfare through Viking for convenience. She noted that any cost pressures are managed and reflected in the overall yield, which was up 11% in Q3.

Andrew Didora asked about the monthly progression of trends during the second quarter and the demand assumptions for the fourth quarter, given the planned inflection in capacity.

Answer

CEO Barry Biffle stated that ancillary revenue trends improved throughout Q2 and that customers are responding well to Frontier's product offerings. For Q4, he explained that even flat year-over-year capacity represents 'better seats' because flying will be concentrated on peak days, which is expected to drive higher loads and yields.

Andrew Didora from Bank of America requested the progression of RASM from January through March and asked for clarification on whether the Q2 guidance implies positive RASM.

Answer

CEO Barry Biffle described RASM as being up 19% in January, followed by a slight decline in February and a 'big drop' in March due to a demand shock. President James Dempsey confirmed that the Q2 guidance is based on the expectation of 'marginally positive' year-over-year RASM, achieved by significant capacity cuts on off-peak days.

Andrew Didora of Bank of America sought to clarify if the target for double-digit margins by summer 2025 represents a sustainable run rate or a seasonal peak. He also asked about the rationale for raising additional liquidity at this time.

Answer

CEO Barry Biffle confirmed the double-digit margin target is a run-rate figure. CFO Mark Mitchell explained that the timing was right to raise liquidity by establishing a cost-efficient revolver secured by their attractive loyalty assets to optimize the balance sheet. He added that expanding the PDP financing facility was also opportune given the fleet's future growth profile and significant lender interest.

Andrew Didora asked for a quantification of the expected revenue uplift from commercial initiatives like Allegiant Extra and Navitaire for 2026. He also inquired whether the company would consider sale-leasebacks to finance future MAX aircraft deliveries instead of direct ownership.

Answer

SVP & CCO Drew Wells noted that Navitaire's benefit is materializing more in load factor and conversion rather than directly in ancillary revenue per passenger, while Allegiant Extra continues to contribute roughly $3 per passenger on equipped flights. SVP & CFO Robert Neal affirmed that while they always evaluate options, direct ownership is considered significantly cheaper over the aircraft's life, and they will maintain this strategy while the balance sheet supports it.

Andrew Didora asked if booking trends at the Sunseeker Resort, particularly long-dated group bookings, could offer a read-through on future airline demand. As a follow-up, he inquired if the company could quantify the RASM differential between the routes that were cut and the rest of the network.

Answer

CEO Greg Anderson and CCO Drew Wells stated it was difficult to use Sunseeker as a proxy for airline demand, given the resort is new and its location is entering its seasonal off-peak period. Regarding the cut routes, Wells did not quantify the RASM differential but explained the cuts targeted weaker off-peak flying and opportunities to consolidate flights with minimal revenue loss, noting the peak-to-off-peak revenue spread has returned to pre-pandemic levels.

Andrew Didora asked for guideposts on capital expenditures for 2025 and 2026, given the changing Boeing delivery schedule. He also inquired about the company's view on the risk associated with the pilots' union voting on a potential strike authorization.

Answer

CFO Robert Neal estimated that 2025 all-in CapEx would be between $400 million and $500 million, acknowledging uncertainty. On the labor front, President and CEO Gregory Anderson characterized the strike authorization vote as a typical part of the negotiation process and affirmed Allegiant's commitment to bargaining in good faith to reach a mutually agreeable contract.

Andrew Didora of Bank of America Merrill Lynch questioned American's strategy on capacity growth relative to peers and asked for more quantification of the recent demand improvement driving confidence for the second half of the year.

Answer

CEO Robert Isom explained that capacity growth is a balance, emphasizing plans to restore share in Chicago and grow in key hubs like DFW, Philadelphia, and Miami. He attributed his confidence in a second-half revenue acceleration to improving booking trends seen from June into July, noting that the domestic rebound should benefit American more than others due to its network exposure.

Andrew Didora of Bank of America asked about the liquidity assumptions underpinning the company's target to reduce total debt to below $35 billion by the end of 2027.

Answer

CFO Devon May reaffirmed the commitment to the debt target, which is supported by limited CapEx needs and strong free cash flow potential. He explained that while liquidity is currently elevated around $10.8 billion due to uncertainty, it would likely decrease as the balance sheet strengthens.

Andrew Didora asked why American's total revenue growth has been trailing GDP and global peers, and what is needed to return to GDP-style growth. He also inquired about the status of co-brand credit card negotiations and whether a deal by year-end 2024 is still a reasonable timeline.

Answer

CEO Robert Isom expressed confidence in returning to stronger growth, attributing recent underperformance to a self-inflicted sales and distribution strategy. He highlighted the recovery in corporate and agency bookings, which have improved from being 11% below historical levels to 7% below. Vice Chair Steve Johnson described the co-brand negotiations with partners Citi and Barclays as being in the "bottom of the seventh inning," indicating significant progress has been made.

Andrew Didora from Bank of America Merrill Lynch asked for data supporting the view that the consumer pullback is waning. He also inquired about the future deployment of free cash flow, particularly regarding share buybacks.

Answer

CEO Ed Bastian pointed to improving consumer confidence metrics, the resilience of Delta's target consumer ($100k+ households), and a record cash sales day as evidence. On capital allocation, he reiterated that debt repayment and the dividend are current priorities, but he fully anticipates exercising the existing $1 billion share repurchase authorization over its three-year term.

Andrew Didora asked for the key data points supporting CEO Ed Bastian's comment that the consumer pullback is starting to wane. He also inquired about the future deployment of free cash flow, specifically regarding the potential for share buybacks.

Answer

CEO Ed Bastian pointed to improving consumer confidence metrics and the financial health of Delta's core consumer (households earning over $100k). President Glen Hauenstein added that the previous day was the highest cash sales day for July in Delta's history. Regarding capital allocation, Bastian confirmed the priority remains debt repayment, though he anticipates exercising the three-year, $1 billion share repurchase shelf over its term.

Andrew Didora inquired about the specifics of the planned capacity cuts, asking if Q2 schedules were set and when the second-half reductions would begin, along with any geographical focus. He also asked about the historical performance of different demand cohorts during recessionary periods.

Answer

President Glen Hauenstein explained that Q2 schedules are largely intact, with trimming to begin in August, focusing on the Southeast. Regarding past downturns, he noted that Premium revenues, now a larger part of the business, have proven to be more resilient, and they have not yet seen any cracks in that segment.

Andrew Didora asked for clarity on the cadence of domestic capacity growth throughout 2025, noting that Q2 schedules appeared high relative to the full-year outlook, and also inquired about transatlantic capacity growth.

Answer

President Glen Hauenstein clarified that Q1 capacity growth would be 4.5-5.0% and that Q2 schedules would be adjusted downward. He projected that the summer months of June, July, and August would represent the low point for year-over-year growth. He also confirmed that transatlantic capacity growth would be slightly above the system average.

Andrew Didora from Bank of America asked when Delta expects to become a cash taxpayer and at what rate, and also requested a ranking of transatlantic revenue potential for 2025 compared to other regions.

Answer

CFO Dan Janki stated that Delta expects to begin paying some cash taxes next year, with the rate stabilizing in the high teens to low 20s over the next three years. President Glen Hauenstein ranked domestic as the strongest revenue region for 2025, with transatlantic following closely behind, and noted improving trends in the Pacific and Latin America.

Andrew Didora asked about the funding plan for the $1.3 billion in 2025 CapEx, questioning if it would be paid from cash or other financing. He also inquired about the recently filed lawsuit by American Airlines related to the NEA wind-down.

Answer

Financial Officer Ursula Hurley explained that three aircraft deliveries have already been paid for with cash. She stated that if the macro environment remains stable, the company will be comfortable with its year-end liquidity and can continue using cash. However, if conditions deteriorate, they will assess returning to financing markets. CEO Joanna Geraghty commented on the lawsuit, stating it was not unexpected and is part of the final financial true-up process with American following the termination of the NEA.

Andrew Didora asked about the outlook for GTF-related AOGs into 2026, the potential for compensation from Pratt & Whitney, and whether the negative impact from the election was broad-based or concentrated in specific markets.

Answer

CFO Ursula Hurley responded that JetBlue does not have a clear line of sight on AOGs beyond 2025 and that discussions with Pratt & Whitney regarding both the AOG forecast and financial compensation are a 'work in progress.' President Marty St. George added that the impact from the election is broad-based across the network, not concentrated in any particular markets.

Asked about the new pricing strategy compared to the old one and any required system changes to support the new product offerings.

Answer

The company stated that pricing remains demand-based, leveraging their experience with bundled offerings. The new products will simplify the customer purchasing experience. A key change will be distributing the new premium products through third-party channels over time, which will expose them to new customer segments. Internal systems are prepared, and they are working with external partners for distribution.

Andrew Didora of Bank of America inquired about the cash flow impact from the cost savings of CRJ and engine sales and asked for key milestones to track progress toward hiring 150 more pilots.

Answer

Executive Torque Zubeck explained that cost savings are primarily from eliminating interest and depreciation, with some maintenance cost benefits. Executive Jonathan Ornstein added that all asset sales have generated cash above their debt balances. Regarding pilot hiring, Ornstein highlighted the need for direct-entry captains and mandatory first officer upgrades via the Aviate program. Executive Michael Lotz noted that quarterly block hour performance is the key metric for investors to monitor progress.

Andrew Didora questioned the cash flow impact of cost savings from CRJ and engine sales, asking if it was primarily non-cash D&A. He also requested key milestones to track progress toward hiring the 150 pilots needed to reach United's target utilization.

Answer

CFO Torque Zubeck clarified that savings include cash components like interest and maintenance, not just depreciation. Chairman and CEO Jonathan Ornstein added that all asset sales have generated cash above their debt balances. Regarding pilot hiring, Ornstein cited the need for direct-entry captains, ensuring first officers are upgrade-capable, and the impact of the Aviate program's new requirements as key drivers. President Michael Lotz noted progress can be tracked via quarterly block hour performance.

Andrew Didora from Bank of America inquired about the new, higher cost per block hour, asking if it represents a sustainable run rate. He also asked about the potential risk of delays in transitioning the CRJ-900 aircraft to United's service.

Answer

President Michael Lotz stated that the current cost per block hour is a reasonable baseline, though he noted maintenance costs were lower than normal this quarter and will likely rise, potentially offset by normalizing pilot training expenses. EVP and COO Brad Rich and Chairman and CEO Jonathan Ornstein added that they do not expect delays with the CRJ transition, as it involves minor cabin refreshes and painting, with the main variable being pilot production, not aircraft readiness.