Atul Maheswari

Atul Maheswari asked about Frontier's long-term 10% growth plan, inquiring where this growth would be concentrated (e.g., backfilling Spirit's vacated space or new geographies) and the rationale behind the 10% target versus a smaller number for accelerated ROI improvement. He also followed up on the full-year guidance, questioning the need for high single to double-digit RASM growth in Q2-Q4 and the confidence in achieving this given accelerating capacity.

Answer

President and CEO Jimmy Dempsey explained that the growth is primarily focused on infilling the existing network by restoring capacity on off-peak days (Tuesdays, Wednesdays, Saturdays), with about half dedicated to new markets like Atlanta and Las Vegas. He stated that 10% growth provides utilization flexibility and revenue stability, building on strong RASM trends from Q4 2025 into Q1 2026. Chief Commercial Officer Bobby Schroeter added that a return to a 'basic first' product architecture, reinforced revenue management discipline, and significant NDC distribution enhancements are driving improved yield, attachment rates, and early bookings, contributing to confidence in RASM performance.

Atul Maheswari inquired about Frontier's long-term 10% growth plan, specifically its geographic concentration, whether it targets markets vacated by competitors, and the rationale for this specific growth rate. He also asked for confirmation on the required RASM growth for the year's guidance and the confidence drivers behind it.

Answer

President and CEO Jimmy Dempsey explained that growth would involve infilling the existing network and targeting new markets, particularly where competitors like Spirit have reduced capacity, citing Atlanta and Las Vegas. He noted 10% growth provides utilization flexibility and RASM stability. Chief Commercial Officer Bobby Schroeter added that recent changes to the basic first product architecture, reinforced revenue management, and enhanced NDC distribution are driving improved yield and attachment rates, contributing to RASM confidence.

Atul Maheswari noted that Frontier no longer expects a profitable second half and asked what changed from the prior quarter's outlook. He also requested the non-stage-adjusted RASM guidance.

Answer

CEO Barry Biffle explained that a significant sales slump from mid-June to mid-July negatively impacted bookings for July, a critical month for the quarter, making the previous forecast for a profitable second half less certain. CFO Mark Mitchell provided the expected Q3 average stage length of 915 miles to help calculate the non-adjusted RASM.

Atul Maheswari of UBS questioned whether the Q2 guidance miss was driven more by costs or a weaker RASM outlook, and also asked how the back-half profitability expectation compares to original plans.

Answer

CEO Barry Biffle and CFO Mark Mitchell explained that Q2 costs are higher due to the short lead time to adjust for capacity cuts, fewer aircraft deliveries, and the non-recurrence of a Q1 lease benefit. President James Dempsey clarified that they still expect positive year-over-year RASM in Q2. Biffle declined to give a full-year guide but confirmed they target H2 profitability, though it will be below original double-digit margin expectations for the year.

Atul Maheswari asked for clarification on the conservatism in the full-year guidance, specifically whether it assumes current strong January trends will not continue. He also sought to understand the assumptions for the low and high ends of the first-quarter guidance range.

Answer

Robert Neal, President and Chief Financial Officer, confirmed that the full-year guidance does not assume the continuation of current strong January trends. Drew Wells, Chief Commercial Officer, explained that the midpoint of the first-quarter guidance reflects expected demand, acknowledging that in-quarter bookings will taper from the post-New Year peak.

Atul Maheswari asked for clarification on the conservatism embedded in the full-year guidance of "at least $8" EPS, specifically whether it assumes current strong January demand trends will not continue. He also sought to understand the assumptions for the low and high ends of the first-quarter EPS guidance.

Answer

President and CFO Robert Neal confirmed that the full-year guidance does not assume the current strong January trends will persist. Chief Commercial Officer Drew Wells explained that the midpoint of the Q1 guidance reflects current demand, acknowledging that in-quarter bookings will naturally taper from the post-New Year peak.

Atul Maheswari questioned the company's confidence in the forecasted Q4 RASM acceleration, asking if recent bookings supported such a ramp. He also asked if the strong 2023 EPS of over $7 was an anomaly or an achievable target, and what fundamental business elements have changed since then.

Answer

SVP & CCO Drew Wells confirmed an uptick in demand is visible but cautioned that with over 85% of Q4 left to book, it is a small sample size. President and CEO Gregory Anderson noted that 2023 had a very strong demand backdrop but also new pilot pay accruals. He expressed confidence that through current initiatives, the company has a path to return to and exceed historical earnings performance, without providing a specific timeline.

Atul Maheswari asked if the incremental revenues are primarily from existing customers who previously couldn't spend more, or from attracting customers of other airlines. He also questioned what macro assumptions are embedded in the 'at least $4' EPS target, given last year's revenue losses due to macro issues.

Answer

President and CEO Bob Jordan clarified that the 2026 guide is based on the performance of initiatives on the current customer base, with no assumption of a significant macro snapback or a large share shift. He noted that the more attractive product offering, especially for business customers, represents a longer-term upside not included in the current calculation.

Atul Maheswari asked if the incremental revenues are primarily from existing customers or from attracting customers of other airlines, and how this impacts the industry's revenue as a percentage of GDP. He also asked about the macro assumptions embedded in the 'at least $4' EPS target, specifically what portion of lost revenues from last year's macro issues are assumed to be regained.

Answer

CEO Bob Jordan clarified that the 2026 guide is based on the performance of initiatives on the current customer base, with no assumption of a big macro snapback or significant share shift. He noted that attracting business customers and gaining corporate share is considered an upside opportunity, not built into the current guide.

Atul Maheswari asked for confirmation on whether American Airlines' full-year guidance assumes current strong booking trends will persist, and what level of demand would be required to reach or exceed the high end of the guidance range. He also inquired about the sustainable long-term margin rate for American and the key drivers to achieve it beyond FY 2026.

Answer

CEO Robert Isom confirmed that the guidance does not assume current booking strength persists, and that reaching the high end would require current demand to continue, while exceeding it would need further acceleration. He outlined key drivers for long-term margin growth, including efficient capacity production, maximizing revenue potential through enhanced customer experience, network optimization, loyalty programs, and effective sales/revenue management.

Atul Maheswari asked for confirmation that American Airlines' full-year guidance does not assume the persistence of current strong booking strengths, and what conditions would be necessary to achieve the high end of the guidance range or even exceed it. He also inquired about American Airlines' sustainable long-term margin rate (EBITDA or pre-tax) and the key drivers to reach that rate beyond FY 2026.

Answer

CFO Devon May confirmed that the guidance does not fully bake in current booking strengths, and sustained strong bookings would likely lead to the high end of the range, with acceleration needed to exceed it. CEO Robert Isom outlined a strategy focused on delivering revenue potential through an elevated customer experience, maximizing network power, strengthening loyalty (AAdvantage, Citi partnership), and advancing sales/revenue management, all contributing to anticipated margin growth and free cash flow production.

Atul Maheswari, on behalf of Tom Wadewitz, questioned the implied slower performance for November and December given September's positive RASM and October's improvement, asking if this is due to caution or current booking data.

Answer

Steve Johnson, Vice Chair and Chief Strategy Officer, clarified that he did not mention November and December trends due to limited bookings at the time, but noted that holiday periods were booking well. He reiterated the flat year-over-year unit revenue projection for Q4 as the best current estimate. Robert Isom, CEO, stated that the full run rate of revenue recovery from the prior sales and distribution strategy is not yet captured but will be built into 2026 forecasts. He highlighted American's outperformance in managed corporate travel (14% YoY better) as an indicator of progress, with the goal to surpass historical share levels.

Atul Maheswari asked about the expected shape of fourth-quarter RASM, specifically if the implied slower performance for November and December, following positive September and improved October, was due to caution or current booking data.

Answer

Steve Johnson, Vice Chair and Chief Strategy Officer, clarified that he did not mention November and December's performance due to limited bookings at the time, but expressed encouragement regarding holiday period bookings. He reiterated that the flat year-over-year unit revenue for Q4 was their best estimate. Robert Isom, CEO, added that the full run rate of indirect channel recovery is not yet captured but will be built into next year's forecasts, with the objective to surpass historical share levels.

Atul Maheswari asked about the drivers of West Coast fuel volatility, what's needed for spreads to normalize, and strategies to reduce reliance on volatile West Coast fuel. He also requested a bridge from the 2026 midpoint EPS guidance to the $10 EPS target for 2027.

Answer

Shane, CFO, Alaska Air Group, attributed West Coast fuel volatility to inconsistent refinery operations, particularly in California, and stated that stabilization is needed. He mentioned initiatives to bring more non-refinery fuel supply to hubs as a longer-term solution. Shane reiterated that the $10 EPS target for 2027 remains in play, based on the 2024 normalized results, $1 billion profit unlock from Alaska Accelerate, and an assumption of macro organic revenue growth offsetting cost growth.

Atul Maheswari asked about the drivers of West Coast fuel volatility and elevated prices, what is needed for spreads to normalize, and what actions the company is taking to reduce reliance on West Coast fuel. He also inquired if the $10 EPS target for 2027 remains in play if the 2026 midpoint ($5 EPS) is achieved, and requested a bridge to that $10 target.

Answer

Andrew Harrison, EVP and CCO, stated that West Coast fuel volatility is driven by inconsistent refinery operations, particularly in California, and that stabilization is needed. He noted that 50% of the company's fuel is exposed to the West Coast and efforts are underway to bring more non-refinery-reliant fuel supply to major hubs, a longer-term initiative. Shane Tackett, CFO, affirmed that the $10 EPS target for 2027 is still in play, based on the 2024 normalized result plus $1 billion profit unlock from Alaska Accelerate (on track to outperform), assuming macro organic revenue growth offsets cost growth and stable fuel prices. He emphasized that if the macro backdrop fully recovers, the company will be in the $10+ range.

Atul Maheswari from UBS Group AG addressed concerns about an accelerating profit decline ex-Jet Forward based on Q4 guidance, asking what is needed for non-Jet Forward profits to improve. He also requested color on Q4 booked yields quarter-to-date, the portion of Q4 booked, and yield assumptions for the unbooked portion.

Answer

Ursula Hurley, CFO of JetBlue Airways, acknowledged Q4 fuel improvement but noted operations from a lower demand base. She highlighted routing progression and ramping Jet Forward initiatives, asserting that without the macro setback, JetBlue would have achieved break-even or better operating margin. Joanna Geraghty, CEO of JetBlue Airways, added that Q4 Fort Lauderdale capacity additions, while strategically important, are temporarily pressuring routing. Marty St. George, President of JetBlue Airways, provided booking levels: approximately 90% for October, 55% for November, and 35-38% for December, with demand heavily focused on peak periods. He noted that while the booking curve is normalizing closer to 2024 distribution, challenges persist in trough periods, indicating a continued trend of customers taking essential but fewer discretionary trips.

Atul Maheswari of UBS inquired about the directional outlook for fourth-quarter RASM compared to the third quarter, assuming current demand levels hold. He also asked where future capacity growth would be concentrated and how the company would prevent RASM dilution.

Answer

President Marty St. George declined to provide Q4 guidance, citing the unpredictability of close-in booking patterns and industry capacity. CEO Joanna Geraghty added that less than 20% of Q4 is booked. Regarding future growth, she did not specify markets but stressed that the growth is capital-efficient as it uses existing aircraft. She assured that the company has multiple levers, including fleet actions and utilization adjustments, to manage growth and protect RASM.