Christopher Stathoulopoulos

Christopher Stathoulopoulos expressed concern about Avis Budget Group's history of missing full-year guidance and sought comfort on the 2026 guide, requesting an EBITDA bridge and quantification of lost revenue from factors like tariff shutdowns, FAA cancellations, and weather in 2025. He also asked for an update on Zipcar UK's financial impact, the status of premium and tech initiatives, and whether the 2026 base case EBITDA guide assumes Americas revenue growth.

Answer

CEO Brian Choi acknowledged past volatility and stated that the Q4 2025 miss included roughly $100 million impact on revenue and a $50 million increase to PLPD reserves. He emphasized that the 2026 outlook, built under current leadership, reflects more conservative assumptions and a tighter operating model, aiming to earn back confidence. CFO Daniel Cunha clarified that Zipcar UK actions had no material impact on recent results. Brian Choi confirmed that premium and tech efforts, including Avis First expansion and Waymo partnership, are not paused but funded by cost rationalization. Daniel Cunha and Brian Choi confirmed that the 2026 base case EBITDA guide does assume modest Americas revenue growth, moving into a 'normalized environment.'

Christopher Stathoulopoulos asked for a detailed overview of demand trends, including leisure versus corporate, Q4 outlook across U.S. domestic, international, inbound, and cross-border, the impact of the government shutdown, and Avis's preparation for future events like the World Cup and America's 250. He also sought insight into the long-term (1, 3, 5 years) plan for customer experience investments and their translation into margin improvement, earnings, free cash flow, and ROIC.

Answer

CEO Brian Choi described a mixed demand environment with healthy leisure but challenged government and defense segments, emphasizing discipline and agility over macro forecasting. He noted positive expectations for the World Cup and America's 250 in 2026. For the long-term, he outlined a deliberate shift to treating customer experience as an operating system, focusing on predictability, speed, empowerment, and AI-driven customer care. He stated the goal is to maintain an EBITDA floor of over $1 billion while continuously investing in customer experience, viewing it as a long-term journey akin to Delta and United Airlines.

Christopher Stathoulopoulos of Susquehanna International Group asked for a concise encapsulation of the 'Avis of the future' vision and its relation to normalized EBITDA, and inquired about 2026 fleet purchase plans given the strong used car market.

Answer

CEO Brian Choi described the future vision as leveraging Avis's core competency in 'mega fleet management' to serve new, high-growth markets like autonomous mobility. He reiterated that the baseline for normalized earnings remains $1 billion in Adjusted EBITDA, with new initiatives being additive. On fleet strategy, Choi stressed that the company must remain disciplined and will not repeat past mistakes of overpaying for vehicles, regardless of tariff impacts, and is focused on negotiating deals that work for both Avis and its OEM partners.

Christopher Stathoulopoulos questioned the confidence behind the company's target of over $1 billion in adjusted EBITDA, given cautious outlooks from other travel sectors, and asked about the potential for positive free cash flow for the year.

Answer

CEO Joseph Ferraro expressed confidence based on strong forward booking trends, particularly for leisure travel, and a robust used car market, which provides opportunities. He acknowledged economic uncertainty but stressed the company is prepared for multiple scenarios. CFO Izilda Martins added that while Q1 free cash flow was negative due to fleet financing, she expects positive free cash flow in the latter part of the year, assuming current trends continue.

Christopher Stathoulopoulos of Susquehanna International Group asked for clarity on the quarterly EBITDA cadence for 2025, noting the guidance implies a second-half weighted year. He also inquired about the potential impact of vehicle import tariffs on the business.

Answer

CFO Izilda Martins confirmed Q1 would have elevated fleet costs similar to Q4 2024, but no further charges are expected beyond Q1. CEO Joseph Ferraro added that performance follows seasonality, with the Easter shift boosting Q2 and a strong summer peak driving results, making the year back-half weighted. Regarding tariffs, Ferraro noted that while the situation is fluid, higher new car prices could benefit used car values and that Avis is flexible enough to adapt to macroeconomic changes.

Christopher Stathoulopoulos asked about the dynamics of the current fleet buying cycle compared to prior years and the progress of the company's broader business transformation initiatives.

Answer

CEO Joseph Ferraro described the model year 2025 fleet buy as a return to more predictable, historical norms with significantly better pricing. He detailed the three core pillars of their transformation: optimizing the fleet buy with data analytics, driving operational efficiencies to improve vehicle utilization, and enhancing revenue generation through their demand fleet pricing system to maximize contribution margin.

Christopher Stathoulopoulos asked for an update on AerCap's view of the supply-demand balance normalization, monthly production rates, and the structural supply shortage, referencing previous investor day comments. He also requested a revisit of AerCap's 'barbell approach' to portfolio management.

Answer

CEO Aengus Kelly believes Boeing and Airbus production might meet demand around 2030-2032, but the reduced durability and time-on-wing of new technology engines will lead to structural supply limitations well into the 2030s. He reiterated that engine OEMs are disincentivized to allow oversupply, as their profits come from later shop visits on older aircraft, ensuring stable returns for AerCap. Regarding the 'barbell approach,' Kelly explained that AerCap sells younger variants of older technology assets (e.g., 737, A320, 777, A330) because he doesn't believe they will remain in service for 25 years. Conversely, AerCap invests in future assets with durable demand, such as the A321neo, A320neo, 737 MAX 8, 787-9, A330-900, and A350-900.

Christopher Stathoulopoulos asked for a more nuanced view on Boeing's role in the aftermarket and how a prolonged strike could impact the market. He also inquired about regional demand trends, particularly in China.

Answer

CEO Aengus Kelly explained that Boeing's aftermarket role is critical for parts and repair approvals, and a strike causes significant background disruption. He noted that demand for their order book remains strong but expects schedules to continue shifting right. He highlighted that narrow-body demand in China is extremely strong, with near-international Asian markets also expected to grow.

Christopher Stathoulopoulos requested details on the 2026 capacity outlook, specifically the composition of new routes (departure, stage, gauge), year-on-year utilization (hours per day, peak vs. off-peak mix), and the distribution of inventory by market, particularly noting the solid decline in most key markets except FLL.

Answer

Chief Commercial Officer Drew Wells stated that stage and gauge are largely offsetting for the year. He mentioned growth in Lauderdale and other new markets, with some spring capacity shifts from Provo, but largely returning by summer. He emphasized that much of the capacity reduction is on off-peak days, keeping peak days close to flat, which is a tailwind for unit revenue. CEO Greg Anderson added that overall aircraft utilization is expected to be flat or slightly up in 2026, after increasing from low 6s hours/day in 2024 to over 7 in 2025.

Christopher Stathoulopoulos requested details on the 2026 capacity outlook, including the composition of new routes (departure, stage, gauge), year-over-year utilization (hours per day, mixed peak vs. off-peak), and the distribution of Q1 inventory against the full-year guide.

Answer

Drew Wells, Chief Commercial Officer, noted that stage and gauge are somewhat neutral. He mentioned growth in Fort Lauderdale and other spots, with some seasonal sculpting and off-peak capacity reductions, allowing peak days to remain close to flat. Greg Anderson, CEO, added that overall aircraft utilization is expected to be flat or slightly up in 2026, following a meaningful increase in 2025.

Christopher Stathoulopoulos requested a more detailed breakdown of the flat capacity outlook for 2026, asking about inputs like stage, gauge, and the mix of peak versus off-peak flying. He also asked for more color on the drivers for 'materially higher' earnings, specifically around utilization and load factor assumptions.

Answer

SVP & CCO Drew Wells indicated that gauge would likely increase slightly due to the fleet mix shift to larger MAX aircraft, and utilization might be slightly lower with less off-peak flying. President and CEO Gregory Anderson added that they plan for a higher proportion of peak flying. Drew Wells also noted there is a line of sight to load factor benefits driven by flat capacity and Navitaire system enhancements.

Christopher Stathoulopoulos sought to better understand network performance by asking for the RASM delta between Allegiant's top and bottom quartile routes. He also requested details on the shape of second-half capacity, including plans for new routes, suspensions, and aircraft configurations.

Answer

CCO Drew Wells declined to provide quartile-level route performance data but reiterated that peak periods are holding up well while off-peak periods are weaker. For H2 capacity, he outlined a month-by-month growth profile and noted that about 5% of routes are new, with mid-20s routes suspended this year. CEO Greg Anderson and Wells detailed the Allegiant Extra rollout, projecting 75 A320s and all 16 MAX aircraft will feature the configuration by year-end.

Christopher Stathoulopoulos asked for a breakdown of how Allegiant will achieve capacity growth with a relatively flat fleet, questioning the mix of departures, gauge, and new routes. He also requested specific metrics for Sunseeker's expected positive Q1 EBITDA, including occupancy and ADR.

Answer

Chief Commercial Officer Drew Wells explained that growth will be primarily driven by increased departures from higher utilization, with 75-80% of added capacity coming from existing routes. President and CEO Gregory Anderson provided Q1 Sunseeker targets, projecting occupancy in the high 50s (57-59%) and an Average Daily Rate (ADR) north of $300, driven by strong group bookings.

Christopher Stathoulopoulos asked about American Airlines' target of 500 flights for ORD (Chicago), its timing, and how it aligns with the full-year guidance, as well as if this level of flying would restore profitability for that hub. He also inquired about future opportunities for savings beyond the $1 billion already realized, specifically mentioning technology, AI, MRO, and procurement.

Answer

CEO Robert Isom confirmed plans to reach 500-550 flights at Chicago by summer, expecting it to return to mid-level profitability. CFO Devon May detailed that future savings will continue to come from streamlining processes, regular technology investments (including AI in areas like Tech Ops and reservations), and procurement, emphasizing a continuous, company-wide effort.

Christopher Stathoulopoulos inquired about American Airlines' target of 500-550 flights at Chicago O'Hare (ORD), its timing, and the expected profitability of the hub at that level. He also asked about future opportunities for savings beyond the $1 billion already realized, specifically mentioning technology, AI, MRO, and procurement.

Answer

Chief Commercial Officer Nat Pieper confirmed the target of 500-550 flights at ORD by summer, expecting the hub to return to mid-level profitability. He elaborated on ongoing efficiency efforts, including leveraging AI in tech ops and reservations, streamlining processes, making regular technology investments, and significant savings driven by the procurement team.

Christopher Stathoulopoulos from Susquehanna International Group, LLP asked for a strategic view on Carnival's ability to protect pricing power and brand equity in the Caribbean, considering competitor growth, new ship classes, and the mix of premium offerings and private destinations.

Answer

CEO Josh Weinstein emphasized that the cruise industry primarily competes with land-based alternatives, where it remains a small player, allowing for continued growth. He highlighted Carnival's upcoming XL sisters and Ace Class ships, its long-term commitment to the Caribbean, and the strategic advantage of its destination development (Celebration Key, Half Moon Cay) in driving consumer consistency and conversion.

Christopher Stathoulopoulos questioned the timing of the new loyalty program launch, asking why the change is happening now and if it was contemplated during the Investor Day two years ago. He also asked for color on the assumptions behind the half-point yield impact for next year.

Answer

CEO Josh Weinstein stated that the loyalty program change was not a focus two years ago. CFO David Bernstein explained that the half-point negative yield impact is a non-cash accounting effect. It stems from the requirement to defer a portion of ticket revenue for future benefits earned. As the program is new, there will be a lag before revenue recognized from redemptions catches up with the amount being deferred, a process expected to take about two years to normalize.

Christopher Stathoulopoulos questioned the timing of the new loyalty program launch, asking why the change is happening now and if it was contemplated two years ago. He also asked for color on the assumptions behind the half-point yield impact for next year.

Answer

CEO Josh Weinstein stated that the loyalty program was not a primary focus two years ago. CFO David Bernstein clarified that the projected half-point yield impact is a direct result of accounting rules that require the deferral of a portion of ticket revenue to account for the value of future benefits earned by guests. He explained it is not based on user acquisition assumptions, but rather is a timing difference that will normalize as guests begin to redeem their benefits.

Christopher Stathoulopoulos of SIG sought to consolidate questions on consumer health, asking if there were any unique or differing trends in booking pace or onboard spend across Carnival's brand segments, from contemporary to luxury, or by region.

Answer

CEO Josh Weinstein gave a short answer of 'no,' indicating consistent strength across the portfolio. He emphasized that Carnival's business is different from airlines as it is purely leisure-focused. He stressed that consumers prioritize vacations in all economic climates and that the company's value proposition makes it resilient.

Christopher Stathoulopoulos asked for a rank-ordering of the drivers behind cruise's persistent demand momentum compared to other travel sectors. He also questioned the outlook for advertising spend, asking if the current elevated levels are the new normal required to maintain demand.

Answer

CEO Josh Weinstein declined to rank-order the drivers but agreed the strength is not from pent-up demand, attributing it to better commercial execution across marketing and trade partnerships. CFO David Bernstein stated that future advertising levels are part of the ongoing planning process, with guidance to come in December. Weinstein added that ad spend supports long-term booking goals and that Carnival's spending remains lower than most peers.

Christopher Stathoulopoulos requested elaboration on the reduction in competitive capacity, details on peak vs. off-peak flying, the outlook for stage and gauge, and the balance between yield and load factor.

Answer

CEO Barry Biffle clarified the nearly three-point competitive capacity reduction applies across all of Frontier's markets and detailed the strategy of significantly cutting Tuesday/Wednesday flying. President James Dempsey added that future growth will focus on peak periods. Biffle reiterated the strategy is to fill planes first, then drive yield, noting that the current RASM strength is primarily yield-driven.

Christopher Stathoulopoulos requested a more detailed breakdown of the full-year capacity plan, asking about the composition of growth in terms of frequencies, peak versus off-peak deployment, stage length, and specific markets.

Answer

CEO Barry Biffle reiterated the strategy of moderating growth and focusing capacity on peak periods and, most importantly, peak days of the week (Thursday, Friday, Sunday, Monday). He emphasized that the company will not chase utilization on off-peak days like Tuesday and Wednesday if it's unprofitable, stating that lower utilization has led to higher margins. He confirmed the company remains fluid on second-half capacity and will adjust based on demand signals.

Christopher Stathoulopoulos of Susquehanna Financial Group requested a deeper understanding of the 2025 network plan, including the mix of new versus mature capacity, the criteria for evaluating new markets, and the strategy for regional capacity placement.

Answer

CEO Barry Biffle clarified that while a third of flying was in new routes at times this year, the goal for mid-2025 is to have the percentage of new flying closely mirror the overall growth rate. He stated that new routes are selected based on their potential to generate double-digit margins, with a historical hit rate of about two-thirds on revenue estimates. The placement of new capacity is market-driven and opportunistic, with Frontier ready to act quickly when competitors make cuts.

Christopher Stathoulopoulos from Susquehanna International Group asked for more detail on the inputs for the 2027 financial targets, particularly the daily aircraft utilization assumptions. He also questioned the reason for the delay in Amazon aircraft utilization.

Answer

CEO Jude Bricker reiterated the inputs include 3% inflation and a return to the prior year's 7.3 hours per day passenger aircraft utilization. He clarified the Amazon utilization delay was due to the timing of aircraft inductions, which caused Amazon to adjust its schedule. He emphasized that under the CMI model, Sun Country operates the schedule Amazon provides.

Christopher Stathoulopoulos asked for a reminder on the timing of Amazon contract rate increases relative to aircraft deliveries and how utilization is reflected in the contract's economics. He also asked about the timing of aircraft returning from CMI leases.

Answer

CEO Jude Bricker explained the Amazon contract's margin comes from its fixed component, making lower utilization favorable for Sun Country. He and CFO William Trousdale noted most rate increases are baked in, with one more tied to growth expected in Q3. Bricker confirmed leased aircraft will return through the end of this year and into next, with inductions taking time due to part availability.

Christopher Stathoulopoulos of Susquehanna Financial Group requested more detail on the economics of the Amazon contract, including schedule visibility and network structure. He also asked about regional performance variations within Sun Country's scheduled service network.

Answer

CEO Jude Bricker confirmed the contract's fixed and variable rate structure and explained that schedules are developed on a two-month basis, providing visibility, though the current fleet integration period will be complex. Regarding network performance, Jude noted very strong demand in leisure trunk routes to West Florida and Mexico, with relative softness in Southern California and the Caribbean. Executive Grant Whitney clarified the Caribbean's 'weakness' is a year-over-year TRASM comparison on strategically expanded and still highly profitable routes.

Christopher Stathoulopoulos sought to bridge the 2025 EBITDA cadence to the company's long-term 'North Star' targets and asked for management's perspective on the potential impact of auto tariffs on the business.

Answer

CFO Scott Haralson explained that while not providing specific 2026 guidance, the company expects to make directional progress towards its targets, with DPU being the biggest and most confident driver of financial improvement. CEO Wayne West commented that Hertz is largely insulated from tariffs due to its advanced fleet rotation, locked-in vehicle buys, and diversified supply, adding that higher new car prices would likely lift residual values, benefiting their model.

Christopher Stathoulopoulos asked for a deeper understanding of the fleet utilization strategy and where its benefits would appear in unit metrics, and also inquired if a total dollar target for cost savings had been communicated.

Answer

Chief Commercial Officer Sandeep Dube detailed a three-pronged approach to utilization: reducing out-of-service waste, improving coordination between fleet and commercial teams, and better managing off-peak demand. CFO Scott Haralson confirmed no formal dollar target for cost savings has been given, but reiterated the run-rate goal of low-$30s for DOE per day, achieved through gradual, continuous improvement.

Christopher Stathoulopoulos asked for quantification of the election and calendar shift impacts on RevPAR and sought a high-level 2025 outlook for the various travel segments like leisure, business, and group.

Answer

CEO Patrick Pacious noted the Q3 calendar shift created a 90-basis-point drag. For 2025, he pointed to positive macro indicators like GDP growth that correlate with RevPAR and highlighted long-term demand drivers like infrastructure spending and event-driven travel as a solid foundation for growth.

Christopher Stathoulopoulos asked about the composition of the 2025 capacity plan, where growth opportunities lie, and the rationale for the 1-2% growth range.

Answer

CEO Bob Jordan explained that the 1-2% capacity growth is driven by efficiency initiatives like red-eyes and faster turn times, not new aircraft CapEx. He noted capacity is being redeployed to stronger markets. The primary uncertainty for the growth range is the Boeing delivery schedule, which could make the high end difficult to achieve. COO Andrew Watterson added that average stage length is increasing.

Inquired about the expected profitability of the ACMI segment, the potential impact of lower interest rates on aircraft lease rates, and the status of ongoing labor negotiations.

Answer

The ACMI segment is expected to be profitable for the full year, with a strong fourth quarter. For 2025, it could represent 25-30% of total adjusted EBITDA. Lease rates for the 767 have remained very stable and are not expected to be significantly impacted by interest rate changes. New pilot labor agreements are not anticipated until 2025 and the potential costs are already factored into financial models.

Asked for a detailed breakdown of the new Amazon agreement, the economics of the power-by-cycle program, the status of labor talks with ATI and Omni, and the commitment status of aircraft for the rest of 2024 and into 2025.

Answer

The Amazon deal involves 10 incremental 767-300s for ABX by year-end, with a potential for 10 more. Power-by-cycle revenue has declined with 767-200 retirements but should stabilize. Labor talks with ATI and Omni are in mediation. Guidance does not include uncommitted aircraft, and while demand for 767s and A330s is strong, the A321 market faces global oversupply issues.

Asked for clarification on the drivers of the guidance miss, seeking to separate temporary issues from persistent ones. He also inquired about pilot attrition, the puts and takes for 2024 EBITDA, power-by-cycle contracts, and the company's liquidity position and unencumbered collateral.

Answer

Management explained the miss was due to a mix of factors, including temporary Omni service and timing issues and market softness impacting CAM. They are confident 2024 EBITDA will exceed 2023's revised figure. Pilot attrition is an ongoing challenge but is being managed. The company has over $400M in liquidity on its revolver, leverage is around 3x, and they confirmed having ~$1.5B in unencumbered collateral.

Christopher Stathoulopoulos sought clarification on the Q3 competitive capacity outlook to better understand yield opportunities and asked how to think about the components of 2025 capacity (stage vs. gauge) in the context of expanding margins.

Answer

CCO Andrew Harrison clarified that at a high level, competitive capacity increases in Alaska's hubs are in the extremely low single-digits for September/October. For 2025, CFO Shane Tackett explained that growth will be similar to the number of new units taken, as the stage length is already long. He noted the next significant opportunity for gauge growth will be the MAX 10, which is not expected until 2026.

Christopher Stathoulopoulos of Susquehanna asked for a breakdown of how various revenue initiatives contribute to the EBITDA guide versus cost efficiencies. He also sought reassurance that Carnival is not reverting to an 'old playbook' of dilutive capacity growth, given the updated guidance with higher capacity and costs.

Answer

CEO Josh Weinstein explained that the benefits from initiatives vary, with some being immediate (SEO) and others long-term (booking curve management). Regarding the guidance, he clarified the capacity increase is a positive development, driven by strong demand for the Costa brand, which will boost EBITDA and liquidity. CFO David Bernstein added that the cost increase was primarily due to higher-than-forecasted occupancy, a direct result of record bookings.