Christopher Stathoulopoulos • Susquehanna Financial Group

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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