Daniel McKenzie • Seaport Global Securities

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CFO Ursula Hurley projected low single-digit capacity growth from 2026 through the end of the decade, driven by an improved forecast for aircraft on the ground (AOG). CEO Joanna Geraghty confirmed that pilot staffing is sufficient due to the use of voluntary programs. President Marty St. George added that while the partner portfolio is crucial, especially with the new United collaboration, the focus has shifted from simple feed metrics to the broader value for the TrueBlue loyalty program and the Paisley subsidiary.

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Financial Officer Ursula Hurley stated that the P&W situation remains fluid and declined to provide a 2026 AOG forecast, emphasizing that they are still working through it. CEO Joanna Geraghty responded that while some JetForward revenue initiatives tied to volume may see a drag from the economy, others like NPS improvements are ahead of plan. She highlighted the resilience of the loyalty program and noted that while the company is always adjusting, the core pillars of the long-term strategy remain the focus.

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CEO Joanna Geraghty affirmed this was the right way to think about the earnings trajectory, with the $800-$900 million EBIT target by 2027 building on the 2025 base. CFO Ursula Hurley added that Q1 2025 CASM ex-fuel will be the highest for the year and will moderate. She projected that if capacity remains flat in 2026, a similar mid-single-digit cost growth could be expected, with the Pratt & Whitney AOG count peaking in the next 1-2 years.

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CFO Ursula Hurley reiterated that the company is building its 2025 plan with the goal of achieving a breakeven or better operating margin. She confirmed that key planning assumptions include flat year-over-year capacity due to mid-to-high teens of aircraft on the ground (AOG) from Pratt & Whitney GTF engine issues, which historically implies mid-single-digit CASM ex-fuel growth. The outlook assumes the macro backdrop remains constructive.

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President & CEO Bob Jordan and COO Andrew Watterson noted that while previously the vast majority of fares were in the lowest tier, now roughly half are in the new 'Basic Economy' tier, indicating successful buy-up. Regarding future strategy, Jordan stated that while the current transformation is the focus, it is not the endpoint. He used examples like lounges and long-haul international to illustrate a commitment to meeting customer needs and capturing wallet share, but confirmed no decisions have been made.

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CFO Tammy Romo and CEO Bob Jordan explained that while not providing specific proceeds figures, the goal is to maximize value from the fleet to fund share buybacks and fleet modernization. On the balance sheet, CFO Tammy Romo confirmed the plan is to continue reducing leverage towards their mid-30% target. CEO Bob Jordan added that they are committed to a strong balance sheet and will discuss further capital return plans with the board.

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CEO Bob Jordan discussed the ongoing board refreshment and the diverse experience the new members bring, stating their focus is on executing the current plan. CFO Tammy Romo clarified that the primary driver of the fleet monetization benefit is the gain on sale of aircraft, stemming from attractive order book pricing and low net book values.

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CFO Shane Tackett noted the resilience of premium cabin demand and growing confidence among the broader consumer base. He declined to quantify the Q4 RASM impact but highlighted the high probability of success for initiatives like the new premium card. CEO Ben Minicucci stated that AI focus is on safety, operational efficiency, and improving the guest experience.

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CCO Andrew Harrison stated that long-haul international is currently about 5% of revenue and will remain a small percentage for the next few years, emphasizing its importance for loyalty and utility out of Seattle. CFO Shane Tackett noted that all planned initiatives, including e-commerce and merchandising improvements, are already contemplated in the full-year EPS guide. He highlighted the unique opportunity of managing two distinct brand front doors into the network.

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CCO Andrew Harrison confirmed the premium is higher on longer-haul flights and noted that Alaska's long domestic stage length makes the product a huge asset. Regarding San Francisco, Harrison clarified his earlier comment referred specifically to business travel recovery. He stated that network growth in the Bay Area has been moderate to avoid getting ahead of the demand curve.

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CEO Pedro Heilbron expressed cautious optimism, citing the company's diversified network, ability to rebalance traffic, and low-cost structure as key advantages during downturns. He clarified that Copa does not have a dedicated vacations package product but maintains strong relationships with vacation wholesalers.

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Executive Daniel Tapia detailed that the 7-8% capacity growth is driven primarily by the full-year effect of prior additions (about two-thirds), increased frequencies on existing routes (about 20%), and the remainder from gauge and new destinations. CEO Pedro Heilbron stated he is not aware of any current conversations to normalize relations with Venezuela but remains hopeful for a resolution to resume service to that important market.

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CFO Jose Montero projected that CapEx in 2026 and 2027 would likely be similar to the ~$900 million expected in 2025, contingent on Boeing deliveries. CEO Pedro Heilbron stated Wingo will receive at least one aircraft in 2025. Montero detailed that 2025 growth is primarily driven by the full-year effect of 2024 routes, with smaller contributions from frequency and gauge. Heilbron assured that Tocumen Airport is not slot-controlled and has expansion plans to accommodate future growth.

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CCO Drew Wells attributed the recent demand uptick to both lower fares stimulating travel and healthier underlying search traffic. However, both he and CEO Greg Anderson confirmed the Q2 guidance does not assume this positive trend continues. Regarding Allegiant Extra, Wells stated it would be on 65% of Q2 departures, with the full A320 retrofit completed by September. He noted that as an ancillary item, it "outpunches its weight" in revenue contribution but did not provide a specific percentage.

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CFO Robert Neal said any proceeds would prioritize balance sheet improvement over shareholder returns. CCO Drew Wells noted minimal network overlap with Spirit. CEO Gregory Anderson stated consolidation is not necessary and that he expects 2026 margins to be higher than 2025, with a long-term goal of returning to historical levels through productivity and commercial initiatives.

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President and CEO Gregory Anderson affirmed that restoring peak utilization should drive 'meaningful margin expansion' in 2025. Chief Commercial Officer Drew Wells clarified the Q4 RASM guide is primarily impacted by hurricane recovery uncertainty, not just holiday growth. Management noted that accounting for a potential Sunseeker sale would be a future decision based on the circumstances.

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CEO Robert Isom and Vice Chair Steve Johnson confirmed a strong focus on using technology, including AI, to create more tailored customer offers and improve revenue, though they did not quantify the opportunity. CEO Robert Isom and CFO Devon May explained that the next phase of their 'Reengineering the Business' initiative will apply an 'AI lens' to all operations, building on the $400 million in cost savings targeted for 2024 and aiming for continued margin expansion and efficiency gains, such as growing capacity faster than headcount.

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