Tom Fitzgerald

Tom Fitzgerald inquired about the drivers behind the significant jump in 'Lease airport services and other revenue' in Q4 2025 and sought updates on the charter business for 2026, including its potential as an incremental positive driver or limitations due to core business utilization.

Answer

Rob Simmons, CFO, confirmed that the increase in 'Leasing and other revenue' was primarily due to an engine deal with a third party. Chip Childs, President and CEO, explained that while there is significant unmet demand for SkyWest Charter, particularly from sports teams, the company's current focus is on fulfilling demand for major partners due to aircraft availability and MRO backlogs. He anticipates more substantial charter opportunities in 2027 or 2028.

Tom Fitzgerald asked about the reason behind the significant increase in lease airport services and other revenue during the quarter. He also sought an update on the SkyWest Charter business for 2026, inquiring if it could be an incremental driver of positivity or if core business utilization would limit its growth.

Answer

Rob Simmons, CFO, confirmed that the jump in lease airport services and other revenue was due to an 'engine deal with a third party.' Chip Childs, President and CEO, noted significant unmet demand for SkyWest Charter, particularly from sports teams, but explained that the current focus is on fulfilling demand for major partners due to aircraft availability. He anticipates 2026 will not be a historically huge year for charter due to MRO backlog and supply chain issues, but long-term objectives for 2027 or 2028 remain promising.

Tom Fitzgerald asked if the Extra Legroom fee is still expected to hit its full run rate potential in Q3. He also inquired if the company has started to see the anticipated fuel offset from bag fees this year.

Answer

COO Andrew Watterson confirmed the expectation of full run rate benefit from seats next year, with strong initial reaction and a ramp-up as customers adapt. CFO Tom Doxey affirmed that fuel savings from fewer bags are being realized, alongside other fuel efficiency initiatives across operations.

Tom Fitzgerald asked if the Extra Legroom fee is still expected to hit its full run rate potential in Q3. He also inquired about the fuel side, specifically if Southwest has started to see the anticipated fuel offset from bag fee implementation this year.

Answer

COO Andrew Watterson confirmed the expectation for full run rate benefit of seats next year, with efforts to accelerate it, noting strong initial reaction to buy-ups and seat ancillaries. CFO Tom Doxey affirmed that fuel savings from fewer bags due to bag fees are being realized, alongside other fuel efficiency initiatives across operations.

Tom Fitzgerald asked for details on the success of JetBlue's premium credit card sign-ups, including geographic distribution, and sought clarification on the upside potential and key drivers within the 75 points of RASM expansion expected from the Blue Sky collaboration and Paisly.

Answer

Marty St. George, President, stated that premium credit card sign-ups are strong across the system, not just New York, driven by the card's value proposition and TrueBlue's high NPS. He emphasized that Paisly's capital-light earnings growth and the enhanced utility of TrueBlue points through the United partnership are crucial drivers for Blue Sky, along with mutual distribution on united.com.

Tom Fitzgerald asked about the success of JetBlue's premium credit card sign-ups, inquiring whether the growth was concentrated in the New York area due to the new lounge or if it was a broader network phenomenon. He also sought details on the upside potential and drivers within the Blue Sky collaboration.

Answer

President Marty St. George stated that premium credit card sign-ups were strong throughout the system, driven by the card's value proposition and New York's importance as a destination, with further optimism for the Boston lounge opening. He highlighted TrueBlue's industry-leading NPS. Regarding Blue Sky, he emphasized Paisly's role as a capital-light earnings growth driver and the significant increase in TrueBlue point utility due to the United partnership, which provides access to worldwide destinations. CEO Joanna Geraghty underscored the unique, dedicated partnership with Barclays.

Tom Fitzgerald from TD Cowen Inc. asked about the reliability and time on wing of JetBlue's A220 fleet and its implications for 2026 planning. He also inquired about JetBlue's strategy for technology in distribution and levers to drive more direct channel sales.

Answer

Ursula Hurley, CFO of JetBlue Airways, acknowledged some reliability challenges with the A220 fleet, which JetBlue is addressing with Airbus Canada. However, she noted that the impact on 2026 capacity growth is less significant than new aircraft deliveries and the return of grounded aircraft. Marty St. George, President of JetBlue Airways, highlighted that JetBlue already achieves three-quarters direct bookings with strong penetration and selective OTA partnerships. He mentioned the ongoing implementation of NDC technology, expressing excitement for its potential to enable continuous pricing, which he believes will optimize demand curves through both price adjustments.

Tom Fitzgerald inquired about the growth in San Diego, covering both transportation metrics and loyalty program sign-ups, and asked for drivers behind the Q4 non-fuel cost beat and updates on IT overhaul investments.

Answer

Andrew Harrison, EVP and CCO, Alaska Air Group, reported strong growth in San Diego, with increased membership and card sign-ups, and positive leading indicators. Ben Minicucci, CEO, Alaska Air Group, and Shane, CFO, Alaska Air Group, attributed the Q4 non-fuel cost beat to broad-based cost management across categories like wages, productivity, and selling expenses. Shane added that IT investments for resiliency and redundancy are underway, with costs contemplated in the 2026 guidance.

Tom Fitzgerald asked about the growth in San Diego, specifically regarding transportation and loyalty program sign-ups, and sought an update on the drivers of the non-fuel cost beat in Q4 and the progress of IT overhaul investments and hygiene improvements for 2026.

Answer

Andrew Harrison, EVP and CCO, reported good growth in San Diego, with increased membership and card sign-ups, and positive leading indicators across share, corporate contracts, and loyalty. Shane Tackett, CFO, attributed the non-fuel cost beat in Q4 to strong performance across many categories, including wages, productivity, maintenance, and selling/distribution expenses, following the single operating certificate. He confirmed that IT investments in resiliency and redundancy are underway, with detailed plans for Q1 execution, and all investments are contemplated in the 2026 guidance.

Tom Fitzgerald asked for clarification on the distinction between a loyalty program and an awards program, and how MileagePlus differentiates itself for investors.

Answer

Andrew Nocella, Executive Vice President and Chief Commercial Officer, explained that MileagePlus is characterized by very low member churn, with customers remaining loyal due to United's strong product, network, and desirable travel rewards. He contrasted this with other programs that rely on constant bonus points and customer switching. Fitzgerald also inquired about the implications of 2025 being a high watermark for domestic capacity growth and how United plans to harvest gains from its United Next investments. Nocella reiterated that United Next growth was driven by connectivity goals, not growth for its own sake. As connectivity targets are met by 2027, the focus will shift to 'gauge' (larger aircraft) rather than increasing flight frequency, aiming to avoid operational complexity and self-competition in large hubs.

Tom Fitzgerald from TD Cowen inquired about the significance of 2025 being a high watermark for domestic capacity growth and how United plans to harvest gains from its United Next investments.

Answer

EVP and Chief Commercial Officer Andrew Nocella clarified that United Next's growth was an outcome of connectivity, not growth for its own sake. He noted that United is approaching its connectivity goals by 2027, after which the focus will shift to gauge and growing the operation with larger aircraft rather than more flights, avoiding operational complexity.

Tom Fitzgerald from TD Cowen requested an update on the Starlink installation cadence through 2026 and the opportunities it creates for connective media.

Answer

EVP and Chief Commercial Officer Andrew Nocella reported that Starlink installation is over halfway complete for United Express, with the first 737-800 recently taking off with 'off the chart' NPS scores. He described Starlink as a 'game-changer' for customer experience, offering gate-to-gate, reliable, and fast Wi-Fi. He highlighted the significant upside for connective media by delivering unique, personalized content and travel aids to each seat, with full fleet enablement expected by the end of 2027. COO Toby Enqvist added a 'nerdy' statistic: 145 paying customers, 170 devices, and 145 gigabytes used on the inaugural flight.

Tom Fitzgerald from TD Cowen requested an update on the Connected Media initiative and its potential contribution by 2026. He also asked about the current aircraft delivery situation and the expected timing of the associated aircraft gauge benefit.

Answer

EVP & CCO Andrew Nocella stated that United aims to double media revenue in 2025 and that the combination of new seatback screens and Starlink connectivity will unlock significant value in the 2026-2027 timeframe. EVP & CFO Mike Leskinen reported that narrowbody MAX deliveries from Boeing are ahead of schedule, while widebody 787s are delayed. He projects a 2% increase in aircraft gauge for 2026, with acceleration expected in 2027.

Tom Fitzgerald from TD Cowen asked about the role of technology, such as dynamic pricing, in Copa's revenue strategy and requested an update on the progress of its seat densification program.

Answer

CEO Pedro Heilbron explained that Copa has invested in 'homemade' digital tools for its website and app to drive ancillary revenue cost-effectively. He noted the company is in its 'infancy' with advanced dynamic pricing but is pursuing it with an ROI-focus. He also stated that 30 aircraft are still pending for seat densification, a project delayed by aircraft delivery schedules.

Tom Fitzgerald asked for the expected run rate for 'other revenue' and how Frontier would manage the risk of another domestic capacity glut next spring.

Answer

CCO Robert Schroeter detailed several initiatives poised to boost 'other revenue,' including loyalty, first-class seating, and NDC distribution, suggesting the current run rate will grow. CEO Barry Biffle addressed the risk by stating that a persistent glut would force more competitors to exit markets, ultimately benefiting Frontier as the 'last man standing' due to its low-cost structure and strong balance sheet.