Alaska Air Group (ALK) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 25, 2023 11:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to the Alaska Air Group 2023 Second Quarter Earnings Call. At this time all participants have been placed on mute to prevent background noise. Today’s call is being recorded and will be accessible for future playback at alaskaair.com. After our speakers’ remarks, we will conduct a question-and-answer session for analysts.

I would like to now turn the call over to Alaska Air Group’s Vice President of Finance, Planning and Investor Relations, Ryan St. John.

Ryan St. John

Thank you, operator, and good morning. Thank you for joining us for our second quarter 2023 earnings call. This morning, we issued our earnings release, which is available at investor.alaskaair.com. On today’s call, you’ll hear updates from Ben, Andrew and Shane. Several others of our management team are also on the line to answer your questions during the Q&A portion of the call.

This morning, Air Group reported second quarter GAAP net income of $240 million. Excluding special items and mark-to-market fuel hedge adjustments, Air Group reported adjusted net income of $387 million. As a reminder, our comments today will include forward-looking statements about future performance, which may differ materially from our actual results.

Information on risk factors that could affect our business can be found within our SEC filings. We will also refer to certain non-GAAP financial measures such as adjusted earnings and unit costs, excluding fuel. And as usual, we have provided a reconciliation between the most directly comparable GAAP and non-GAAP measures in today’s earnings release.

Over to you, Ben.

Ben Minicucci

Thanks Ryan and Good morning, everyone. Our solid second quarter results reflect the strength of the leisure demand environment to date, as well as our team’s unwavering commitment to operational excellence and reliability. I am thankful for their focus, which has helped us capitalize on this busy travel season to produce these great results. Our 18.3% pre-tax margin will likely lead the industry coming in above 2019 margins, despite higher fuel and structurally higher costs.

Our earnings per share of $3 was $0.83 higher than 2019 levels, bringing us above 2019 on a year-to-date basis, and beating consensus by 11%. The strength of demand this quarter was evident on June 30th when we flew the most passengers in a single day in Air Group’s history. And at a 99.5% completion rate, we ran one of the best operations in the country as we continued to prioritize completing flights and serving our guests with care. This was 1.7 points better than 2022 and 0.3 points better than 2019.