Alaska Air Group, Inc. (ALK) Earnings Call Transcript & Summary

Good noon, everybody. And welcome once again to Citi's Industrials Conference. My name is Steve Trent. I'm the Americas Airlines and Latin transports analyst for Citi, we are delighted to have Alaska Air with us today. And just 1 or 2 quick housekeeping things before we start. If anybody needs my disclosures, they are available upon request. And two, we'd love to have this as interactive as possible. So if you have any questions, please just raise your hand and don't be shy. But we are delighted this afternoon to have Alaska Air's CFO, Shane Tackett. Shane, thank you very much for coming out, and welcome once again to you and your team, Stephanie and Ryan as well.

Maybe if we could begin on Boeing. And you mentioned on the 4Q earnings call that you foresee difficult conversations with them. And I'm wondering if there's been any progress in those conversations and whether last month's incident has led to any procedural adjustments that you guys have made on flight ops.

Yes. And first of all, thanks for having us, Stephen. It's really, really nice to be out here. I think we missed a chance to get to the conference last year. So it's good to be back. Yes, the January accident has been a pretty paramount event for our company. It's taken -- most of our attention and focus as we expect for the past 6 weeks. A lot of that has been in partnership with Boeing to really understand a; how an event like this could have happened and b; what are the entirety like the end-to-end spectrum of steps they need to take to ensure that nothing like this could ever happen again, and that they're producing perfect aircraft off the production line. We and other airlines, as you would expect and have heard are going to significantly increase our own on-site oversight of the factory process, both in Wichita and Spirit and in rent in with Boeing. Boeing obviously has put every -- all of their energy into understanding how they need to relook at their own production processes and flow through the factory to ensure something like this could never happen again. So there -- what matters at the end of the day is that they actually do take the steps that they're starting to identify, but they are putting all of the right work in right now. And we do believe that over time, they're going to be able to reclaim a position of really high quality in their production processes. We've flown Boeing aircraft since the '60s. We've talked about this before openly, regionally, these 2 companies are very intertwined. We have friends and family members who work at Boeing and vice versa. We have a single fleet of Boeing narrow-body aircraft on the mainline side. So it's really important that they fix these issues for us and for the rest of their customers and for the flying public and I'm hopeful and optimistic that that's what they're going to do, and I'm confident they're going to do that as well.

Super. And I definitely appreciate that, Shane. And if we could dig in a little bit into demand indicators you're seeing -- you'd mentioned, for example, that big tech has been a little bit slow in some recent quarters. How do you see that segment recovering versus other segments?

Yes. No, business is slowly but surely starting to return on the West Coast. It has been in this very like deliberate but slow pattern. I think it's the slowest region to recover. We've talked about that. I think that remains the case. Most nontech on average is fully recovered, certainly by revenue. And I think even by volume, we're starting to feel like that is the case as well. Tech is give or take, 70% recovered by revenue. There are certain of our customer base, big companies, really big companies in the Pacific Northwest that are fully recovered. And there are some others that are much further behind. So it tends to be very company independent, but we're starting to see that sector get back to where they were in from decline in revenue production relative to 2019. And I'll just -- like I've said this multiple times, these are the most valuable companies on earth, they're going to continue to expand and grow. They're going to get out in front of their customers. So we've never felt like structurally, it wasn't going to come back. It was just a matter of like under what period of time. And so good progress, probably another full year or something to get fully through the cycle and have pre-pandemic, both revenue and volumes returned.

No, super and if we could pivot maybe a little bit from what you're seeing in the different segments to maybe what you're seeing on a geographic basis, I've had a couple of investors asking about Hawaii after the horrible stuff that happened there in September, what do you see at this part on demand indicators for that corridor?

Yes. No, that's great. Really important question for us, regardless of the announced acquisition, Hawaii is a critical market for us. You're starting to see Maui volumes recover. And I think what we have said and what others have said, is going to likely play out. It's going to be a several multi-quarter recovery. I think there's a belief that it will get back to the pre-September volumes, maybe that's at the back end of this year or into next year. But it's pretty ratable. You're starting to see people shift their travel and vacations back into Maui. There's still a lot of recovery of that part of the island that needs to happen. There's still a lot of impacted residents and we can't lose sight of any of that. I think the governor is very focused on the needs of the displaced residents. I think we want to be as supportive as we can be in that process. We're in no rush at all in terms of bringing -- hoping that Maui like fully recovers, we just think over time, it's going to. It's a beautiful place. It's a place people want to travel to. The other islands are strong. I would say we happened to be in Hawaii recently for work and Waikiki was bustling, it was packed shoulder-to-shoulder. You're starting to see some Japan tourism uptick. Again, there's a lot of capacity coming out of Japan into the islands. But it's another indicator that the destination is a really good destination that people want to go to. So it's just going to take a little bit more time to get fully recovered, much like our tech business travel.

Fantastic. And speaking of the goings on in the 50th state over there, I mean, I'm a little jealous of that Hawaii traveling, but I would love to know as we're on the topic, when you think about longer-term, the opportunity with Hawaiian Airline -- excuse me, Hawaiian Airlines, maybe what are sort of the kind of key items that you might adjust in terms of synergy generation, assuming that you go ahead with the merger.

Yes. No, thanks, Stephen. Look, we talked about 4 categories, 3 of those are really commercial categories, the biggest of which is just the combination of the network. And honestly, our synergy estimates didn't contemplate doing anything differently. They just took what we flew today and what they flew today, put it together. And then they took the code shares that we had in place with other partners, no new code shares and added those into the mix. And it generates a significant synergy because of all the new pathways that are essentially opened up for travel over to the Hawaii Island. We're going to ultimately benefit residents of Hawaii. We're going to maintain neighbor island fly and that's going to not be different. We are going to be focused on that as we do in the State of Alaska. And residents of Hawaii will have a chance now to use us as a connecting carrier into the continent and they either get on to one of our flights domestically or one of our partner flights domestically and go wherever they want to go. So it's an entirely new network of choice for Hawaii residents and people go in that direction. I think there's still more work to be done, and there's a lot of opportunity to actually refine this schedules. And it's not about reducing capacity. I don't foresee that at all. This is not about getting capacity out of the islands. It's about maintaining or putting more capacity into the islands on us. It's really about creating connectivity into the Hawaiian network today. And then we can start to put timings and cover more of the day what the flights were doing relative to the flights they're doing or use widebodies in a different way out of our core hubs than they are to give more capacity and more choice to consumers up and down the West Coast. And all of that would be incremental to the announced synergies because that's just not work that we contemplated as we looked at the economics of the deal and what we thought we could achieve. Loyalty is the next biggest contributor. It's for the same reasons I just mentioned, there's a lot of opportunity, I think, with Hawaii residents and folks off the West Coast who are loyal to Hawaiian today when they're traveling between islands or traveling from the West Coast into Hawaii, but probably are splitting a lot of their travel if they're doing other travel domestically. And we have an opportunity with the value proposition of the combined airline to capture that as well. And so we're really excited about that. The last thing is cargo. We haven't talked a ton about cargo, I do think with our relationships, certainly through one world, Asia, through Honolulu, into the West Coast and our deep network in the continent. There's just like sort of exponentially more opportunities for us to carry cargo and Hawaiian or us as a stand-alone entity had. And so I think we've been pretty conservative on our view there, but it's certainly an area we think has a lot of upside.

Super, no, and that's very helpful. And just a quick follow-up on that, Shane, in terms of the synergies, is it fair to say as well that you're not assuming, for example, that Hawaiian would join oneworld Alliance in your expectations on synergies.

No. I mean, not per se, like that wasn't part of the synergy math, but we do expect once we're a single operating carrier, that network would become part of the oneworld Alliance as well. So just they would become naturally a part of what our network offers, and they would be covered under the oneworld network as well, which I think there's lots of reasons to believe that, that could be powerful for both oneworld partners and for Hawaiian and us as a combined entity.

Super. Really appreciate that. And if we could dig in a little bit on the balance sheet, you guys have an investment-grade credit rating by Moody's, which is no small fleet in this industry, and they're not exactly many investment-grade rated airlines out there. How do you guys think about that as you're going out negotiating with your fuel heads counterparties or looking to do a capital raise. If you could maybe give us a little color on what flexibility that gives you and what power you bring as a counterparty.

Yes. No, thank you. It was obviously something that we were -- have been focused on had wanted to achieve, felt like we deserved. We've been pretty deliberate about managing our recovery through the pandemic and certainly the balance sheet recovery through the pandemic. We used to talk about this. I think we were one of the first to fully recover sort of pre-pandemic metrics in terms of leverage, first, to get to cash flow 0 versus to actually generate cash flow. So we've been very deliberate about like the balance sheet is the #1 thing we need to focus on in this industry because it's so cyclical, and it's really the best way to create security over the long-term. It was really wonderful to get the recognition from Moody's I think you're right, these are tough to come by in this industry. It's a volatile industry. There's a lot of risk incumbent in it. Look, I think we also know we're in a cycle here over the next couple of years where we're going to have to access the public markets quite a bit. So it couldn't come at a better time, right? Because we're going to be in the market. We've got -- we have to finance the Hawaiian acquisition should we be allowed to move forward with that. And beyond that, we've got some of the COVID era debt that is going to begin to mature and roll off, including the CARES Act debt that goes from very, very attractive, like 1% interest rates to floating rate. And so I think it gives us an ability to go and acquire that debt at a better price and/or it gives us an ability to look at unencumbered debt, not that we were saying we would do that, but it's a new option. I think that we could seriously consider that we probably wouldn't have had we not had the credit rating that we did. We've talked about this. We're mindful of other folks who've used loyalty programs to collateralized debt offerings. I think those have gotten better ratings in the corporate rating. And so that's certainly something that we're going to look at very closely, and we could do even better than just investment grade on the corporate entity if we decided to collateralize the Mileage Plan program in the next year or so.

Well, fantastic. No, great color. I really appreciate that. Maybe we could pivot a little bit to lead strategy. Relative to some of your competitors, you guys are definitely seem to be embracing the opportunities to do regional flying your Embraer orders, the Horizon network and what have you? And how do you see the regional economics developing given all we have seen on pilot wages and this kind of thing.

First, like I'll tell you, regional is not only important to our network in total in terms of getting maximal like network revenues in the door. There is a part of it that's really like -- we're committed to the communities we serve, and we have been. And we are flying about 75% of our pre-pandemic regional schedule. We haven't taken any cities out of the network. So yes, frequencies have gone down in a number of the smaller cities that we serve, but we haven't actually exited those markets. And that's important to us. In many of these markets, we've been the primary way to get into Seattle and to connect beyond for 10, 20, 30, 40, 50 years, horizon really in the Pacific Northwest. And then more recently, obviously, we partner with SkyWest, mostly sort of in the California part of our network. So it's a really important part of what we do. I think being good stewards of air service into the communities we serve is something that's like core to our DNA. It's still very much part of who we are. We grew up in the State of Alaska. Ben talks about this all the time. Only 3 of the communities we serve in the state of Alaska have road service. And so the only way in and out for most of the year is on aircraft and -- so we just feel like a really strong value and sort of set of principles around serving there -- the smaller communities in our region. Look, the regional economics have changed fundamentally. There's no doubt about it. There is convergence and costs closer to mainline primarily on both the labor side. And I think that's structural, and it's going to stay also on the airport cost side. A lot of these once small airports have grown up and they have their own capital programs and they do need to build and expand. So I think -- the question isn't will we serve them. It's like in what way will we serve them over time? Will it make sense to mix in mainline flying with regional flying because the marginal economics are that much closer. So my guess is you'll see lower rates of growth on the regional side of the business than you will on the mainline side of the business. But it will be a very important part of the overall puzzle that we're solving for still. And I don't -- I think that's probably something I expect for the next 5 to 10 years.

Fantastic. And related to regional flying, do you have any high-level expectations with respect to whether we could see some scope clause relief or adjustments over the coming years when we look at your pilots -- your regional pilots?

Yes. I don't anticipate much, by the way. I don't think we have in our mind that we think there's a structural change on work rules or scope in these contracts. As you know, those are really critical features of CBAs to our pilots and other work groups who have scope types of clauses. If we were at like a point of criticality where a part of the business couldn't continue on because of a contractual provision, we would always sit down and talk with our pilots about that, but I don't feel like that's the case today. I think where we're at makes a lot of sense I think the contracts are working for pilots and for Alaska and Horizon and our companies right now. And so I don't anticipate any real meaningful principal changes on the scope side of the business.

Great. Fantastic. And as I mentioned before, please don't be shy if you have any questions. I do have a question that I received from an investor with respect to your [ potential ] investment program. So some of your competitors have invested in eVTOL products, sustainable aviation fuel and things along those lines. How are you guys thinking about -- and I know you're looking at Hawaiian, but how are you guys thinking about longer-term potential investments in one or more of these areas?

Yes. No, I love this question. A couple of years ago, we actually started a corporate venture capital arm called Alaska Star Ventures. We've committed capital through that arm to a few different companies. Most of the investments we're going to make in the near-term are really around future of propulsion, I would say. And so a lot of them are geared towards staff. Some of them were geared towards other emerging technologies, be it hydrogen or electric or some sort of hybrid. I think it's really important for us to understand like we are in the midst or the early stages of another innovation cycle in the industry. So like the last 20 years were really about maximizing the technology that existed 20 or 30 years ago and improving upon it and getting like maximum capability out of it. And I think you've reached that largely with airframes and with engines as they exist today. We all know that we are going to move to a more sustainable way of fueling aircraft. A lot of ambitious goals between now and 2040 and 2050. So we thought it was really required of us to start making small investments in these emerging technologies. We don't know which 1 is going to prevail. I think it's way too soon to know that, I think all of them have a reason to get relatively intrigued by them. It seems to me like some hybridization of current technology is probably the easiest to get to market right away just from a worthiness perspective, an FAA perspective, a certification perspective. I don't know if that's electric hybrid or if it's a hydrogen type hybrid. And then staff really is required. At the end of the day, you have to get -- we are going to use the engines that are out there operating for a long time and they require some sort of fuel to propel them and you've got to really start to work the sustainable aviation fuel curve up. So we've got offtake agreements. We're already doing offtake in San Francisco with Neste. We have several other partners that we've done offtake agreements with -- we've partnered with a firm called Twelve to look at recycling carbon into fuel. None of these -- or anything I would like bet the company on it at this point. But I think if you get enough ideas out there working, you'll start to see the technology curves converge and people will start to figure out like that is the technology that can actually scale. So my hope is over the next 5 or 6 years, we identify what can scale at a cost that makes sense for the industry. And then you spend the 2030s and 2040s building the infrastructure to go deliver it. A lot of work to be done. I'm getting more optimistic. I think the public private partnership is starting to happen. I think there's a lot of interest at both state and federal levels, how can we all work together to solve this issue for the industry. And while there's very little SaaS supply today, I haven't given up on the idea at some point, it could scale quickly, once we identify the right source and the right technology.

Fantastic. That's great color. And maybe at least somewhat on that same topic, I know that you guys saw some volatility in West Coast refining margins in recent quarters. If we look to last year, we had something similar happened with New York Harbor grade with all the stuff going on in the Russian Federation. Has any of that led you to evolve in terms of how you would think optimally about fuel hedging?

Yes, well first, I mean, I think probably every company, our business says this, but it's like we're never surprised like that's something that's going to happen to like throw a curve ball at us, we are surprised on what it is. Just to remind folks, we've had a refining margin relative to the rest of the country of about $0.10 forever. Like it just has been pretty consistent those periods of volatility and it moved to $0.30 in the third quarter and $0.34 in the fourth quarter. It's really the only reason we believe we didn't leave the industry in margin or maybe the second margin like had -- would have had the second highest margin in the industry have thought first. In January, it went back to $0.10 in February, it went back to $0.30. And so it's been a very volatile thing. The West Coast refining capacity continues to be off and on. There's a lot of been a lot of disruption that was unexpected over the last 2 or 3 quarters. So I don't know that it's structural yet, but it's certainly becoming a frustration just given that we're trying to configure this business to be the top margin producer in the industry, and this is kind of pulling us out of that placement. I think for hedging, we have, and we talked about this on the call, we've really started to rethink why -- like what is the purpose of hedging a barrel of oil for us today relative to when we started the program 15-plus years ago. A barrel of oil, the volatility has been relatively less than it was before, and we're doing 20% out of the money strips. So the volatility has to be pretty wide for those to actually net over time, be beneficial to the company. It really was for insurance purposes, really protecting the downside I think our balance sheet, our core level of profit production is a lot of insurance by itself that wasn't there when we put the program in place because we were like at breakeven margins or 2% or 3% margins. And it's not the most volatile part of the fuel cost stack, which is now the refining margin, which used to be $0.30 is now $1. So we're going to be pretty deliberate at looking at how much hedging of a barrel oil do we want to do versus can we hedge more of the volatile part of the cost stack, which has hedged the refining margin, not so much harder thing to hedge, which is all to say that we are rethinking the strategy. We don't know what our new go forward is yet, but it's something we'll continue to talk to folks about as we figure it out.

Great. Super. I appreciate that, Shane. When we think about your domestic network and you guys are mostly a domestic airline versus the big 3, at least relative to their exposure, for example, but when you look at how well you've done versus the discount carriers have done, you're both doing domestic, but you guys are clearly getting a better margin. What do you think are kind of the key characteristics and your stronger profitability versus theirs.

Thanks for the questions. And I -- look, I think there's a couple of things that are more just structurally what's going on in the demand space of the market today. I think there are company-specific drivers as well that get into our business model and our way of meeting the market relative to theirs. If you just look at like what's going on, I think, on the demand side, and I'm oversimplifying, but if you just say there's 3 buckets of demand like a really price-sensitive bucket of demand, sort of a big middle like the average traveler and then the premium end of demand. A lot of that growth with the folks that you're talking about is in the price-sensitive side of the market. And that demand pool just isn't growing as quickly. It doesn't appear to be going as quickly. Right now, it has grown very fast over the last 10 or 15 years. It just seems to not be growing at that same rate right now. I think the big middle it feels to me is growing with the economy. That's what you would expect it to because it's massive. It's where most of the demand sits. But a lot of people in the middle are also trading up into premium, which is why you've seen the carriers who have more premium exposure do not only just relatively better on the margins a few points, but significantly better. And I think for whatever reason, if it's a pandemic effect because people got to go trial premium economy in first class in a way that they didn't before because load factors were low and prices were low or some other effect, a lot of folks are willing to pay a little bit more to be in those more premium experiences. And we're seeing it be very sticky demand. People once they trade up, tend to not want to trade down into the next trip, they also preference premium economy or first class again. And I tend to believe that that's probably durable. Certainly, if you had a big economic calamity or something that it probably can change. But all else equal, I think people are going to continue to want to see premium experiences. You move from the aircraft side onto the airport experience with lounges and then broad global networks that you can redeem your currency in with oneworld partners. And we just have a value proposition that's very different than those other companies and that is more in line with the growth part of the market today. And I think it's durable. It's a little bit what also informed our -- why we really liked the idea with Hawaiian because it's a premium market. It's a long-stage-length market. People want to sit in premium parts of the cabin into that market. It's a premium destination market. And so I just think that structurally, we were configured in a way to meet this demand surge in premium and more quickly and in a better way than some of those other folks that you talked about.

That's super. And I really appreciate the color. When we look at sort of what's going on in the air traffic control system and airport infrastructure in the U.S., I mean Northeast, for example, we've got the FAA [indiscernible] down, limited air traffic movements, which I know is not a big deal for you guys specifically, but it -- what are you seeing in kind of your core markets in terms of the amount of investment that's going into the airports you serve, how well their staff from an ATC perspective, are you happy with your hourly air traffic movements capability in those markets.

Yes. No, I appreciate that. We are insulated and not really close to the nuance level, the East Coast, sort of Florida and New York space management and just resourcing with ATC. West Coast, we haven't had those issues. I think we felt very good about how we're working with ATC. And haven't felt like there was a resourcing issue. I think our issues are more things that none of us can control like weather. And you get San Francisco or you get Seattle on the wrong day given that they are saturated with departure volumes and their really tough ramp movement environments, you get a little bit of weather that brings down your flow rate and it's going to have a stacking effect on the day. But I think that's something that we're all going to have to continue to get used to them better at Airports by and large, are not -- they're getting more congested, and we all have to be better at really meticulously operating in those environments and using all the technology available to continue to get flow rates at near peak capacity levels. So it's an issue we're going to deal with over here. We haven't had the resourcing issue that you alluded to the East Coast has.

No, that's super. I definitely appreciate it. If we get pivot a little bit and talk about sort of other aspects of revenue flow, your loyalty program, your co-branded card revenue flows, and I know you guys recently did a call with us, which I deeply appreciate. But if you could give us a little bit of color what you sort of broadly see as the long-term potential for those businesses.

Yes. No, thanks. At our Investor Day almost 2 years ago now, we actually announced a renewal with Bank of America. They've been a phenomenal partner of ours for a long time, 30 years or nearly 30 years. They do a great job helping us co-brand the card, co-market the card. They're heavily invested in the card. I think we feel really good about the contract that we signed with them. And it certainly was -- provide a lot of value within the P&L over the last couple of years. I think that our program, such as it is -- hasn't evolved a time over 20 years. And we've got somebody who's now leading the loyalty side of the business and the co-brand side of the business who I think has a lot of energy for this program and a lot of ideas about how to enhance value for consumers in a way that still brings incremental value for Alaska as well, not really ready to talk about any of those things. We were actually just talking up in the room. Like for the first time, we've added the ability for people to spend on their credit card to get a contribution towards a higher status level. So we don't let you spend to get status. You have to fly. But if you are flying and getting status as a way to get a higher level of status to spend on the card, which is the exact right type of incentivizing that you want to do. There's something good for the person who wants to get to the next elite level. And then obviously, card spend is one of the key metrics on the program for us. So I think there's more opportunity for us to get greater levels of penetration in some of our noncore markets, get closer to top of wallet in some of those noncore markets and really make sure our customers understand the value of the currency. I think it continues to get rated as one of the most valuable loyalty currencies. It's hard to tell consumers how to like score our currency relative to somebody else's point or mile because they all just seem like it's the same. It's a mile, a mile, a mile. You guys all know they actually have under different underlying values with oneworld with our portfolio of other partners. I think our currency and the way we value it and sort of our redemption levels is the best value out there for any consumer. So if you have a lot of flying to do and we can serve the flying like we are the loyalty program you should be a part of. And we could do a better job, especially in our noncore markets, making sure people understand that.

Fantastic, really appreciate that. There's been a lot of talk over the last couple of years about pilot supply. It seems like some of this is now settled down to there's more equilibrium. What about other pieces of the labor force. How are you guys feeling about your mechanic supply, your pipeline of flight attendants and ground crew. Is it sort of a real stretch that going beg people to come in and do these things? Or is it -- do you have a good pipeline?

So 2 things, I mean, you got to look at both sides, like how do you attract folks into open positions and then how many people you are treating? Both are really important things to be looking at. There was a gross sort of like overarching pilot supply problem because of all the early retirements as you know. And then pilot started to backfill those positions and then there's sort of be this attrition wheel where pilots move between companies. That's never happened. So like so it was like twofold. You had like they got to replace all those retirements. We've got to recover all of the flying that we did pre-pandemic. And now we've got a bunch of pilots who are deciding to go to different airlines and some deciding to come to us. But that attrition rate became kind of the key issue last year. So in most all the groups, the attrition rates are normalized, I would say, at this point. They're very close to pre-pandemic levels. Pilots are a little bit higher, but continue to come down that curve. And so we're not seeing loss of employees at nearly the rate that we did through the pandemic -- on the attraction side, we're filling classes, and we're able to attract really high-quality folks. We've got a lot of interest, as an example, in flight attendant. Like we have no problem filling flight attendant classes right now. I think on the ground handling side, and the agent side, we're also doing a good job filling vacancies. I think we are doing a good job on the mechanic side that is going to be one area that just like pilots, we've got to be very focused on creating a pipeline for because of the qualifications needed and the experience you want maintaining aircraft, you really do want a robust pipeline of folks. And it didn't get as much air time, but I think it's as important to us as any of the work groups are, but it could have become a strain on our ability to grow and maintain our level of flying if we weren't able to go get qualified mechanics in the door, and there was a shortening supply of them. So it is interesting you mentioned that, that is an area that we've been really focused on as well. But we're doing good on the hiring front.

Fantastic, fantastic. No, thank you, Shane. And I know we're getting a little bit short on time. We have a -- we've got a pretty shy crowd here, but that's fine. I wanted to ask as well, if I may, a follow-up on the earlier investment grade question. Do you see incremental value and maybe also getting the nod from Fitch and S&P, in addition to already having it from Moody's, is that something that you guys are thinking about as well in terms of your pursuit?

Yes. I mean certainly, we believe we deserve it. Like I'll just start there. I think we have a lot of discrete factors that inform that position if you just look at our operating performance, our balance sheet. And there's a lot of like the software side of like how we manage the company, our level of discipline I think our markets tend to be very robust markets. I go back to this. We serve some of the largest and most valuable companies in the world. They can do a very good job of it. So I don't -- I think sometimes they look at market concentration or something as a risk factor, but they don't go underneath that and say, these are pretty resilient economies, pretty resilient markets. And they're probably going to like withstand ups and downs in the general economy better than a lot of other places are just because of the composition of the companies that are there and the economies, what makes up the economies on the West Coast. So yes, I think it's something we're going to continue to advocate for ourselves for, and we would hope that both of those agencies take another look at us over the coming quarters. We would certainly like to get multiple investment-grade ratings, yes.

Fantastic. Fantastic. Well, listen, it looks like we are just about out of time, and I want to keep everybody on their meeting schedules. So why don't we stop it there and I would just like to thank Shane and the Alaska team for coming by and spending time with us today.

All right. Thanks everybody.