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

Thank you for coming. Final day of the Bank of America Industrial, Transportation & Airlines conference. Happy to have Alaska Air Group here with us to kick off this final day. With us from Alaska is Brett Catlin, the VP of Loyalty Alliances and Sales for Alaska Air Group. And we also have Ryan St. John up here with us, who is the VP of Planning and Investor Relations. So guys, thank you for being here. And for the audience, I have a bunch of questions prepared, but if anyone over the course of the next 30, 35 minutes has any questions, just feel free to raise your hand, we'll get a mic over to you if needed.

So I guess maybe I'll just start out with a couple of kind of near-term questions. I know there's a lot to get through, a lot going on in Alaska these days. But I'd say the general tone so far over the last few days of the conference is just, I'd call it, stability. I think most of the airlines, that's been at what they've been talking about in terms of the demand environment. Yes, but over the last week or so, we've had some ULCCs. Allegiant talked about a little bit of a near-term pickup. Frontier was saying yesterday that they were beginning to raise fares a little bit. Just curious what you guys are seeing in terms of demand. Are you seeing any near-term improvement? Any comments there?

Yes. I would say that things are still tracking in line with what we had guided to. Volumes have been very good recently. And I think, again, we've probably talked about this a little bit, like volume currently is not really an issue. I think we're going to fill up our planes as much as we did last year. April load factor, I think, actually was slightly ahead of last year. So there's clearly a ton of people who want to travel. And it's really more of the question on the yield side as to where ultimately things land. But yes, like last week was our largest booking week since March. So we had a lot of good volumes come in. And as you can imagine, and I think we've said this before, June is probably the most pressured on the yield side. There's just a lot of industry capacity. Yes, a lot more growth than in April. So that's still the case, but I think we're pretty confident that we're going to be able to fill up our aircraft. There's obviously a lot of demand for travel. So sort of similar commentary to what we said on the earnings call, but there are 6 weeks to go, so there's a lot of opportunity. Hawaii has still been looking very strong, even close-in has been very good in Hawaii. So we're feeling good about that. Obviously, now that the networks truly are combined, and we've reracked the schedules as of April, things are looking very good there, which isn't surprising to us.

Interesting. And also on the call, I think you called out corporate maybe not as bad as what you were seeing earlier in 1Q. Is that still a fair assessment? I guess what have you seen across both corporate and leisure, particularly as maybe some of the equity markets have recovered and maybe some of the real draconian scenarios have eased a little bit?

Yes. On the corporate side -- and thanks, Andrew. Good morning, everyone. Nice to see you all. March was an interesting month, I would characterize it as choppy. So we're coming off that base, which we would have spoken to during the earnings call a few weeks prior. The timing of Easter does introduce noise. And so I think we're cautiously optimistic with what we're seeing, the data stability that the term you used is probably reflective. I will say, though that it's mixed across the industry. So on the West Coast, over 1/3 of our corporate demand comes from tech. Tech has some interesting characteristics at the moment. Some are rather strong. Others are comparatively weak. So that's a sector we're watching pretty closely. The other thing I'd note is small, medium business in Q1, that was up double digits year-over-year for us, which is really encouraging. That obviously plays well to our network and how we configure things. It's also an area we're investing in. Later this summer, we'll launch a new booking platform incentive specific to that sector. So we're really excited about the momentum we see on the small medium business side. And I'd say we're optimistic on the corporate side that we've found kind of a bottom, if you will, and are starting to move back off that.

Interesting. Can you maybe provide a little bit of color? Obviously, given your geographic exposure, tech is a big part of your corporate program. What are the some of the other big industry groups that you're levered to?

Yes, it's professional services, of course, is a material one for us. You get into industrials as well. That's more specific to Seattle with Boeing. And then you kind of have a long tail that would be reflective of the rest of the national market.

Got it. Okay. Brett, maybe kind of moving on a little bit, maybe getting into the first part of your title and in terms of loyalty. At Investor Day, I think you presented $150 million in incremental profit from just program improvements across loyalty. Can you maybe walk us through some of the buckets that drive that $150 million kind of where you stand in those and maybe kind of a time line to when those can mature?

Yes, absolutely. Thank you. So we laid out at Investor Day was essentially $150 million net profit from loyalty initiatives out through 2027. There were 4 categories that comprise that $150 million. I'd say 2 of them were the lion's share, just a function of timing of when say the cash flows come in and when we actually recognize them in the P&L. So the 2 that are most consequential over the next couple of years, the first is around program changes that were announced last year and then implemented up through April. We're now done implementing those. And when I say in Q1, like relative to budget, like our expectations, we exceeded plan there. So we feel really good about the trajectory of what the changes are doing to actually drive a shift in behavior. A couple of examples. So we've more closely linked card spend. So, of course, partner with Bank of America, linking that to a lie-qualifying status. That's absolutely been accretive. We've also introduced more status tiers, so what we call them milestones. And that has -- we've seen an effect of that engaging people more before tiers, within tiers and then beyond tiers. So we know we have splitters in a market like Seattle, folks that are loyal to Alaska. But once they were topping out in the elite ladder, they were maybe more of a free agent. And so we've addressed some of those dynamics, which has seen a read-through in some of the loyalty performance. So that's a big driver. The second is, of course, synergies. This is also one where in Q1 out of the gate super strong above expectations. I think what we'll see, though, is this August, we'll combine the single loyalty programs. And so we want to see if we can sustain that momentum on the loyalty synergy side, and we're, of course, optimistic that we can. But so far, the signs are really encouraging in terms of the combination of Alaska and Hawaii. It unlocks a lot more loyalty utility. Just this past Monday, we started flying Seattle to Tokyo. That's a huge inducement for folks to go out and get the credit card, spend on the credit card and ultimately engage with the program. So I feel really good about that. Then the final 2 items and the cash flows for these may hit before '27, but the P&L tends to be out in 2028 and beyond. The first is our new premium card product that will launch in August as well. We teased it a bit at Investor Day, I did a bit of an early signup, had 100,000 people expressing interest. We think that run rate is going to be north of $90 million of net P&L value. So that's a product we're very excited to get in the market. We think the timing, the demographics mix, particularly on the West Coast, that product will do well. Then the fourth, and this may be a topic we come back to is just expanding the reach of our program, which has historically done very well, Pacific Northwest, West Coast, now Hawaii to have more national relevance. And so again, we see that being longer term, but obviously, an important attribute of what we want to accomplish.

Actually, 2 follow-ups on that. I guess, first, in Hawaii, I'm sure the Hawaiian card had some pretty good penetration into that market. But I guess what you know about your sign-ups and your exposure in Seattle, and I guess the Alaska market. Is there room for further improvement within Hawaii on the card program any -- from a penetration standpoint? Or is that pretty much maxed out?

Yes, it's interesting. When you look at the Hawaiian market, and we, of course, do this in diligence now post-close being 9 months and we've dug in quite a bit deeper. What we see in Hawaii is you had a lot of local love for the brand. Hawaii residents tended to be loyal, but the problem is Hawaiian couldn't get them everywhere they wanted to go. And so they might love the brand, but then when it came to getting to Washington, D.C. or Orlando, they may end up flying on a competitor. We can obviously serve those needs now. And so more specific to your question, Andrew, what we saw as a result of that was penetration wasn't where we expected to be on the card. We see upside in terms of getting penetration levels not to State of Alaska for kind of a comparison, but say, closer to Pacific Northwest. So absolutely upside on acquisition. The other is on spend because the points that don't have the same utility, Hawaiian's legacy partner network was much stronger. Their own operated network was much weaker rather. Their own operated network was also weaker. People weren't spending on the card because the points weren't as useful. And so a big opportunity for us. It's reflected in the synergy numbers is driving incremental card spend on that product portfolio.

What would you say your share is in the Seattle market?

So there's a few different ways to look at it. You can look at card swipes, spend, acquisition. I think how we tend to view it is overall volume of cards that we have in the market, which is exceptionally strong. We go and look at Visa benchmarks. It has one comparison. And in Seattle, we tend to over-index pretty much every comparison.

Okay. Got it. You mentioned the national awareness that was definitely on my list of questions here. I think at Investor Day, you spoke to kind of 50% growth targets in terms of active members. I guess when you think about national awareness, how are you thinking about what markets are you targeting? Is the network already built into those markets? Or does the commercial team have a lot of work to do in order to help drive the national awareness of the card program?

Yes. It's a fantastic question. As I kind of alluded a moment ago like the West Coast, historically very strong for us, Pacific Northwest, we see a material opportunity in California to continue to grow. We're 8 years into the Virgin America acquisition. There's still room for us to bring more people into the program. Hawaiian was actually very strong in California. Now they couldn't serve the needs of every Californian, but people aspire to go to Hawaii and they had a decent base. So building on that as a key opportunity. The second piece is more around kind of the national to your question, Andrew. And it's probably less about our operated network and more about the partners that we have in our portfolio. So both airline partners, that's, of course, important with one world, but also our non-air partners. So trying to drive more ubiquity. I'll give you a fairly narrow example with Lyft. We've worked with Lyft for a number of years. Of course, you can -- if you take a Lyft in Manhattan, you'll get points in our program. And so trying to lean into those kind of programs, which they're not going to be nearly as profit accretive as, say, our Bank of America co-brand relationship, but it's massively important to getting people into the funnel. And we know if we can get them in the funnel. People love the program, and ultimately, that drives more co-brand acquisition. So I think what you'll see is it's probably less about the network we operate and more about who is in our partnership stable.

Okay. Interesting. Loyalty today is, what, about 15% of total revenues. I guess, Brett, when you think about the next 5, 10 years, you integrate Hawaiian, you grow national awareness. Where do you think that 15% can go?

Yes. So historically, the 15% of revenue that comes to loyalty. When we look at benchmarks, it's very strong. It's something that Air Group, we're really proud of. It's, of course, something we looked at on the Hawaiian side pre-combination. They were high single digits. So kind of step one for us is we want to get the legacy Hawaiian network and that base of members up to legacy Alaska standard, so call it that 15%. So that's where we'll begin. And as we think about how do we go beyond 15%, there's a couple of levers we're really focused on. One is what you might call like an expansionary points policy. We want to get a lot more points in the system. Now these aren't points from flying. They're points from engaging with our partners, principally on the co-brand. So if we can grow the number of points that are outstanding, ultimately, that's going to allow us to pump more through the system and increase that number. The second is around what you might call the velocity of points so points that come in and then sit dormant for a couple of years, we actually want people to use their points, see value in the currency and then go aspire to get more points. And so we're really focused on how do we drive that flywheel. And we've done things like lower the entry-level cost of a redemption. So before, it might have been 10,000 points, now it starts at 4,500. And so just trying to find ways to make the currency more ubiquitous, more interesting, and ultimately, I think, that's going to drive the flywheel of people wanting to spend more on the card and to get more points. The third thing I'd just note is how we ultimately look at redemption inventory and availability there's a lot we still think we can do on that front to ultimately fill seats that might not have been filled with redemption passengers and just ways to optimize the margin.

Got it. I guess lastly on loyalty. We've heard a lot over the last few months, so the ULCCs are changing their loyalty programs. Southwest is making some changes as well. The changes that they make kind of influence the way you think about loyalty? Or do you not worry about that?

Yes, it's a great question. I'd say we're curious and interested, but we also look at the moat that we have around global and premium. And we look at card attachment, loyalty attachment, a lot of it is a function of especially now, can you get me overseas. Like I may only go to Tokyo once in 20 years or once in a lifetime, but they did that I can go to Tokyo. That's a very powerful inducement for me to engage with the program. Similarly, do you have a lie-flat product? Do you have a premium-front product. That becomes a really strong loyalty inducement. Now people may very well use their points to get to love it, but the fact that you could get them in a lie-flat bed in Tokyo, that matters. And ultimately, we think that's what makes our program a really powerful competitor.

Yes. Okay.

Yes. I think back to the national relevance, I think we talked to us before, but over 1/4 of our bookings on the Tokyo player coming from east of the Rockies. Our theory of Seattle's position and the connectivity over Seattle being a much better itinerary than other cities. A lot of people in the Midwest, we have an opportunity to go convince them that this is the loyalty program for them. Even if they only fly Tokyo a couple of times every decade, but we're now getting in front of a lot of people that we probably wouldn't have gotten in front of otherwise.

That's definitely an interesting stat, right? Are those people that have flown Hawaiian, out of flown Alaska before? Or is that -- are those just brand-new consumers seeing what you're offering?

It's good question. I don't know the exact breakdown, but some of these cities, I would guess, they probably have -- really have performed before, if I had to guess, maybe some of the larger metros, maybe they have. But I think it's just more [indiscernible] to get in front of what the credit card offers and things of that nature.

Got it. Right. Maybe moving on to some of the alliances. What do you think your partners in oneworld are most excited about having you as part of the program?

Yes. We obviously spent a lot of time with our partners. Joining oneworld in 2021 that was transformative for what we could do for our guests, where we could get them. Our relationship with American Airlines, I think, is a mainstay of our membership in oneworld and what we've been able to do. Specifically, when you think about the Pacific, which is where we, as Air Group, think we have a right to win a potential advantage with the Seattle market, the 2 larger alliances of Star and Sky team, they operate about 25% of the capacity in U.S. to Asia. You look at oneworld, it's about 10%, 11%, call it, 13% once Hawaiian joins next year, so half the size. And so the opportunity when we talk to our partners is no different than the opportunity we see when we talk to ourselves internally, which is while oneworld could have a much more powerful proposition into Asia. And there's no better place to connect people into that market than Seattle. We operate the largest hub on the West Coast, 350 daily departures, more than 100 nonstock destinations were already banked for the things that Ryan is talking about with bringing people from Kansas City or Denver to Tokyo, and then we can do it in a way that leverages our partners, say, JAL in Tokyo. Our first market is no coincidence. It's Narita because that's where JAL operates, and we can get beyond there. We'll do Seoul later in the summer, early fall out in September. And so I think what you hear from our partners is excitement because this isn't cannibalizing oneworld traffic. If anything, it's enhancing the proposition that we can offer to our guests more broadly. And so a lot of enthusiasm for what we're doing and desire to partner more closely around how we provide great options for guests.

So being part of the alliance, obviously, massive international opportunities for you. How does that -- how do you think about potential wide-body growth from here? Is that -- does that become more of a priority for you? Or is it just leveraging your partners within oneworld in order to get your Alaska consumer around the globe?

Yes, there's a couple of dimensions to it. I think what we've seen and I alluded to a second ago is you start with your partner hubs. That, that's a great place to build connectivity in a market like Tokyo, it wouldn't be unreasonable for us to have 1/3 of that lift going beyond JAL over time. And so that's a really natural place to begin. And then I think you can learn depending on where that traffic is going beyond, you can contemplate well, is there a seasonal opportunity to fly to a secondary market? Are there opportunities to add frequency? And so I think we're kind of going down that very disciplined orderly playbook. I think we've said publicly, we want to fly 12 destinations, long-haul intercontinental out of Seattle that takes time. And so you start with what makes the most sense and flying into Partner Hub is a fantastic place to begin.

You've spoken a lot about international into Asia, right, in terms of Japan, you talked about Seoul. What would it take to get across the Atlantic? Does oneworld allow you to maybe get into making a market like London or Paris quicker? Or how do you think about the time line of that transatlantic opportunity?

Yes. It's interesting. So when we look at the global mix, particularly on the corporate side coming back to an earlier point you raised, London out of Seattle, it's the largest corporate market by 3x. Tokyo and Seoul are #2 and 3. But if you want to effectively serve corporates in Seattle, you have to get into markets like London over time and now having partners that sit in London and have a lot of scale, that helps. It helps potentially for getting access. It helps for getting beyond, which are critical to fill it. I'd say we're also mindful though of the seasonality of some of these markets. Our network already tends to be somewhat seasonal. And so the beauty for us of Asia is it's pretty level across the year. And so you can fill the plane effectively in January, maybe not with the same yields is July, but there is demand that's going to come throughout the year. And so how we think about Europe is a much -- a function of seasonality as it is serving the top business markets and our partner hubs that have that beyond connectivity.

Got it. Maybe changing gears a little bit, maybe bring Ryan into the mix a little bit. I know outside of the stability theme at this conference, continued outperformance of premium has been one as well. We began to see in your 1Q results how you can -- outperformed on RASM. How do all these initiatives you think position you on a relative basis versus the industry in terms of premium revenue growth?

Yes. Yes. I think just on the numbers side that we talked at Investor Day, soon we want to grow the percentage of our seats that are premium. We're doing that today on the 737 fleet with an extra row premium and first class in some of our aircraft. So to get much closer to, say, the network carriers in terms of percentage of seats, obviously, the mix will be like a little bit different. We don't have as many widebodies, so that's a future opportunity as we talked about, whether it's more live flats upfront, especially on the A330 fleet, a true international premium economy. I think like all the changes we're making should move us closer and closer to looking more like a network carrier, just more regionally concentrated. There's still a ton of opportunity there. I think, like Brett alluded, there's the demographics on the West Coast, especially with the premium credit card. There's a lot of folks who demand premium-type offerings, but that, of course, extends to things like lounges. We're building another lounge in Seattle. We'll essentially have like an international lounge for the first time in Seattle that will be specifically for front-of-cabin folks. Like a lot of carriers do, we're beginning work in San Diego. So that's an area of opportunity. So I think just net-net, we're trying to up-level our overall premium sort of offering an experience beyond just additional seats. But clearly, we know where the high bar is in the industry and whether or not we can get there someday is one question, but I believe we're just continuing to enter ourselves closer and closer and further away from sort of the traditional low-cost carrier that we've always been, no one has.

But remind me, what's your percentage of premium seats today versus the percentage you're going to have call it, in 2, 3 years' time?

Yes. Today, it was about 26%, although it's changing by the minute, because I think we have 40, 50, 60 aircraft already retrofitted. Out of the 200 were going to do it, it will be 29% when we're finished with the 737. And that I think when we really get into the wide-body opportunity, that could push us into the 30 and beyond, especially as we're taking new aircraft, too.

Okay. Helpful. As we just finished up airlines earnings season, one thing I was pleasantly surprised with is that given all the macro uncertainty, you just heard a lot of airlines talking about cutting capacity in the back half to better match demand. One could argue it's not fast, not coming out fast enough, but they're talking about it. Anything topical that you noticed over the course of earnings across the industry? How are you seeing competitive capacity in your markets going forward?

Yes. Yes. I think -- we've seen a lot of these announcements. We haven't necessarily seen the schedules change yet. To your point, a lot of it is coming later in the year. So it's a little early to see exactly where things are going to be shifting. So a little bit of a wait-and-see. There's been some near-term capacity changes, particularly from the ultra-low-cost carriers, which have been positive, I think, in our network. But beyond that, kind of status quo across the board, I think through the summer, it sounds like most things are going to be originally as planned, which is driving a little bit of the pressure on the yield side of the equation even though we know we'll probably fill up our aircraft as much as we would have wanted to. But yes, I mean, we'll see when things start to solidify in the back half of the year. Obviously, as we've talked about, we're not growing very much at all. A lot of the growth is Hawaiian and its utilization. And so the Alaska fleet is not really growing. So we feel pretty good about where our capacity is. And we're not quite yet into sort of the fall booking window to know even the changes that have come out yet or having a material impact. So but all things being equal, if the back half of the year is much lower growth across the industry, even just system-wide, whether it's in our markets or not, there's sort of a ripple effect across every industry.

Yes. Curious, are you seeing any change in competitive behavior in Seattle now that you're launching the international destinations?

Nothing like, too direct from what we can tell, I mean, there's been no real frequency changes or anything that I think we can see, maybe some gauge changes. But some of those things look to be more system-wide with some of those carriers all across the West Coast rather than just Seattle. So, so far, no real big change, I think, on the competitive landscape internationally, at least in Seattle from now.

Yes. I'd add up. Seattle is obviously our hometown. We just launched Tokyo on Monday. We've had a number of community events there. A lot of enthusiasm for Alaska to fly long haul. People have wanted us to do this for decades. We're confident that we're very well positioned in that market to ultimately win. And while there hasn't been pronounced competitive action, like we've always known that this is an industry, there's other opportunities for folks to come in full capacity if they want to, but we're going to come out ahead as our point of view given the depth of our loyalty and the history we have in that market.

Any questions from the audience before we move on? No, quiet this morning. Maybe moving on to the balance sheet, right? It's definitely a strength of Alaska's. I guess the buyback, there is a lot of discussion about that on the call. It seems like given the macro volatility of the team feels comfortable kind of accelerating that buyback in the near term. It's a nice tool to have. Just how do you think about the ability to kind of keep maybe a higher pace for longer? And how do you think about overall capital returns in this environment?

Yes. Yes. I think we talked about accelerating what we had planned to do this year, partly just given, of course, where the stock has been trading, which we feel pretty strongly is way below where it should be trading. Obviously, there's been a little bit of a rebound in the past couple of weeks. So that still hasn't changed. It's still down from where it was post Investor Day. I think the Investor Day story was great. It obviously created a lot of excitement. But of course, when it comes to share repurchases, you're getting less bang for your buck at the prices it was at. So I think when we saw things changed in the last couple of months, it was an opportunity to maybe go a little bit faster. Think you'll see us go faster kind of through the first part of this year, and then we'll pause and kind of see how the back half of the year shapes up. But when we did all the math on it, there's really minimal impact to overall net leverage, especially debt to cap. It doesn't really put our goal of getting back to 1.5x leverage by the end of next year in jeopardy in any way. And so it just kind of seems like a no-brainer. Our Board is convicted on it so as the management team. So, yes, we're currently going through that right now and buying a little bit more than we had planned with, of course, at the current prices at the end of the day, will be a lot more market cap more than we thought 3 months ago.

Yes. I guess when you think about the de minimis impact on the balance sheet. Do you think the total dollars dedicated to the program, could that increase versus your plan at Investor Day?

No, I think we had said we'd probably spend at least $250 million this year. I think it's going to be north of that by some amount. We'll see where it ultimately lands. But we're committed to getting through the $1 billion that we had announced at some point over the next 4 years, and then we'll kind of reassess from there. So I think currently, we've got a little bit of a near-term plan that we're executing against. And again, we'll sort of pause midyear and kind of take a look around and see what we want to do for the rest of the year and beyond, just given where things may shape up in the back half of the year.

Got it. I know you're digesting and integrating an acquisition right now. But despite many other attempts, you've been the most acquisitive over the past decade or so with Hawaiian and Virgin. Do you feel like the industry needs more consolidation?

I think we're just focused on what's in our control right now. We're focused on integrating Hawaiian and doing it right. And we've obviously got a lot of initiatives in front of us. We're an ambitious company. We've added a lot to our plates. I think we're just focused on doing what we're doing right now, getting through that. I can't speak for the broader industry. I think we're just excited about our opportunity in front of us. And we're always going to make decisions that are in the best interest of the long-term future of the company. And so all options are always on the table. But right now, we have plenty on our plates in front of us that we want to execute on to improve the business.

Got it. I wouldn't dig any further on that one. I guess last from me with about 5 minutes or so left. I tried asking this on the earnings call, but Shane didn't really bite. So I'll bring it to I'll bring it back up since I have you on stage here, but yes, with your cost cadence over the course of 2025, it seems like 4Q is going to be closer to flat. I know you don't want to start talking about 2026, but when we think about that baseline out of 4Q, maybe some of the puts and takes to think about from a cost perspective off of that baseline?

Yes. Yes, it's a little early, obviously, even though we are currently scheduling our 2026 budget meetings right now. So we're already thinking about it. But it's a little tough to say. I think capacity growth more than anything in the last couple of years has been the bigger driver of CASM, I think, across the industry. I think the typical pressures will continue to exist with airport real estate costs and such. Obviously, the flight attendant deal we got this year was sort of the last big deal, and so we won't have to absorb something like that through next year. We are, of course, though, going through joint bargaining with our union groups at both Alaska and Hawaiian. And so at some point, hopefully in the future, sooner than later, we obviously want to integrate them as fast as possible, ultimately see what the economics of those are. Going in next year, we will have a tailwind on cost synergies, which should help offset some things. A lot of those really ramp up kind of in the fourth quarter this year. So 3 quarters of next year, you'll get the effect of that coming through. There's a little bit more maintenance, I know next year, especially on the engine fronts that we're working for. I don't know the size of it, but -- so there's some decent puts and takes, but I think like the cost synergies is one of the bigger opportunities. And then ultimately, what our growth trajectory looks like next year, which will be a little bit of a function of how demand does. But obviously, in the last 2 years, our growth has been a lot more constrained than we had anticipated, which, of course, is pressuring the CASM front just because we've got all these integration activities happening that we need to get done. And so there's not room to cut those types of things. But I think on average, the next couple of years, we should hopefully have an opportunity to do better than the industry average on cost, just given some of the synergies and things of that nature that we're doing.

Great. And what's the timing in terms of getting the labor groups combined? How long does that take?

Yes, there's no set time. These are just regular labor negotiations. They're just slightly different than normal. But with Virgin America, I think the fastest deal we did was 12 months post-acquisition and then the longest one took 36 months. So probably nothing this year. I mean, I could be wrong, it would be nice to get something across the finish line this year, if we could, but there's a chance for some of them to happen next year, and there might be some of that take a little bit longer. But we're currently bargaining with 3 of the unions right now. So we've already started the process so I can keep that off, which is good.

Okay. Last question for the -- for me for this morning. I heard over the past few days, I mean, Boeing is kind of getting back on track from a narrow-body delivery perspective, maybe a little bit less so wide-body, but obviously, you're all narrow-body order book right now? Any -- what are you seeing on Boeing?

Yes. I think similar commentary, I think it's been good. I think we've unfortunately been in the habit of adding a lot of extra buffer to when we believe we're going to get airplanes in the last 2 years. And currently, they're delivering ahead of some of those buffers, the time we think we'll get it versus when we put it in schedule. So all good on that front. I actually think on the 787, things have been good there as well, and we have 2 more to come this year. So at least for the ones that we're taking, things have been going well. So yes, I think net-net has been positive. And, obviously, we are only 12 minutes down the road from where they build the 737s. And so we're on site a lot. We met with them last week. And so there's a lot of great progress that we've seen over the last 18 months, which is great to see, right?

It's refreshing that not having to ask an airline about tariff impact. So I don't have to worry about that with you guys. But unless there's a question in the audience, we're about a minute left, if there are no questions, we can -- yes, we got one?

Maybe if you could just give an update on the rebanking progress at Portland and Seattle and some of the wins and what you're seeing there?

Yes. Yes. I think we mentioned it on the call, but the Seattle rebanking is effectively done, I believe. We obviously had already been to Seattle a lot over the years. But connecting traffic through Seattle was up 15% as we speak. Some of that probably is coming through on these Tokyo flights, which is great. And then Portland is actually a really great story. A lot of that banking is starting to come to fruition this quarter. But future bookings on those flights are up 200% with connecting itineraries. And so Portland obviously had a lot of opportunity. Portland was a pretty flattened schedule previous to this. So it's going from being a flattened schedule to a true banked hub and the early returns are great, which is good. I think we've talked about Portland's being a relief now for Seattle, moving more domestic connections over Portland to free up Seattle for either local or international connectivity. So, so far so good. And, I mean, I don't know what our goal was, but 200%, that's a pretty big number.

And I think importantly, you'll really see the benefit come into the troughs. But we're going to fill planes in the summer from the Pacific Northwest. And so the power of banking comes in January, when you have the brand, you have the network and you're going to add those points of load factor that would have been difficult on a local basis.

Yes, maybe we'll take some of those Kansas City people going to Tokyo to Hawaii in January.

There you go.

Great. With that, thank you for joining us.