Alaska Air Group, Inc.

Good morning, ladies and gentlemen, and welcome to the Alaska Air Group 2026 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 now like to turn the call over to Alaska Air Group's Vice President of Finance, Planning, and Investor Relations, Ryan St. John.

Thank you, Operator, and good morning. Thanks for joining us today to discuss our second quarter 2026 earnings results. Yesterday, we issued our earnings release along with several accompanying slides detailing our results, which are 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. Air Group reported a second quarter gap net loss of $76 million. Excluding special items, Air Group reported an adjusted net loss of $102 million. As a reminder, forward-looking statements about future performance 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 cost 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.

Thanks, Ryan, and good morning, everyone. Let me start by directly acknowledging our financial performance. While we beat our initial guidance for the second quarter, we still reported a loss. and we're not satisfied with that outcome, especially in what should be one of our strongest quarters of the year. At the same time, it's important to recognize what this quarter represented for our company. It was one of the most consequential and strategically important quarters in our history. We achieved the most complex technology milestone of our integration, successfully operated the largest summer schedule in our history and launched our first ever service to Europe. Thank you for joining us today. They delivered these milestones while continuing to provide outstanding care for our guests, and their commitment has been the driving force behind everything we've accomplished this quarter. While there was no way around the overwhelming fuel headwind, we saw an extremely positive earnings trajectory throughout the quarter that only deepens our confidence in our long-term strategy. The momentum we are seeing is clear. Unit revenue strengthened, unit costs improved, and we returned to profitability in June with a double-digit pre-tax margin despite fuel prices up nearly 70% year-over-year. Absent a fuel spike, this would have been a solidly profitable quarter, which underscores that our underlying business is running well and that Alaska Accelerate is working. With significant commercial momentum, industry-leading operational performance, and an integration that's paying off, combined with easing fuel prices, disciplined cost execution, and the man-holding firm were set up for a strong earnings inflection into the back half of the year. Operationally, the second quarter was a strong continuation and expansion of the themes I highlighted last call. We led the industry in on-time performance year-to-date, up five points year-over-year in Q2. At the same time, our team successfully completed the most complex milestone of our integration, migrating to a single passenger service system and establishing the industry's first dual brand PSS platform. Delivering industry-leading reliability while undertaking a transformation of this scale speaks to the strength of our operation and our people. Our net promoter scores continue to lead the industry and our guest experience is only getting better. With the reservation cutover behind us, guest satisfaction has climbed seven points since last quarter, led by Hawaii, which jumped 10 points. Our investment in Starlink Wi-Fi is driving that experience further, with guest satisfaction on Starlink-equipped flights 20% higher than non-equipped flights. The onboard portal is also allowing us to deepen loyalty, with nearly 75% of non-members signing up for Atmos accounts to utilize this benefit. With one-third of our fleet now equipped and the remainder expected by 2027, we're excited to be delivering a best-in-class onboard experience. On fleet, cabin retrofits across our 737s are now complete, adding 1.3 million incremental first and premium class seats, and demand is absorbing them well, with premium revenues up 15% in the quarter. Yesterday, we announced our plan to retire the 717 fleet beginning in 2028 and transition neighbor island flying to more modern, fuel-efficient Boeing 737s, bringing improved reliability, better economics, and more cargo capability as we continue investing in Hawaii. Cargo remains an important strategic growth opportunity for us. After restructuring our Amazon flying under a more profitable contract, We're now moving into the next phase of growth, adding four additional 737-800 freighters deployed across Hawaii and Alaska. This further strengthens our position as the only U.S. airline with a dedicated cargo fleet, and as we scale the international operation and capture the benefits of these investments, cargo will become an increasingly meaningful contributor to the profitability of our airlines. Our international long-haul launches from Seattle are off to a strong start. Atmos members told us they were excited to fly internationally with us, and it's materializing. Our new Rome, London, and Reykjavik routes are each carrying 50% or more Atmos members, an early signal of the loyalty demand behind this expansion. With every new long-haul route, our global relevance and perception grows, and we move closer to becoming Seattle's largest international carrier. And last but not least, our new premium summer car continues to perform well. Total account holders are nearly 50% above our expectation, with over 60% of new accounts this quarter coming from outside the Pacific Northwest. Taken together, this quarter is proof that our plan is working. Even against a volatile backdrop and an outsized fuel headwind, we made real progress on every front that matters. Building a business that can absorb short-term pressures and keep moving forward. Heading into the second half, we're set up well. Demand is holding firm, and our integration milestones are increasingly behind us. We look forward to continuing to deliver on the commitments we've made to our people, our guests, and our owners as we build scale, relevance, and loyalty for the long term. Before I close, I want to touch on a recent leadership announcement. Shane Tackett was promoted to President of Alaska Airlines, taking on responsibility for the commercial organization while continuing as CFO. Shane is a 25-year veteran of the company and has been instrumental in guiding us through the Hawaiian acquisition and execution of Alaska Accelerate. And this expanded role reflects the breadth of his leadership as we move into the company's next chapter. More broadly, we have conviction in our business model and the initiatives we put in place. are working, and the results we're seeing only strengthen our confidence that we're building a business model that is structurally capable of producing the $10 of earnings per share that we originally envisioned and laid out under our Alaska Accelerate plan. We'll discuss this and more about what's ahead for Air Group at our upcoming Investor Day on September 29th here in Seattle. And with that, I'll turn it over to Andrew.