Alaska Air Group (ALK) investor relations material

Strategy and integration

• Strategy shifts from cost leadership, scale and low fares toward commercial leadership, differentiated revenue and loyalty, while retaining a relative cost advantage; Hawaiian added scale, global reach, premium products and a unified loyalty platform.

• About two-thirds of the $1B incremental-profit goal is achieved; Atmos Rewards launched and the airlines combined operating certificates while maintaining strong NPS and on-time performance.

• The roadmap moves from building foundations in 2024–25 to activating growth in 2026–28, then scaling and harvesting value in 2029–30.

• Alaska Accelerate’s four ambitions are unchanged; the focus shifts from integration to growth engines and value capture, with new initiatives expected to add 2–3 margin points beyond the original plan.

Financial outlook and capital priorities

• The remaining $1B of Accelerate value is expected in 2027; ex-fuel EPS is expected to grow $3–$4 next year, with EPS potential above $10 at $2.50/gal fuel and $5–$6 at $3.25/gal.

• Long-term targets remain 11%–13% pre-tax margins, >$10 EPS, double-digit ROIC and ~1.5x net leverage; FCF conversion targets rise from ~5% at $5.50 EPS to >60% at $10 EPS.

• Fleet plan supports ~4% annual capacity growth; CapEx is $1.9B in 2026, $1.6B in 2027 and ~$1.7B annually in 2028–30, averaging $1.75B through 2030.

• Balance-sheet strength is the first capital-allocation priority; leverage is targeted below 2x and ultimately near 1.5x, debt-to-capital toward 50%–60%, with dilution offset and rapid deleveraging as earnings recover.

• Fuel remains the largest near-term earnings headwind; a multi-year West Coast fuel strategy represents up to 1 point of long-term margin opportunity.

Revenue diversification and network growth

• By 2030, diversified revenue is targeted above 60% of total, including premium revenue above 40%, loyalty cash near $4B and cargo revenue near $750M.

• Seattle plans 15 long-haul destinations/routes by 2030; long-haul capacity is targeted at 15% of ASMs, up 7 points from 2026, with international service growing to 10 destinations by 2028.

• Seattle growth levers include larger aircraft, more frequencies, Paine Field expansion to 16 daily departures next summer and optimized hub flows; plans include Atlantic and Pacific joint businesses and at least 8 points of local-share growth.

• International unit revenue growth outpaced domestic by 9 points since 2019; long-haul managed-corporate share is >2 points above fair share, and ~30% of leisure guests are new.

• Portland local O&D share rose 5 points and flow traffic grew 5x in 1H26 vs. 1H23; San Diego targets >5 points of share growth by 2030.