Alaska Air Group, Inc. · NYSE:ALK
Alaska Air — Investor Day (December 2024)
55 slides from Alaska Air's investor day presentation, Dec 10, 2024
Slide 1: Accelerating our Vision of the Future
Accelerating cur Vision of the Future 2024Investor Day | December 10,
Slide 2: Safe Harbor
Safe Harbor This presentation may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. These statements relate to f
Slide 3: Industry rankings (#1 and #3)
#1 #1 #1 #1 #1 #1 #1 #1 #1 #3 #3 #1 #1 #1 #3 #3
Slide 4: Acquisition of Hawaiian Airlines drives greater scale, relevance, and loyalty
Acquisition of Hawaiian Airlines drives greater scale, relevance, and loyalty Top 25 Hub Expanded Network Brand Strength = Leading share in Hawai'i, $8B premium leisure hub = Top global leisure destination = Strengthens existing Hawai'i franchise served for 17 years Scale benefits from leading marke
Slide 5: Alaska Accelerate is set to deliver returns
Alaska Accelerate is set to deliver returns Strategy delivers $1 billion in incremental pretax profit by 2027 2025 Targets: Earnings per Share = 30% EPS accretion with EPS > $5.75 > $10 = No margin dilution with RASM > CASMex = Positive FCF generation* > $5.75 2027 Targets: " Deliver at least $10 EP
Slide 6: Industry factors of success have shifted in recent years
Industry factors of success have shifted in recent years ...have widened profit disparities 17-19 Avg Q3 Pretax Margin ™ 22-'24 Avg Q3 Pretax Margin Fundamental changes in Cost convergence with network carriers Cost reduction z z 18% Aircraft & infrastructure ULCC / LCC hyper growth eoratiaints 13%
Slide 7: Maintaining industry-leading margins requires building another key element of our resilient business model
Maintaining industry-leading margins requires building another key element of our resilient business model Resilient Business Model Rématkable Cost Balanee Sheet Car@)& Service Advaittage Strength Network
Slide 8: Our playbook is evolving, but Alaska will continue to own a unique niche in the industry
Our playbook is evolving, but Alaska will continue to own a unique niche in the industry ZMaska March 2022 Investor Day 7 iccelerate Opportunistic Building scale, relevance & loyalty 4-8% CAGR, above industry . < 4% CAGR the next few years Cost discipline protects relative advantage Low costs drive
Slide 9: Commercial strategy geared to deliver $800 million of $1 billion incremental profit by 2027
Commercial strategy geared to deliver $800 million of $1 billion incremental profit by 2027 Connecting our guests to the world Delivering a remarkable travel experience Creating a valuable loyalty ecosystem Growing the cargo business Unlock power of combined network Invest in & optimize key hubs Goi
Slide 10: Our combined network is now relevant to more guests than ever
Our combined network is now relevant to more guests than ever Before: Hubs were local-focused Now: Hubs are center of balanced network SEA PDX SFO West Osan Capacity distribution from hubs: Capacity distribution from hubs: 23% 24% 53% 41% 18% 41% North/South East West North/South East This is our pl
Slide 11: Optimizing Hawai'i network timing increases utility
Optimizing Hawai'i network timing increases utility, enabling access to 4 million+ more annual guests... Improved schedule options! to and from HI... ...creates #1 utility to and from HI PDX ® HNL North America utility (YE2Q24)? HA-only MAS+HA 08:05 11:00 Narrow 07:45 10:40 Narrow 08:40 11:35 Wide 1
Slide 12: Optimized brand & aircraft utilization unlocks $175M in run rate synergies
..combined with optimized brand & aircraft utilization, unlocks $175M in run rate synergies Higher Hawaiian utilization unlocks the ...which will be deployed to leverage Hawaiian equivalent flying of ~7 incremental aircraft brand strength in Hawai'i Hours per aircraft per day 2024 favors Daily seats
Slide 13: Beyond Hawai'i, we're investing seats in the fastest-growing West Coast markets
Beyond Hawai'i, we’re investing seats in the fastest- growing West Coast markets Design work for future SAN lounge underway Annual Revenue ($B) HNL il Portland San Diego 3.0% GDP CAGR 5.0% GDP CAGR Hees $11 The West Coast’s Evolve Portland into a Growth Opportunity as largest hub and our major West
Slide 14: via PDX via SEA 29.6 35.5
5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 via PDX via SEA 29.6 35.5
Slide 15: Implementing proven revenue management technology enables greater revenue capture
.. While implementing proven revenue management technology enables greater revenue capture and $125M incremental profit O&D RM leverages improved ...while continuous pricing maximizes network connectivity revenue opportunity Origin so $198 — Before: Pig Fare related to segment demand Any price point
Slide 16: Improved hub strength creating an international gateway in SEA
With improved hub strength, creating an international gateway in SEA drives next evolution in building relevance We are launching SEA international service with two new routes: __ International Gateway by 2030: Intercontinental Revenue Contribution Beginning May 2025 Beginning October 2025 Network -
Slide 17: Our Seattle hub is the largest connecting complex on the West Coast
Our Seattle hub is the largest connecting complex on the West Coast SEA offers the most connecting seats ...and the most destinations in N. America Daily N. America seats, YE Aug. 2025! N. America destinations, YE Aug. 2025? 46K 104 SEA SFO LAX SEA SEA SFO SEA LAX 7 Network - International
Slide 18: Seattle and the Pacific Northwest have strong intercontinental demand
Seattle and the Pacific Northwest, where we have the most relevance and loyalty, have strong intercontinental demand US > Asia + Oceania annual passengers (M) US > Europe annual passengers (M) | Pacific Northwest total 1.0 ) 6 Seattle 0.7 | Pacific Northwest total 1.3 10 Seattle 0.8 18 Network - Int
Slide 19: Seattle is closer to 90% of the world's population than SFO and LAX
Seattle is closer to 90% of the world’s population than SFO and LAX Best-served London Pari ; lon ¢ aris Tokyo 1% @ 11% ot! ' Rome e . . 10% Bangkok ; Best-served 8% ‘ Dy via SFO/LAX | Pe: Ho Chi = Ss * Minh City oe : SEA geographic benefit: % A ; : v Faster itinerary times v Lower costs to operate
Slide 20: Advantageous geography allows us to better serve many mid-continent cities
Advantageous geography allows us to better serve many mid-continent cities Distance advantage of Seattle to Tokyo Specific distance examples Kt Ga Boise (BO!) GE om os Bol UES 8% shorter vs SFO ° y 16% shorter vs LAX stc OM a MCI Kansas City (MCI) SFO ABQ s . 6% shorter vs SFO LAX AUS 8% shorter vs
Slide 21: International and domestic spend rankings
#1 #2 #3 #4 #5 International Spend Domestic Spend
Slide 22: Investments in premium seat products and merchandising drive $100M additional profit by 2027
Investments In premium seat products and merchandising drive $100M additional profit by 2027 Premium ASMs grew 5% between 2019 and We offer products across all segments of the 2023 while unit revenues grew by 30%? market with four distinct premium experiences Segmented Products 40-45% Saver 13% ($50
Slide 23: Our premium seat mix is set to approach network carrier average
Our premium seat mix is set to approach network carrier average, with further opportunity on widebody fleet in the future Existing fleet retrofits increase Our Widebody aircraft are under-indexed in business class and premium seat mix 3pts to 29%! lack a true international premium economy cabin % Pr
Slide 24: Our network is best positioned to sell premium seat products within North America
Our network is best positioned to sell premium seat products within North America Our North American stage length is ~46% Passengers are willing to pay more for longer than the Big 4 average premium cabins on longer flights - ) iecnelock Increase in Fare over Main Cabin 70% oFAAGASMs || Airline Stag
Slide 25: Global partners and oneworld
Global partners and oneworld LE Se, BRITISH AIRWAYS AMERICANAIRLINES CATHAY PACIFIC FIJI AIRWAYS FINNAIR ®@ © ® @ MALAYSIA AIRLINES, QANTAS QATAR AIRWAYS, ROYAL AIR MAROC ROYAL JORDANIAN SRILANKAN AIRLINES. ®©®@eOG@nen @ ‘AER LINGUS AIR TAHITI NUL CONDOR HAINAN AIRLINES, ICELANDAIR KOREAN AIR LATAM
Slide 26: Guest-first mentality & premium offerings drive industry leading Net Promoter Scores
Guest-first mentality & premium offerings drive industry leading Net Promoter Scores, 20+ pts above network carrier average Net Promoter Score All Guests Premium Guests il 53 52 50 31 29 | 62 59 52 46 44 42 18 ~ 69) G Competitor Set (9) (10) __. Network Carrier Average 26 Product - Experience
Slide 27: Commercial strategy geared to deliver $800 million of $1 billion incremental profit by 2027
Commercial strategy geared to deliver $800 million of $1 billion incremental profit by 2027 Connecting our guests to the world Delivering a remarkable travel experience Creating a valuable loyalty ecosystem Growing the cargo business Unlock power of combined network Invest in & optimize key hubs Goi
Slide 28: Air Group's current loyalty offering includes over 11 million active members
Air Group’s current loyalty offering includes over 11 million active members Alaska Mileage Plan >11M >3M >600k HAWAIIANMi active come program iles. cardholders elites members >$2B >15% >$12B annual cash of Air Group program remuneration revenue valuation Loyalty - Overview
Slide 29: We've already invested $25M in a modern, digital loyalty platform
We've already invested $25M in a modern, digital loyalty platform that can scale more quickly Anita Holiday 6 3 f ef 162019 — B ey’ * Tok* 854 «= Modernized Backend New Loyalty Mobile Streamlined Partner Loyalty Systems & Desktop Experience Content Integrations = 18-month, $15M investment in = $10M
Slide 30: Our loyalty platform is set to deliver step-out growth & $150M in incremental profit
Our loyalty platform is set to deliver step-out growth & $150M in incremental profit from program improvements Program Cash Remuneration Growth Cash from Incremental Initiatives pe lox cagR> CAGR ae om 98 Program Refresh $45M Synergy Capture $160M o» os Ti Card Product Expansion $165M National Platf
Slide 31: In 2025 we'll refresh our program, with investments driving incremental profit
In 2025 we'll refresh our program, with investments driving incremental profit of S20M New Milestone Rewards More Ways to Earn Rewards Improved Currency Offering A faster path ~ = to elite status for 2025. Loyalty - Refresh
Slide 32: Run-rate cash remuneration
90 100 160 Run-rate cash remuneration
Slide 33: Hawai'i market investment fosters material loyalty and cobrand growth
Hawai'i market investment fosters material loyalty and cobrand growth 70% Hawaii +10pts market Hawaii program market penetration cobrand 2025 2027 Penetration Today 2027 Replicating successful State of Free membership includes Air Group’s cobrand card Alaska (Club 49) community quarterly discounts,
Slide 34: We're launching an innovative Premium Card to amplify our growth
We’re launching an innovative Premium Card to amplify our growth, driving incremental profit of S40M Design Objectives Incremental Cash Remuneration $165M Supports premium positioning with a differentiated offering $110M é 20M Ensure strong resonance with affluent, $ next-generation travelers 2025 2
Slide 35: New Premium Card leans into unique benefits and global travel
New Premium Card leans into unique benefits and global travel Industry Leading Cardholder Proposition = Global Companion Award = Alaska Lounge & Wi-Fi pass = 3x miles on all eligible dining Certificate(s) allotment purchases = 3x miles on all eligible foreign = Accelerated path to elite status = Uni
Slide 36: Building national relevance is key to igniting program growth
Building national relevance is key to igniting program growth and will drive incremental profit over time All-new loyalty platform brand, visual identity, and signature moments More Brand Relevance 24 global airline partners now sold on alaskaair.com with more to come More Content Relevance More Mor
Slide 37: Reimagined loyalty platform launches in 2025
Reimagined loyalty platform launches in 2025 Significant Unlock by 2027 Program Refresh: Rolling out now > 30% growth in program cash remuneration Synergy Capture: Rolling out now > 50% growth in active program members > $150M incremental pretax profit from initiatives
Slide 38: Cargo business set to expand in strategic importance to deliver $150M incremental profit
Cargo business set to expand in strategic importance to deliver $150M incremental profit $60M Cargo Business Unlocks Combined network improves schedule quality and a a a <= profitability = 3x more connecting markets (6k > 18k lanes) = Close gap on widebody belly performance vs. $35M industry (~3k lb
Slide 39: Innovation is in our DNA: Rooted in business needs
Innovation is in our DNA: Rooted in business needs, we elevate the guest experience with emerging tech ey fea offer Tap-to-Pa Metis i use Al scheduling of optimization sei ig ing fer GenAl arch tool eee Mt mM Ox 2 First Airline to: AU AC : my YY ad ee 3 2) oT lead in digital aa identities launch iPa
Slide 40: Modernizing our platforms has increased speed to market
Modernizing our platforms has increased speed to market, delivering business value along the way From (0% Legacy in ‘22 to O% Legacy by ‘25 Bradley, we have deals for you @°2ee° and @6@@ J @@®q © Frictionless Day of Travel Experience Mobile App as Global Travel Companion Personalized Selling across
Slide 41: Alaska Star Ventures leverages industry innovation to deliver business value
Alaska Star Ventures leverages industry innovation to deliver business value & shape the future of aviation = Balanced portfolio of targeted, high-quality investments = Wholly-owned, self-perpetuating that are relevant to our future and good for consumers = Dedicated Corp Dev leader with deep indust
Slide 42: Portfolio companies advance efficiency & performance, improve guest experience, reduce climate impact
Portfolio companies advance efficiency & performance, improve guest experience, and/or reduce climate impact Al-enabled aircraft turn visibility and optimization Hydrogen-Electric Powertrains Twelve Carbon Transformation, Power-to-liquid fuel JetZero Blended Wing- Body Aircraft
Slide 43: Al-enabled aircraft turn visibility & optimization provides operational efficiency savings today
Al-enabled aircraft turn visibility & optimization provides operational efficiency savings today A ASSAIA = Al-powered computer vision data from tarmac cameras monitor and analyze ground ops, tracks events in real time = Data-driven insights and automation provide actionable insights and predictive
Slide 44: Zero-emissions powertrain with defined path to certification
Zero-emissions powertrain with defined path to certification, testing retrofit for retired Alaska regional aircraft | | Z=ROANVIA * Electrification backed by hydrogen fuel cells * Retrofit and line-fit options for many popular commercial aircraft models = Founder: Val Miftakhov Compan = Operations:
Slide 45: Transforming recaptured carbon dioxide into sustainable aviation fuel
Transforming recaptured carbon dioxide into sustainable aviation fuel with 90%+ lower lifecycle carbon emissions —__ twelve Carbon transformation: converts CO2, water and Tech renewable energy into hydrocarbon products from Renewable Energy fabrics to fuels S = “E-Jet SAF” is a drop-in power-to-liqu
Slide 46: Blended wing-body aircraft design delivers up to 50% better fuel efficiency
Blended wing-body aircraft design using existing engine- technology and delivers up to 50% better fuel efficiency JetZero | | Existing narrowbody engines powering widebody- size airframe; all commercial off-the-shelf inputs Innovative aerodynamics drive efficiency Founders: Tom O’Leary and Mark Page
Slide 47: Expanded investment approach with UP.Labs focuses on direct business value
Expanded investment approach with UP.Labs focuses on direct business value & long-term equity creation UP.Labs is a first-of-its-kind venture lab; part of the UP ecosystem Business Model Leadership Team = Identify Alaska’s most pressing challenges = UP. Labs: John Kuolt, Katelyn Foley = Launch start
Slide 48: Launched first company in Q4 2024: Odysee
Launched first company in Q4 2024: Odysee drives Al-enabled schedule optimization Odysee launched October 2024 Additional companies launching 2025-2026 = Al-powered schedule planning and decision-making tool with tradeoff analysis and stress test simulation Solution #3 launch = Benefits include sche
Slide 49: Synergies begin to unlock in earnest in 2025, with at least $500M captured by 2027
Synergies begin to unlock in earnest in 2025, with at least $500M captured by 2027 Synergy capture Network ~$175M 3 $500M+ o . > * Increased cardholder spend/ & Loyalty $90M penetration, better card economics » Network synergies and access to 3x Cargo ~$35M new shipping lanes y ~$200M a rier ——! x i
Slide 50: Alaska Accelerate unlocks clear path back to target pretax margins of 11% to 15% by 2027
Alaska Accelerate unlocks clear path back to target pretax margins of 11% to 15% by 2027 n profit improvement by 2027 + lapping $350m one-time headwinds [ ii) $500M Rev: 850m 1N-A3% $350M | Cost: $200m Max: $223m. S-4% HA: $130m 2024 Pro One-Time Synergies Premium Cabin Double Digit Newly Announced
Slide 51: Return to target leverage levels by 2026 and $1 billion share repurchase program
..With return to target leverage levels by 2026, and incremental share repurchase program of $1 billion executed by 2028 Balance Sheet Targets Share Repurchases Debt to @qeoam Se EGE New Share Repurchase Program - Forecast “” In Millions Yd [ 2027 2024F 2025 2026 2027 % of Market Cap 7.0% 10.5% 14.0
Slide 52: EPS to reach $10 by 2027
EPS to reach $10 by 2027, with acquisition expected to be 50% accretive to EPS in 2025 : Q4 2024 FY 2024 FY 2025 Metiic Guidance Guidance Guidance ep er Capacity Up ~1.5% Up 2-3% RASM Up mid-to-high- single digits CASMex Up low-double digits Economic Fuel Cost per Gallon $2.55 to $2.65 ~$2.55 EPS $0
Slide 53: Alaska Accelerate positions us to be an industry winner
Alaska Accelerate positions us to be an industry winner Continued cost advantage Product & experience aligned with guest demand > eper relevance & loyalty True global presence enabled by widebody fleet $1 billion incremental profit by 2027
Slide 54: We are focused on four critical milestones to complete the integration
We are focused on four critical milestones to complete the integration Single Loyalty Single Operating Single Passenger Certificate Service System Joint Collective Bargaining Agreements 2H 2025 Q4 2025 Q2 2026 2025-2027 Bringing the two loyalty Single airline from a FAA programs (HawaiianMiles regul
Slide 55: Approximately 53% of $400-500M expected one-time integration costs spent through 2024
Approximately 53% of $400-500M expected one-time integration costs spent through 2024 Integration Cost Forecast Types of Spend i a ° 2023-2024 2025 2026 2027 Technology integration Change in control and employee retention / severance Investment banking and financing fees Legal consultation Non-IT co