ALK JPM Industrials 2026

Ben, it's great to see you. Thank you so much for making the trip. You're certainly no stranger to the JPMorgan Industrials Conference. It's great to have you back.

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We've gotten several updates from your competitors this morning. The narrative is pretty good. In fairness, first quarter really didn't have that, given the refining lag, not that many days of really elevated fuel, but that's clearly been a challenge for Alaska in the past. How should we be thinking about the first quarter in light of everything going on in the world right now?

Yes. Well, thanks for having me, Jamie. Great to be here with everybody. At this point in time, we're not going to change our Q1 guidance.

And just to give you some context, if not for the conflict in the last few weeks, it would have been better than our midpoint on our Q1 guidance. I would say, consistent with the commentary of others, demand is the bright spot and it continues to be for Alaska. The -- but let's talk about fuel for us. Fuel, we're a little disadvantaged on the West Coast because of refinery margins.

I'm frustrated in California, two refinery margins closed in the last 6 months, one recently in San Francisco, in L.A., which really drives that volatility for us having fuel maybe $0.20 a gallon more than everyone else. And the bright spot was we got with the acquisition of Hawaii, we got fuel from Singapore, and we pay less per gallon for Hawaii fuel getting tankered there than we do on the West Coast.

And if you just pause that, you say like how could that be? But that's just to give you the context of the disparity. And so that's where we're with fuel.

But a few things that we're going to do on fuel is prior to Hawaiian, 65% of our fuel came from West Coast. post Hawaiian, it's 56%. And now we've got an initiative over the next 2 years to take that reliance down to somewhere in the low to mid-40s. And how we're going to do that is tanker fuel from Singapore to the Pacific Northwest to Seattle.

So right now, we're working with some partners to build the infrastructure to how to tanker fuel to bring that reliance down and reduce our gap of what we pay per gallon down from the rest of the industry. So it's an audacious plan that we're working on, but we could see somewhere in the order of hopefully, a $0.10 impact per gallon within 2 years if it works. So