Good morning. My name is Brandy and I will be your conference operator today. At this time I would like to welcome everyone to the Alaska Air Group first quarter 2008 earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speakers’’ remarks there will be a question-and-answer session. (Operator Instructions) I would now like to turn the call over to Shannon Alberts, Managing Director, Investor Relations. Please go ahead, ma’am.

Hello everyone and thank you for joining us for Alaska Air Group’s first quarter 2008 conference call. Alaska Air Group Chairman and CEO Bill Ayer; CFO Brad Tilden; and Horizon Air CEO Jeff Pinneo will provide an overview of the quarter after which we’ll be happy to take questions from analysts and then from journalists. Other members of the senior management team are also present to help answer questions. Today’s call will include forward-looking statements that may differ materially from actual results. Additional information on risk factors that could affect our business can be found in our periodic SEC. Our presentation includes some non-GAAP financial measures and we provided a reconciliation between the most directly comparable GAAP and non-GAAP measures on pages 8 and 11 through 13 of our earnings release. As we reported earlier this morning the first quarter 2008 Alaska Air Group lost $35.9 million or $0.97 per share versus a net loss of $10.3 or $0.26 per share last year. Excluding the impact of fuel hedge mark-to-market adjustments in both periods Air Group reported a net loss of $36.3 million or $0.98 per share which compares to our first call mean loss estimate of $0.97 per share and to our 2007 loss of $0.39 per share. One of our fundamental objectives is to achieve an acceptable return on invested capital. According to our calculations Air Group has earned a return on invested capital over the last four quarters of 5.5% well below our goal of 10%. Additional information about expected capacity changes, unit costs, fuel hedge position, capital expenditures and fleet count can be found in our investor update which is included in our Form 8-K and on our Investor website at www.AlaskaAir.com. Now I’ll turn the call over to Bill Ayer.

Good morning everybody. Well the big news today is the Horizon fleet change so after I make a few comments I’ll turn the call over to Jeff to explain the rationale for our decision. Then we’ll hear from Brad for an update on Alaska and the Air Group balance sheet. With five airlines declaring bankruptcy within a two week period, oil closing at $118 yesterday and growing concerns about the economy to say that the airline industry is facing some of the most difficult challenges in its history is an understatement. Some analysts have likened the headwinds facing the industry today to the aftermath of 911. It remains to be seen to what degree those predictions play out but as I think you have already concluded a significant change is ahead for our industry. Many now believe that $100 plus oil is here for the foreseeable future. That’s also our view and the actions we are taking reflect this outlook. In addition to the Horizon fleet transition today we are also announcing a number of changes at both carriers in response to the current economic environment. When fully implemented these changes could generate up to $150 million in revenue and cost savings. We plan to devote most of the time this morning to talking about these actions. Reporting an Air Group adjusted net loss that is more than double lost year’s is disheartening in light of the tremendous efforts and sacrifices our people have made to control costs and to improve our operation. The fact is that the tidal wave of rising fuel costs has outstripped our progress. Our balance sheet and fuel hedge portfolio combined with our progress on costs have put us in a good relative position and they allow us to make considered, rational decisions for the…

Good day everybody. Well given the announcement we made today regarding our move to an all Q400 fleet I’ll be spending the majority of my time on that but before I get into that I’d like to spend just a minute on our first quarter results. As reported Horizon posted an adjusted pre-tax loss of $18.1 million compared to a loss of $1.2 million in the same period last year. Our revenues grew 9.7% on 1.8% growth and capacity. System wide RASM was up 7.7% and as in previous quarters mix played a key role in the year-over-year comparison as aircraft that were flying low RASM, low cabin emissions for Frontier last year returned to our native network. If we look at this by line of business brand capacity was up 29% and RASM was down 7.9% due to lower yields and purchase capacity was up 15.8% while RASM was down 1% due to strong load factors which offset lower yields. This year of course the Frontier Flying is gone. As we replace our 37 seat Q200 line with 76 seat Q400s we expect lower RASMs however the [CASM] on the Q400 is much lower than the Q200 it’s replacing so profits should improve. I would like to note that the high ASM growth for both the brand and CPA entities came about due to the rapid return of the Frontier Jet Express aircraft. This capacity growth has affected our revenue performance will be adjusted as part of the move to a single fleet of Q400s. We have recently announced service between Los Angeles and Flagstaff, Arizona and between Santa Rosa and Las Vegas both of which will be funded from frequency trends in under performing markets. In an effort to recoup some of the cost increases brought on by…

Good morning everyone. With deals stated on an economic basis Alaska Airlines reported a pre-tax loss of $37.7 million for the quarter compared to a loss of $14.3 million in 2006. The increased loss was simply a result of fares not keeping pace with rising fuel costs. Mainline passenger revenue increased 11% this quarter on a 6.8% increase in capacity and a 4.1% increase in passenger [PRASM]. The quarterly PRASM increase was driven by a 3% increase in load factor as our yields were flat. Our PRASM performance lagged the domestic industry by about 2.5 points for the quarter but PRASM for the month of March was slightly better than the industry as our relative performance improved steadily through the quarter. Additionally our yields were diluted by the 6% increase in our average trip length. By themselves our two Portland transcons and three Hawaii routes depressed our system yield by about 3 points and our system RASM by about 2 points so adjusting for these our RASM performance was on par with the industry. As is the case at all airlines our revenues are simply not high enough given current fuel costs. We’re turning over every rock in our effort to address this problem and today I’d like to talk about three areas that we’re working. Schedule adjustments, fee increases and changes in pricing and yield management practices. Let me spend a minute on each. First schedule, as Bill said we’ve been actively managing our schedule to improve our profits. Over the last couple of schedules we have completely exited the San Diego-San Francisco and Orange County open markets as well as several Horizon markets. Additionally we’ve reduced frequency in a number of other markets, reviewed the aircraft to add new TransCon from Portland three daily trips to Hawaii and…

We’re happy to address questions from analysts at this time. Brandy would you please assemble the roster for us?

(Operator Instructions) We ask that you please limit your questions to one and one follow up. We’ll pause for just a moment compile the Q&A roster. Your first question comes from Ray Neidl. Raymond Neidl – Calyon Securities (USA), Inc.: Could you give us your overall thoughts in an industry that may be consolidating where you’re going to have much bigger airlines out there. I know you have a partnership with a lot of them, but is there a place for a special niche airline like Alaska in a world of giants? What’s your thoughts on that?

Absolutely. I think you’re right about consolidation and frankly we think from an industry standpoint that’s a good thing. But we think we have a very significant role to play almost regardless of what happens with the industry and specifically the partnerships that we have with as you know the Switzerland strategy with so many carriers is based on the win-win situation that the relationship works for us and works for them and we think those things will continue. They’ll stay in place as long as there needs to be mutual benefit. So we don’t see anything there. We think Seattle is poised as a place for more agent service for example and looking forward to that. We just think we’re well positioned no matter what happens with consolidation in the industry and the focus is on the things that we’ve talked about here. It’s about fleet and it’s about cost management and customer service and we’re making progress on all those fronts. Raymond Neidl – Calyon Securities (USA), Inc.: I got on when you were talking about the Q400 which is a great airplane, I’ve ridden on that and it’s very comfortable from the passenger viewpoint. But my question is with Horizon here, I know you have to make major changes there to cut costs and get those guys back to profitability and these high fuel costs, but by going to one fleet type, a fairly big airplane like the Q400, is that going to preclude you from going into a lot of smaller markets or developing newer markets that previously you had developed to turn over to Alaska Air?

I’ll start then Brad may want to chime in. I think the answer is that it’s different. That is for as many markets on the fringe, on the very low end for instance and maybe some at the higher end that might not be optimally served by the Q400, we think going forward there are new opportunities as well that more than balance that. I think it’s fair to say that as we go forward there are a few markets that are characterized currently by low frequencies with Q400s and low densities that are going to be a challenge for the Q400 to serve appropriately and so we’re going to work it hard. Our commitment is to work hard to preserve levels of serve whether it’s through us or vis-à-vis Air Group and another third party smaller operator to ensure continuous service into the communities we’ve been a part of for an awful long time. And we see that mainly on the low end.

The toughest thing is going to be those markets that are closer in with a smaller number of frequencies today. I think a lot of Horizon’s capacity today is represented in the marketplace. Seattle those markets that are closer in with a smaller number of frequencies today. I think a lot of Horizon’s capacity today is represented in markets like Seattle-Spokane and Seattle-Portland. Seattle-Portland is 30 plus frequency so you have an opportunity to up-gauge and still have really frequent service passengers.

We’re learning as we go forward when we talked about frequency trends, Ray. In most of our markets one or two flights off of what was a six flight pattern is a really healthy thing to do. We’re not losing traffic, it’s still a very convenient pattern, more for local passengers in the network and the lower unit costs in the Q400 make it a much better proposition. All in all we’re pleased with how that progresses and as we learn, we can also take a look at other things that we’re not doing today that in years in the future might pencil out profitably too. Raymond Neidl – Calyon Securities (USA), Inc.: Would you consider contracting out to a third party for smaller aircraft?

Yeah, Ray, we may well do that. We don’t have a huge need for that. It may be something like three our four airplanes for particularly small cities that feed Seattle and Portland. It may be that our need for that is so small that we have trouble attracting someone but that is actually part of our thinking, to look at someone’s Delta, serve some of the particularly thin city fares that feed Seattle and Portland.

That’s not unlike what Alaska does today in the state of Alaska.

Sure.

Your next question comes from Mike Linenberg with Merrill Lynch. Michael Linenberg – Merrill Lynch: Couple questions here, maybe as a starting point with the new competition coming into the LA and San Francisco to Seattle market at the same time that you guys are going to hourly service, I’m not sure if you’ve actually started the hourly service, what are you seeing with bookings and how are loads holding up and of course should we expect that pricing in that market will be depressed given the competition and the additional seats?

Maybe I’ll start and maybe we can get Gregg to offer some color on this as well, candidly this is one part of our network that there is going to be a little bit of pressure with respect to capacity. We’re going at 13 flights into LAX last summer and we’re going to 15 this summer and I think San Francisco we had seven and we’re going to eight. We’re increasing gauge a little bit in these Virgin American markets specifically and responsive air service which is four and three. I think it’s important to keep in mind that in the bigger scheme of things we have 500 flights a day and a lot of our markets’ capacity is flat or down but there is a fight going on up and down the West Coast from Seattle LAX and Seattle to San Francisco and we don’t intend to give anything in that fight. Those margins are extremely important to us and we will defend them to the end. Michael Linenberg – Merrill Lynch: I don’t know if Gregg is there.

Maybe another thing I’d say is that it’s a bit too early to tell the impact of Virgin on our service. They only started in the month of March in one city pair and we saw no impact. In fact our Bay area PRASM in the month of March exceeded our system PRASM improvement. There is [missing audio 00:03:13] we had Eastern moved into it and we netted from that. As we look forward in both LA and San Francisco in the next quarter we’re seeing demand in SoCal roughly flat, identical load factor roughly flat year-over-year and in the Bay area a little bit of softness but nothing that’s very concerning and I think as we say that I stated in the last quarter’s conference call we’re in this fight to win and we know how history has played out elsewhere in the country and we don’t intend for that to happen here. Michael Linenberg – Merrill Lynch: My second question, and this is either to Jeff or Brad, I think Jeff you had commented about Horizon as you think about each airplane coming in there are these return on investment [inaudible] I see hurdles. Can you share with us what those hurdles are or even just give us a rough range as an investor or as one who follows the company when you look at historically the returns generated by the Horizon business? And I realize there could be some transfer costs, call it inefficiencies between the two models, but historically it has appeared from the outside that you have been in violation or not in – I was going to say violation or not able to meet those return prerequisites. Based on what it’s been historically, it seems like you would take no additional 70 seaters. I know it’s kind of a philosophical question but it does sound like you are on to the right track going to a single aircraft type. That does seem to be what will make that model work.

It’s a great question, Mike, and I think it’s not only philosophical, I think it’s very pragmatic relative to getting smarter about our business, the deployment of capital within Alaska Air Group and what’s standards any investment decision needs to make. I know you’ve heard us talk increasingly with detail about [inaudible] and over the last few years and I think the standard that I referred to is the one that old Alaska and Horizon with the guidance of our Board are applying to any investment decision going forward. So with that said, as you look at opportunity out there, it’s a difficult challenge. You’re looking at trying to forecast the returns on a 17 year commitment to an asset in a volatile environment. There is certainty to that. I can say is that we’ve gotten an awful lot smarter about how we calculate the prospects, the range and what the downside risks are. What you can take I think a lot of confidence in is that the analysis and it’s much more refined, sharper the standards are high. We understand there’s risk. In this business getting out of bed in the morning has risk to it, so that goes with the turf. But we’re being wise about it and we’re being conservative and it’s been a great collaborative effort. You guys want to add anything that?

Mike, I guess we would agree with the premise of that question, that returns on capital at Horizon today are not what they need to be. I think they’re about 2% in terms of the way we would calculate that. I’m not sure that we want to actually share our own model in terms of what this does for us because candidly it just may not be as precise as it should be to share with you. What we look at takes a tremendous distance towards getting towards appropriate returns on capital with the fleet move by itself. The other important thing in your question, while there is some capital investment involved in getting to more Q400s, I actually think the invested capital base at Horizon will stay flat or go down as the capital associated with the Q200s and CRJs comes out of the base.

When we have substantially improved returns.

Right.

We think we’ve a line of sight to how we get there in terms of the goal we talked about.

Importantly we have a discipline about this that several years ago we didn’t have and I think a lot of carriers are probably in that same boat. As we look at from the Board’s perspective allocating scarce capital to the two entities with a standard and we’re getting better at our forecasting of returns and we have a very strong discipline about this going forward and I think that’s really important.

Your next question comes from Peter Jacobs with Ragen Mackenzie. Peter Jacobs – Ragen Mackenzie, a Division of Wells Fargo: First question I guess for Brad, could you expand a little bit on your comments regarding the $10 in extra average fare that you’d need for break even and then the $25 per share to make he acceptable returns that you want. Is that relative to the first quarter or is that how you look at it over the entire year? I’m just trying to understand how that maps into the seasonality of the business, so on and so forth.

Candidly, what we did with that quick and dirty analysis was we assumed the revenue performance for the last three quarters of the year was similar to the first quarter and we assumed the capacity growth and the cost guidance that we’ve given you and then we took fuel out at whatever crude assumption you have and you know our hedge positions, but we basically took fuel out and we took the 350 million gallons that we think we’ll burn and multiplied that by $3.60 a gallon which is that’s the fuel cost at $118 a barrel crude, $0.70 crack and zero hedges. And if you do that and have the same passenger count that’s in our forecast, you needed to get $10 a passenger to bring the P&L of Alaska Airlines to zero and you needed $25 or $26 a passenger to bring the P&L to a 10% margin. Peter Jacobs – Ragen Mackenzie, a Division of Wells Fargo: I’m glad they have transcripts of these calls because that’s how we’re going to have to follow that. Second question is the $0.70 refining margin that you talked about for the crack spread, now that’s not including the taxes and fess you pay, is it? Or should I think about another $0.14 on top of that?

No, the $0.70 does not include taxes and into plane and that’s about $0.13 a gallon. Peter Jacobs – Ragen Mackenzie, a Division of Wells Fargo: That’s how then you get to this $3.63?

Right. Peter Jacobs – Ragen Mackenzie, a Division of Wells Fargo: Okay, because I couldn’t get the math to work.

Peter, we said in the notes that that’s a figure that people should just be really, really reacting to. Over my time at Alaska the crack spread has been in the range of $0.07 to $0.15 and so to see it go to this level today is very, very difficult for folks like us that depend on this commodity to try to make things work. It’s difficult to understand why it is where it is. Peter Jacobs – Ragen Mackenzie, a Division of Wells Fargo: Also, could you talk a little bit more just about some of the competition and how you’re holding up in other parts of your system, maybe TransCon, Mexico and areas like that and what kind of competitive reaction you’re getting with your flights to Hawaii?

I would say our advanced book load factor is trending up year-over-year in each of the next couple of months and apart from some softness as mentioned you mentioned earlier in the Bay area the rest are all trending ahead. We’re delighted with the response we’ve seen in the blind markets. I think on a go forward basis perhaps it will be helped a little bit by the reduction in capacity to the Islands generally from the West Coast. Our advanced bookings are very strong. Clearly in that market as in others we need to get a little bit more ticket price to make our return targets. Mexico is strengthening, that largely a function of reductions in competitor capacity there and the TransCons look to be strong again for the summer. Peter Jacobs – Ragen Mackenzie, a Division of Wells Fargo: One last short one please and that is what kind of sense do you have in terms of when we’ll see some of these fare or revenue initiatives start to take hold? Is that something that we should look at as being maybe material in the third or fourth quarter this year or should we be a little bit more muted in our expectations?

The figure we provided was $30 to $40 million annually which would be roughly 1% of the company's revenue. I guess if I was thinking about that I would say you should begin to see that roll in in the third quarter in terms of having any real significant impact. We’re thinking a little bit towards the latter part of the second quarter.

Your next [audio cuts off 00:01:54] Frank Boroch – Bear Stearns: Bill, I was wondering if maybe if you could share have you had opportunity to communicate the slower growth plans with labor? Or maybe Jeff? You could both comment on this and how does that impact their expectations and maybe the peace of negotiations?

At Alaska, Frank, I think it’s been an evolving story and as we said a while back this year was planned to be upwards of 6% capacity growth and that’s now scaled back to 2% and we’re through the biggest part of that with this quarter and we go back to some very slow growth rates for the balance of the year. We do make a habit of keeping all the employees informed about what’s going on and I think this is pretty visible. People have friends at other carriers, they know what’s going on, they know the risks in the industry and people are very concerned and I think by and large from what I’m hearing are appreciative of the actions that we’re taking to maintain a relatively good position here for the company. And what I’ve noticed frankly is people working together more, decisions are easier to get to in this kind of environment frankly and we’re finding better everything about our company. The differentiation here is customer service and we’re seeing lots of indications that that’s getting even better. I think the on time performance is a further indicator of that, the improvement there. I think we’ve communicated well and we do that as an ongoing thing and that Jeff has the additional piece of the Q400s and he’s already been working that communication with his folks. Frank Boroch – Bear Stearns: Lastly, as you see the need to make the fleet changes, what’s the bigger driver? Is this going to help you or this is going to hurt the 2010 CASM X fuel goals but you should see a larger benefit on the unit revenue side? How do you foresee getting some of the fixed costs out that previously you hadn’t thought about? Male Executive Are you asking more about Alaska or Horizon? Frank Boroch – Bear Stearns: I guess I was speaking about both, given that the growth trajectories are now changing but the 20/10 plan as being more about the Alaska and the 7.25 CASM figure.

We’re probably not in a position to provide a lot of update on that, Frank. Obviously new capacity is some of the lowest CASM capacity you have because we’re bringing on new big airplanes with lots of seats and a lot of them have been flying in longer haul missions so that helps. It looks like in an environment like this you have to do everything you can possibly to hold your business together and so there may be more diligence and more attention with respect to the other side of the business. I think net-net our guidance for this year is still 7.5 and we are quite comfortable with that guidance when we’re in a position to provide some guidance, some views towards 2009 we’ll do that.

Your next question comes from Gary Chase with Lehman Brothers. Gary Chase – Lehman Brothers: I apologize, I’ve been trying to listen to some of this consolidation hearing so if you said some of this, I do apologize but I was curious, one of the things that everybody wants to do in an environment like this, fuel has moved $30, or jet fuel has, in such a short period of time, everybody is now moving to adapt to this environment and I think to a lesser extent than others, you’ve got to act but to a lesser extent than others given the hedge position you have and the balance you’ve got. I guess I’m just a little surprised to hear that what you want to do now is despite this rapidly changing environment which you acknowledge is true to invest a lot of additional capital in the business. Can you talk to what the incremental investment is to do this fleet transition and how you think about this concept of maybe at a time like this it might make sense to disinvest in the business a little bit which is what I think some of the competition is trying to do and/or at least keep some powder dry to see what shakes out relative to consolidation in other things. Is this constraining in any way?

Gary, we might ask Jay Schaefer, our Treasurer, to comment on this. He’s been real involved on this project. John One important I think point to make in particular with Horizon is while there are 15 firm Q400s coming in as they move to a single fleet as the Q200s and the CRJs leave that their invested capital will be either flat or likely down from where it is today. For Alaska we are getting through our single fleet transition to all 737s so like last year this year we have a heavy capital expenditure amount but that’s going to start to decline as we get through the single fleet transition. So as we look into 2009 and 2010 cap ex begins to fall pretty dramatically and I think that’s appropriate given where fuel is today but after we’re done with both fleet transitions as Bill said in his opening remarks, we’ll have the two most fuel efficient airplanes in their class and given where fuel is that’s probably a pretty appropriate place to be for an airline. Gary Chase – Lehman Brothers: Just a couple follow ups to that, invested capital will be down, that means you expect proceeds from aircraft dispositions to offset the incremental cost of buying the Q400s? John Horizon fleet will shrink from roughly 65 airplanes down to between 48 to 53ish and so that’s part of it. Gary Chase – Lehman Brothers: Presumably this is you think a superior alternative to just downsizing the Horizon fleet and waiting to see what plays out? I guess the follow on question is what fuel price would you not contemplate?

Maybe just to be clear, Gary, there is actually no change on Alaska Air Group’s capital spending as a result of this announcement. Prior to this decision we had a firm order for 15 Q400s. Those 15 Q400s will come in and we will have 48 Q400s on the property. The real announcement today is we’re basically saying that plus or minus a couple of airplanes is the fleet that we see at the moment. And then we retire the Q200s and we retire the CRJs and they come out of the capital base. In terms of what fuel price or what might change our thinking about this, I think the proviso that is important is the re-marketability of the CRJ-700s. The economics of this decision are based on us having certain success getting out of that fleet type and I’m not sure at a point that we can talk about exactly where the threshold is but we do need to find a market for those 20 airplanes for this strategy to work.

We stay close to that Gary, you don’t know until you actually get out and put a sign on these things but all indications are that worldwide the market for the 70 seat bus aircraft is still very robust. You get to the place that they just described, flat or reduced invested capital, incremental capital announcements made here and fleet size that’s going down from 67 to somewhere around 50. That’s the story.

Your next question comes from Jamie Baker with J.P. Morgan. Jamie Baker – J.P. Morgan: I saw you did have handful of MD80 cancellations recently. Just curious as to your level of confidence that you’re in complete compliance with the recent ADs on 737 rudders and fatigue issues.

We’re getting into Phase II of the FAA Special Audit as you know. I think we have a high level of confidence in the work but given the experiences that have occurred across the industry I guess we’re also prepared to work with the FAA in their inspections which go through June 30th and help them through evaluating our paperwork and our airplanes. Jamie Baker – J.P. Morgan: Second, you’ve historically shown a little more breadth of revenue acceleration from the first quarter to the second and most airlines in the business in an obvious reflection of where you fly, I realize there’s some extra noise this year, but is there any reason that we shouldn’t really assume a fairly typical level of seasonal acceleration? You’ve identified Southwest fare increases and a little bit of pressure in the Northwest corridor, but above and beyond that any reason they shouldn’t be in line with history?

I think that’s right, Jamie. If we talk about April by itself, the Easter thing was significant. The other thing that maybe affects us a little bit more than the others is April has 30 days and we ended up with five Tuesdays and Wednesdays which we have a little bit more exposure to the leisure market so that maybe hits us a little bit more than the other airlines. I think that maybe something you’re seeing in terms of why the April advances are different than May and June. In terms of the yield side, I think the industry is moving to get fares up and we’re following that trend and I just take my hat off to our folks down in the revenue management area. I think that good stuff is happening down. I guess the bigger issues is that is it enough with fuel where it is? I think it’s going to be good compared to last year. I think the seasonal trends will probably continue. It’s not going to be nearly enough for fuel is $118 a barrel. We’ll still work it as hard as we can.

Your next question comes from Daniel McKenzie with Credit Suisse. Daniel McKenzie – Credit Suisse: I had to hop off the call for a few minutes. I apologize if my questions have been asked, I wonder if you could talk about Alaska’s willingness to be a bidder for any assets that might come up?

Our focus is 150% on what we’re doing here at both Alaska and Horizon and certainly we’re going to pay attention as to what happens to the industry and if there are opportunities. Being relatively better positioned as we are gives us a chance to maybe look at some of those opportunities. But that’s such a broad question. We’re going to pay attention and continue to position the company for the best long term benefit. Daniel McKenzie – Credit Suisse: Separately, let me just go back to Horizon at this risk of kicking the dead horse, a number of legacy carriers are dumping significant numbers of RJs, so RF flying is presumably getting cheaper. I’m just wondering if you have a sense for whether the new fleet swap for Horizon will result in economics that perhaps are less than where RJ economics are already going today?

Dan, can you repeat the question? We just want to make sure we answer exactly what you’re asking. Daniel McKenzie – Credit Suisse: What I’m trying to get at it here is in terms of the economics of the Q400s and given where RJ economics are going, Express Jet is renegotiating its contract with Continental, there’s RJs that appear to be getting dumped on the market. The cost of RJ flying seems to be going down and I’m just wondering is your sense that the new Q400 flying going to be even more cost competitive than were RJ economics appear to be going now?

If it were all done by a third party, for example? Daniel McKenzie – Credit Suisse: Exactly.

That’s your question? Daniel McKenzie – Credit Suisse: Yes.

Maybe I’ll jump in here, Jeff and you could follow on or something. There is a chance that if you have a little bit of a [inaudible] view and said what is the lowest cost bid here, there is a chance that you can get this flying done for a lower cost, then this Q400 solution is going to work out. Our company is not always positioned to sell the lowest cost, lowest service end of the spectrum. I think this is going to be much, much more competitive from a cost perspective and it’s going to enable us to keep our brand together, keep the position we have for providing good customer service. We do believe that in terms of the long run business model and our ability to have revenues that exceed our costs and provide returns, it’s the best answer for us. I guess we can see that if you were just looking for the lowest CASM solution there probably is one out there that’s not this Q400 idea.

I know that the distinction when you mention RJ coming back and the distinction between the type of capacity that’s cutting back in the 50 seat versus the type that’s still in demand, the 70 to 90 seat and with as much as is coming back onto the market it’s not clear that any pricing that’s associated with putting those things back to work is going to be directly reflective of the cost either. A number of operators being put in a very tough situation of being handed back airplanes and such. Our view is we look at the Q400 and it’s competitive and virtually all those spaces particularly when we the benefits of single fleet and efficiencies that we’re moving toward there and then you add into that the synergies that we have within the brand the way that they’re a seamless product and everything else on the revenue side we think it’s a very competitive alternative to that. John I must might add the AK we had some charts that included fuel efficiency by regional aircraft and if you look at the fuel efficiency of the Q400 versus a CRJ-700 and in particular the 50 seat RJs that maybe the regional carriers are flying, this is a very, very, very competitive airplane given today’s fuel environment.

It’s about 22% better than the class of 50 seat RJs and even the [MBROW]170 that you referred to, it’s even better than that. Compared to our own CRJ-700 it’s about 18% better on a per passenger basis. Daniel McKenzie – Credit Suisse: If I could just throw one last really quick one your way, if I could just flip that question around, is there any demand since it is a specialized plane, is there any demand from other legacy carriers that could perhaps be an opportunity under the CPA arrangement for the Q400? John We believe that’s a strong possibility. We’ve had conversations. I think on a going forward basis the new efficiencies will have with this strategy cost possibly will make it an even more competitive alternative as other major partners are more interested in fuel efficient network support solutions. We’ll certainly keep those channels of conversation open.

I’m going to have the call move on now to the media portion and I’m turning the call over t our Managing Director of Corporate Communications, Caroline Boren who will conduct that portion of the call. Brandy, I’m going to go ahead and ask you to remind our media callers of the procedure for asking questions and then we’ll proceed

(Operator Instructions)

It sounds like there maybe aren’t any.

Please hold while we continue to queue the roster. There are no media questions at this time.

Thanks everybody for your participation and we’ll talk to you next quarter.

This concludes today’s Alaska Air Group first quarter 2008 earnings release conference call. You may now disconnect.