Lavanya Sareen - Managing Director of Investor Relations Bradley D. Tilden - Chairman, Chief Executive Officer, President, Chairman of Management Executive Committee, Chief Executive Officer of Horizon Air, Chief Executive Officer of Alaska Airlines and President of Alaska Airlines Andrew R. Harrison - Senior Vice President of Planning & Revenue Management Brandon S. Pedersen - Chief Financial Officer, Principal Accounting Officer, Executive Vice President of Finance and Member of Management Executive Committee Benito Minicucci - Member of Management Executive Committee, Chief Operating Officer of Alaska Airlines and Executive Vice President of Operations for Alaska Airlines Curtis Kopf - Chris Berry - Managing Director of Accounting and Corporate Controller Mark G. Eliasen - Vice President of Finance and Treasurer

Savanthi Syth - Raymond James & Associates, Inc., Research Division John D. Godyn - Morgan Stanley, Research Division Helane R. Becker - Cowen and Company, LLC, Research Division Hunter K. Keay - Wolfe Research, LLC Jamie N. Baker - JP Morgan Chase & Co, Research Division Michael Linenberg - Deutsche Bank AG, Research Division Duane Pfennigwerth - Evercore Partners Inc., Research Division Glenn D. Engel - BofA Merrill Lynch, Research Division Bob McAdoo - Imperial Capital, LLC, Research Division Joseph W. DeNardi - Stifel, Nicolaus & Company, Incorporated, Research Division Stephen O'Hara - Sidoti & Company, LLC Daniel McKenzie - The Buckingham Research Group Incorporated Michael W. Derchin - CRT Capital Group LLC, Research Division

Good morning. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Alaska Air Group Third Quarter 2014 Earnings Conference Call. Today's call is being recorded and will be accessible for future playback at www.alaskaair.com. [Operator Instructions] Thank you. I would now like to turn the call over to Alaska Air Group's Managing Director, Lavanya Sareen.

Thanks, Tiffany. Hey, everyone, good morning. Thank you for joining us for Alaska Air Group's Third Quarter 2014 Earnings Call. On the call today are CEO, Brad Tilden; CFO, Brandon Pedersen; and our Senior VP of Planning & Revenue Management, Andrew Harrison, will provide highlights from the third quarter and our outlook for the fourth quarter. Several members of our senior management team are also on hand to help answer your questions. Our comments today will include forward-looking statements regarding our future expectations, which may differ significantly from actual results. Information on risk factors that could affect our business can be found in our SEC filings. We will refer to certain non-GAAP financial measures such as adjusted earnings and unit costs, excluding fuel. We have provided a reconciliation between the most directly comparable GAAP and non-GAAP measures in our earnings release. This morning, Alaska Air Group reported a third quarter GAAP profit of $198 million. Excluding the impact of mark-to-market adjustments related to our fuel hedge portfolio, Air Group reported a record adjusted net income of $200 million or $1.47 per share. This compares to our first call mean estimate of $1.42 per share and to last year's adjusted net income of $157 million or $1.11 per share. Additional information about cost expectations, capacity plans, fuel hedging, capital expenditures and other items can be found in our investor update included in our Form 8-K issued this morning and available on our website at alaskaair.com. And with that, I'll turn the call over to Brad.

Thanks, Lavanya, and good morning, everyone. Lavanya just shared the numbers. I thought I'd provide a little context on our performance and then talk for a bit about how we're looking at 2015. I thought this was a very good quarter on almost all fronts. It starts with the flight schedule and our folks in planning and revenue management continue to do an excellent job of letting in capacity in places where it's most appropriate based on underlying demand and of defending and protecting our route network. As you know, this group of people is nimble and they move quickly. Employees across our system did a great job growing and creating new demand for our service by continuing to run a great operation and by doing the little things for our customers that make us who we are. Our folks in marketing and external relations, in particular, have done a terrific job getting our name out in the communities where we fly and building loyalty. And we will share some impressive loyalty numbers with you in just a moment. And our folks throughout the operation did a great job with very high volumes, much higher than in the prior year. And our folks in finance are making sure that all of this performance translates into this stock being a great investment for our owners. They're also doing a good job keeping our team focused on the things we need to do in 2015 to keep our costs going down and to keep this machine running smoothly. Our $320 million pretax profit resulted in a pretax margin of 21.8%, which is 340 basis points higher than last year. It may be that this result leads the industry. Our ROIC for the trailing 12 months is 17.2%, and that performance was driven…

Thanks, Brad, and good morning, everyone. Our revenue performance for the third quarter was very strong, given competitive capacity in our markets was up 9%. Passenger revenue increased 7% on an 8% capacity growth. While PRASM was down 1.1%, underlying demand was solid. PRASM was flat in July, down 1.7% in August and down 1.4% in September. We knew summer was going to be strong, but we were particularly pleased with the September shorter period as PRASM performance was down less than in August. The up-gauging of our fleet with the 737-900ERs has helped drive unit costs down while growing total revenue. We were able to make extensive use of our new ERs during the peak summer months, with many of these aircraft deployed into Hawaii and transcontinental markets. We ended the quarter with 22 of these impressive airplanes, and they allowed us to generate up to 15% more capacity on high load factor routes without additional frequencies. In addition, and without compromising passenger comfort, our seat retrofit program is allowing us to add seats on our 737-800s, the backbone of our mainline fleet. We've completed 55 of 61 aircraft, and we expect to complete the remaining 6 aircraft before years end. The seats retrofit program should provide an incremental benefit of about $25 million next year. We continue to make changes to our network and revenue management practices. Earlier this year, we added a new booking class to our first-class pricing structure. These fares are lower than our full first-class fares and allow us to stimulate demand in the first-class cabin as well as remain competitive with other carriers during weaker demand periods. We've been very pleased with the results to date. For the third quarter, total first-class revenue was up 9% or $14 million on a 4.4% increase…

Thanks, Andrew, and good morning, everybody. Air Group's adjusted net profit improved by 27%, and our earnings per share improved by 32%. The trailing 12-month fully cash ROIC of 17.2% was 420 basis points higher than at this point last year. On an adjusted pretax basis, we earned $320 million, a nearly $70 million increase. As Andrew said, revenues grew by $100 million. These revenue gains were offset by a $31 million increase in nonfuel expenses, slightly higher total economic fuel costs and lower net nonoperating costs. As Brad said, pretax margin improved by 340 basis points to 21.8%. We think pretax margin is a better metric than operating margin when comparing ALK to other airlines given the substantial net interest expense incurred by others. Consolidated nonfuel unit costs were down 3.6% on the 8.1% increase in capacity. Some of that can be attributed to having 2 quarters' worth of increase in pilot wages in Q3 of last year given the timing of ratification of that contract and the high Port of Seattle lease costs that we were accruing in Q3 last year. But notwithstanding those items, cost control continues to be really solid. In fact, if you factor out the onetime items that distort the comp, unit costs were down 2%. Productivity continues to be an important part of the story. It was up another 2.2% this quarter on a passengers per FTE basis. Across all our divisions at both companies, we're seeing a focus on productivity, and I want to thank everyone for it, especially Ben Minicucci, Alaska's COO; and Dave Campbell, the new leader of Horizon; and their entire operating teams for the productivity gains. Technology is helping, too. Our great website and mobile tools contributed to a 2.1% increase in the share of bookings that go…

Thanks very much, Brandon. So to recap, we run a safe operation, a reliable operation, we offer low fares, we have award-winning service and we have terrific customer loyalty. We've got one of the youngest and most fuel-efficient fleets in the industry, we have an investment-grade balance sheet and we're returning cash to shareholders. We bought back 2.5% of the outstanding stock this quarter. We look forward to seeing you all in New York on December 4. It looks like you're going to have a busy first part of December with at least 2 other Investor Days in New York, but we're looking forward to that time to share with -- more with you about our 2015 plan. And now we do want to move to Q&A. As we do that, I want to introduce 3 new members of our team. First, Dave Campbell, who comes to us, he's running Horizon Air as our President, long career at American Airlines and some time at JetBlue. Very excited to have Dave aboard. Curtis Kopf is here. Curtis has been with the company for 4 years. He runs our Customer Innovation group, and he is the Interim Head of Marketing. And then finally, Herman Wacker, he's with -- he's been with Alaska Air Group for 7 years and recently succeeded Keith Loveless as General Counsel. So we're all here available to answer questions. Operator, if you want to queue them up.

[Operator Instructions] Your first question comes from the line of Savi Syth with Raymond James. Savanthi Syth - Raymond James & Associates, Inc., Research Division: Just on the -- I mean, unit revenue has been performing really well and to your point, and then I think September, especially versus how August performed, did very well. And I'm just wondering, in your markets that you're growing, and some of it is in response -- competitive response, some of it is just the opportunity. How is the unit revenue performing between those 2 categories?

Savi, it's Andrew. What I will tell you is, obviously, where this heavier competitive capacity coming into our market, they tend to marginally underperform our system average. But what we have been finding, especially as we looked at the third quarter, the largest areas of growth, which was Midcon, Mountain and Transcon, their unit revenues were all actually above the system average. So we are actually finding meaningful benefit for the maturing of these new revenue streams that we're building on. Savanthi Syth - Raymond James & Associates, Inc., Research Division: Got it. And then just on the ancillary revenue front, it was up about 10% per passenger, I believe. How much of that is from the kind of revenue initiative? And what's kind of the ongoing trend?

Most of the increase in ancillary revenues was the bag fee and the change fees we made last year, and they will annualize in the first quarter. But as we go into 2015, we're going to be continuing to look for ways to maintain that ancillary revenue growth.

Your next question comes from the line of John Godyn with Morgan Stanley.

I appreciate it, Andrew, the commentary about competitive capacity trends looking sort of still not good but better than maybe some of the numbers that had been recorded earlier. One of the things that is a little bit uncertain though is, as we keep seeing schedules that look out a little bit farther, the first quarter instead of the fourth quarter, it always seems like the worst is still in front of us. I wonder if the team has a sense of what quarter things are sort of as bad as they can get. Or at what point can we sort of look at results and sound the all clear and we just sort of know that those RASM numbers reflect more of a steady-state competitive environment?

John, it's Andrew. Yes. I think as you look at the booking schedule as I do, all we know is what we see today. And to your point, as we go into the first quarter, that is a high watermark. Honestly, what we're doing is focusing completely on how we're going to continue to change and evolve our business. And as you've seen, the last 4 quarters, even though we've -- our unit revenues have lagged the A4A for the last 20 months, we've been able to grow, we've been able to expand margins, expand our absolute profit and expand our ROIC. And for 2015, we are squarely continuing to work on plans to continue our momentum.

Got it. Okay, that's very helpful. And Brandon, if we could talk a little bit about the buyback. The amount that was bought back this quarter was fantastic. It was tremendous versus the authorization that you have out there. If I remember correctly, when you put out that authorization, you didn't really put a clear time line around it. You did offer some comments here that future free cash flow would continue to go to capital returns in one form or another. I was hoping that we could sort of revisit the authorization time line a little bit. And maybe you could talk about the appetite to continue to accelerate the buyback here as the stock, I think by many people's argument, is still depressed by the Delta threat.

Well, John, it's Brandon. Thanks for your comments. We really appreciate it. You're right, we did accelerate the buyback in Q3, and we took advantage of the pullback in the share price to do that. As you guys know, we have the flexibility to do that, and this shows that we will exercise that flexibility. In terms of looking forward, I don't think we're going to give anything more today on how fast we think we're going to use the existing share authorization. I think you can look back at our track record and say, "Man, Alaska has done a pretty nice job managing the buyback, using it appropriately when the timing is right." Being in the market -- I can tell you, we're in the market every single day, and we're just continuing to do the right thing.

Your next question comes from the line of Helane Becker with Cowen.

So I just had a couple of questions. As we think about the aircraft that you're taking delivery of next year, should we think about that as going into owned aircraft? Or do you think you would use the opportunity to add more leverage back to the balance sheet?

Helane, it's Brandon. At this point, we kind of divorced those questions a little bit. I think we would own the airplane, and then what we'll do is separately manage the capital structure. We have a strong bias toward ownership. We like it for a lot of reasons. And then as I said, use -- we'll flex the capital structure as necessary.

Okay. And then I don't want necessarily for you to give away any, I don't know what the right word is, but cities that you might think about flying to going forward. But maybe you could just talk about the opportunities you have to expand out of either Seattle or Portland or both over the next 1.5 years or so, maybe into markets internationally or further East and the eastern part of United States.

Helane, it's Andrew. What I would say is, as I shared a little bit earlier, what's especially exciting is as we continue to grow this company and as our unit costs continue to come down and we get these new fuel-efficient ER aircraft, we're finding more opportunities given our cost structure and our network that we can look to fly. So I think the opportunity is being created by the way we're running the business. The other thing I would point to is, obviously, we're getting the MAX in 2017, looks to be a fantastic airplane as well. And we're just beginning to look at all the call options that might come available to us as we look at the range of that aircraft, its cost structure and where we want our company to be by the time we actually receive that airplane.

Okay. Can I just follow with one? Just last question about Seattle and the fact that -- I think somebody mentioned that there was congestion at the airport. Is the airport authority doing anything to help you out there with -- and I think you guys are having some construction on the North Terminal. So how will that affect on-time performance as that continues?

Helane, it's Ben. Yes. We did have some congestion this summer, and it is more a time of day and a summer phenomenon. So we are putting a lot of work right now modeling day of week, time of year. And it also depends what flow of the airports in north flow and south flow, which makes an impact. So we are working with the airport with ATC. We're working with network scheduling to make sure that where we see the constraints of the time of day, that we're going to try and move flights, maybe add a bit of block time. Our on-time performance in the summer, although was lower, was about 84% for July and August, which is better than most. But it's below where we want to be, but still fairly strong. So we are working hard and we will have plans in place by March to mitigate any of that impact.

Your next question comes from the line of Hunter Keay with Wolfe Research.

Two questions for you. So has Alaska ever in its history evaluated a wide-body strategy to Asia given that you would have such a dominant share of that market from Seattle? And if you did evaluate it, did you not do it because of the cost -- mostly, did you not do it because of the cost complexity it would introduce or because of a concern over the amount of local demand to Asia?

Hunter, I don't know that we'll talk a lot about that. What I will say is that we love the strategy that we have today as we've moved Alaska to all 737s. So this is maybe a direct answer to your question. As we moved Alaska to all 737s, Horizon to all Q400s, we have just seen tremendous economies as we sort of become, we think, best-in-class at operating these 2 airplane types. And Alaska's got -- you're familiar with all the benefits. There's easier pilot training costs. The pilot reserves, there's a fewer number of reserves that you have. With the 737s, we're up-gauging. So we're getting tremendous economies with fuel and maintenance and so forth. Horizon you've seen a massive turnaround of that company as we move from maybe 3 fleet types a few years ago to 1 now, and it's gone from basically a breakeven operation to producing $100 million a year of pretax income. So we love the simplicity. We love the focus that a single fleet type brings us. And that's our answer.

Okay. I understand. And then you talked about how 70% of your passengers are basically checking in on their own right now. So is the number of kiosks that you use down 70%? And why not maybe give that final push, get rid of some kiosks, get rid of your footprint, because presumably, that 30% of passengers that are not checking in on their own are customers whose loyalty you have to worry about the least. And I can suggest a way to get that 70% up a lot higher, if you want, by the way.

This is Curtis, and I'd love to talk offline about how to get the 70% higher. But you're exactly right. We're seeing explosive growth in check-in via mobile. And in fact, customers who check in via mobile are also happier about the whole process. And then secondly, we're seeing web check-in continue to grow. And we're seeing kiosk check-in steadily decline. So I do think we will see that trend over time. It may not be immediate, but I think you're right. And...

It's Ben Minicucci. I think what you're seeing is a shift of how people are checking in. So there's a lot of opportunities for us at the airport to look at really changing the customer experience. And what you'll see us do in 2015 is put some initiatives in place that really transforms what we're thinking about the lobby area. So it will have a lot of benefits that I hope we can share with you in the next few calls.

And Hunter, even though they're using their mobile phone to check in, they're still using the kiosks to print bag tags. So that's where we're looking to go with this technology.

Your next question comes from the line of Jamie Baker with JPMorgan. Jamie N. Baker - JP Morgan Chase & Co, Research Division: I just can't sit here and resist calling out Hunter. Alaska did in fact order the 747, though I appreciate how that nugget of airline trivia might have slipped by. Following up on John's question, you mentioned the recent scheduled filings. And even with some slight trims, the Delta overlap in your current markets rises considerably this quarter and into the first as well. The total OA impact was challenging. I know you guys don't want to provide quarterly RASM guidance, but can you at least remind us of any sort of year-on-year comparisons unique to your own flying that might provide some RASM benefit year-on-year, things that we should consider in potentially offsetting what appears to be just really, really nasty RASM headwinds as we move towards year-end and beyond?

Yes, thanks, Jamie. I think the couple of ways that we are working hard to address the obvious pressures that will come into the first quarter is, again, continuing to capitalize on our seasonality, and we're going to do that in 2 ways. You see a number of the capacity adds are in our Pacific Northwest to Hawaii, which is more of a winter season for us. And of course, deploying all those ERs and those fuel-efficient aircraft to the islands where we can is going to be helpful. And we continue to be very surgical and try to be really smart about the day of week cuts and when we fly and when we don't fly. So those are the things we continue to work on, as well as the new markets, even in the softer demand periods, continue to mature and get stronger. So those are 3 areas of water level that we hope to continue to rise and offset some of the unit revenue pressures.

Your next question comes from the line of Michael Linenberg with Deutsche Bank.

Brandon, going back to the aircraft that you're going to add over the next 3 years, I think you said 37 aircraft. How should we think about the split between replacement versus growth? Would it be fair to say that the majority of those airplanes are replacement airplanes?

Yes, so right now -- actually, I said 35 in my remarks -- there's 36. So we have 36 900ERs on order for '15, '16 and '17, and we want to replace the remaining 27 400s. So on a net basis, it does represent growth, but it's not a huge amount of unit growth. But it is a fair amount of ASM growth just because of the up-gauging that you get, and that's pretty efficient growth, too.

Definitely. And then my second question, and maybe this is for Andrew, when I look at some of the other markets that you're expanding into, like, for example, you've been doing a nice job building out San Diego. When you make the decisions to add a route, how important is it to have a codeshare partner involved in a new route to bring them on as a risk-sharing partner? And maybe sort of as a second half to that question, is -- a large number of those San Diego flights, do they have, say, for example, the American codeshare? Or for the most part, are they being just operated under the Alaska code only?

Yes. I think history has taught me personally. I think the more dependent we are on ourselves in our own network, I think the better we're going to be off on the long run. So the way I view the codeshare relationships is we never start a market purely based on what we might get from a codeshare. We do it based on our own economics, our own network and our own strategy. And then what we hope to do, once we've announced it, then we can legally go talk to codeshare partners. And if codeshare makes sense to help the network and grow the pie, then we'll do that. But pretty much, we focus on what we can do with our aircraft.

Your next question comes from the line of Duane Pfennigwerth with Evercore.

Just on ancillary revenue. You mentioned you're round-tripping the credit card deal, and I think you'll begin to round-trip some of the change fees in the fourth quarter. So can you talk maybe broadly what levers you can pull to reaccelerate other revenue growth into '15?

Duane, it's Andrew. What I will say is we've been spending a lot of time looking at what the industry does. And as you know, we're about $13, $13.50 per passenger, and some of the industry is up closer to $20. So we know that where we can find the value-add opportunity for customers, we're going to look hard at that. And what I will tell you is that we are looking at additional things that might provide opportunity for us and our customers in the ancillary revenue. And that's probably as much as I would say right now.

Okay, fair enough. And then one for Brandon. Could you just help us with kind of where your cash tax rate stands this year versus last year and what your outlook for 2015 would be?

Yes, sure, Duane. I think we'll be at a cash tax rate this year of about 35%. I think that's up about 10% from last year. My recollection is, is that we were in the mid-20s in terms of cash effective rate. And then as we look forward next year, there is some question out there as to what happens with bonus depreciation, but I would expect our cash rate and our effective rate on the book side would be pretty close to even.

Your next question comes from the line of Glenn Engel with Bank of America.

Few questions on the cost side. I'm not sure if you touched on this. Wages were actually down 2%. Did that reverse any of the flight attendants? And would you expect that not to be the case in the fourth quarter?

No. Glenn, this is Chris Berry. Wages were down. There's a lot of things going on in there. Last year, you might recall, and Brandon mentioned it in his comments, that we had the retro pilot pay as part of the agreement that they signed. That was about $6 million in the quarter last year. We also have year-over-year pension decline, which is kind of consistent throughout the quarter, of $10 million. And then there's just a few other things, but that's the majority of what's happening. There's nothing in there with flight attendant this year or last.

I guess it surprised me because it was even down from the second quarter, and you were certainly flying more in the third quarter than the second.

Yes, there were some other things, medical costs and a couple of other true-ups as well. But for the majority, I mean, it was really the pilot retro was in last year's and then -- as well as the continued benefit from pension expense.

Same for the -- same as other line. That was down also 3% despite a lot more flying and down from this second quarter.

The other line, the other operating cost line?

Yes.

Yes. There's a lot of noise in there, but there were some decreases in property taxes this quarter from an assessment. We got a favorable change to an assessment and in a couple of states we operate in, as well as we had a couple of warranty claims that we were able to get in the quarter as well. So that drove the year-over-year decline there.

And utilization was down 1.8%, yet you're showing great unit cost improvement. This utilization down is just the less off-peak flying that Andrew was talking about?

For which period you're referring to?

Third quarter versus last year, it looked like utilization was down.

I might have to take that one offline and take a look.

Glenn, it's Brandon. We'll get back to you on that one.

Yes.

And finally, the selling cost was up tons, selling expense?

Yes, selling -- this is Chris again. Selling expenses were up, I mean, mostly because of advertising that we're doing here locally as well as some other things. And Curtis or Joe, you want to add to that?

Sure. Yes. We have increased our advertising in Seattle in light of the competitive environment, and we're seeing fantastic results on that. That said, we still spend less in similar sized airlines, and we expect that spend to be flat going into next year.

Glenn, this is Andrew. We were just having a brain freeze there. Of course, our COO just told me again. We have the -- we're adding the extra row of seats, and there's a couple of lines of aircraft that are in there getting mod-ed and that's why we're actually down. Because we're actually -- in utilization, we're flying the airplanes harder but on a fleet basis, that's what's going on there.

So these unit costs are coming down despite those headwinds? Impressive.

Your next question comes from the line of Bob McAdoo with Imperial Capital.

Most of my questions have been answered. Just one quick one. What are you paying for fuel today?

The raw price we're paying is $3.71.

2.

$2.71. Sorry.

$2.71?

Yes.

And so the $2.77 that you've got, that you're telling us, what is that -- what are you assuming happens going out in a quarter or 2?

Yes, Bob, that includes $0.06 of hedging costs. So $2.77 would be the all-in economic costs of fuel.

So basically, you're just assuming today's price straight out when you're talking to us, not making any assumptions, any other changes?

That's right, for the quarter.

Your next question comes from the line of Joe DeNardi with Stifel. Joseph W. DeNardi - Stifel, Nicolaus & Company, Incorporated, Research Division: Andrew, I'm wondering, on the improvement and the competitive capacity trends you're seeing, can you just kind of walk us through who's pulling back relative to the last look there?

Joe, yes, it's mainly -- we've seen -- it's really split between sort of Seattle and Portland. And we have United pulling down a fair bit of regional capacity out of there from Portland. We're also seeing some of the bigger carriers just true up, some of their winter flying out of their hubs as well. And then basically, other than that, it's spread across a number of pieces here and there. So it's actually sort of a mixed bag, but I think it's just people truing up schedules. Joseph W. DeNardi - Stifel, Nicolaus & Company, Incorporated, Research Division: Okay. And then, Brandon, on the investment-grade rating, can you just maybe help us -- walk us through kind of how that helps you guys maybe on the income statement? I mean, are there areas maybe that we would consider where that would help you out?

Joe, I'm going to ask Mark Eliasen to answer that one.

Joe, it's Mark. It helps us in multiple ways. As Brandon already said, we renewed our lines of credits. We've gotten a lower margin and a lower fee for those lines. That's one place. It helps us when we buy fuels in terms of credit terms. It helps us with pretty much anything, any place where we're going in and getting credit, whether it's operational credit or financial terms. And when we do start financing again, it will help us a lot there as well.

I mean, Joe, the hope would be that one day -- between the strength of the balance sheet and the investment-grade rating, which gives us low interest cost, the hope is, one day, we start to think of it as nonoperating line. It's just a net 0 cost line, 0 benefit, 0 cost line, which is an incredible thing for our business that's as capital-intensive as ours.

Your next question comes from the line of Steve O'Hara with Sidoti & Company. Stephen O'Hara - Sidoti & Company, LLC: I'm just curious about the 400s that are coming off. Are those unencumbered? Are they encumbered? Are they leased? If you could talk about that a little bit. And then maybe on the MAXs, when you take those, what's your feeling in terms of your competitive position in the industry when you have those? Does it improve? Does it stay the same based on the other orders you see out there?

Well, Steve, I'm going to let Mark take the first part of that question.

Yes, Steve, it's Mark Eliasen. 18 of our 400s are leased. So those will be just straightforward lease returns. And then we do have the Freighter and Combis, which we own. And we also own 3 of our passenger 400s. So the bulk of that fleet of 27 will just be returned as part of the lease.

And on your second question, in terms of the MAX, Andrew touched on it a little bit, we're super excited to get the MAX. We're excited for the efficiency gains that are going to come with it. We're excited for the longer legs that provide us the opportunity that gives us on the network. To the extent we're getting those earlier on, that will certainly just add to our fuel cost advantage that we already have. Stephen O'Hara - Sidoti & Company, LLC: Okay. And yes, I mean, I guess maybe a tougher question is, what do you see in terms of the industry doing -- as maybe their costs get better, how much of that goes to the customer versus shareholders? And then I guess you guys had talked previously about a brand update. I'm just wondering where that process is as well.

I'd like to take the first part, and we'll ask Curtis to do the brand. It's hard to say. Lower fuel costs and when they get trend -- I mean, I do think in an economy like ours, when costs go down, over time, a lot of that benefit does get competed away. Our job is, just on a relative basis, to have low cost and capital and have enough margin to cover the growth that we're doing. So I don't know that we have a strong view on what -- how lower fuel prices ultimately translate to revenues. Curtis, on brand, do you want update on that?

Yes. We are refreshing our brand look to be more consistent and more modern, and we've already started that. And you'll see updates across all of our customer touch points, like our website in the airports, over the next 12 months.

Your next question comes from the line of Dan McKenzie with Buckingham Research.

I've sort of been in and off the call here, but I apologize if this has been answered. But what's the potential here for an expanded codeshare with American? Is it a dead opportunity? Is there a potential opportunity looking ahead? Where are we at there potentially?

Dan, it's Andrew. As we've shared on previous calls, we continue to enjoy a good solid relationship with the new American. In fact, even this quarter, our codeshare and interline revenues were actually up 10%. And again, as we have anything more new to report, as it relates to American, we will do so.

Understood. And then following up on the new fare bucket for paid first-class. If I heard correctly, $14 million -- $14 million benefit in the quarter, and that was just 50% of the first-class opportunity. So the implicit math, of course, roughly $100 million in incremental revenue annually based on the commentary. But I would say it's all about the supply-demand dynamic and revenue management technique. What's really the right way to think about that on a potential annual run rate here?

I may not agree with the $100 million. It'd be very nice. But I think then $14 million was our overall performance of our first-class cabin. But a little bit to your point, we've only ever had one fare for our first-class cabin. And the opportunity we're seeing is to bring incremental paid passengers into that first-class cabin and also connecting traffic, haven't received any benefit of this new fare yet. So I think overall, what I will be watching for is outperformance of unit revenues in our first-class cabin relative to our system. And as we move forward on this, we'll have a better view of how much it's actually going to be, but that's sort of where we are today.

Got it. And then just can you remind us what percent of your revenues come from your, say, top 5% of your customers?

I'm not sure we've really given that number before. I think what we have shared before is probably about, I think, 10% or 12% of our revenues come in our highest classes, the business first-class type.

Your next question comes from the line of Michael Derchin with CRT Capital Group.

Along the nostalgia line, I mean, I was curious how big an opportunity is Salt Lake City. I remember when Western Airlines built it up -- and it was a pretty decent operation for them, both as local as well as connecting hub. So I wonder how big that could be over time.

This is Andrew. I think like any new markets, what we've found generally with Salt Lake City is we perform much better when it's into our core Pacific Northwest hubs. The other West Coast key city flying, they're a little bit more challenging, obviously. We're continuing to work that. Our marketing group have gone out and got some fantastic contracts and corporate contracts, LDS contracts. We're doing a lot of marketing. The most exciting thing about Salt Lake City is that the folks there didn't really know who we were. And we're starting to see that they're actually knowing who we are now, and I think that's just very rewarding for us.

Your next question comes from the line of Savi Syth with Raymond James. Savanthi Syth - Raymond James & Associates, Inc., Research Division: Just one quick question. On the debt funds, what's your latest thinking on where you want your debt levels to be and if you're thinking of increasing that or just maintaining current levels?

Savi, it's Brandon. We're very comfortable where we're at. I tried to address that in my prepared comments. We think it really gives us some gunpowder to do some things, if we need it. It really fortifies our position here in the Pacific Northwest. Just to share some facts with you, we have been comparing ourselves to high-quality industrials. And so if you look at the S&P 500, for example, and you look at the industrials within the S&P 500, half of them roughly have debt-to-cap levels that are lower than 40%. And so that's really the sweet spot that we want to be in. We like that company a lot, and so we think that, that's a good place for us. Savanthi Syth - Raymond James & Associates, Inc., Research Division: Got it. And then just next year, so I may, are the kind of the biggest cash flow items just aircraft beyond operating cash flow?

Yes, for sure. Debt repayments are extremely modest. And as we alluded to maybe with Helane's comment, we're going to manage the capital structure, I think, a little bit. But yes, really just CapEx and a lot of operating -- or a lot of free cash flow beyond that.

I would now like to turn the conference back over to Brad Tilden.

All right. Thanks, everybody, for joining us. We'll be in New York City on December 4 for our Investor Day. We hope to see lots of you there. Thanks.

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