Lavanya Sareen - Managing Director-Investor Relations Bradley D. Tilden - Chief Executive Officer and President Andrew R. Harrison - Executive Vice President and Chief Commercial Officer Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance Benito Minicucci - Chief Operating Officer and Executive Vice President, Operations Shane R. Tackett - Vice President-Revenue Management, Alaska Airlines, Inc. Joseph A. Sprague - SVP-Communications & External Affairs

Julie A. Yates-Stewart - Credit Suisse Securities (USA) LLC (Broker) Joseph DeNardi - Stifel, Nicolaus & Co., Inc. Hunter K. Keay - Wolfe Research LLC Savanthi N. Syth - Raymond James & Associates, Inc. Rajeev Lalwani - Morgan Stanley & Co. LLC Jamie N. Baker - JPMorgan Securities LLC Michael Linenberg - Deutsche Bank Securities, Inc. Helane Becker - Cowen & Co. LLC Duane Pfennigwerth - Evercore ISI Dan J. McKenzie - The Buckingham Research Group, Inc. Darryl Genovesi - UBS Securities LLC David E. Fintzen - Barclays Capital, Inc. Andrew George Didora - Bank of America Merrill Lynch

Good morning. My name is Joana, and I will be your conference operator today. At this time, I would like to welcome everyone to the Alaska Air Group's Third Quarter 2015 Earnings Conference Call. Today's call is being recorded and will be accessible for future playback at www.alaskaair.com. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session for analysts and journalists. Thank you. I would now like to turn the call over to Alaska Air Group's Managing Director of Investor Relations, Lavanya Sareen.

Thanks, Joana. Hey, good morning, everyone. Thank you for joining us for Alaska Air Group's third quarter 2015 earnings call. On the call today our CEO, Brad Tilden, will provide an overview of the business, our Chief Commercial Officer, Andrew Harrison, will share the revenue results for the third quarter and outlook for the rest of the year, and then Brandon Pedersen, our CFO, will discuss our financial results and our capital allocation plans. 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. Several risk factors could cause actual results to differ from our expectations. Information on risk factors that could affect our business can be found in our SEC filings. During the call, we will refer to certain non-GAAP financial measures, such as unit costs excluding fuel. We have provided a reconciliation between GAAP and non-GAAP measures in our earnings release. This morning, Alaska Air Group reported a third quarter GAAP profit of $274 million. Excluding the impact of mark-to-market adjustments related to our fuel hedge portfolio, Air Group reported a record adjusted net income of $277 million. This was ahead of First Call lean estimate of $2.10 per share and higher than our last year's adjusted net income of $200 million, or $1.47 per share. We've included additional information about cost expectations, capacity plans, capital expenditures, and other items in our earnings release and investor update filed this morning. So now, I'll turn the call over to Brad.

Hey, thanks, Lavanya, and good morning, everyone. Lavanya just shared the numbers. I thought I would take a minute as we enter the fourth quarter to sort of look back and measure ourselves against the things that we set out to do at the beginning of the year. And as you know, we've got three strong quarters behind us now and 2015 is shaping up to be a really good year on almost all fronts. First, we are operating safely and reliably. Second, our employees are engaged and our team of 15,000 people is providing our customers with great experiences every day and on every flight. Third, we are growing our customer base. Our Mileage Plan members and our Alaska Airlines credit card holders are both growing at record rates. Fourth, we're successfully entering new markets. We've entered 10 new markets thus far this year, creating new, diverse, and profitable revenue streams. And fifth, finally, we believe we're doing the right things for our owners. We have not only strong profitability, but also excellent cash flow from operations, an extremely strong balance sheet, and a commitment to shareholder-friendly stewardship and capital allocation that's been demonstrated over many years now. In this industry, all of us know that there are always things to lose sleep over and we all do plenty of that. But we believe the first nine months of 2015 have been very solid. We believe that this new competition we're dealing with is making us better, and we believe that our competitive position today is very strong. Our $442 million pre-tax profit for the quarter equates to a pre-tax margin of 29.2%, which is 740 basis points higher than last year. In fact, this quarterly profit is larger than all but four of the annual profits we've produced…

Thanks, Brad, and good morning, everybody. Our third quarter revenue performance was solid. And we were able to sustain high load factors while increasing capacity 8.2%. We grew passenger revenue by $48 million or 3.8%, despite competitive capacity increasing 13% in our markets. While strong demand in summer months is not surprising, we were pleased with our year-over-year change in PRASM for the month of September. It was 40 basis points better than August, despite year-over-year change in capacity for September being 250 basis points higher than August. This strength, despite Labor Day moving further into the fall, which resulted in lost traffic as the majority of school children in Washington State had returned to class by Labor Day this year. In the third quarter we continued to grow and diversify our revenue by adding more new markets to our network. We've added 15 markets since the beginning of Q3 2014. And about half of those new markets were added in the last quarter. 75% of new markets are not only profitable, but generating returns in excess of our cost of capital, some of them achieving this level of profitability within six months of launch. This is unprecedented for Alaska Airlines and has been possible given our foundation of low cost, powerful Pacific Northwest network, global loyalty program, award-winning customer service, and industry-leading operation. But specifically four key areas helped us deliver the solid Q3 results. First, our strategy of adding non-stop service to destinations our frequent flyers previously flew from our hubs with one or more stops on other carriers. This is creating new and profitable revenue streams. About 40% of seats on our new flights are filled with Mileage Plan members, which is in line with our system average for mature routes. This demonstrates strong support for our…

Your first question comes from Julie Yates with Credit Suisse. Your line is open. Julie A. Yates-Stewart - Credit Suisse Securities (USA) LLC (Broker): Good morning. Thanks for taking my question.

Hey, Julie. Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Hi, Julie. Julie A. Yates-Stewart - Credit Suisse Securities (USA) LLC (Broker): Based on the other calls it seems the rest of the industry is seeing some sequential improvement in unit revenues in Q4. And I realize you guys don't give unit revenue guidance, but can you offer any perspective on whether you at Alaska would expect to also see this dynamic, despite the increase in capacity growth in the fourth quarter?

Hi, Julie. It's Andrew. You're right. We don't give fourth quarter guidance, because the CFO won't let me. But other than that I would just go back to the remarks that I shared, which is our advance book load factor, where we even have positive gap in November and December is flat on top of our capacity growth. So we aren't seeing any change in the demand environment. If anything it continues to be very robust here in Seattle. Julie A. Yates-Stewart - Credit Suisse Securities (USA) LLC (Broker): Okay. That's helpful. And then with the 11 new markets in the fourth quarter though, does that impact it as you have some introductory pricing in those markets?

We always do. But I think you touch on something that I think is important for me to clarify. I mean if you look at the fourth quarter where we're up 12.5%, 9 points of that is in trans-con, mid-con and the Pacific Northwest, Hawaii, where we've been doing very, very well. And in fact when we talk about new markets, what we're really looking at is markets today that have either no non-stop service or very little non-stop service. So whether it's Milwaukee, Oklahoma City, Raleigh-Durham, Costa Rica, Nashville, Portland, Austin, all of these new markets fit very well with our network and bringing good solid revenues in. So that's why we have good confidence with that. Julie A. Yates-Stewart - Credit Suisse Securities (USA) LLC (Broker): Okay. Excellent. Thank you. Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Thanks, Julie.

Your next question comes from the line of Joseph DeNardi with Stifel. Your line is open. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Thanks. Thank you. Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Hey, Joe. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Brandon, I think there was some concern – or maybe Brad – there was some concern earlier in the year as the capacity guidance ticked up throughout the year. But can you just talk a little bit about how that additional capacity has translated into some of the additional cash that you've returned to shareholders?

Yeah. Joe, it's Brad. Maybe I'll jump into that. I think what I would just simply say is what's – in Seattle what we see is quite a strong economy. We are adding. We're growing. We're taking delivery of these new airplanes. We're putting them into markets. As Andrew sort of suggested, many of these markets are doing great right out of the gate. Andrew, I can't remember the exact figure you quoted, but 75% are early in their life producing returns that cover our cost of capital. So I think the simple answer to your question is yes, this is good new growth. We're producing returns as a company that are far in excess of our cost of capital. And this is helping us with our substantial returns to the owners of the company. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Okay. And then for Brandon, just on the CASM trend going forward. Is there any inflation in your CASM associated with kind of addressing the competitive environment there? And maybe you're investing more than you otherwise would, and that starts to get better as the competitive pressures start to level off a bit? Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: I don't know that I would call it inflation necessarily. But what I would say is, is that we've done a lot to invest in our product. And ultimately at the end of the day customers choose your service because you operate well and you've got great people on board and you've got great product. And we want to make sure that our product is as good as it can be. And so we are investing into food and beverage, we are investing in some of the training initiatives that we've talked about. I wouldn't necessarily call it inflation. I would call it intentional investment into what customers see every day. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Okay. Thank you. Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Thanks, Joe.

Your next question comes from Hunter Keay with Wolfe Research. Your line is open.

Good morning.

Hey, Hunter. Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Good morning, Hunter.

So your lost bags were up like 34% in the recent period – I forgot the period, but it was up a lot. And presumably that's because you're giving away more of these checked bags for free with the credit card. So, Brandon, you talked about bad costs. Are you going to have to maybe spend some money to address that problem? That's part one of the question. And part two, if this feeds into a bigger membership base for when you recut your credit card deal, how should we think about the magnitude of that in relation to the roughly $50 million benefit you got when you did the deal with BofA a couple years ago? Thanks.

Hunter, it's Ben. I'll take the first question on the bag performance. We had a rough quarter on mishandled bags, and the operations folks own that. We are not happy with how we performed. We actually have an initiative right now and going into 2016 to get our mishandled bags right in line. I don't want to put the cause on the free bag with a credit card. That is us to perform at the levels that I know we can perform.

And, Hunter, in terms of if we were to renegotiate our bank card deal, I mean whatever is in the base is in the base. So I just think the economics get better across the board.

Okay.

In terms of free bags is in the base is what I mean to say.

Yeah, I got you. I guess I was just trying to get to it. I think you said there were a lot more members. 75 – what is it? 40% of your seats are filled by Mileage Plan members or something. So I'm assuming the number of people that have credit cards and these Mileage Plan numbers are improving in volume, which would lead one to conclude that you get more than $50 million when you re-cut this credit card deal, whenever that would be. But anyway. Okay, so yes, whatever. Asked and answered, right? Okay. So how do you think about competition? You talked a lot about competitive capacity in the context of where your passengers buy their tickets. So would you be – in an all else equal situation, would you be generally more protective of keeping passengers that live in your core origination market, as it relates specifically to how you manage your inventory? As opposed to customers on your planes that maybe originate in your destination markets? Does that change the way you think about managing your inventory?

Yeah. Hunter, I might start, and then I'm going to turn it over to a new personality on the call. But sure. I mean the way we would look at our network is we have incredible strength in the state of Alaska, in Washington State, in Oregon, and considerable strength in California. And to the extent we have competition in those markets, a lot of these results that you see are the results of the loyal customer base, the flight schedule, everything we're doing out of these markets. So for sure we would want to work hard for originating traffic out of those hubs, out of those regions and protect what we have here. In terms of your second question I want to introduce a new personality. Shane Tackett is our Vice President of Revenue Management. Shane has been with the company a long time. Fifteen years, Shane? Or...

Yeah.

Shane has worked in our corporate real estate group. He spent a long time at financial planning and analysis. He did a terrific job in labor relations. He's the one that helped us get many of these deals that we have today. And now, he's running revenue management. So Shane will – there's your introduction.

Thanks, Brad. Good morning, everybody. Hey, I'll add just a little bit to what Brad said. We are sort of keenly focused on making sure we retain sort of the loyalty of the customers and our work. And so, we're very strategic about what competitors are doing, what fares they're offering and you'll find that we're competitive across the board. We're not interested in building our base of strength. I think in terms of outside of Seattle-Anchorage, some of the core parts of our network, we actually have been doing a little bit better in terms of focusing on getting originating passengers off of the core network. One place that we've done a good job over the last 12 months is Salt Lake City where we started struggling a little bit out of the gate in terms of load factor. We put a lot of energy into it as a commercial team and we've seen those load factors come up nearly to our system average. So, we'll do more of that as the network gets broader and more complex, but I think we're doing a great job and most of that is to the credit of my team down in RM.

Thank you.

Your next question comes from Savi Syth with Raymond James. Your line is open. Savanthi N. Syth - Raymond James & Associates, Inc.: Hey. Good morning, everyone.

Hi, Savi. Savanthi N. Syth - Raymond James & Associates, Inc.: Hey. On the margin commentary that you made, stepping back, I was curious what your thoughts were? I mean, historically and you continue to have a leadership position on the margin versus the industry. Maybe what drives that and how do you maintain that? Or how do you think about margins longer term? Is it versus in relation to ROIC? Or how should we think about margins? I know right now fuel has been a big tailwind, but as we look forward as fuel recovering somewhat maybe and with the competitive landscape much changed. Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Good morning, Savi. It's Brandon. Maybe I'll start with that. It's actually a good question and it's one that we're thinking a lot about right now. Back a decade or so ago when we set out a goal of having a 10% margin, it was viewed as sort of aspirational in nature certainly by others in the industry and we worked hard to get there and our 10% margin was directly connected to an ROIC goal. What I will say is that the industry is much different now than it was then – structurally, revenue environment, the competition in Seattle. And so it's really fair to say that 10% or $0.10 on the dollar as we talked about internally is probably not a relevant place to be over the long term. On the other hand, we're at a 29% margin for the quarter, 23% on a rolling 12 basis among the top three in the industry, typically behind Spirit and Allegiant. Congratulations to those guys. They're doing very well. But that's probably not sustainable either both because as you say, fuel will recover, but I think just in the context of where airlines as a mature industry that's healthy are going to be, it's probably going to look more like industrials broadly than as a real outlier like it is today. So it's a really good question. It's one I don't have a great answer for, but I suppose what I've done is maybe set out the goalposts on each side, and the right answer is probably somewhere in between.

Savi, I might sort of jump onto that as well. It is something we're spending time on right now just to make sure we understand where our profitability comes from so that we can sustain it. I think a lot of our margin performance comes from our low-cost structure. I mean, just simply said, our costs, as Brandon said, they've been down 13 of the last 14 years. We did restructure this company outside of bankruptcy. We sit here today with a low-cost position, and Brandon, you know the exact numbers, I don't. But I think we're something like 20% lower CASM ex-fuel than the mainline airlines, and we're just a little bit higher than the LTCs. So part of that low-cost structure gives us margin, part of that low-cost structure gives us the ability to offer our low fares. I think a second big thing that sort of leads to our margin performance is customer preference. Our customers do like to fly with Alaska Air Group. They like to fly with Alaska, with Horizon. And some of that's the fare, but a lot of that's the service. So I sort of think those two things. And then you might say, well, okay, you've got a low-cost structure, where did that come from? And there's lots of answers to that. But anyway, I guess I just want to simply say that I think the low-cost structure is a very, very important part of our margin advantage. Savanthi N. Syth - Raymond James & Associates, Inc.: That's helpful. Thank you. And just more for the near-term question. On ancillary revenue on a per passenger basis, it seems like you might lag some of your peers on that front. Is that by choice and you get it more on the base fare? Or is there opportunity on the ancillary revenue side?

Savi, it's Andrew. I think we're down about 2.8% and I think what you're seeing right now is sort of a transition period. As you know, we've gone out with free bags on the first bag fee. But we've also seen massive increases in our loyalty membership, credit-card holding. So, our goal and we continue to be focused on getting to be more industry average on our ancillary revenues as far as the big network carriers go. And as you've heard from Shane a little bit, his team is also very focused on first-class cabin and continuing to, as we invest in the product there, continue to achieve the premium and the first-class load factors that we also need. Even if it's sell off at the gate and the preferred seating we've launched this year. All of these things together we think are going to continue to work well, but we just need a little bit more time after the first free bag adjustment. Savanthi N. Syth - Raymond James & Associates, Inc.: Helpful. All right. Thank you.

Thanks, Savi.

Your next question comes from Rajeev Lalwani with Morgan Stanley. Your line is open. Rajeev Lalwani - Morgan Stanley & Co. LLC: Thanks for the time. First question, just on Seattle. It seems like the demand has been incredibly strong there. How do you get confident that capacity growth from others won't stay elevated just given that dynamic as we look forward?

Rajeev, it's Andrew. It's hard to predict the future. But what I will tell you as I look at our COO here that the room at the inn is getting very tight. If you take out morning banks between 8 a.m. and 10 a.m. and our evening banks bags between 20:00-22:00, they seem full, completely full. And we're already having to move our network around because we have a sizable network to accommodate. So while I don't know what the future holds, what I do know is that I think we're going to see it slow. And in my prepared remarks, the size of the new markets that competitors are coming into are getting smaller and smaller and smaller. So we've learned to adjust in this environment. And so I don't have huge concerns that we will be continuing to be able to adjust as we move forward. Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Rajeev, Brandon here. Maybe I'll add one other thought on that. We tried to build our business to withstand competition. We've seen it over the last three years to be sure. But our mindset is that there's always going to be competition in our market. This is an extremely competitive industry. But for the reason that we just talked about with Savi, I think this company has been successful and will continue to be successful because of the great service that we provide, the excellent operation that we run and our low-cost structure. So, I think we'll be fine. Rajeev Lalwani - Morgan Stanley & Co. LLC: Yeah, that's great color, gentlemen. And just a quick one for you, Brandon. In terms of the capital allocation, I think you've been paying down a little bit of debt this year, and correct me if I'm wrong there. But just thoughts going forward. Are you going to maybe continue to do that? Or is it – is all the cash flow going to go exclusively to shareholders? Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Yeah. Any debt paydown that we've done has been just paying normal maturities. We've got an awesome balance sheet right now, and we don't have any specific initiative to pay down more debt because we're already in a very substantial net cash position. I think what I'm saying is that the strong free cash flow that we're generating is for the most part going to get deployed back to our shareholders, just like it has been over the last nine months or so. Rajeev Lalwani - Morgan Stanley & Co. LLC: Great. Thank you. Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Thank you.

Your next question comes from Jamie Baker with JPMorgan. Your line is open.

Hey. Good morning, Team Alaska. Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Thank you.

As it relates to the American coach here and accepting that American doesn't have a Northwestern Pacific gateway, but they do still have a fairly respectable presence of their own at West. My assumption has been that your relationship with American won't fully replace what was once the high level of revenue cooperation with Delta. Is that the way that you see it?

Good morning, Jamie. It's Andrew. I'd say a couple of things. We're focused on really two aspects our partners and ourselves, and I think if you look at the dynamics and we will share with you at Investor Day much more visibility in where we are today with all of our alliance partners and the traffic. So look forward to that. We're finding that we're basically – American as I shared in my comments, up 10%, but we're also finding a lot of traffic coming back onto our network and so really the way we look at it is growing the overall traffic. And so we're using our own network and our own expanded network as well as American and their expanded network to net, net be better off. And that's how we're looking today and that's where we want to keep moving forward.

Okay. That's helpful. And then just secondly, and this is a housekeeping item. You cited your view that you're retaining about two-thirds of fuel's lower benefit. And I'm just curious as to the methodology you used there. Are you simply looking at year-on-year fuel savings and comparing it to the year-on-year change in EBIT? Or is it something more complex and proprietary than that?

Hey, Jamie, this is Lavanya. Nothing more proprietary than that. Just bringing it to the bottom line and how much fuel prices have come down.

Okay. Perfect. We come up with the same figure. I just didn't know if there was a way to build a better mousetrap. So, okay. Thanks so much, everybody.

Thanks, Jamie. Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Thank you.

Your next question comes from Michael Linenberg with Deutsche Bank. Your line is open.

Yes. Hey. I guess two questions. I actually – I think both for Andrew. Andrew, you talked about connections in Seattle up 15% and I sort of think Seattle historically just based on how it's positioned would probably see a lot more local traffic historically than connect with the exception of some of the international. Where is that split now when you look at your traffic in Seattle connect versus local? And where could that go? It's never going to be a Chicago like 50/50, but where could that potentially go, especially given the significant amount of new flights coming from the international carriers?

Yeah. I think a couple of things and I honestly I don't – and maybe we can follow up, but I don't have a scientific split for you right in front of me on that whole question as it relates to the flow and the local. But the way I look at it is, especially on the domestic side, for our network good, solid local demand. Where we have capacity that's coming in that's maybe incremental and that's where Shane and his team can use our expanded regional network to bring traffic in from our Montanas, Washingtons, Oregons and Alaska to help fill those additional seats. I think what's really exciting on the international front, to your point is, Seattle relative to New York, Los Angeles, San Francisco, demand is way, way smaller and so the feed is imperative for these international carriers and partners of ours. And so what we're seeing, number one, is our own members with our partners choosing to fly on our international partners and then we're using our network, including all of our new markets, to help bring traffic to the West Coast through their international network and beyond. So overall all these pieces have been working well for us. And we have a lot of refining to do. We have more things to do, but we're feeling very good about that.

Okay. Great. And then the second one, and maybe this is just more of sort of a footnote. But the partnership that you have with United, is that just limited to a few club rooms? Is that all that is?

Yeah. I mean we have interline with United. Maybe what you're referring to is there has been changes in our lounge agreements. And we won't be partnering with Delta in our lounges anymore. But we have a new agreement globally with American. And so we've got about five club rooms where we're using United to help supplement out our lounge system, and so that's really what you're seeing.

Okay. Good. Thank you.

Your next question comes from Helane Becker with Cowen & Company. Your line is open. Helane Becker - Cowen & Co. LLC: Thanks very much, operator. Hi, everybody. Thank you for the time. So you guys, I noticed in the press release today you talked about new routes out of Portland. And I know that airport tends to be somewhat underutilized. Is that something we should think about going forward, that Portland is going to be an increasingly more relevant to the route network?

Helane, good morning. It's Andrew. Yeah I think obviously Portland is extremely important to us, so well over 120 plus flights a day. And what we're seeing with the strength of our cost performance and our lower cost performance and our rule of thumb is Portland's always half the demand of Seattle. We're seeing opportunity with our cost structure and new aircraft, especially the 175, to grow Portland. So you see in the first quarter we've got Portland-Minne [Minneapolis], we've got Portland-Kansas City, Portland-Omaha. So I think you'll see us continue to grow Portland as we move forward. Helane Becker - Cowen & Co. LLC: So those routes that you just mentioned are being flown with 175s?

Yes, I believe so. Yeah. Helane Becker - Cowen & Co. LLC: Yeah. Okay. And then my other question, I think, Brad, you talked about those new Space Bins, and the fact that you can carry more bags on them. How do you monetize that for us, for your shareholders – or for yourselves actually? How do you get paid for having those extra bags on board? Because you're not charging your frequent flyers for the checked bag. And it seems like putting all those extra bags on board will just slow the boarding process down. And you already have a pretty tight turn time. So how are we supposed to think about those bags coming on board? And how it winds up measuring up to your high expectations for yourselves?

Helane, that's a hard question, so I'm going to ask Ben to answer that.

Hi, Helane. Helane Becker - Cowen & Co. LLC: Hi, Ben.

Helane, most airlines today, we struggle with carry-on bags. And the problem with airplanes today, on 737-800 with 150 people, we have maybe 120, 130 carry-on bags. There's at least 10 to 20 on every flight that don't fit. So we have a process to try and manage carry-on bags on every flight. They get lined up in the jet way, and they've got to get taken down downstairs. These are legal carry-on bags. These are not bags that people will normally check. So what we've done – what the bigger bins will actually do is actually speed up the boarding process, have people bring their bags in. Instead of us having to create a process where, after we check in – or we on 110 people, we start tagging bags and putting them on the jet way for our rampers to come pick them up. So operation wise this is going to be a massive, massive help and help our operation.

And, Helane, just on that, I mean Ben is talking about already regulation carry onboard bags. So these were coming on anyway. It's just that he's not having to take them downstairs. And one thing that – and I think we've shared this in the past, that we are very aware of obviously what the bag fees generate for our business. But that's not something that – bag fees, there's different views on those. We are investing in additional or ancillary products that our customers want to pay for, really enjoy. So our preferred seating is an example, our buy onboard products and other things as we invest in our business. Those are the things that we are looking to increase the revenue per ship versus bag fee revenue. Helane Becker - Cowen & Co. LLC: Great. Okay. Thanks very much. Those were my two questions.

Thanks, Helane.

Thanks, Helane.

Your next question comes from Duane Pfennigwerth with Evercore ISI. Your line is open.

Hey, thanks for taking the question and squeezing me in here. Just curious, my model on a quarterly basis only goes back to 2006. When is the last time that Alaska has grown consolidated capacity 13%?

Off the top of my head I don't know. I'm pretty sure – well we've been growing it double-digit per quarter in many quarters. First and second quarter were all double-digit growth and in previous years. Actual 13%? Off the top of my head, but it's certainly within a point or two of what we've done many, many times over the past few years. That's just off the top of my head (50:26).

And, Duane, Lavanya pulled some data for us just in the last couple of days. We have – so 13% is the high watermark. We plan to grow 8% next year for the year. And we've actually grown 7.2% ASMs I think is what you told us, Lavanya, for the last five years. We've grown 7% on average for the last 20 years. So next year's growth is – on an annual basis is right in line with – a little bit high, given what's happening in Seattle. But basically in line with what we have been doing. I mean it is what it is. It's a little high in the fourth quarter and the first quarter, but there's no difference in our thinking about next year as compared to other years.

Duane, just to add to that, if you sort of dissected that by five-year increments, you would find that it's essentially about 7% in every five-year increment. So it's interesting to see that. And next year we're right in the ballpark of what we've said for the long term, which is between 4% and 8%.

I appreciate that. I guess, we started this year at 8% and are ending at 11%. So maybe you can just help us understand what changed over the course of the year, how the thought process changed? What's actually driving 13% right now? Maybe the answer is, look, fuel is ridiculously low, and we can make a lot more money doing this right now. And if that changes, then we'll revert back. But maybe you could help us think about your thought process over the course of the year. Thanks for taking the question.

I think what you're really seeing is us continue to accelerate new markets as we see new revenue opportunities. And I mean they're performing, and we will continue to do this as long as they perform. Those are the main reasons. Also next year, we have a lot of gauge going on. And even this year, I think we updated our forecast to about 10%. We're going to be about 10.6%. That's basically flying half or more airplanes than we had shared with you. So you're going to continue to find us waver around a little bit. But we will make sure that we adjust capacity one way or the other, given the economic environment if we see a change.

Maybe further to your point, Andrew, Duane, if you go back and look at 2009, I think what you would see is Alaska quickly, quickly responding to a downturn in demand. So this is working now, as Andrew says, but if things change, we'll change.

Okay, guys. Again, thank you for taking the questions.

Thank you.

Thank you.

Your next question comes from Dan McKenzie with Buckingham Research. Your line is open.

Okay. Good morning, guys. Thanks. A couple questions here. Andrew, in the competitive markets, what percent of system PRASM are they trending? So 70%, 80% of what's normal? And, I guess, what I'm trying to get at is, what is the trajectory? We've got a very good demand story in Seattle. I guess, I'm just trying to understand is that trajectory – is that gap narrowing? Or perhaps are you trying to suggest it may widen in the first quarter?

I think high level, the color I would give you is that Shane's team has done a fantastic job where we've had incursions in the first year. As they move into the second year, our performance has actually improved. And I think what you're also seeing is some of the downward pressure, especially on like Alaska long haul being offset with good, strong revenue performance in other areas of our system. So I probably didn't do a great job answering your question. But overall, where we see pressure on unit revenues, we have offsetting benefits on unit revenues from a network perspective.

Yeah, maybe I can circle back. But, I guess, just on the offsets here, I guess, I'm just wondering what percent of revenues now come from codeshare relationships? And with American Systems now integrated, I appreciate the commentary. But maybe you could just remind us how fast is that overall codeshare growing? And what's really the target here as a percent of total revenue?

I think overall on a complete partner basis, I think traffic's about 15% of the third quarter. And I think what you're going to find, Dan, is that we will lose in some and gain in others, net-net be solid. The goal, though, is to increase the yield and really working with American and our other partners with premium product, corporate customers and accounts. And so we're very, very optimistic about turning that on in a powerful way. But as for specifics, I'll share what we can at Investor Day and I think you'll learn more there.

Okay. But I think if I can maybe clarifying a little further. Historically has that been 14% and so you've now recovered basically the codeshare traffic that you've lost to Delta?

Yeah. I would say – I mean, really broad scope here is anything we've lost, we've replaced. And that's the big picture.

It's actually a touch over 15% right now, Dan. And that is – my sense is that maybe is a little higher than we've been the last few years.

Well, congratulations. Thanks, guys.

Thanks.

Thank you.

Your next question comes from Darryl Genovesi with UBS. Your line is open.

Hi, guys. Thanks for the time.

Good Morning, Darryl.

Brandon, your maintenance CASM has been for the most part a good guide for you guys for the last couple of years. Just wondering now, as we approach the timeframe where you've kind of done retiring 737 Classics, what would you kind of anticipate there in terms of perhaps an upward movement? I mean, is this something that should continue to benefit you until all the Classics are gone? Or just, I guess, 737 NGs that you have purchased over the last several years as they were off warranty likely to start to push the maintenance CASM back up again? Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Yeah. Darryl, maybe I'll start and then Ben can jump in here. What I would say is that to the extent that 400s are exiting the fleet, that's a benefit to maintenance CASM. But we are getting to a point where some of those initial NGs are getting to their first big overhaul. And that's something that we're thinking about as we move into 2016 and certainly into 2017. Ben, you want to talk about that?

Yeah. Darryl. So we have – of course, we have our Classics and they'll be going away. But our NGs are reaching 13 years to 15 years old. We've got brand new ones and ones that are 15 years old. So we manage those NGs with cost – larger heavy maintenance cost. And getting into the first major overhaul on NGs. So yeah, you will see an uptick in maintenance costs on our older NGs. But with the younger planes, the NGs under new have just been terrific cost profile for the first 10-or-so years.

Great. Thanks very much. And then, Andrew, just with regard to these multiple partnership agreements that you have in place, when you go out and market to the corporate contract customer in particular, is there often a sort of joint marketing event that happens with the partner? Or are you still for the most part kind of marketing on your own? And does that create an opportunity down the road?

I'm going to let Joe handle that one, as he looks after our corporate accounts. Joseph A. Sprague - SVP-Communications & External Affairs: Hey, Darryl. It's Joseph Sprague. I've got external relations and sales as part of that team. Yeah, in fact, we have a more intense effort going around corporate accounts in Seattle, but throughout our system right now than probably ever before. And the team's doing really great. We are doing more and more sort of joint sales activities with American and maybe that's a big opportunity for us going forward. And then you've heard us talk about our partnerships with the foreign flag carriers, the international carriers, particularly here in Seattle. And promoting those to corporate accounts here in Seattle is another big opportunity. There's a lot of interest in folks that fly out domestically that can then use those other international carriers out of Seattle to get anywhere in the globe.

Okay. Thanks very much, guys.

Thanks, Darryl.

Thank you, Darryl.

Your next question comes from David Fintzen with Barclays. Your line is open.

Hey. Good morning, everyone.

Hey, Dave.

When we think about the 8% growth that you're talking about for 2016, and if I go back to last quarter, I believe you had said something along the lines that your mindset had been you to grow more. And you weren't going to say exactly where you're going to grow. You gave us some guidance that kind of fits that. But that mindset was pushing you to lower that number. Is this 8% a continuation of that? Or has your view of 2016 kind of stabilized through the course of this third quarter?

Yeah, David. We're still got 8% in the sight here. And as I said earlier, it's really mid-con and trans-con are big primary drivers in the first half. And then as it relates to the landscaping economy, we will continue to look out and make adjustments as necessary. But nothing materially changed since we last spoke.

Okay. And are you seeing anything sort of residual oil demand-related in Alaska that you're watching? Or where would that come from realistically or what are the places you're most concerned about? Joseph A. Sprague - SVP-Communications & External Affairs: This is Joe. I'll touch on just the state of Alaska piece and then Andrew can pick up anything else. The state of Alaska, the falling oil prices they are having a big impact on the state government, but overall consumer demand is strong. Their permanent fund dividend check they get each year, all the state residents get, was one of the highest ever. The tourism numbers to the state of Alaska this summer were quite strong. So I think that market is steady and I think will be for the foreseeable future. Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Joe, isn't it correct that the state has big budget reserves that they'll use to smooth out variations according to a... Joseph A. Sprague - SVP-Communications & External Affairs: They do. Brandon S. Pedersen - Chief Financial Officer & Executive Vice President, Finance: Okay.

And then just on the demand side, the only thing that keep me up most at night is just managing competitive capacity coming in on our markets and using the full breadth and depth of our network and our partners to compensate from that. All other things being equal, demand is very good.

Okay. Thanks. I appreciate all that.

Thank you.

Thanks, David.

Operator, we have time for one more question.

Okay. Your next question comes from Andrew Didora with Bank of America. Your line is open.

Hey, guys. Actually all my questions have been answered. Thanks for all the color, though. Thank you.

Thanks, Andrew.

You're welcome.

Thanks, Andrew. So I think that sort of takes us to the end of our hour. Thanks, everybody, for dialing in and we look forward to seeing many of you in New York City on December 3 for our Investor Day. Thank you.

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