Lavanya Sareen - Managing Director-Investor Relations Bradley D. Tilden - Chief Executive Officer and Chairman Andrew R. Harrison - Executive Vice President and Chief Commercial Officer Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance Shane R. Tackett - Vice President-Revenue Management, Alaska Airlines, Inc. Benito Minicucci - President and Chief Operating Officer Kyle B. Levine - Vice President-Legal & General Counsel Mark G. Eliasen - Treasurer & Vice President-Finance Joseph A. Sprague - SVP-Communications & External Relations

Savanthi N. Syth - Raymond James & Associates, Inc. Joseph DeNardi - Stifel, Nicolaus & Co., Inc. Rajeev Lalwani - Morgan Stanley & Co. LLC J. Yates - Credit Suisse Securities (USA) LLC (Broker) Jamie N. Baker - JPMorgan Securities LLC Helane Becker - Cowen & Co. LLC Hunter K. Keay - Wolfe Research LLC Catherine M. O'Brien - Deutsche Bank Securities, Inc. Darryl Genovesi - UBS Securities LLC Dan J. McKenzie - The Buckingham Research Group, Inc.

Good morning. My name is Sally, I will be your conference operator today. At this time, I would like to welcome everyone to the Alaska Air Group Second Quarter 2016 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, Sally, and good morning, everyone. Thank you for joining us for Alaska Air Group's second quarter 2016 earnings call. On the call today, our CEO, Brad Tilden will provide an overview of the business and share our progress on the proposed acquisition of Virgin America. Our Chief Commercial Officer, Andrew Harrison will share revenue results for the quarter, followed by Brandon Pedersen, our CFO, who will discuss our financial results, capital allocation plans and outlook for the second half of 2016. Several members of our senior management team are also on hand to help answer your questions. As a reminder, 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. In addition, today's call may be deemed a solicitation in respect of Alaska Air Group's contemplated acquisition of Virgin America. The information discussed today is qualified in its entirety. The Virgin America's definitive proxy statement that was filed with the SEC on June 20, along with other relevant solicitation materials, which are all available on Virgin America's Inventor Relations page at ir.virginamerica.com. And now, that I have complied with our GC's request in completeness, we will move to the results. This morning Alaska Air Group reported a second quarter GAAP net profit of $260 million. Excluding the $6 million impact of mark-to-market adjustments related to our fuel hedge portfolio and a $9 million impact associated with merger-related costs, Air Group recorded a record adjusted net income of $263 million, up 14%. Earnings per share grew by 20% to $2.12 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. Now, I'll turn the call over to Brad.

Thanks, Lavanya, and good morning, everybody. As we progress through 2016 and look forward to the second half of the year, we know that our investors have a lot on their minds and the equity market certainly reflect that. As you know, we try to stay focused and concentrate our efforts here on building a fundamentally good business. As we look ahead, we feel very good about our underlying business and all of us here are very excited about the future. The fundamentals of our business are strong. We are running a great airline and we believe the merger with Virgin America is going to create a very strong airline with reach across the entire country and with real strength in originating traffic up and down the West Coast. I'll start off today by talking about the underlying business and then share an update on the merger. First, we're operating safely and on time. Our ops folks are doing an outstanding job and I want to thank them. 88.7% of our flights arrived on time in the second quarter and we did this with much less block times than the average airline, which is a credit to how efficient and consistent we are on the ground. We expect this on-time performance will lead the six largest domestic airlines. We also completed 99.8% of our flights in the second quarter, canceling on average only one mainline flight per day. Second, our employees are taking great care of our customers. We spent a lot of time with our frontline employees building alignment and talking with them about the sort of airline we want to be for our customers. We're seeing substantial evidence that these investments are paying off. Our customer satisfaction scores, which have been on a seven-year or eight-year run continue…

Thanks, Brad, and good morning, everyone. Our second quarter revenue increase $57 million or 4%. This contrasts with the industry revenue shrinking by about 2%. Over the past five years, our revenues have grown 35%, outpacing the industry by 3 to 1. This growth has come with strong returns that resembles high-quality companies. Our second quarter PRASM was down 7.7%. We were very pleased though that our unit revenue performance was within a 150 basis points to the industry, notwithstanding the fact that we grew capacity by 11% with competitive capacity growing 13%. We're also very pleased to see our load factors at 85% which was flat for the first time since the first quarter of 2013. That said, close-in pricing has been showing weakness for reasons you're already familiar with. While we are always mindful of the environment we operate in, the fundamentals of Alaska are sound for several reasons. First, we are offering a high-value product to customers at low fares. Our low fares are enabled by low cost and have allowed us to grow profitably. The 100 new markets Brad referenced earlier in aggregate are earning margins at system-average levels and represent approximately 20% of our annual revenues. I'm also pleased to announce that we just learned we've received approval for four additional flights to Newark. We plan to launch Portland and San Diego-Newark this November and then San Jose and a third Seattle-Newark in March and May respectively. Secondly, when speaking of offering options to our customers, partnerships are key. Earlier in June, we launched a new Mileage Plan partnership with Japan Airlines making it the third international partner we've added in the last 12 months, Hainan and Iceland Air being the other two. That brings our total partners to 17 and allows us to serve…

And your first question comes from the line of Savi Syth with Raymond James. Your line is open. Savanthi N. Syth - Raymond James & Associates, Inc.: Hey. Good morning, guys.

Hi, Savi. Savanthi N. Syth - Raymond James & Associates, Inc.: Hi. I think Andrew mentioned that there is close-in fare weakness and I wonder if you could just elaborate on that a little bit, particularly maybe how it progressed through the quarter, or if there were certain regions that you saw kind of greater weakness? And maybe along those lines, what the implications of your slowing capacity growth might be to maybe help offset those trends?

Yeah. I'll start off and Shane may have something to add. But we're not experiencing anything materially different than the industry, Savi, but what I will tell you is that our close-in bookings from a business volume is actually up. We still continue to see strong volume and demand closer in. Big picture, I think the industry is at a place where there's been consolidation and there is new products like basic fares into the marketplace, and I think there is just some adjustments going along, but as we've shared in our remarks, we still feel very confident in how we are managing our revenues and building this business. Shane, do you have any comment there?

Maybe I'll just add in terms of like the progression. I think we started to see the close-in sort of changes in pricing environment walk in to the West Coast somewhere around March, and they've just sort of progressively made their way through the quarter, but nothing sort of unexpected, based on what we had seen going on in the industry elsewhere. Savanthi N. Syth - Raymond James & Associates, Inc.: Thanks, Shane. And just a follow-up on that. So is the progress since March, is it continuing to deteriorate or is that just kind of now that it's entered it's just throughout?

I mean it's – just more recently it has felt more stable. It feels like we're sort of at where we're going to be. I couldn't really – I don't know what will happen in the near future. But nothing is getting worse recently. It's sort of been here for last month or two. Savanthi N. Syth - Raymond James & Associates, Inc.: All right, great. Thank you.

Savi.

Your next question comes from the line of Joseph DeNardi with Stifel. Your line is open. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Hey. Thank you very much. Andrew or Brandon, I'm wondering if you could just talk about capacity, you're going to be coming out of the year at a pretty low number. Does that continue into next year until the deliveries come in? In the release, you give fleet count at the end of 2018. What does it look like in 2017, just any color on kind of capacity plans for next year?

Yeah. I will start with capacity and let Brandon touch on the fleet. You're right, in fact, the 3% in the fourth quarter and I think if you look into the booking schedule into the first quarter, it's quite low. As I did share, we're going to have some very exciting opportunities with some Newark opportunities and Cuba. But, we are going to be firming up and, as you know, we normally set our guidance for 2017 later in the year and of course with the proposed Virgin America acquisition, we're going to be taking a long hard look at 2017 capacity. So, for now, I would just say that you keep focused on the next few quarters, 2017 will be much more information coming on that. Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: Joe, it's Brandon. Just to follow-up on the fleet question. We'll end this year with a 153 airplanes on the mainline as you see in the Investor Update. At the end of 2017, we'll actually only have one more at a 154 airplanes based on what we see right now. A big delivery year next year with 14 new 737-900s coming in. However, it's the year we finished returning all the 737-400. So, net growth of one. We'll have some gauge growth that we can use for capacity growth but on the fleet side not much. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Okay. And then, Brandon, just on the dividend side, you've made it pretty clear that the buybacks probably going to slow, but you've been pretty good about growing the dividend. Do you see that as sustainable going forward even as the buyback comes down? Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: I do. Yeah. We've been saying for the last couple of years, we want to be known as a company that pays a consistent and meaningful dividend, but also one that grows the dividend. I can't speak for the board right now, but that would be our intent. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Okay. Thank you.

Your next question comes from the line of Rajeev Lalwani with Morgan Stanley. Your line is open. Rajeev Lalwani - Morgan Stanley & Co. LLC: Great. Hi, gentlemen. Thanks for the time. Just given all the pressures we've seen out there with the airlines stocks and the pricing and macro, is it maybe causing you to take another look at Virgin and maybe you can just walk through the out that you have to the extent that the extremes out there do continue?

Rajeev, thanks for the question. We continue to be super excited about Virgin America. We take ourselves back up to 35,000 feet or 41,000 feet. I mean, I think this business is actually a better business than it was 5 or 10 years ago. We're very confident in our own company, our ability to do well with the assets we have. As you know, we've got real strength at Alaska. We fly to 35 states and a 115 cities, but real strength of originating traffic in Alaska, Washington and Oregon. And then, Virgin gives us California. So we try to not focus too much on the short-term, on what's happening with PRASM and more think about fundamentally what's going to happen in this industry over 5 years, 10 years, and 15 years and all of us are just enormously excited about what we're going to do bringing these two great companies together. So that's where our head is. Rajeev Lalwani - Morgan Stanley & Co. LLC: Okay. Thanks. A quick question for Andrew. Andrew, can you maybe provide on maybe a historical basis what the impact is to RASM to the extent that you have a move in capacity that's 5 points or 10 points. I am just trying to figure out maybe how to think about pluses and minuses going forward just given that things are going to move a lot on the supply side.

Yeah. I think it's been sometime since we've grown at this lower level. So I think you'd have to go back in history. But I think the other dynamic that's going on too is just the change in the competitive landscape. So I am not sure history would be the best teller of the future. I think right now the lower growth is going to be a good move for us in the fourth quarter as we get ready and set our sights on 2017. That's the best I can give you. Rajeev Lalwani - Morgan Stanley & Co. LLC: Okay. At least I tried.

You bet.

Your next question comes from the line of Julie Yates with Credit Suisse. Your line is open. J. Yates - Credit Suisse Securities (USA) LLC (Broker): Good morning. Thanks for taking my question.

Good morning.

Good morning, Julie. J. Yates - Credit Suisse Securities (USA) LLC (Broker): First, I will ask a question on labor. At what point you guys began engaging the pilots for single contract negotiations and how long does that take in order? Do you need to get to a single contract to recognize any of the synergies that you guys have laid out?

Good morning, Julie, this is Ben Minicucci. Those discussions are ongoing ,as we speak. So, we've engaged both on our side, the Alaska side and the Virgin America negotiating team and it will probably a 12 month process at the minimum before we get to some common labor agreements and common integrated seniority list so – and yes once it is combined we will be able to extract more synergy from that. J. Yates - Credit Suisse Securities (USA) LLC (Broker): Okay, great. And then just a second one. You guys mentioned an agreement with the DOJ around the close for the fourth quarter. Is there any update following the second information request (29:33) request or will the next data point to look for really be an approval position? Kyle B. Levine - Vice President-Legal & General Counsel: Hey, Julie. This is Kyle. We are making great progress with the second request, and as we've said before, DOJ is looking really closely, as we expected. We are still really confident that we can close in Q4 and what's going to come into focus for the department is this is a great pro-consumer combination. As you'd expect, some of the things, they are looking at right now between now and the ultimate clearance date, if that does come, is that route overlaps, great story there. We have only seven route overlaps, and, of course, they are really interested in our fare philosophies. We have a success story we love to tell as a low fare, high value airline. So, all said and done, we are on track for a Q4 close if things are going well. J. Yates - Credit Suisse Securities (USA) LLC (Broker): Great. Thanks so much.

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

Hey, good morning everybody.

Hey, Jamie. Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: How are you?

I'm well. Thank you, all things considered. Brad, you spoke at the Wings Club about the potential for retaining the Virgin America brand as a separate entity. Today, it sounds more like you are studying which aspects of the brand you might want to retain. In the event that you were actually serious about the possibility of keeping it separate, could you identify any airline-within-an-airline construct anywhere in the world where margins approach those of Alaska Air Group?

Jamie, thank you for the question. We've actually thought about this quite a lot. I think we are not going to say a lot more at this point about this consideration. I will just tell you what we are doing is we are looking at lot of data. We have built clean teams with Virgin and Alaska. We are looking at what's attractive in California to customers about the Virgin America offering. We are just trying to think about what might be best for our Company, going forward. And I just think the best thing for the owners of this company might be for us to do this work in quietly. And then when we have something to say – I don't think it's going to be all that long. What we've said is first quarter 2017. When we actually have a viewpoint, when we have a perspective on this, we will share it. So sorry to not give you a better – more information but I just think that might be best for all involved right now.

Yeah, okay, okay. I will give you a chance to make it up to me on my second question then. We will see if I get lucky. I know that on paper the merger raises very few regulatory red flags but I still can't escape this sort of nagging feeling that DOJ may prove susceptible to its own emotions when it comes to the subject of airline M&A. In the event that the DOJ does move to block or tries to extract some sort of concessions, do you walk or do you fight? Kyle B. Levine - Vice President-Legal & General Counsel: Hey, Jamie. It's Kyle, again. I guess, I would say neither. We entered this contract expecting to enter a long marriage with Virgin America and our position really wouldn't change even if DOJ challenges or acquires some divestiture, which, by the way, just looking at precedent, I think that's highly unlikely. Obviously, I can't speak for the department. But, again, we are talking about a pro-consumer situation where there are seven overlap routes, none touching a slot-constrained airport.

Yeah. I definitely agree with everything on paper. I don't know, it's maybe having been here before that led me to answer the question or ask the question, but I definitely appreciate the one and half answers that I got today. I'll pass it on to the next guy. Thanks so much, guys. Kyle B. Levine - Vice President-Legal & General Counsel: Thank you so much.

Your next question comes from the line of Helane Becker with Cowen and Company. Your line is open. Helane Becker - Cowen & Co. LLC: Thanks very much, operator. Hi, guys. Thank you for the time here. My first question is can you share what the interest rate is on the deal financing? Mark G. Eliasen - Treasurer & Vice President-Finance: Yeah. Helane, hi. This is Mark. What we can tell you is obviously we won't know the exact rate until we close. What we can say is that margins are very tight. And you know that markets rates are down and, as Brandon said, at historic low levels. So, what I can say is we will be comfortably below 3% and that's about all the guidance I can give you right now. Helane Becker - Cowen & Co. LLC: Okay. That's helpful. Thank you. And then my other question is on, actually on the income statement and operating expense line. And maybe Brandon, this might be for you. Given that you've turned over the fleet, why is your maintenance – started to retire older aircraft. Why is the maintenance cost up 25% in the quarter. Was there something going on last year that caused this increase to be so substantial this year?

Hi, Helane. This is (34:42). I'll answer that one. Helane Becker - Cowen & Co. LLC: Okay.

Yeah. Last year, if you might recall in the second quarter of last year, we had some maintenance credits that were related to some engine work we had done in previous periods. So, we got all those credits and recognized it was last year. That was about $10 million. So, when you look at a year-over-year, if you take away that $10 million difference between the two periods then maintenance normalizes quite a bit. So, that's really the big difference. Helane Becker - Cowen & Co. LLC: Okay. Great. That's hugely helpful. Thank you. Those are really my only questions. Thanks very much.

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

Thanks. Hi, guys. How're you doing? So, I get a little frustrated when I hear airlines talking about PRASM as some sort of like short-term only metric as if it's some sort of like hedge fund only thing that matters and like long-only guys don't care about it because it's just not true. This was going to be the fourth year where PRASM is basically down or flat or something like that for you guys. And that's not sustainable. Brandon, you talked about the compounding effect of CASM. There's a compounding effect of PRASM too. So is there a thought to maybe thinking about this as you reevaluate a whole lot of things post-merger, whether it's guidance, conventions or long-term targets to maybe making PRASM a long-term metric somehow? And by that I mean we are going to have a target of roughly inflationary-like growth of PRASM plus or minus 200 basis points or something like that because I don't know why PRASM has to be so short-term-oriented and I feel like you guys might be in the position now to sort of reevaluate things after the merger closes to do something about that. Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: Yeah, Hunter. It's Brandon, maybe I'll take that. I agree with you. I don't know why there is so much focus on PRASM. What I would do if I were an investor is I would focus on profit, and I think as you think about our business going forward either as Alaska standalone or as a combined company, we are going to make profit-maximizing decisions and some of that is going to come from PRASM and some of that is going to come from CASM. I think the danger of focusing just on PRASM is that you don't know what happens in any particular market. You don't know what happens with fuel prices and I think you are seeing a lot of that now. But at the end of the day, it's really MASM that matters and profit on the bottom line and actual cash that goes into your checking account that you can use to delever the balance sheet and pay back debt and return capital to shareholders. So I agree with you. I...

Brandon, Brandon. I am sorry to interrupt you but I think you misheard me. I am saying the exact opposite to be clear. I think PRASM matters a lot because it's a proxy for pricing power and that is what gets this group to rerate?

I was going to jump on to Brandon's answer as well. I think you're making a great point. And I think Brandon does agree with you. If you look at this industry 15 years ago, people didn't know what CASM was, we started talking about CASM, now every airline has three-year objectives for CASM, two year, one year. We give really good, and I think reliable guidance on CASM. Then, I would say it was roughly 10 years ago ROIC came into focus and we started talking about that. I think you're giving us and other management teams a great challenges. If you were to Andrew Harrison and Shane Tackett, if you were to give these guys a sort of a longer terms message to say what are you going to do for the revenue side of the business, how would you construct that goal in. In the Virgin, it's – as we sort of thought about these things. They are hard questions to look at them and gotten our head around. It was hard to start producing CASM objectives. But I personally think you have given us a good challenge and we should take that away and think about it. We might come away a stronger airline if we had a way of articulating our RASM objective.

Yeah. Okay. Thank you, guys. I appreciate it.

Yeah. Thanks, Hunter.

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

Hi, gentlemen. This is actually Catherine O'Brien filling in for Mike.

Hi, Cathy.

Hi, guys. I know you're announcing closing yield pressure on the West Coast, but last quarter you're actually seeing strength in your corporate segment. And I believe though that corporate was outpacing system revenue. I was just wondering has that trend continued into the June quarter. And if so do you think you've been gaining share because of your relative value proposition versus some of your network carrier competitors? Joseph A. Sprague - SVP-Communications & External Relations: Hey, Catherine. This is Joe Sprague. Short answer is yes. For the quarter just ended, we did see continuing strength in the corporate sector. In fact, corporate customer activity was up both on flights and revenue. And particularly here in Seattle, really good growth from companies sort of the key local corporations that we do business with here in the Seattle area. And then just from a sector standpoint, I think, some of the underlying strength in addition to us delivering a great product to our customers and our sales team really getting after it, is the tech sector that we benefit from here on the West Coast is doing especially well right now.

Okay. What about your share? You are seeing that go up in some of your home markets? Joseph A. Sprague - SVP-Communications & External Relations: Yes. Yes, we have. In fact share is up across all of our key markets.

Okay. And if I could just ask one more quick follow-up. I know, you guys took a pause on the share repurchase program this quarter. But, should we expect any additional buybacks this year to hit that $325 million target of dividends and share buybacks this year or has that target changed? Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: Hey, it's Brandon. No, you should not expect any additional share buybacks this year. I think the target – what was your number?

I think you guys said $325 million last quarter. Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: Yeah. I think we included the share buybacks that we did year-to-date plus the dividend payments that we would pay through the rest of the year will be right at that level.

Okay. Great. Thanks so much for the time. Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: Thank you.

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

Hi, guys. Thanks for the time. Maybe I'll start with one for Andrew. Andrew, you had highlighted an outlook for 13% and 12% competitive growth in the next quarters and you'd commented that, that was sort of similar to what you had been seeing. But, it looks like the mix changes a bit, right, because most of the competitive growth that you guys have been seeing has been from Delta, which is building a connecting hub over Seattle, whereas the mix seems to be moving away from Delta, as we move into the end of the year, so just wondering is, is that emphasis on perhaps a little bit more of the local market by the competitors that are going to be growing in Seattle, and your other markets in the second half, does that put more pressure on Alaska revenue perhaps than what you have been seeing?

I think you are spot on with the mix and I think really the competitive pressure, we are seeing a little bit is, some of the network carriers, with their hubs into Pacific Northwest, and then to a much lesser extent, some of the ULCCs. So, it's not – it's a little bit fragmented across various markets that we compete in. So, at the end of the day, competitive capacity is competitive capacity, but from our perspective, there is no real changes to the dynamic to our network, given the mix change.

Okay. All right. Thanks for that. And then maybe, if I could, a quick follow-up for Brandon. Brandon, I think we've seen something like a 75-basis point compression in 10-year treasury yields this year. I'm just looking at your 10-K where you disclosed a $128 million impact to the pension deficit with every 50 basis point move in the discount rate, is that a good number to use on a prospective basis? Mark G. Eliasen - Treasurer & Vice President-Finance: Yeah. Hey Darryl. This is Mark. I can just tell you that rates have gone down and as we already mentioned that's really going to help us with the financing as we financed the $2 billion acquisition. So it will impact the liability aspect of our pensions, but it really is, what those rates end up at yearend, we don't know what it will be. They are already going back; I think that they are already up about 20 basis points from where they ended up in the quarter. So not sure where they are going, but it will have an impact on the liability, yes.

But the sensitivity should be roughly the same as it would have been in 2015? Mark G. Eliasen - Treasurer & Vice President-Finance: Yeah, it would be.

Okay. Thanks, Mark. Mark G. Eliasen - Treasurer & Vice President-Finance: And I will just tell you that on the asset side of the pensions, they are growing and as you know, we are virtually or nearly fully funded at yearend and we are still remaining at about that status, so no big story there for us.

Great. Thanks very much. Mark G. Eliasen - Treasurer & Vice President-Finance: Thank you.

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

Hey. Good morning, guys. Andrew you talked about weakness in closing yields and my question is I think somewhat related to an earlier question, but just yet demand is pretty good here. So I am wondering if you can just elaborate a little bit more and that is, is the weakness in closing yields just simply a function of competitive capacity, is it more of a speared (44:37) effect, is it simply Alaska growing a little bit too fast to absorb the demand, what really has to happen. Well, I guess you can't really talk about pricing, but just wondering if you can just provide a little bit more perspective on what's really been probably the biggest culprit for that from your perspective.

No, Dan, I think saying a whole lot more is probably not helpful for anyone. I think fundamentally what I will share with you is that we've seen is changes in what are traditionally fare fences and just revenue management practices close in. And I think they are in some part a reaction to changes in dynamics of how people are flowing passengers across their network across the country. There's certainly ULCC dynamics in here and there's certainly new products being launched by some of the network carriers. And I think when you put all of that together, you're getting what you're getting today. And so, I don't have a whole lot more insight than that, Dan. But, as Shane shared, we're dealing with that, we're managing it well, and because this stuff is close-in, we have no view what it would be in three months time because by definition it's close-in, we won't know until we're three months from now. So, I know that's probably only half of an answer of a half, but I apologize. But that's sort of what we're seeing, but we're not immune to what the rest of the industry is seeing.

No, I understand. I appreciate that, that was helpful. And then, Brandon, I think what stood out to me in the earnings release was mainline CASM ex-fuel of $6.88, down 4% year-over-year. And obviously that factors in some deferred expenses in the quarter, but given that just some of your key labor contracts are out of the way and just kind of given your commentary of locking your non-fuel CASM down a little each year, what goal if any do you have with where that metric lands over the next year or two? Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: It's really just to continue to drive it down. We have a long streak of CASM reduction that I think this year will be 15 out of the last 16. As we close the acquisition with Virgin America in the fourth quarter, everything sort of resets. But, the philosophy of the company does not reset, which is continuing to drive cost down, so we can be more competitive, increase the gap between us and the legacy carriers and offer low fares to our customers.

And then, I guess if I could just squeeze one last one in here; just following up on Jamie's question. Just given the strength of Virgin's brand, Brad, of course it's great to hear you talk about how strong the Alaska brand is as well. So, I'm wondering does it make sense to talk about it in terms of a Net Promoter Score, which seems to be at least one of the definitive – more definitive measures of a company's brand and if so, is it north or south of Google?

So, Dan, what's your – we like the Net Promoter Score, I think we could say that. What's your exact question?

Just whether it makes sense to talk about the brand and in terms of a Net Promoter Score, sort of talking about that publicly because just I think there's a broad recognition that there is a very high correlation between where that score sits and revenue production?

Yeah. Yeah. Dan, I don't think we want to say a lot more about the brand, but I think I will say to you that we do like the Net Promoter Score and over time here we've been measuring customer satisfaction. We're thinking about shifting, relying more on Net Promoter Score because I think it does have a lot of validity, but I don't think we want to say more about the brand today.

Understood. Okay, thanks for the time you guys.

Yeah, thanks. Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: Thank you.

And your next question comes from the line of Savi Syth with Raymond James. Your line is open. Savanthi N. Syth - Raymond James & Associates, Inc.: Hey, guys, thanks for the extra question here. I was just wondering if – I think you're still on track to start rolling out Preferred Class, and if you could just remind us what the timing of that will be and especially a little bit more on how that might ramp up through 2017 and maybe when we'll start to see that benefiting the earnings?

Hey Savi, this is Shane. Thanks for the question. Yeah, Premium Class is sort of the name that we're using to brand it and it is on track. We're still on track to begin configuring aircraft in late September and so we'll have, I think, 60 aircraft done or 70 aircraft done by the end of the year. We did push the date that we decided to pre-sell the actual products from this summer to Q4. There's just a lot going on right now. And we wanted to pay attention to the right things and make sure we delivered this really well when we get there in Q4. So all of the economics are going to roll onto 2017, but they'll be up and running by January and very consistent with what we had shared at the Investor Day some months ago. Savanthi N. Syth - Raymond James & Associates, Inc.: All right. So, the kind of the benefit this year probably not there, but you'll have the run rate in 2017?

I think we had a very de minimis amount. Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: I think we have $5 million for this year, so...

Yeah. Savanthi N. Syth - Raymond James & Associates, Inc.: Got it. And if I may – got it. And If I can quickly ask, just any update on how kind of the demand is in kind of the state of Alaska or as well as Hawaii?

I can sort of answer that. I mean without getting too specific, demand has actually been very strong out of the state. It's sort of grown in line with the rest of our system. The state of Hawaii is also very strong, especially out of the Pacific Northwest. And out of California, there's more capacity in the Bay Area that Hawaii and a lot of it's being filled. So both places continue to be fairly strong points for us on the network. Savanthi N. Syth - Raymond James & Associates, Inc.: All right. Great. Thank you.

Thanks, Savi. Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: Thank you.

Your next question comes from the line of Joseph DeNardi with Stifel. Your line is open. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: All right. Thanks for the follow-up. Andrew just on the other revenue line, I think there is some noise there from the credit card deal. Can you just speak to excluding that or once you annualize that, what the kind of underlying growth and other revenue looks like? And are you guys seeing any headwind to take rates on bag fees or anything like that as you build out your international partners, I think Virgin has actually spoken to as they've done that, that that's been a little bit of a headwind for bag fees? Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: Joe, it's Brandon. Maybe I'll start with the first part and Andrew can comment about ancillary, I would not call that noise at all. I would call that actual real economics associated with our credit card deal, which are fabulous. As you might recall, we had a new deal in the middle of last year, so we're seeing the annualization of that both on increase in rate and the strong volumes that we're seeing, that should be basically done now in the second quarter, maybe trickles a little bit into the third quarter. In terms of the ancillaries, Andrew?

Yeah. I think, really the main thing on ancillaries is really back to the card, as Brandon said. The significant growth in the card and the first bag free up to seven passengers, but that's all being recouped in other places through the growth of the card, the economics and the strength. So, net-net we expect our bag fees to be down year-over-year on a per-passenger basis, but that's what we were hoping, so. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Okay. I mean, Brandon, can you just speak to, I guess, as you annualized that in the third quarter, kind of what the underlying growth in other revenue is so we can model that effectively in the third quarter? Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: I don't have that off the top of my head, Joe, maybe we'll get back to you on that one. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Okay. All right. Thank you. Brandon S. Pedersen - Chief Financial Officer & Executive VP-Finance: Okay.

Thank you. Ladies and gentlemen, I will now turn the call back over to Mr. Brad Tilden.

Thanks, everybody. We appreciate your interest and your questions and we look forward to speaking with you next quarter.

Thank you for participating in today's conference call. This call will be available for future replay at www.alaskaair.com. You may now disconnect.