Andrew Harrison
Executive Vice President and Chief Commercial Officer at Alaska Air Group
Thanks, Ben, and good morning, everyone. Today, my comments will focus on fourth quarter and full year results, along with Q1 revenue trends. Fourth quarter revenues reached $2.6 billion, up nearly 3% year-over-year, coming in slightly ahead of the midpoint of the revised guidance we put out in early December. Capacity finished the quarter up 13.6%. We saw a strong finish to the year in December with limited weather events and excellent operational performance to support holiday travel. This resulted in record traffic and coupon revenue up 7%.
For the full year, we generated a record $10.4 billion in revenue. This was up 8.1% versus 2022 on capacity of 12.8%, resulting in full year unit revenue down approximately 4%. The improvement we saw in unit revenue through year-end showed a marked strengthening in our core revenue. Unit revenues improved from down 13% in August to down 9% in December. Notwithstanding, we grew December capacity 2 points more than August year-over-year. This is a 4-point improvement, underscoring a strengthening pricing environment from continued normalization of international demand and industry adaptation to post-COVID demand realities.
On managed business travel, consistent with what we've shared before, our belief is that we're seeing a slow and steady recovery. For example, in the fourth quarter, our portfolio saw a strong 15% year-over-year revenue growth on higher volumes and yields. Overall, business revenues are within 5% of 2019 levels with most industries now fully recovered. The notable exceptions are tech and professional services, which still lag other industries but did see 26% and 14% year-over-year revenue growth respectively in Q4.
Premium cabin revenues also continued their solid performance in 2023. First and premium class revenues finished up 15% and 10% respectively for the year, continuing to substantially outpace main cabin revenue. At nearly 32% of total revenue, our premium product orientation provides a clear point of differentiation against our domestic-focused peers, which will continue to be a core competitive advantage for us in years to come.
Regarding loyalty, bank cash remuneration also hit a new record, bringing in $1.6 billion for the full year, up approximately 13% year-over-year. We also continue to thoughtfully build value in our loyalty programs through our extensive portfolio of domestic and international partnerships and alliances, which represent approximately 7% of our total revenue.
In 2023, we added five new partners, bringing our total airline partnerships to 30, 21 of which we now sell on alaskaair.com. Our pivot to selling partners on alaskaair.com, we believe, will be a big unlock for us. We expect to further build out our selling platform in 2024, including a significant ad in British Airways, who we have never sold direct from our website other than for award redemptions. Selling our partners direct has three significant benefits. First, our website becomes increasingly valuable as a one-stop shop, providing a step change in utility for guests through expanded booking options for both domestic and international trips.
Second, it further rewards guest loyalty. When our guests book itineraries on our partners through alaskaair.com, they benefit from Alaska's generous policies such as no change fees and, importantly, full mileage accrual for main cabin and above on all partners we sell directly, which is not available through other channels. And third, it drives incremental revenue to Alaska.
In December, 38% of partner revenues sold on alaskaair.com was attributable to an Alaska operated segment. In 2024, we plan to sell approximately 5,000 tickets per day on partner flights, which is double what we sold in 2023. As we grow partner sales on alaskaair.com, we will also improve our own operated revenues.
Now, turning to our outlook and guidance. Assuming a gradual return of service of the MAX 9 fleet through the first week of February, we expect to have canceled over 3,000 flights during January, impacting our first quarter capacity by 7 points, which will result in capacity being down mid-single-digits year-over-year for the quarter.
However, given the time of year is seasonally low from a demand standpoint, we've been able to rebook over half of those guests impacted by cancellations back onto Alaska flights. Additionally, capacity flexibility at our regional carrier horizon due to lower pilot attrition has resulted in their operation of more than 150 unscheduled flights. This has allowed us to rebook over 10,000 impacted guests and get them to their destinations. As Ben mentioned, we were on an excellent revenue trajectory for the first quarter.
Prior to the MAX 9 grounding, we had line of sight to unit revenues up 1% to 2% year-over-year on low single-digit growth with held yields improving 1 to 2 points per week to start the year. This is a significant 11-point change in trajectory in unit revenue performance from Q4 of '23. As we sit here today, held yield for February and March is marginally positive with daily sold yield up 8% this past week. Clearly, we are seeing the benefits from capacity adjustments to new post-COVID demand realities, strategically reshaping our network and applying our learnings to utilize our assets more optimally.
We are seeing strong unit revenue performance from bookings in our highest frequency business markets and into California, where we reduced capacity double-digits year-over-year. Several new leisure markets are also performing well right out of the gate. And then lastly, the general fare environment is improving, along with the competitive capacity backdrop in our markets.
For the past six months, competitive capacity was up high single-digits, but trending towards flat in Q1, ahead of low single-digit growth in the second quarter. At this point in time, our held load factors for Q1 are near flat and daily intakes remain positive on a yield basis year-over-year. Taken all together, absent the impact from the MAX 9 grounding, we feel very good about the outlook for our core business in Q1 and beyond.
And in closing, we are now a $10 billion revenue franchise, and are not the same company we were a few years ago. We have a diversified product mix and all the elements in place to cater to evolving guest preferences, including lounges, first and premium class across 100% of our fleet, a global network through our partners and a robust loyalty program. Yet there is more to come, and we are excited to continue building on future opportunities, optimizing premium seeding upsells, implementation of NDC and better merchandising and increasing the number of premium seats on both our Boeing 8s and 9s, all of which will help support strong financial performance and long-term profitable growth.
And with that, I'll pass it over to Shane.