Andrew Harrison
Executive Vice President and Chief Commercial Officer at Alaska Air Group
Thanks, Ben, and good morning, everyone. My comments today will focus on second quarter results, our third quarter guidance, as well as progress on commercial initiatives.
I'm going to start with the tremendous revenue result for the quarter, this was the highest revenue generating quarter in our history. Second quarter revenues totaled $2.7 billion, demonstrating the swift change in environment compared to how we started the year. Second quarter revenue was up 16% on capacity that was down 8%, leading to an impressive 26% increase in unit revenues. Very strong demand coupled with reduced industry capacity resulted in Air Group flying record load factors for all three months of the quarter, April at 87%, May at 87.5%, and June finishing at 89.6%.
Yields increased over 20 points from April to June, and we outperformed our own mid-point guidance for the quarter by 3 percentage points. I'm also excited to share that May marked the first time revenues from our business channels exceeded pre-pandemic levels. A testament to our partnership with AMEX GBT, American Airlines and the resilience of our small and medium business customers. We saw revenue strength across all regions and from a product perspective, premium revenues continue to accelerate from the first quarter.
For this quarter, both first class and premium class revenues were up 30% with paid load factor up 8 points in first and 16 points in premium versus 2019. We offer a fantastic premium product, which aligns well with our long average stage length for domestic carrier. Today, premium seats account for about 1/4 of our total seats and this mix will only continue to improve as we retire the A320s and bring on the MAX 9, which will have a 11% more premium seating.
As we shared with you at Investor Day, our loyalty program and Bank of America card was going to be a revenue and profit accelerant. Q2 is proof of this. Cash remuneration from the bank this quarter was up 43%, while total loyalty revenues were up 58% versus the second quarter of 2019, both primarily driven by strong bank commissions and Mileage Plan redemptions. As we've shared, approximately $195 million of my team's $400 million commercial initiatives relates to product and loyalty. We expect to recognize approximately 70% or $135 million of the revenue from this initiative in our P&L this year.
And lastly, we get to talk about meaningful results from our oneworld membership. As global travel restrictions have eased and international travel rebounds strongly, we've been encouraged by the incremental revenue we saw this quarter. In June, our Alliance relationship drove a record amount of revenue, representing approximately 8% of total coupon revenue has been mentioned earlier, this is a full 2 point increase over 2019. We are currently revisiting our revenue estimates from oneworld and our partners, because if June volumes are indicative of what we will see going forward, we will need to revise our internal forecasts upward.
Looking ahead, we are well positioned to produce another solid financial quarter. Undoubtedly, we are in an exceptional demand period and the moderated capacity outlook sets a strong backdrop for our revenue performance. Considering current trends, which I'll expand on in a minute, we expect third quarter revenues to be up 16% to 19% on capacity that is down 5% to 8% versus 2019. This implies unit revenues up approximately 26% flat sequentially versus the second quarter, but a strong result on slightly higher capacity.
With that guidance provided, I do want to offer more color on the trends we're seeing today, which affected into these estimates. For clarity, demand remains very strong. Leisure demand continues to sit well above 2019 levels, while our business channels have now recovered fully revenue wise. While corporate business travel volumes have been a little choppy, we do expect these volumes to continue to recover from their approximate 75% to 80% levels today. That said, we do recognize that there are significant pressures on consumers, including rising interest rates, high oil prices and inflation which if persist are likely to put downward pressure on demand and therefore pricing from where we are today as we enter the fall.
There was a very aggressive run up in yield during the second quarter. And while we look to have peaked in yields, new bookings remain at historically high yields, just not as high as the past few weeks. Touching on capacity for a moment, our regional partners like all others across the industry continue to face pilot staffing and training challenges. Compared to 2019 approximately 35% of our CPA block hours have been removed from the rest of 2022, impacting our second half capacity by approximately 3 points. We expect these headwinds to persist well into 2023.
Apart from accelerating the retirement of our Q400 fleet, we've also taken several proactive network steps to mitigate the impact of this loss capacity. First, we pivoted to Mainline flying, where we've had previously operated regional aircraft. Second by reducing day of week capacity in long stage length regional markets. And in third, in a limited number of markets suspending service through next spring. And no instances have we exited any cities.
Touching on Mainline with the delivery of our 28th MAX last month, our MAX aircraft now represents 16% of Mainline capacity. As our fleet grows, we're ready to take advantage of the up gauging opportunities by putting more seats in the core hubs like Seattle, where we now offer 100 nonstop destinations, which is 2 times that of our competitors. We've worked hard over the last several years in transitioning our company to enable profitable growth post-pandemic, which includes a tangible commercial roadmap that we expect will deliver $400 million in incremental revenue over the next several years. And we are off to a very strong start. We have a solid fleet plan, high quality hubs well placed across the West Coast, a growing loyalty program and expensive partnerships for our guests to serve the destinations that we cannot.
And with that, I'll pass it to Shane.
