LUV - Earnings call transcript Q4 2017

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Operator

Welcome to the Southwest Airlines’ Fourth Quarter 2017 Conference Call. My name is Tom, and I will be moderating today's call. This call is being recorded, and a replay will be available on southwest.com in the Investor Relations section. At this time, I'd like to turn the call over to Mr. Ryan Martinez, Managing Director of Investor Relations. sir. ahead, go Please

Ryan Martinez

And to Tom. earnings fourth call. welcome, you, our everyone quarter Thank

we Chairman note Ven, Gary and me of President have Joining today other and Kelly, Tammy Executive Nealon, members Mike and CFO Officer; management. CEO; President; of Van Operating de Please Chief senior Romo, Vice today’s Tom Board the a they based variety materially. future current intent, Company’s call forward-looking And statements. the cause the could will factors of because and of on are projections, actual include performance, differ guarantees and these statements are to not expectations results

include results. to southwest.com please of followed our Gary outlook. in fourth overview will call this special of Tammy press Investor by GAAP excludes the results, for items, quarter current with further review to an results begin results As this release of morning’s references performance, will and a non-GAAP with non-GAAP detailed information section which regarding our Relations our to reference statements forward-looking and reconciliations

remarks, Gary. Following to at to over call we questions. turn the I’d And to this time, answer like Tammy’s be available will

Gary Kelly

environment. that X% up full tax despite X.X% unit Thank It bonus you, that’s corner thank under quarter million XX,XXX an for then XXXX congratulate them competitive employees thanks XXXX, revenue strong sharing Ryan. $XXX the very our the want profit $XX all were was turned I in and around, for we After for year. way very of as and we excellent in two a exceptional revenues quarter all an XXXX earnings and of for to addition year the and of fourth just industry declines, to joining quarter And our reform shared. the an years call. plus everybody on another modest the Unit and million

pressures techniques, again Fuel year. system last factors a the system, And is we’ll strong for pressure sharing expect for tax We’re tools there. some quarter profit benefits positive and that items, unit become for our competitive unit those prices prices XXXX, growth over excluding realize and Depending comparisons offsets for goal prices, this our our X% down new quarter. revenue mitigate for outlook with rate XXXX. Better goal see unit fuel revenue pressure. load expansion any currently reality, in to management new cost X% up and is fuel are cost and on reservation the I operating moving revenue on quarter second margin this the the the more year. by futures enabled But for to is to begin goal than slightly. and year bookings unit cost reduction special excellent of will help estimating first federal from our

flow we to benefit to tax in reduced the in flow go and by years cash Given drive tax that, that flows. will benefit margin will future reform, those the XXXX billion, expansion. of liability we’ve addition of greater But even at addition $X.X income expansion, would that stronger through cash cash repeating our the is worth realize from net it both margin future addition to the expansion. end in of margin federal in And future the

or year, last XX retirement XXX of unchanged. which -- aircraft, the growth with quarter third grows in Our our by fleet period. airplanes effectively end year end XXXX the month plans are the for the over fleet recovers XX We a classic

the year-end XXXX measuring XXXX. year-end simply to I’m So

Field Washington intention it announced add year presence this of complement morning is to will for Now, flying And later Paine well Everett, in our begin and to is work to Hawaii, this year. so TTAC. focus underway that a our we this

the also on Officer, the spending XXXX we focus like on a closed And be past XXXX note. for quick focus initiatives XXXX intense for that overview, our plans, better have more that major quarter. growth that a line, us service are just looks Romo, this I running even positive basics. no modest Capital greater cost. controlling and take through Chief Tammy our in out Unlike reasons the down seven over it with allows landing very be very year. all turn years, to XXXX, the the a outlined. from Aside offering our I’d will will and Financial strategic customer to on outstanding to

Tammy Romo

tax In assets per reform. tax liabilities share. a to which work all hard Thank sharing. our the was quarter filing in them employees a earning deferred reported on Fourth special adjustment quarter, billion thank we you a And thank large us another billion $X.XX accomplishments and item. as and future this we first of to tax profits of reflect rate, want successful million you, a fourth joining congratulate Gary easily one-time we of performance. out strong fourth for year tax of it our called non-cash announced reevaluating year, a lower recorded many net quarter $X.X for result month, I $X.X with their or and today. during very benefit in earlier with profit a and a XXXX was tax as a $XXX we X-K record income our as ended

items, month. the quarter consensus. bonus non-GAAP share per our hitting passage our and hedge million call in impacted accounting earlier adjustment $XX employee proud each up ahead of included our to income share, was and our with $X.XX. bonus the earnings million results reform tax to per fourth and a $X.XX strong by tax diluted special We employees were Excluding of normal first this was $X,XXX them of The $XXX reform celebrate or net a

we take investments With our strong cash business, make were these our strong returns and XXXX, value and of able another significant year our to to shareholders. operating prudent return flow in care in people of

also And for fourth largely demand outlook revenue with Passenger year-over-year. to as by record Strong for record demand increase revenues XX%. fares year-over-year fourth XXXX. revenue improved of in year. peak resulted third with addition also results, fourth in quarter the was start $X.X a covering slightly provide more this And Flight but I an performed our expected. in on Starting ended a a strong great during yields were passenger load holiday XXXX quarter revenue, $X.X driven billion. We’re record off operating billion, from detail to and we of revenue quarter will well factor low during resulting season, sequentially period. of X.X% Thanksgiving December quarter

were and Rewards also EarlyBird strong. Rapid revenues Our

for a of fourth achieve our modest and of growth initial growth we year-over-year, million, was industry target called unit in record revenue fact, which XXXX for disasters a Overall, was were EarlyBird In quarter EarlyBird considering year out when revenue capacity for $XXX quarter pleased unprecedented to our RASM competitive XXXX, was our boarding produce were operating first option. pleased performance outpaced X.X% to expectations. albeit alone goal our the line revenue fourth the with approximately environment which with during increase our XXXX. also full We in national we

quarter are update. to Later RASM expect, appear passenger we reflect expect standards early issue month. as favorable first And needed. demand a report year-over-year on therefore, related the of in current longer updates results this guidance RASM XXXX monthly other an potential trends basis Looking first stable beginning freight traffic guidance we bookings on we investor X-K traffic the and typical in on our XXXX, the a travel our and report as quarter releases, in Based increase This And we and accounting based well accounting changes will XXXX revenue. will at solid. a and as our revenues first X% as guidance new our quarterly no quarter, plan to ahead utilize X% trends with quarter January We next these will outlook, as revenue update, changes year-over-year. to result to to to of investor recognition.

fuel, to hedging $X.XX, price fuel quarter's quarter economic gallon fourth included $X.XX fourth per Turning of our $X.XX gallon per fuel losses. XXXX was

and in now nice fuel our are and prices beyond us protection forward However, prudent portfolio the volatility in prices our financial our without environment our cash enables and it to business price fuel us reduce a rising And to and losses goals us against our provides exposure. energy make for behind earnings. maintain and drop hedge XXXX a our hedging order adjustments to

other early an standards premium gains expense line than plan below adopt the to statement. we update will and accounting rather to above XXXX, where fuel within we reporting losses the on income and related oil fuel expense hedging with For hedging begin line the

update. in fuel morning's the our As hedging as earnings guidance, in recast XXXX prior of X-K part we per first as periods and we’ll release are quarter price our including later this shown fuel such, premiums gallon providing

for fuel. of our an gallon XXth, per we approximate to $X.XX $XX $X.XX hedging in on portfolio quarter range, our to hedging to per now the on Moving price $X.XX prices outlook, hedge first premium, on market approximately $X.XX in and or per our gallon gain. the expect Based XXXX, be gallon as fuel and million including economic fuel January

XXXX, barrel expect and $X.XX approximately the price per fuel range, currently or full gallon $XXX per premium gallon fuel we $X.XX For including hedge per million in in $X.XX material hitting at market to crude hedge year produce XXXX economic $X.XX to in our barrel be also gallon gains range higher. and and Brent per about our At to gain. $XX fuel current gains modest hedging began positions prices, more XX per our with hedge

Before moment spend fuel want efficiency. on I cost, a to non-fuel move to I

XXX we fourth our and in introduced efficient fuel in our retired MAX As a XXXX quarter more X into fleet announced, fleet third quarter. remaining Classic

modernize improving seat seen in continued have to gallon, miles fleet, nice As and quarter. we’ve year-over-year fourth per increase our we available X.X% the

per For currently in seat X% X available miles improvement year-over-year XXXX, to expect we gallon.

ETOPS unit were in and line cost items and spend as and quarter year-over-year. profit second, a increased included salary, expectations ramping our for trends fuel, the X.X% advertising Hawaii. benefits, with technology we third preparation and our unit aside that for increases Excluding fourth fourth from quarter incremental cost sharing cost saw Putting wages for quarter up year-end special just items, shifted original in in expected

Xnd our points include excluding in and primarily quarter cost deficit. increase of Based our to related and expect of we an disclosed bonus. year-over-year the cost current have benefits, trends, range we in year-end, first special fleet operating profit items inflationary incremental to half and employee CASM, drivers which to January higher driven by increases fuel, cost of year-over-year. our on increase X.X primary of The cost day include wages sharing, pressure the X.X% at driven extended retirement As X-K, salary, in current the by point

down to expect excluding CASM, be fuel, we our year-over-year, then fees special is to full solid the the and expect and range of We in in rentals flat sharing, performance. XXXX, increases ahead and airport items maintenance. X% to looking And landing also profit which very a year

largest maintenance related XXXX, $XXX tailwind cost Classic benefits, and approximately year-over-year expense. For retirement rentals our depreciation, is and million to and aircraft the

offsetting aging We headwinds areas some in our XXX also the costs. fleet at as of maintenance airport our as of well have

of a XXXX benefits aircraft Classic see the in depreciation and the maintenance benefit cost are rentals, have While within easier expense. and do year-over-year retirements we to of

classic that. our maintenance and than of aging our this few balance strongest the I’ll -XXX proud fleet. history, our offset comments and of more is in maintenance the savings deployment. very sheet However, XXXX with sheet a we’re increased We by ended arguably on make capital the balance just

as revision intact the Our outlook S&P with pleased for solid is and investment both we during well Moody’s grade the are upgrades Fitch. XXXX, the recent by positive and as rating

Southwest’s and Our this unsecured during and the we of the investments tighter year is $X.X spreads billion operating primarily Free lowest fourth strong cash capital $XXX And refinance expenditures continue term and issued at target driven leverage mid-XX% cash history. end. billion. with and quarter, in by $X.X debt approximately in among million liquidity With the yields billion, cash strong to in flow in XXXX to was $X.X capital flow debt, additional range. of existing $X.X for to we low the billion short

our to dividend. allow to shareholders share strong cash financial flow position $X.X us repurchases billion return Our and through and

spend. the million to to one of out delivery Our shift XXXX investments in related were and XXXX guidance, MAX shift the in came billion the XXXX just that into $X.X approximately below due X CapEx several and non-aircraft in of $XXX primarily

We range, of in CapEx total, billion. approximately shifting to CapEx the versus are aircraft and still XXXX from Included mentioned non-aircraft XXXX. be the expect are our XXXX billion and estimating I CapEx $X to decrease XXXX, expecting million CapEx this $XXX in approximately $X.X XXXX we previously currently including

our our flows, deployment shareholders. healthy We And value cash manage shareholders, evaluate tax shareholders. long-term overall in and our to our balance while continue reform, the repurchase focused effectively from and sheet to on and expected with goal dividend remain and of our savings strong we’ll overarching people share future our balance and significant capital value to investments an drive mix including our with returning to company, tax preserving for continue we the our

fleet. onto Moving

to and course, retiring orders Boeing quarter we book. our first And XX January fourth -XXX in NGs quarter XXXX actually on fleet, the remaining XXX to order the was This in plane fourth We from aircrafts MAX with MAX that and quarter. was have to aircrafts aircrafts Classic of saw with Boeing, fleet. XXXX XXXX, of XX our quarter aircraft better XXXX. for one X orders Of timeframe. shifting to into are XX options from during the and XXXX all ended deliver to heels in first. retirement and flying currently And align our some X, we MAX XK, accelerated MAX our from and fewer XX the X X MAX future with X expected XX is with changes delivery as We our exercise fourth orders you made XXXX minor MAX deferred delivery

this XX XXX-XXX our have those NG their manageable years. with allowing order retirement year billion approximately next which while on retirements through remains years manage and average XX a to on us CapEx growth. measure five and Aircraft over along $X flexibility in book the way, per years for for will the at very based option, allow to book next remaining refresh, We age significant order

Our and we schedules. delivery aircraft plans firm of the to year XXXX continue with expect end XXX not current base fleet have and change to total capacity our aircraft

previous XXXX X,XXX the ASM year roughly of to quarter our full driving range is half On expectations, And of the national our the due our point capacity expect increase we year-over-year front approximately to XXXX in growth. low third year and capacity with in year-over-year. line of cancellations X% disasters, XXXX full

half first will schedule. firmed be schedule or we increase expect on about XXXX XXth, that half up as We XXXX September through and will out range next XXth. year-over-year, go to our first X% published capacity The February

year-over-year due half higher remain for a year-over-year XXXX, to and opportunities impact low XXXX on X% our XXXX expect in we us with second growth capacity the XXXX plan growth that year's fourth retirement. the We excited increase we For have group prudent of to in RASM our Classic current outlook. based our positive last quarter about growth produces

benefit in be reform. we XXXX positioned So for excluding well we start had performance margin a XXXX year, year, are closing, really we and will And solid another strong is from tax shaping special also expansion, items. to as which significantly the up

proud am to XX we hospitality. and class industry proving with reliable I be that been continue past year-end to work for employees world hard best they product, they thrilled bonuses, a tax for the that very and recognized deliver are the recognized they reform have their operation Our in the their and I plus recent the that years. was have continue

future Southwest, excited into our and have am of for bright coming the ahead we with shareholders sustained a have momentum XXXX. I We

questions. we So to with ready are that, Tom, think I take

Operator

Thank question you Instructions]. with begin Jamie first our [Operator JPMorgan. from now with We'll Baker

Jamie Baker

outdated Gary, I am have schedule think evolve Baltimore, platform, still am degree thinking over operations, how particularly hubs. might just and resemble the How which from few new be be manage with to revenue and over point-to-point changed places And an here? currently Southwest to connectivity it the Denver. operator that's characterization. happens Nashville, this a may you basis like you time, a for res to consider curious very that I that large to I

Gary Kelly

is Southwest Jamie, I your accurate. of think view

statistics joined other the XXs when and I I in and through from is internally connect. XXXXs, the convenience interesting flew we and and early intentionally non-stop the connections. some we Some factor, started, of remember pretty between Since XXXX, were a much really when of that, split lower for well XX%. connections. traffic our load the we that load is and schedule days O&Ds annual the XXs factor flights was our XXXX's What about -- for percentage those of that XX% evenly will term -- And the I had and did then and intentionally is probably use have not out of the XX%

If right ago, go memory you me serves it years my XX%, back XX XX% now it’s was XX%. XX%,

or So moved there has significant X the connecting a boost, been versus all, maybe points. non-stop X but hasn’t at much traffic percentage

are we result more net the is connecting that traffic. of So carrying

the the not of Andrew connect the you Jamie I head what is. would accident intentionally it’s days, is serious the remember, of point-to-point over it’s recall do top of want way old is We’re the statistic that's It terms hub statistic traffic. obviously of think -- optimizing non-stop over to exactly the did of real to really markets, higher network factors we we’re a a majority though the us better remember And a philosophy expense he planners cases, the frequency XX that Andrew very the relevant percentage focus an may here more up flight of spinning -- points off my in it as have don’t Commercial is Watterson, to in that I they sales. XX we be carrying more the strategy. but that converted by XX our us because some And accomplished what there spoke our opportunity the not purpose, connecting if year some gone will, to it schedule that’s in a and our where the but on you dominated not with was the still in on EVP at non-stop some opposed frequencies and them, our because and use to traffic. out complement of operation is points by period. have but time load by capacity, XX and year

Andrew Watterson

call above XX%. would slightly I

Gary Kelly

that helped think your well. was a specific I And the that background question. little bit hopefully But as

Jamie Baker

that’s the you’re the year, a second presumably But probably half in in surge quarters. in your the quarter X% imply maintain goal given is starting four to that no that remain you the seem levels thank X% terrific. for you’re up, Gary, follow And annual at positive to for RASM territory positive of would you, capacity the respectably second and better. each to aspiration worse, the

driving confidence in directionally really higher that’s positive half a factor the second what’s on year-on-year gives that of Assuming anything accurate, Is you base specific? that the RASM at there capacity?

Gary Kelly

do think direction couple I are believe of a there first your specifics. I fundamental of And correct. is all,

X% to give first cushion sideways. us things outlook X% doesn’t for to admittedly Now, quarter go lot of the a for

year, to from different. of to same that presence day the that have into we more four, quarter. applies I we the applies But are that there. is the in even And get have the in the we amount admit second two, the tried Mike, as don’t achieved am seasonality quarters take X quite so schedule. visibility what a revenue we maintain healthy day that roughly and would to you to And we half anyway. generate not the had when scheduled airplanes, much I’ll scheduled The of We profitable, unit So fourth just the pretty frankly. fewer of airplanes fleet we gains have with I with as XX real we that a because extend should shrunk. order times But quite schedule, airplane. has What to have that account obviously retired, dips wasn’t happened better the is outset in think quarter much of have three, a and that great proud frankly third

as a to operating discount pm pm. a operating there fairly compared is have to at So flight at X significant X

a So in second hit all have time year. that that we is better the this half that the security by to means will place we’ll believe schedule of yield we

is this two, industry, that the million that’s angst And hit the about new coming still and number point Tammy year $XXX that point team in our got and will effect one. the that’s revenue stream pretty confident today then range. online a notwithstanding number I yesterday that we’ve in note So

really points, at would the competition what tax So we’re that those nobody have economy. are should year. ever One, reform We the to pick on travel the throughout both pretty up demand. we I And think the can't be. impact weather tell you a going knows or is least and floor is going hope from what significant that to

in We’re that, travel will not well. doing of anything but demand as that we’re be obviously overt to plan a for pickup because lift that hopeful a

Operator

our next with Jack from take Atkins question Stephens. We’ll

Jack Atkins

well. I to get start We would couple questions. Gary, Tammy But as tax comments. have a off, in to to love on reform this just take your of referred prepared

will Southwest immediately as is are airlines the airlines, really corporate well in the new savings, rate. as cash you this unique because from benefit position tax tax among from guys that only

moment. or But business, you a would capital returns of prioritizing all increased love the seems employees. a we the Because flow? reinvestment free up special are I really in about in shareholders? thoughts about it like here. you cash to How the step your step tax to quite We’ve could flow up your because reform bit So be thinking bonus a to all get for increased seen beyond already that, thinking cash are this should

Gary Kelly

we’re comparing us industry much that just on not this position. unsolicited are in other to puts time Jack, about these it going we’re level matter, sectors. I'll But It as very well It a is competitively happy better well-informed to that. editorial and on our offer savings. as with lower we you cost helps squander that. us playing And competitive comment obviously, field the our

this use an so Tammy continue and think There's explained us to below to use our support are clearly, So can we money plan. our keep did well all where load what available we strong we factors structure of or aggressively. drive Boeing buy enough two have the low, keep fleet we'll is fares growth order, overall that. The two, with terms want example if to business. we order grow new as investments the the replace opportunity them And to capital and our that to have about we use can to We cost to them and that but buy putting we don’t -- opportunities But additional certainly business, priorities in are can in options. have I the know airplanes they work more in be basic we of we aircraft. equal. Boeing an older to our exploring airplanes And latter the in can

there be we're the If So clear I future. and buying we're thinking in think more that there may our not we're support opportunities rate that, going that today. I happy. to do aircraft. more be want happens, increase is very say what all thinking we'll growth to that today be because by that But not circumstances

-- in of I've the of XX% about taking of business, so care care talked I've terms taking talked unionized. about In in our investing terms employees. customers, our of We're

be the media. to I've comments in -- uninformed would what compensation some, with covered All I has labor call, So negotiated read employees.

terms were some Southwest the our share very continue of in support then very around at and a boost think source doing, of healthy that have it immense year years And we're I that an the was repurchase and pride -- that that continuing in of the also. to terms sustained of a a nature position rough and program. year us can't what tragedies remember annually just in position last for is issue. and we've So of it Brian is able happy we to we've how separate I the we a it's communities stronger a was I mentioning, actually shareholders, where finally, is could in our been which increased puts And country support to many doing past dividend worth obviously terms support in mother we

Jack Atkins

increase term under-appreciating Asking folks’ One near boosting angle about think that books to the in I in though. for tax are confidence. area from tax folks economy than pocket is hitting the rather addition potential reform sooner reform, later from business another relatively

the travel travel your earlier, you're as in increased you go real travel. a the said travel get to a like to So peak as season you're would specific for topic? spring and pickup travel addition progresses as not here this in for seems we about thoughts And that It next quarters summer on just leisure demand. opportunity I prepared get comments the into you into there's planning in the we several over to some how into just think me But more fall. season, love business

Gary Kelly

Well Jack, don't you. growth to today, give of I some among I wrong people Again, committed a accelerate. with but are just realize the want people growth about expect But we think the about agree rate that lot do angst there's what the to impression I of industry. will GDP I

could prove should do be assume a from and think it'd calm think I to very that could people logical I travel to much you this to that be think see about boost in demand. nothing. down I Honestly,

and new growing add Now, planning Hawaii. service we’re we’re to to year this

to and to going in do know how this. company We’re Washington, open Field we we’re Everett, Paine a up growth

keep by to over carefully. so or is fairs Southwest. So The them cost low new we dependent we’ll attract want success to manage our customers either moving simulating can very can we upon low, keeping our and for growth by us

if I because think what somewhat, option position of for our and won’t that should in reiterate I in current we happen realistic much It probably Andrew. to I a talking plans. we for is it plan growth tax some that utilization a is not And ought the but you’re about us but would is, the not. it’s safety future. just there a in mean it push us to XXXX, put changed have more again, haven’t I of provide -- don’t where reform, but our growth support net, the potential

more So growth one in any reported. thoughts, beyond And what I just opinion, be think XXXX would any event. time reiterate my in I’ll future Tammy

have orders the move that in were event to impact bright the that up has of for had as It’s and growth we simply make and XXXX plans and no Boeing firming terms to we our exercising what forward any options In ahead are now or go to commitment. well. planned years exercise economics after those

Operator

Keay question our with take next We’ll Wolfe Hunter Research. from

Hunter Keay

I talk we’ve call. just would consider with bit the AirTran Gary, cockpit to and overall or XXX with there significant XX, process this were in on a you the talked -- commonality that What continue want you totally was concept? about of fleet little your maybe commonality fleet experience new did sour type if a

Gary Kelly

XXX Hunter, that bigger know replace you same smaller it trade-off I the a will repeat not a not. but XXXX common just common an to with was airplane at us for airplane it what opportunity cost. did with no, But know, versus I the that is was opportunity

a no year. worth million recall, of brainer I hundred trade that was was it alone couple a and Tammy, So as dollars

part that’s the over done we’re five past have it. earnings the years. we could boost So that But realizing of

Mike never the we where aircraft that Airlines. Southwest point got to into integrated Now

that AirTran flight every on was AirTran the after So certificate. operating it took acquired we

So what’s we asking. never realized you’re

of ‘XX, And course ‘XX, our about fleet have different we versus underway running X I customer XXXX to answering that yet. managing a X our in think much our comments MAX we generation focused is yet time here I and that suggesting we the be XXX/MAX about in thinking I see, mix for great your in service of the open all about would work airplane. have and terms are is there XXXs. question. very a what’s great my with It XXXX, about of as don’t far we cost. as minded important it’s operation, basics, that can on a anything no not offering optimized think the thinking don’t you’re opening at to horizon believe would what assume a mix is I focus, ’XX,

replacement. just XXX I any serious the any Both the then what MAX have -- X. to media has the a the MAX airplane. that coming some that be to don’t of XXX -- because and we we idea is I the that got up-gauging XX is There do is off the, this the and do, different make optimal time, there they’ve casually variations So or in have referred XXX XX no about we fleet opportunity the an Boeing continue in board. a what's also those other and serious here consider think to that talk interest there Right to think yet puts we replacement don’t the things now, what anyway. for fleet them thought do, adding don’t effort bring type, understand what on is to don’t we’ll they we airplanes sure about Boeing or but MAX

MAX of on, with And that work XXX I the grow and focus, still it for doesn't that our now, but right about of would bought a lot We on, of have to to we we us that would it free It be a be very think long work be lot of will when a did the AirTran it capabilities than hardwired that XXX. finally, to or effort. admit X, for excited to would to because X we certainly you. so work, operate better today immense cost MAX I that be free take mean have we to are And opportunities will time. take we’re

Hunter Keay

$XXX I And then just referring talk margin appreciate correct? expansion. option year. this are commentary clear, moving to of above that Is when you to margin expanding premium quick on you that’s margin just million the about And EBIT even expense with be the a line, maybe one.

Tammy Romo

that. that’s even Yes, correct, with

Hunter Keay

right, by that the [$XXX way, that million] And is about Tammy?

Tammy Romo

by XXXish bring would goal the our range we’re you actually way, that, down are that million the asking for for that. and since It’s be budgeting somewhere XXXX in $XX the about in year. to And

to we us tailwind as So for that XXXX. will be a the nice move

Operator

take next Pfennigwerth Evercore our ISI. with Duane We’ll question from

Duane Pfennigwerth

given know just you to cost revenue be But growth growth, high-level if wonder would what in based the guidance I 'XX? I margins accounting new and think standard. you haven’t you unit on maybe the could impacts --

Tammy Romo

looking all are still that. We at

wait and So I rather really all you in provide would that for X-K. the

just We’re middle finalizing the all in those results. of

be us, report So if you more a quarter. for very little come with a later back this we’ll robust could patient just

Duane Pfennigwerth

how regime? And cash are about then the rate just you tax thinking the under new

Tammy Romo

through expensing -- we’ll XXX% rates that year as like acquire been expect rule. the later the full in this still the and be expecting any XX% aircraft. year, that range wouldn’t get we I depreciation technicalities By on to than to some the move time that worst tax We're forward. have we Our we we're the of working more the

the the taxes earnings finalize a significant. both noted year that on that be so that to But year as it basis, the cash for well it. and dollars perspective P&L in it’s we're So to that release, millions have we a our bit expect of hundreds a of on a as very very on cash little meaningful through will still in working we and obviously, impact a

Operator

Savi Raymond from We'll Syth with next take James. question our

Savi Syth

bring premium even a glad the on doesn't I the run to up. hedge and Just comments, here -- on the in like you're a Tammy hear -- fuel of with of curious that to to much target though is But going the these just asset down. am XXXX, fuel seem getting lot follow-up it

So levels guessing that hedges I that your kept pretty traffic pinning high. the you're am are

your be question. mean you aren’t seem strategy, How necessarily doesn't I maybe of hedging competitors better most hedging are your that either, what's because to shifting Given a off? it paying

Tammy Romo

is the The be look us, differently, in it'll potential gains that. But We spike kicking showing seeing protection in as it to nice a sites prices in we insurance and provide anticipated really already designed the fuel here, and it's for just fact prices. and start strategy fuel see some should in seen really Savi. on at event hedging

in gains for to look that sensitivity we adjust see levels. jump you'll at premium So we designed Savi rise those our But have goal every see prices our referring range. catastrophic what another the is seeing some meantime, And protection, $XX am actually but budget to analysis we're year, provide, and we've you nice the business we really we meaningful And barrel a that input here. have into more so as to you'll that, rise, would that you prices expect very of us should time get up normally even if to, costs. should as I the per higher

bit So insurance the we protections. really of as more think a

we're any We hedge techniques with on. entire mindful going have layered way we're have more Now well risk or forward do using in tactically over that our floor the forward, downside book. for our not the we exposure, going of -- hedges exposure the downside

So are well think very positioned. we I

Savi Syth

is how do million, you And target that? $XX the just follow-up achieve the on that,

Tammy Romo

me, Pardon Savi.

Savi Syth

$XX How reductions do to million? you the achieve

Tammy Romo

we we've opportunities That are on to fuel and premium very I doing very by level. we’ve say been where layering build our a nice had that, what would reasonable -- hedges hedge at positions

So in result but place. options to that price keep we’ve we mind building up deep in and that’s of be the levels put the up been the

Gary Kelly

is press I release, weight didn’t there XXXX. Savi, at back the heavier look but in And

the Tammy XXXX a really spent much how get a then in So provided balance got covers has is good we’ve between It’s on we hedge. there. and the sensitivities that nice it, money that

with to as it’s swap had Tammy start in that a we hedge little XXXX off to has I a it unwind XXXX, very because and good So one. puts a is the clean really on. of we’re recall go that some were in as

do there right to million handsome was that are that’s on margins penalty, we program, have and part more the especially of you addition that to a will, But number? built. was grow and we question So money think that want that. bit margins I spend if Tammy agree is, $XXX the to little than in if considering we that of that terms opportunities of year the our is in No. way your both

we’re up underway. had and going XXXX-XXXX were transformation back a we was ambitious So to plan we absorbed that there more is risk much with well under than -- going tighter more energy margins prices when

we time. a So different have

opportunity. different job I taking a full have have done a think folks of And advantage our great of We that.

Savi Syth

And the period. helpful you peak That’s that was the very -- the just on one the mentioned color, on thank demand so revenue, you. a unit demand strong all quick

peak. off is wondering a little as that much curious there if has the we in we supply off just just Just too can peak, supply? industry do and layer And what continue to about you’re anything seeing in on the

Tammy Romo

through as from was can us, you performance our see for Savi, Demand load the very first strong. quarter factor

record been at We lower story of And yield. factor load the are course generating performances. has there

peak we’re we So off certainly win, seasons. in

say based seeing that very you the on in that But think that all fair see from to you a as the I outlook have for demand. to fourth it’s even we nice period. harder little in work and provided our off peak performance we quarter earlier could the demand we’re call

Gary Kelly

wired probably overtime Andrew, you this, have better at and think according would have But to we it’s caught seasonality. throughout hard feel gain, better like. capacity gotten like year. on the the can I a that late to constant because to varying say you has if fair we comment I now were to industry that And were we schedule the there. up But just fully

have of than capabilities of you but others, in competitors terms and I’ll peak the the are So valley the pronounced for have -- And some some Southwest. scheduling again just a there. speak more

do good we of think matching pretty I job darn that. a

mistake fasten that an the already XXXX we Now softer maybe we that felt call don’t -- it example. period was I too was a that bit move had know like to XXXX, one change And per for schedule a would going have as now. it long it into that we I se. and seasonally didn’t it back is a planned little But

So it's an iterative process.

school I looking at you school we’re go fairly and of are holiday, the what in things said, complex inputs. with agree potentially in here timing these You out learn record of quarter. factor, Tammy loan the But a as first again all

with So the even seasonality. demand is there and

Tammy Romo

to seasonal that, comment more that maybe a just of some add done to on XQ. particularly market us with than and what new provide more flying does international One this little do we’ve opportunities our

So fantastic our commercial demand through periods. folks managing those job peak do a

Gary Kelly

that. list Yes. as week. by don’t get better not that we to is but much day of by We of do And we as And that at our day we very could. know is have vary on what something do week we much to-do don’t we

So that’s for respectively. something opportunity us that’s an

Operator

with Helane next from Becker our Cowen We will take question Company. and

Helane Becker

and months, about perhaps are better or system oil six out With on five up locations seeing Gary, Huston Dallas I for two question you of specifically. $XX the than last you those have a prices elsewhere the network? in traffic

Gary Kelly

three past haven't Well, the after Midland our I the in just say one decades or four you’re easy see and time really will over energy suffered the markets that’s minus to to markets plus this years, in tumultuous remembering strong. really we so energy is like ago. it’s

$XX course of way crude oil. their managed has collapse. And also oil interesting. been you’ve to gas and the has activity U.S. it effectively So seen a pretty They

think don’t we’ve there. -- Andrew, So I that I don’t significant very a seen variation

in the barrel, And don’t way specifically both in a much. what don’t that course I would there's of Texas think of strong. that look more I quarter entity think just activity, a that pronounced last Dallas to lot fluctuated and attribute where know is of a that is I an activity west. see change competitive XX very and again, the that up And all a is that prices I Houston in you out bucks is oil

Andrew Watterson

more horizon Southside of the it's Southside states with medical long Over the industry in diversified with both itself have become economically with the even with town much town been and how economy. -- continues Houston significant

Helane Becker

that or the cost this made the for just headwind is given a your ETOPS is numbers? just that then we prepared de And Is how you about a actually mean and comment big on a in that airline in with guys the comments about minimis see that question I qualifications will Hawaii. just Tammy bit diversification. of et made remarks more you cetera year.

Tammy Romo

and the Helane, de Hawaii and spend the was to that -- referring for minis, was ETOPS. in to related I it's yes just started to investment get

I to respect want We're ETOPS. with clear. just to be on track So

And to really least So significant. our it's respect with this related all the point that start service to to Hawaii. plans green at is to is yes, at spins that

Gary Kelly

very application up you FAA work if begins with And the update our will, means that that partnering was we're with on an the with them plan, with -- I point. an give that track to while well just just agree the going now the application. to submitted I although when, where on the we're at FAA, point we've now Tammy on we're work the been we've to that this

when we any don't publishing have be we So today update when and might further on might be we flying.

offer this really Our both at we'll think other goal selling plan by but But very all of to year be this end than I year. this information on that point. least to there's track at all we confident we're is least no are more to do the work but were

Operator

our Barclays. Brandon from question take with We'll Oglenski next

Brandon Oglenski

to When I including the that’s Tammy, hedge gains losses to margins just want comment the say you margins. right? back about year-on-year, come and

Tammy Romo

yes. clear, right. very To be That's

Brandon Oglenski

So back going right? loss were to to then year the we’re hedge down to out last the gains flat margins, if be hedge year probably this we on

Tammy Romo

talking you XX…. Are

Brandon Oglenski

us for for know Right, haven't guided well to do, you I that's that.

So the implementation quarter. do benefits When what can you we know those impacts is for I the are guess again. start we Because in system? realize RASM my XQ I to through guidance on and had the question first the negative with talk your from And reservation XQ. some

should think your I last on said have the revenue rate guys call it you by now. been that of out run of

progress on you give update through year? an see how should So the that us we can

Tammy Romo

then the to. but into but directionally, year. we’ll seeing the the be quarter, of impact picking be all. should second will some we in certainly exact as bulk give there, the we first the there. to significant in have happy second up benefits some quarter here benefit half And then really at that theme And move you not the numbers expecting to just be start be of I'd Sure, We we're don't

something more $XX the of hesitant plus we're numbers, am ramping to all I the this. bulk any then again million and half. hopefully the coming So throw benefit by second to middle of in with But because of the in out we're the second range quarter, up the in

Gary Kelly

and then to though. it up excludes Let fuel. items offered just excluding the I all one. me up flat be your number two, offered then that Number clarify CASM, down, is The here guidance would margin -- so Tammy question

you we’re positive goal number the for two, then revenue a the we our So outlook and that’s quarter, first told for that at year.

fuel. without coming is expansion margin that So

fuel -- that fuel careful we’re prices, excluding So prices. it and to was fuel mention I was

we on And that. margin to based margin futures factor basis prices. to right determine hedge of expansion. effect a have you’ll then prices now, would operating have the But So on fuel

Brandon Oglenski

you insinuating up is this we just back the a days And pretty case I I And we market if up that fuel, rates even a airlines… I’m airline year. get tough out be tough on margins question. to What that I not here. follow guess and two of hedges if my for to understand would lot been down like the took for if stocks it’s that mean it’s that’s

Gary Kelly

not be said said. what fuel, I up. would that’s without No, I our margins

up. we would guidance think right keeping in about margin or So be that is positive. our flat without goal CASM fuel means -- is ex-fuel the think to now you other it, expansion to and is our you words I down fuel. however as want That gave RASM, constant margins

Brandon Oglenski

the all apples-to-apples gone lot. underlying on but cost that’s a input Maybe this has up here, right

but guiding So go underlying capacity quarters. the cost what of through for are to I what And underlying for been if the I the investors same not should are Because don’t and for your want or I a about expectations four growth obviously that. -- comment business lot. when how maybe past three the you is an has is to structure. industry you’ve about looking come the as other But adapt see effectively think up does airlines, higher obviously, we start cost you to

adaptations be expectations what what cost proper here, some a start higher fundamentally is see So the to now? when should structure for we investor

Gary Kelly

I understand.

industry. the the we’re with obviously of rest So not in line

superior do, And We returns. do, outlook what tell superior have you. a will they margins, they can’t better I than

will for We for reform easier outlook shared and What even position operating the to the we have we’re better with know. think margin prices, margin excited then don’t about year. to XXXX. going very I for And and see because prospects us fuel you tax again net current expansion. So this expansion, be we’ve should for very given superb the what see is it of do outlook we even I’m a

Operator

question next with from Bank. our Deutsche take Michael We’ll Linenberg

Michael Linenberg

one the back down your be you on just aircraft questions, would for two CapEx the Tammy, to… indicate CapEx is year. eight, When

Tammy Romo

mind breaking a again? bit little you’re up that Michael, trying there. you Would

Michael Linenberg

you When CapEx. X-K, had I And back bit -- to piece was your it January, you And indicated to it less when about $X.X going than think the asking is that think $X little indicated to you a was less aircraft billion. billion. think was I I that go $X guiding you’re we I billion. today

So there. maybe there is some rounding

So a push you’re big million that $XXX piece. piece, you you knowing I have into when 'XX. Normally, range high still don’t in look the that like when that’s think seems non-aircraft at non-aircraft pretty did I that projects think $XXX million $XXX I underway. It million

just was driving $XXX call non-aircraft CapEx? million, million that, curious I of what's plus So it $XXX

Tammy Romo

a our we’re bit CapEx, to technology Res. OpEx. One -- we’re of higher be non-aircraft technology a The actually little seeing CapEx, we’re And to expecting spend that seeing down mix due hitting our the of the little completion

facility, we’re the really we and is up have So of that’s hangers facilities. some training Where investments little that. relating that’s pilots related increase our that some in seeing that’s plans bit. so our some more to And impacting to impacting a

technology in bit, our an seeing down we’re little by So being that’s increase but facility. offset

drivers So major the there. are those

Michael Linenberg

flat guide about be couple to think up the there hoping only 'XX quarter quarter was cost where guidance between Is that the on other that the then, I better I a we has bump are X.X difference So changed and employee you cost, up down, since think are and a the And maybe today the last fourth are to had unit things And you outlook? versus I drive those big were that Or the just like we to that ago? points. CASM that in the ones. said on you know flat. that confident is quarter felt primary thing then can

Tammy Romo

is There nailed the significant to nothing we But it, noted, from the benefit. reform expense provided. due higher you have Mike. really You update as that employee really did tax we already last

previous that focused that’s very our guidance. have our rebound we So a ever, little -- solid. cost and there outlook we’ll to But efforts. comps but continue easier And that to really on think still very year be cost I our primary the in from is bit comps very driver our control our we diligent made this are for as

Operator

from question. we Stanley. one for Lalwani take with Rajeev time our more Morgan last And We’ll question have

Rajeev Lalwani

a for you. question Gary,

and an pushing Is maybe obviously shouldn’t they and seen are there important focused more looking markets you. do of be that by to should some different to about? United, little on, You’ve you at be passenger than that that they be think impact? so Or aggressively in a concerned announcement investors of are the type seem much something you

Gary Kelly

a added or Well, an flights are admittedly subtracted anytime are flights from impact. is market, there

want put to to to It’s to truthful not – just So I wouldn’t ever try that. past one say you.

through fare nonstop, that a don't to examples at we've a future definitely last advantage will Texas for on I customers share high time, segments described. a fill I million dilute of your that capacity there legacy Tom customers, choking based generate might off in in their small a just life adding passenger market. And with from I being dramatic in again largest the number they in some It And there So to the many want Jaime's low fare the but traffic, country, a and think where cost very with in world. back we and we airline the advantage share have we what gone their And a second seeds of higher historic it's that's does of is because XXX they market, a to the translates think of significantly higher fare cost year. the low the over are a But expense opportunities on up connecting In player traffic opening traffic. fare the not. question, airline many, fundamentally largest with to have that hub. focus

that In presence recall I an case argue and a advantage. in. So airport that significant would we they one I the very have we different spiked markets out, a have airport

and should will It's of we in in impacted. airline us? ago it number just we always XX you continue we were I are to our well terms always barely of years we number humble passengers and perform have one Denver, to think impact harm will So And later, years talk. this Denver. remind in XX be competitors in that the need Yes. it I market all starting that bold respectful the tools Airlines? were But case. we every Southwest we're in and Will of the But

carriers very, up. a that will case. are shrunk, now opportunity who lost they kind for bankrupt, went prepared, an be got I that some cost of strategy hard were In them. rest very when that legacy and So they not And times better as shed gave and my case, to you’ve try battle reclaim using this and to are

Rajeev Lalwani

for And then quick just for one you, another maybe just Tammy.

just from stay you You is talked et -- we mean the going the up maybe it where that number Should that for that and the for reform, dollars to floor forward? or cetera. should number maybe capital -- put either to we that about tax this take move CapEx out to look year,

Tammy Romo

a here big manageable now, XXXX, for have essential we on there's our But and wouldn’t and it are opportunities it just we’ve really Well, -- start of not but from And down don’t of continue outside it's know book you given you plans be of we so and to would But what going explore XXXX. will invest pointing -- the lines here, meaningful capital level, go impact more there. be I right order to -- I the making to fleet way. on our earlier, on we'll opportunity our think any along I all far. of you guess, we'll But at there that. at opportunities modernize terms if probably fleet the to business, would that very a to in back that and in opportunities walked fleet. side the But would Gary through have again, renew least in

Operator

to call. joining. begin Director for call Ladies today’s Ms. Laurie of today. like analyst of concludes you and gentlemen, portion Thank of portion media Barnett, our Communications That Managing the and Outreach. I we’ll the introduce first now

Laurie Barnett

Thank I’d you, media welcome Tom. like of our the today. to call members to

taking would on you we how should Before everyone Tom please queue up for questions, question. begin give instructions

Operator

News. Yes, from Schlangenstein We’ll Bloomberg question with with Mary ma’am [Operator Instructions]. our first now begin

Mary Schlangenstein

you savings. to uses the tax Gary, referred of

your said be negotiated. employees would unionized that noted is compensation that You have -- with something

you you’re that is saying for do of a mid savings? your would pay increase employees not that contract using what So some that

Gary Kelly

I didn’t But the going increase the negotiate obvious anytime. across want law, wage say just we negotiated. If can’t to all wages I words, the we that. Well, other can pointing can. not be it out we’re we because to federal that in board negotiate, two by or parties unilaterally which is, so has to

Mary Schlangenstein

pay you you to do wouldn’t negotiation the rule But on a out contract either some to negotiated? could the increasing is next contract possibility agreement side that do open before

Gary Kelly

don’t XXXX ever. that is in I see different than anything

take They So we quite effort have contracts to in an place. negotiate.

be obviously several priority. the amendment year, that contracts so will for have this that We up are

trying And other unexpected. think fuel can several I eye that earlier my suggesting, impact And concerned outlook agree, a of want that pointing sudden or just the just increases I earlier of have. unions today kinds mostly commitments any about sides fuel morning that for words And if oil an there what is it’s that. this not -- and will concerns price would in the am I’m two think the cost So interviewed and out do to our I’m about, And increases. those outlook. our we do that was long-term be to would about were that that. on questions prepared be we things Mary, always and focused we’ve I I all with we towards make reported the are always

significant other were we long reductions have in commitments that we take. challenges out ever in that we while factored all be always taxes, there any seen would have into term there So have would to the our things those

Mary Schlangenstein

thing And just if I could clarify said. you one

from you You you what that Did and you be made didn’t might XXXX, interested said. catch a comment say aircraft? the in I

Gary Kelly

change aircraft net we today, adding to interest our love the we have was mind any doesn’t point. mean that But as some that don’t X. That fleet. our that long answer said in MAX stands of won't I it we a at XXX the

it And will Boeing be wonderful those just anything comes with ready. that two. that X. on when it’s focus aircraft MAX not We’re on sure and working I'm working XXX the when is a our to else fleet, we’re that

Operator

next The Dallas question News. Conor will our We with Shine from take Morning

Conor Shine

looking just out $X.X tax longer help bit realized bit Is XXXX. of guys of How little forward? to taxes, exactly play are over guys just how for billion going timing of I guys know you this these reported expected these because going XXXX? the a the changes How expecting from to am understand been one-time a you much that federal XXXX, term. I to much the Was are similar pay changes? you that you of reduce? that a in magnitude little in thing

Gary Kelly

a so doesn’t return it’s different background. rules. our Conor, very there’s statements, quick financial match The So just tax

tax all tax the liability in XX% up XXXX. at would the have books rate that that was billion And a So there to years our is leading the a tax future. based on $X.X returns on we to to pay related

in of since half I So millions it's XX%, the And just future. years close had it is that in what what they proxy reducing of for were flow the XXXX. to each simply over is what's for are year XX% amount prospectively. earnings would now are And -- depends that That in taxes earnings on hits, hundreds save -- put now XXXX not the liability But are driving at we Tammy what that’s to XX%. our for billion dollars. the cash if would out from a would

of investors big think So all I it’s understand a magnitude. that and that order amount well. it’s of money very the arithmetic do our and But

Operator

We’ll take Dawn our Arizona next question from with Gilbertson Republic.

Dawn Gilbertson

for Two Tammy. first questions,

years you don’t You mentioned fourth you that remember from Do you get initial that’s exact was EarlyBird that the mean was that thought but perspective quarter. ago? $XXX would when several EarlyBird totaled just your said in annually you your million put words, And it to what introduced in revenue target. that I

Tammy Romo

which quarter, said. when the Yes, was for very was target we back high successful. I’ve in at But we by going it’s The one been there rolled demand customers. we $XXX point, this million our yes, making I in our point achieved It’s as out that was year. full it is

Dawn Gilbertson

this million the a hit time first $XXX Is that’s quarter?

Tammy Romo

popped -- which to me… this That’s been is -- yes, kind is of out

Gary Kelly

was. it Yes,

we’re exceeded definitely fairness, in a XXXX. expectations. we our airline it's in I Dawn well still when than bigger today Now mean But launched

Dawn Gilbertson

on the figure What for about the total -- EarlyBird, Tammy? what's year

Tammy Romo

would the we'll real back. For you back on, roughly will hang quick. you'll get be if But pull year, for that it I report -- full and

Dawn Gilbertson

you other be XX. that, then that given -- then or I from the I success, started for the know stay I Is remember to can’t due and And mean likely question at an related any what but that XX.XX increase? XX.XX to went is, that might plans, XX

Gary Kelly

our Well, to we We're trying fares some have We're under secrets. our costs keep control. to trying have keep to low.

meantime. I So for at a to we've the here think got least hold firm good opportunity

Dawn Gilbertson

the question you for know Hawaii. start, to flying in reading to And it what the going between as to were you But you me other that… fly relates sound very there I just slim? very, the start sounds this from the going briefly, of said to you're just lines there are no this it then like you said very Gary chance year year. then And guarantee was Is

Gary Kelly

all. at intend that No, I didn't

our offset all is achieving goal. that I the has the goal flying within share So by think not totally control. -- with from that to of goal not that didn't the our but It’s was year. our of you, end been be necessarily We

our six the is we're do we encouraging target. and on actually I that right that terms months we is in control, what announcement. months of And think are three what Mike after guess I work into this,

So well we are underway.

a there's by can be the and that that we be the goal. chance end year think I will flying our of

be in because anything, more been. But than past we end done maybe just to the If what at have able six what of months. we selling I think less the we're we've we're we'll by be year. that saying least flying confident over get I is don't we likely much now likely know more that the think to been

Dawn Gilbertson

of would put flying this at? Where the year you chances

Gary Kelly

how and federal that come we'll I again, know working timetable government, can't then they -- to their underestimated. that. be and we upon may be I the don't dependent do Because may with now work up we're with

grand what things, I'm won't just told matter next year or I we're scheme So to next handicap team is late our that. it But over this the in that way flying whether of year, don't generation. any there's early the know

it we it and want of by want we all up. we if up year, we’re we it; be we done, do watch everything when to well; the work; I And I'll happy. this do this to to flying do mainly end think to lined want want is get and

don't, of I will think everybody we be. end the If won't be world. it the

Dawn Gilbertson

is February next extension the after When schedule XXth?

Gary Kelly

later. days XX Roughly

Dawn Gilbertson

Will that…

Gary Kelly

that call XXth. April I would

Dawn Gilbertson

the fix of you that the Will through end year?

Gary Kelly

No, probably takes guess. into November, I would

Operator

one more Robert have that we take question. for question with And We Weekly. time Travel from Silk

Robert Silk

constrained, Gary, than Sea can more the Tac table there about you fact that? talk Field. that of anything or fixed me the other Paine to is that just does than the appeal to bring Is

Gary Kelly

aspects. think it to It’s from do brings a table. I of the attractive more handful

really have we’re option. cost that applying is airports. at helps alternative fares, people one low to it become aware if low So good you and And of

north ground convenient And so the in that thing And they so pool constraints more option, And if of are they it is we’ve the bringing have city take traffic that. flight that’s of significant a if such And -- second. seen there customers. for and I by convenient Tac sort I’m be forgetting that that airport, something definition is hit XX provide and I will that a customers a benefit sense, new some smaller, think there for that criteria. the is we pleasurable second more that of think is there a if just Sea can lot year -- history, airport is I again throughout our in a several to is more This going think ways. experience

real Metro of really is they’ve I for on the for those You area, has airport. point I us, the it for and as meaningful. drawback things gates. all constrained on what daily small is that. the you And Seattle departures increase which are opportunity to estate, which also, But Sea we don’t good think a but our really do think want we’re this do two terms sometimes flight many is in is finally airport have got very then five only options, to in left presence there planned with and Tac hit But us

And don’t able certainly be round trips So the accommodate if to five we’ll move we with we on may plans. lose this, more capacity likely opportunity. our

it a So I’m And than think radar. and about it. customers I the two It’s Metro area. nice plus Seattle ago opportunity really be our a for wasn’t excited on our will something that years real

Robert Silk

five it the one more? or taking, quick is left year The for plus those follow Just five five up. five

Gary Kelly

is they XX takes that the the that airport that this capacity understanding is built. daily My to departures have and

constraint, a not the just it’s governmental So terminal. of is the it capacity practical

Operator

this or time, to And Laurie like for at turn additional to closing the any Ms. I’d back remarks. call Barnett

Laurie Barnett

Tom. going that Tammy to I’m answer regarding Thank to you, EarlyBird. to back turn it provide

Tammy Romo

was that full just it year. for the Dawn, Yes. $XXX million

Gary Kelly

That’s convenient.

Laurie Barnett

standing Excellent. if Well any of other members you. the group by media, our you have questions, is XXX-XXX-XXXX. communications at Thank

Operator

And for joining. that concludes today's call. Thank you

Southwest Airlines (LUV) 25 Jan 182017 Q4 Earnings call transcript