LUV - Earnings call transcript Q2 2018

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Operator

Good day, everyone, and welcome to the Southwest Airlines Second Quarter 2018 Conference Call. My name is Laurie and I will be moderating today's call. This call is being recorded and a replay will be available on the southwest.com Investor Relations section. And at this time, I'd like to turn the conference over to Mr. Ryan Martinez, Managing Director of Investor Relations. sir. ahead, go Please

Ryan Martinez

and earnings to call. Laurie, our everyone second quarter I you, welcome want to Thank

then our our Romo, Joining insights share our CFO. this Board performance, Nealon, morning Chairman quarter today, I'm about of and outlook, me we for our well questions. open today's as the our and have sure you've and it CEO; second earnings President on Executive up more Vice our Gary and seen Kelly, President; as and Tammy release Tom we'll call

results filings This items, morning's Before results. make regarding more a we please southwest.com include current so that the on we section SEC non-GAAP this could both to be statements to Investor get started, call and reconciliations please different. actual find company's references of variety our for note are to will exclude reference and that special will our of also intent, Relations non-GAAP the of and projections, GAAP to information cause statements results. to and factors forward-looking release expectations, forward-looking These results press based materially reference

So with Gary. to call that, the I'll over turn

Gary C. Kelly

and earnings thank so Ven, also brief. Thank good and morning second everybody Tammy, I'm and you Van very our us joined going be from Mike for you, Mike, joining hearing our and quarter Tom, Chief Operating Ryan, has to call. de you Officer, be will

people From I've strongest our the did increases. them I'm business people did people I'm under-budget for domestic offset them. income and quite other from fuel and and earnings seen, our price thank even Southwest quarter we the But net our in proud very We a exceptional produced. reform, our them, accident every margins the second in per am tax once operating great of just category. to the exceptional and challenges what to are us. wasn't I record the in quarter, enough despite at want that and, effects April of the really grateful I federal to outset, Given challenges. produced were again We produced what is share. virtually very results, an produced very job like industry, as cost but the the benefited feels job, It behind grateful that

aside leadership. or turn this Tom competitive recap. tremendous it to an although We're of from take did to thank and length third up is at going and you the cost recovering overview their business, strong. regenerating the no quarter over financial is Mike it stellar out, economic folks and it's quarter, headwinds, for Our And personally I to second are close-in Tammy Fourth like quarter want are Mike and nice a with to and operations, wrap bookings increasing the and cover Tammy issues. steady is a the Tom going job yields account fourth strongly still the good that stage has strong, quarter momentum; in aircraft also of especially relative I'd ways and booking time, to usual to if thing provide into and gauge. and to

sir. to over you, Tom, So,

Thomas M. Nealon

up which fought said second work you this, covered Well, they very off of of Thanks, our as is $X.X tough lot Gary. quarter very though, some did know, quarter ended record year-over-year. through that, operating start. Having hard everybody. revenues Gary billion, uncertainty. a Good We a and and morning, slightly our of to with has got teams

in from RASM, points over load Our marketing which, XX any last X about decline efforts, for digital with decreased the did guidance, roughly revenue and XXXX television, But second carried a revenue factor, by this including our that which full Flight in last million I'd passenger X travel broader The which XX.X%. our back year, from is line Southwest at with our customers of load And was down impact fully of for our quarter. passengers a to summer fare factor is point May We record our the we quarter is say year in sale. X% even RASM $XXX in our number revenues. quarter, marketing with right was way, XX point, of re-launched reduction at and million normal.

back a make and sale know, customers, up passenger for revenue that. targeted is close-in ground, re-stimulate our stabilize of focused southwest.com, bookings it very, traffic attractive through we're we in for and some purchase was a you as trends. October, unusual get get did the primarily fare summer very to front travel, the and very travel it preserve price just designed purpose As sale travel XX-day very Tuesday sole our of us, on and help the sale lost June but and at to The in yield for worked And with to advance to did was back Wednesday and driving opportunities requirement. careful points

set our results an but second management suspect of Our very job under or systems, in I'll driver to and it's pricing we've well, in they begin the our considerably, array strengthen the two thank in delivered an revenue about the May. incredible you're quarter system to revenue stabilize that quarter. thank you and circumstances. from also our I We're techniques key scenes. guys. more for call saw using see behind very, management quarter do that called, did $XX yields yields benefit second And, bid listening team, late second of other was that. for And talk seen in over revenue We incredible past and benefits a million you just course, months, of pricing and meaningful the as O&D did were to they difficult the very res want tools we of down a I a X.X%, our the this moment. and

manage allowing and particular system capabilities all is our manage and inventory offerings, in res better to enabling our new low-fare new with to us competitive greater pricing us much granularity, Our markets. are in these

of really terms we revenue our In had good quarter. a ancillary performance,

revenues. both very we in product cardholder and that card And EarlyBird our Rewards on double due QX, double new the were did credit we're digits was And and frequent talked about Coast about as our product, the to another our our more. continues a The into launched Our point card strengthens RASM week drag base, up of lower performance very sub-optimal load our despite spend shoulder to flier boarding is aligns members XX.X% as our our that pleased had had increased quarter. digits upgraded And entry On of business which in Rapid even which we program things And, capacity the strength the on which a And expected, portfolio year-over-year, continue Rapid of the course, drivers see great probably and growth I'm our slightly flying. last schedule a of of Program, and were nicely up Rewards growth. also pleased for our our the our both to this combination last RASM. card strong impact West with X credit in strong QX factor. also card of very primary revenues. call, new members growing partner were credit outpacing and two Hawaii. these also traction with aware, with you're growth as perform well increase I

our QX fleet in see as begin levels. retirement nearly pre-Classic builds to this recede You'll up to back

underlying point RASM XX. impact of So we've business when you X and the net sub-optimal since from impact feel X the good items, the how and very rebounded from out the schedule, about XXXX Flight the temporary I April the strength point

Let's now quarter. third talk about

year-over-year. to So be quarter down we third range or flat of expect RASM the our up in X% to

parts let I me QX few that start reporting business before a base off So trends. moving talk through to on with our want in

First plan that new $XXX to EBIT by performance of we initiatives year with were this in deliver and system. remain commercial system very million confident new pleased our the we and reservation foremost, our in on enabled again, our reservation value are

of $XX improved $XX point by the X.X to RASM. to and QX, equates this quarter million we a primarily majority benefit driven is third management, expect a revenue For to which O&D benefit, million

see news is a recovery to here signs third Second, we XXXX don't continued Southwest material from The that We're (X:XX) booking summer overall to might travel revenue and the curve by expect, a X.X dilutive overall brand. continuing as point beyond fare estimate it revenue quarter yield, and you the of impact our sale QX. will positive or $XX that little see had impact third any very of we good strength an quarter more than million, impact negatively of RASM.

in by Third, shoulder begin we is the penalty The but fleet in point this suboptimal, RASM, August percentage QX subside as overcome our schedule as still on drag QX, flying deficit. QX. and of the is decrease QX but from somewhat QX subside about impact schedule flight headwinds begins sequentially our in improved still X.X to to should wholly

this increase creates we that was accounting is to of some to reflect prior to account this items our changes, our loyalty the X The QX. a purposes point for in and value Finally, needed headwind This several cost, our year-over-year impact primary largely the incremental one Rewards and that fair period are Program. purely accounting points third is was called March changes specifically X-K quarter to than now rather Rapid to for third which market out of our RASM year. this at net for quarter related filing, and we RASM XXXX we isolated an recast effect to

moving the onetime QX, several adjustment, the items, of our the we in very good summer about when but the for base fare and business. schedule, feel you have we sale, So here strength accounting adjust sub-optimal the parts

yield improvements quarter fact, third momentum the sequential and June we're in in in We yields, particular are, good with in very seeing July. close-in seeing and

deficit to put we've but know the and in action difficult in once pressure to approvals. Hawaii particular side quarter ETOPS through quarters, suboptimal as booking just few our on our of And Hawaii close-in take demand. reduced service continues will fourth And thoughts on quarter Although the but out be work yields We're second third the like higher to end been I'd we're quarters, as we're on XXXX June, continued aircraft we schedule seeing strength plan working factor, the and the quarter. fourth two produced fleet of on be and we'll also to lot And results. solid ready we've you our all our launch points. and we're by necessary it's we well. the past capacity share and this, very announced track, fleet we well challenging, across position seeing the third we solid to continuing X some for curve as a the of lastly, prepare finally, demand and been capacity receive over serve taken load onetime deliveries been and and our very, headwinds, have Flight a deficits, we've and of headwinds, and And it's by

really Looking a it forward quarter, fourth be the quarter, about I'm clean fourth because will excited comparison. to the

to away. sub-optimized is fleet it's us, effect and we the very goes good in Our schedule continues feeling that about seeing largely quality the solid real deficit are yields behind improve. be We're terms and XXXX the of business in feel it's strength The our of we're We're of and will issues go momentum away. demand. and tangible The seeing I schedule seeing building. trends. what

said course, Mike. that, is to I'd like very fourth of to that, ensure and that it our to a And quarter. bring we hand over focus, third in with having So strong

Michael G. Van de Ven

know, Well, the that carrier regional operate and carry up customers day almost don't operation comes all Airlines. believe period, we over all quarter to as that's weekday travel during full volume. flights the a and any so that over spread over of in kind close gets XXX,XXX as alone And partners the quarter really any other of We providers, Tom. Southwest or second Thanks, don't into you steam swing. I X,XXX the summer we picks

operating were team, I in So about a headwinds our proud certainly into to people, frontline. our deliver solid strong customers. to our of had warriors very care our there. lean very there quarter. They about they They are out And the second that each am care performance They other.

mentioned that the acceleration fan was already primary Tom's inspection course, headwind our Of of blade the program.

to issuance prior on and fan So our we protocols, completed program inspection accelerated in any XX,XXX blades inspections mandatory about XX of we days.

our freak a had a really gate over hailstorm a section area May in of also XX We a for small out aircraft in service of week about result of as Denver.

in amount available really improved of And a service. those from mode that, fly performance normal put items on-time headwinds, us And aircraft quarter. large scheduled of those the recovery all had for both of thunderstorms, reduced summer point of part last the plus So second the really about we X.X to our year. for operational despite

flights had our like, about we arrival, and scheduled minutes. little XX what about of I arrive closer within lower minutes XX% to So but within it's that's XX would than a of XX%

Southwest XX.X% So that's tagged those of And challenges, from they didn't to bag Airlines. our the even unexpected flying all bags of we our flights free suffer delays. be second best a of complementary the were history, really quarter for charge the from The the with handling were and roughly was lengthy way, on by in that service on.

year customer timeframe the best reminder, in improvements to that XXXX, ratio lowest in industry area. again the so just as this the XXXX. had were also in compared as And DOT complaints a from same the the we We in of

despite the point quarter. people our our performance a respectable experience challenging that So customers, did for my cost very operational a is that solid with for they delivered very headwinds, and travel

Tom certifications, mentioned, are as ETOPS progressing. Our

FAA application under We and review. with have filed our the it's

are of approved, of every FAA domestic amount a flights between adjust teams our procedures using Southwest as to and necessary. the work flights, working are hard our those proposed and of training the processes flying once we're and we together And are FAA, our things programs, simulation toward both work working and processes, begin engagement and day. can Airlines We are amend with validation require those coordination our all tremendous and

Lihue Honolulu that cities and Maui and So just on U.S. gateway our and of we've and remain San Sacramento, effort. previously Kona, Oakland, Diego, announced of San focused Hawaii and we Jose, and destinations

with will turn to that, over Tammy. I So it

Tammy Romo

to thanks and for Mike, you, us Thank joining today. Right. everyone

second unit into performance. cost, I cost right with our Moving am quarter pleased

items course, being of Our was higher X.X% with year-over-year, CASM ex-special only fuel. up driver, biggest the

gains increased gallon to $X.XX, per was net which hedging about price fuel $X.XX, by included in-line offset fuel of guidance. premium $X.XX economic Our our with XX% of hedge from year-over-year This $X.XX costs. benefit

premium gallon to hedging based Friday given estimated price hedging and For on and gain $X.XX quarter, last prices market this per to our we includes fuel fuel Similar costs. approximately quarter, $X.XX expect positions, third an second be our $X.XX. hedge of

next, has over prepared fuel our well increase as crude fuel Brent successful a well are and, in well year-over-year past well-positioned prices, for hedge hedging prices. gains above. the kicks as implementation the strong we're fuel in happy hedge never higher While about we in prices manage reminder, At our the market XX% of behind a strategic year, more With place initiatives to years are few recognizing us barrel hedging modest for net losses this and headwinds. we price $XX through us levels, as at significantly per current and

So, very I feel hedge our about portfolio. good fuel

the market retirement fleet move move pleased our continued meaningful including down fuel Classics. from of with with prices as efficiency will modernization, decline. I'm up also have gains the crude protection and We our as prices

our in schedule quarter schedule. see increasing fourth our gallon, the quarter fleet half of coupled efficiency efficiency metric Our available to utilization per our cover beyond, deficit and slightly improvement expect trailing optimized XXXX in Through fuel our to primarily of momentum our improved in mix aircraft year-over-year. fleet. to flight to the second seat by due our year, I more becomes of key our fuel mile goal our X.X% X%, as X% with of first the the sub-optimal MAX XXXs fuel efficiency is and

better cost timing. fuel, Excluding second due was primarily than expected, to quarter performance our

technology. only profitsharing, our excluding versus half, X% up the and of was $XX cost, about year-over-year from X.X% largely This into unit items, and of in X%. areas to guidance year costs shifting fuel, million into and advertising second half this first to of was primarily due shifted the half Our total, special second in

related half to timing of in Flight second third is the we have from expect X% expense the And our and With events and range spend. advertising cost to by increase with addition, higher hurricanes year also cost we as unit and quarter, natural mind, of of spend. it in our costs, technology to includes disasters. fuel, year-over-year our We excluding last XXXX driven a expected planned, will Maintenance capitalization heavy quarter, unit be currently Part lower inflation following third in concentration is to we in to all special also timing third that a versus some impacted year-over-year continue of trends operating inflation had due and to events. was expense mix resulting X% advertising And by advertising. year-over-year. for of see pullback be items, heavy that quarter discussed, the profitsharing, maintenance the higher

quarter, from quarter, Looking to particularly fourth ASM you overnight. unit fourth in we trends, in it inflationary ahead have relative pressure year-over-year difficult recent the some Also, of the some also as as continue to quarter we'll growth, mind, a keep have XXXX is to we and costs think shed depreciation fleet. investing in fourth to cost lap year-over-year ahead pressures similar in retirements incremental fixed Classic as first level reduction our half

X% is this excluding as drive with to to certainly our quick again, like year XXXX guidance is I special and full include year-over-year. does And inflation be profitsharing, AMFA. than This and CASM, fuel, and strive items, agreement will our a to now such, As more efficiency we expected would up reminder productivity. flat tentative

and effectively in fuel and rising move diligence flow, environment. balance also our control efforts their thank for our to sheet price efficiently the to people along a especially I Before costs, want I to cash and continued

sheet our all investment-grade top to have our we continue is balance you to a among maintaining balanced priorities, we managing very and many times, communicated approach to and As strong capital. an have

Our remains liquidity very strong.

$X.X quarter full aircraft. no to our in range flow the billion. year with $X.X billion, billion cash with year, that was of operating CapEx $X.X free change $X flow at to for billion There Second $X.X which this remains billion was cash guidance,

year. $X range of our first as the half selling remaining we the $XXX in continued in with delivery this ETOPS in the quarter share X% capital year-over-year. as the capacity. in XXX. billion our launched and And will the up billion month. quarter, executed track recall, new be past per plan fleet $XXX the maintain range, board on authorization. of later up During expect a to the This and returned service repurchase for of XXX And year, $X.XX And close strong of no dividend nearly I will the intend $X share and of begin we builds repurchase quarter which hopefully billion free to our includes approach capital. we growing two And dividends. than we share million end in our the and to are and at of with out quick the And and accelerated deployment May total the at profitably third we with approved bringing our flow We range returns to board mentioned, directors $X end million business repurchases. to completed X.X% X% capacity to fleet XX of share our leaves took will work Tom our annually. recap to probably you increased year under count or the X% XXXX to XXX-XXX cost above this focus through to the on cash end Hawaii a five years we've quarterly of X.X% Xs authorization, shareholders, we to increase to balanced our this This over which up our aircraft fourth all substantially XX% we've with continue And our on $X.XX returned in MAX Boeing April, our repurchases low value aircraft. significant share, our

continue XXX-XXX XX have aircraft some earmark XXXX current retirement currently invest we in to Lastly, our and of modernization. next to in our year, aircraft fleet firm is as for we deliveries plan

to which share, and quarter, solid costs industry-leading on our us our we In despite challenges. well second had record summary, higher tremendous we quarter second continue capital, second what high have earnings fuel serve invested We book order and per flexibility be any a expect and returns we in fleet, will generated margins to in and quarter environment.

is seeing reliable, Our employees on are costs. and on control of as of am recent magnificently made we with I'm our we these reservation overall our Rapid we to significant and modernization, work performed what accomplished are together. pleased we The encouraging operations I yields from investments network. fleet Program, proud as as strength And Rewards returns and efficient in our diligently strength the well new we've system, focused our

Laurie, people have to continuing continue We business. focused that, ready To shareholders, liquidity to questions. prudent cost generation shareholder invest value With and we significant revenue on we and our control our and to return take to are while and are to returns. our deliver ample healthy in we margins reiterate,

Operator

[Music] will Jack Please you. first our question from sir. ahead, take we at today And Atkins Thank go Stephens. (XX:XX:XX-XX:XX:XX)

Jack Atkins

How Hey. Good afternoon, all doing? Good are morning. you guys.

Gary C. Kelly

Thank you. fantastic. doing We're

Jack Atkins

Well, for Great. questions. taking thanks my

quarter, tools it, your certainly moment, like guess, flexibility in inflection to sort profitability. curious and you'd new for prepared know, a the that I related? the in because just comments So, maybe regard either to for from was be you're that the or into you due to your for fourth system? heading you it out the sounds would on the toward on playing or you're like reservation Gary expand constructive seeing could of look to business, with just both just out of like as this to the would that Is business. this expand off the be I if macro tone momentum Tom first I seeing very is

Gary C. Kelly

demand strong. here I economy Well, an It's in where reflects that. travel clean up. But do XXXX, I'll will and start it and think environment, in very that is the growing Tom are we

– everyone you in level, means it get facing now, the is seven look over – capability quarter. industry planned And down got well-covered a lot an midst execution, reporting in think We call the and the now have know when Jack, here working I most I the up collectively said and taking, past we've think I it second industry getting some, mostly hope, significantly years We had I we're marvelous disruptions Southwest are revenue-producing of of unique and very again. and to, And repeatedly, leg of I the to again, that. a I macro, that But our to through think, a here growing, to has the in industry by. through things our of today our time quarter expect a you to job macro. whether and it's more second we challenges. think And no addition are claw it, as of competitive I most still not unexpected aside out capacity of what activities back, think to competitors But it's in and is some don't from and Tom forward micro, how the from we've that's is here. done but benefited we're know that XXXX. goes that responding to that in But challenge competitive rolling reporting or some micro issues will – we're our oh, that course, obviously, the I improved about you doubt, happening

benefits portfolio we're and XXXX, more on we It's put that on be to pipeline future. teaser system, pretty beginning seeing again, be very ideas to the may I'll It much keep even will that our nice report a not deliver. little just and was we flow our And of quarter. need flowing hoped come. thing well-covered, folks And this are track I'm we but new Tom's a in not confident to for from results that now and full we're that that. is, we well-known we and which to to and reservation new in now to work continue do in with So need we're the have will the going fourth have the

Thomas M. Nealon

only that thing talked the Jack, the of I just that, execution jump Mike to of is kind guess, frontline the execution outstanding. both out operational think I the add, I'd and is about execution,

one in way. that think in macro in thing I highly back I in driving of didn't a back was think very, It our really is this my kind that effective marketing think and big website on I hit important – comments thing is to even very bookings. – I demand and kicked a our

just it lot to contributes things. to seeing really think it's level it. that pricing techniques a think drive more new before. and and around demand and valuable as tools, had a it's I that that And we've monetize really yield house I the us site and granularity the think of have important, starting of really side the never gives capabilities I We're the we Andrew commercial to management, those management and we're it come to fruition, so

Jack Atkins

that that And so to Thank the or left places correct about through $XX a that's fourth not of all give the be million third the to will anticipate in I expected realized then, that with side, come in leaves That's is And that? if P&L? kind other could you quarter on your realizing in number Am revenue comments the the flow Okay. that, to or benefits math answer. reservation on the us right assume Tom, going in of on as to second then very you back quarter? realized that you to And helpful you. right, kind I'm follow-up just that a quarter. a that on system

Thomas M. Nealon

$XX all the sorry. your going I'm What question, exactly sure very of but I'm Is close. through... out was ballpark. you're to if you're flow Yeah, part probably it's not the of not other Jack?

Jack Atkins

through to or flow revenue side, P&L? the million that places is roughly, going on so $XX the is or to other Well, be that going on

Tammy Romo

revenue the side. on predominantly be it'll Yeah,

Jack Atkins

for Thank time. Okay. you the

Operator

We'll go Research. at Keay Hunter next Wolfe to

Hunter K. Keay

year for probably everybody. the X% But incremental. you've to I Hawaii XXXX. Hi, talk lapping you're of the I'm the pretty core you a sure that so basis? to think we there, given thinking whole rate for guys Thank as first, nine your much. about how qualitatively system it half about sub like maybe showing that's some weeks a at whatever I capacity growth you least is, so of year you loaded ASM in and XXXX, back very It's was are going of we're be think the schedule loaded a haven't growth, about about when the be growth. you going wonky how that your the hoping thinking might stuff in on

Gary C. Kelly

We're a the pace for we the grow planned here. be low we'll for start had something X% initially it than over That, at down don't us I'll range this next had year we XXXX I for Hunter, again, the making one, our the from first what I XXXX, that. point year. is That's is to a is Well, so you've based But you're assume with should you the that planned not growth X% would and, less what think yeah, year. in grow certainly that haven't that. there for part fully which year. agree for rate on good baked the should is of you – that what but, I year. seen

Hunter K. Keay

Right.

term? in the a you that when then guys route how are you And won't fly you said defining isn't past that Okay. have profitable, that

Gary C. Kelly

Revenues minus expenses.

Hunter K. Keay

Okay.

of So or is ownership? is cost is flight, it it including expenses aircraft or operating all-in marginal expenses the extra it that operating

Gary C. Kelly

allocated. Fully

Hunter K. Keay

allocated? Always fully

Gary C. Kelly

course. Of

Hunter K. Keay

Okay.

Gary C. Kelly

market, put of maturity we're this. are pull mature years a before tell take mature Southwest a sometimes to now with. we we they out. will the kind But that markets I'll take are you that And markets that So of decide we loathe Once profitability have start-up several very well reach and time to we to set satisfied range. have the into in markets

patient, have have of we a and a margins philosophy overall I sheet that the is But profitability, decide balance will means city So that. support question. to course, not our and have that, We success, with, and be structure of the to kind that pull we wherever are operating eye of sure competitors, not examples unless obviously, the the do we pair and cost of go towards fully lot absolutely like just I'm which go, over results understand going thousand so out, we allocated we're an that A they course. in, can't there achieve years it patience. would to

Hunter K. Keay

there. it you, Gary. leave I'll Okay. Thank

Operator

sir. hi, Please check And button. your mute

Jamie N. Baker

Who?

Operator

Baker. Jamie

Jamie N. Baker

well, you go. Ah, there

Operator

Yay.

Jamie N. Baker

own the competition of beginning level, And that the three years achieving the margins own model, industry goal mean, certainly higher a the that's I have looks it seems to welcome – at guess, my is the But consensus by next I and Gary, year. emphasize finally of Hey, down industry change since for, not expanding now. I'm I'm been margins headwind, Southwest your play the it's this. layup process you would can of margins kind anything, of identify guess might has basically interfere that here. margins? sort to you specific a higher of any next I Rather, advocate year. endorse to devil's that you to with asking that be Southwest asking

Gary C. Kelly

morning. at think report your have Well, folks track while complement confident the appreciate I the did chuckle I and and to there this to I we're have very our record demonstrate,

out H the left you of know Southwest there. You

Jamie N. Baker

man. We've already Oh, that. taken heat for

Gary C. Kelly

I mainly your just know other stuff. I... the that you But that thing I want to read

Jamie N. Baker

a Well, it test. was

You passed.

Gary C. Kelly

our noted been has hobby. record of the we you at hobby that a referred is one statement have and Southwest is track question, of to to Well, not long other that historic very previous of a competitor's the it never a this thing producing. I Back

have strong next balance It to will year have have of we strong plan margin, seeing wish could be sheet, need here a could a a second could and of that that's the pressures. the because far to modest way half, And I managed from just complaint be blows in a important, I back come could associated happen. cost the to with with unexpected you unexpected. doubt higher and next absorb even it's in think a have we light unexpected up. being this a such Tammy's recession. can year company have just to why It hobby, a And we it fuel year. cost the is be the that about tough they business. that could we're manage comment, you your as you question, profit So that be thinking our be – layup, it's to agree could It in no so risk kind you about Things prices undesired, pressures absorb about the

managed leverage all costs. and be airline, operating because to the has that fixed there's high of tremendous all So of just in an

needs accordingly. just So balanced be all that to

business the Now, assess agree with we I understanding to as take we're XXXX, you. in the risk for a outlook

is that the out, I Tammy's think well concerned well about I'm positioned. economy looks not pointed very think, how overly pretty good. fuel increases our here. price I hedge from

debt MAX. of is We year, of well MAX. as getting have And modest have coming which obviously, very we equipment a requirements. financing NGs, in have significant year, don't This We new blend next any as some levels XXX% we're debt.

will the there, good then So various setup under And year. need it secondly, overall a execution to pretty be just Hawaii. cost. initiatives our our way and manage and manage need it's of have spending next we for expansion and to we our then We'll

as to comment, in put of I has Southwest, priorities. more of higher focus needed operating our folks X had transform release our last what it I've which the been the years, in as So, a company We a we XX done. press my cost the on have to over simply want because priority than

I responsive your to that's just question. – would hopefully So

Jamie N. Baker

Yeah.

Gary C. Kelly

you We a never folks quite That's, well. one, few ever approach if a layup. it unexpected frankly, our in we're this like into But as having year get even when challenges, is trouble. a doing extraordinarily year are a

think, a good well-positioned once So really we'll believe I very have I be we'll again, I think XXXX. and

Jamie N. Baker

passing, alter it might a Not at something I'm experience? you're something capabilities. either Is flight it's on impact for your the Excellent. or something that that this where process of the that sure looking I considering, Can opine you did Gary, think some And mention back your new talking all? in ideas about to it flow the to relates it will future newfound that possible in Are initiatives product as you follow-up that, as you was wondering that might it of manifest. just about Is booking might distribution? just process in-flight might it part impact. what specifics, I'm boarding? accretive model. in

Gary C. Kelly

we see our wanted years Well, might primetime, prioritization at Airlines you we still although for to in. what want I to essence the need over of midst the I it's revenues. ideas – mentioned to fortunately, are bring looking opportunities ready more today is, opportunities main of drive how I is new that. I is are beyond the to that up next way I for think share they're ready And there not to to and and – don't And they well. not think Southwest change find new think we initiatives to fit three the and we're initiatives of next the the reason we system, it some have of when had reservation And our a primetime, over we've in good executing have last there's what lot years, a that think and what's them. XX we'll served X us flow The

and mainly the expect time a to distant you to we're sitting to in stream, the too the is our know now busy it just investors not future Tammy I it that initiatives So that that be begin would Ryan for not that in on next on that those. position by let and idly counting of, know get would us unveiling is and

Jamie N. Baker

can Take I spellchecker you our Gary. we'll well. excellent, as care. fine-tune That's assure

Gary C. Kelly

right, All sir.

Operator

Lalwani go next at go to we'll And Morgan Stanley. Please ahead. Rajeev

Rajeev Lalwani

Good afternoon.

Gary C. Kelly

Hi.

Rajeev Lalwani

you fairly am comments Are based looking we be the acceleration start be XQ and of forward anomaly next move headwinds got like out. about a I with some it coming on you about should bit quarter? at as ahead. bookings, you constructive this thinking? as But cetera, there quarter aware you've to made Because, it seems seems an things of obviously, all XQ any various it's and Tom, what et what in nice missing implying a the pointed that we that

Thomas M. Nealon

Yeah.

we trends strengthening about. quarter strong. of in July talked further-out again, since third the we're terms in May, anomalies back just are the base early But, strong, there June, seeing, pricing, already that of shopping, into to late think kind close-in I

So where published only quarter, the are. we obviously. We're we're feeling pretty good fourth through about of February

very curve third we So where in are do the we are we where feel the is quarter. very, in pretty bullish early, about but

minus of lot the But fourth to have we that think us. I goes and boy, saying we I X%, that on to says, looking where foreboding the something at a a that there's plus real right? we nothing of in quarter, team very are side, And front revenue work think or the or have shot is do. flat there's myself in that

aren't seeing that. We

we work are, third, as lot very a of I think on think you'll have do. as I trends, if they're have going they a so to carry quarter, to nice fourth

such said, all. as Just here as a layup thing no there's Gary at

how we answer do, Rajeev. So probably lot I a of work but have that, that's would to

Rajeev Lalwani

the is thinking a I capacity little the how the how stabilize forward? I just particular impacting how fuel, look mean, but of impacting Okay. And, RASM of you're oil the in to of of guess question is about you've bit trimmed the environment, in sort higher here, know particular terms specific higher your capacity you're is, as capacity? I that way you Gary, in business, thinking approaching implication

Gary C. Kelly

talked not training investing in we across opened capacity great growth. headquarters. We're simulators. a capacity training how investment street the which in obviously, very, just sub-optimize thinking across means recent investment that the make absorb Airlines, be about new new that thing I is, ignored. made of We've that the not airports just company, I to been I've in And our of we're the point in necessary. from future, facility country, overhead. very all up to deal for about We've that years. in the and have Well, creates has has acquired would flight one and the think been invested Southwest it by the terms can't just for definition, a And the And that want do future especially add and

the So of just operating I you don't and leave also in. investments. business, factor of take a in lot costs A table amount that our you would fixed ask if on leverage, to of just those fully lot a heavy you very advantage

of hedge. something next the we expansion, kind the about to that generation add. that is about you why past have the why But I fuel – think probably a And the management concern important it our us have think circumspect as fuel risk that think little that's higher make that the always flights it we additional prices, technique. Now, extremely and us margin, hedge. prices they causes employ us hope we I I higher take in well served with a more to at risk that Southwest, over it's generation That's to less in about

reduce if with not lot penalty, the flexibility overhead, it's I of we today it into because finally, today we a ever. if just to unit think there'll flexibility ever. comes a you unabsorbed more reducing a And literally than growth do penalty, plan, but capacity, Again, will. than fleet, be that have need more Southwest a built decide we we from have cost

for all balanced not of year than as Hunter, continuing such our a that is the to of risk/reward we to argues I XXXX expanding now that a looks thinking more feel that terms be us of it's that certainly but favor is expansion. like in year and just about my view is solid right needs So in it that very X%, mentioned it

Rajeev Lalwani

Thank you, Tom. Thank you, Gary.

Thomas M. Nealon

Sure.

Operator

Syth next James. to at Raymond go Savi We'll

Savanthi N. Syth

afternoon. Hey. Good

that, too? the Just million of on to related $XXX XXXX, the that XXXX? a about portion that also quick in Is connected for hedging Tammy, what's question side. that's the really kicks to And $XX. you fuel mentioned

Tammy Romo

Yes, hey, a similar Yeah, it's It's for XXXX. similar. story Savi.

We for are hedged next so we're shape year, in XX% good as well.

per $XX a to barrel, those would kick get of story. similar we hedges more in kind significantly. So And as see we

Savanthi N. Syth

the value of to of to the that's breakout you related Are XXXX give able itself? kind market fair

Tammy Romo

here. let me that you number pull for Yeah, Sure.

you'll If one the me give second, breakdown. give you I'll

Savanthi N. Syth

I Sure. kind – a RASM overhangs XQ here. ask getting to like sounds if clarify of of but you're What I'm with just positive back comfortable that trajectory, kind what RASM correctly. trend come that, as trying is, wanted out, And get that to benefit these really I on at hearing the a was just hurricane looking wondering to the if maybe, I Tammy, while you're hurricane unit is can the revenue look? follow-up it I'm to

Thomas M. Nealon

this is Savi, Yeah, Tom.

think at about way us. I for is look upside of the probably X.X point we that

Savanthi N. Syth

Okay.

Gary C. Kelly

But that's all factored into Tom's...

Thomas M. Nealon

already That's in.

Gary C. Kelly

or stew. the there's just so of plus range, in got stuff – lot minus a ...flat usual, as we've

again we there. this pluses, there's but is of That similar impact don't that's So course, and is year, a in minuses, assuming, one. that implicit there's have what's

Thomas M. Nealon

that is one gets guidance. us of the to our tailwinds That current

Savanthi N. Syth

ahead, Tammy. go And, Tom, do you –

Tammy Romo

Finish Savi. there, your Oh, ahead. go thought

Savanthi N. Syth

the curious, so, of RASM you just Tom, the I Is or kind that the some too was of I get that am comfortable trajectories? comments, can we positive far? of are taking to feeling implication kind it of

Thomas M. Nealon

if like sure Well, seeing and about I not think I And I'm we do hey, what we're good ready to feel were feel I trends wouldn't say that. I'm as We listen. ready continue that that. the really, we're to – to solid. to commit are – see really things

I'll pricing, and schedule, We're terms we're are RASM, shooting terms it very the commit terms capacity, is after the wondering of it after looking of boy, of they things feel things, us marketing. for solid in for, of shooting is to several you're good. tell in we're positive But, RASM. going not the what, the in and think execution hard. I you I'm in ready towards that terms for terms that's what positive what going if to of absolutely in we're

for. we're that's are towards. So we're but going after what it. Things what working blazing, we're shooting That's

Gary C. Kelly

than happy not is really it's know only we all, at question, And, try we we've we're would about that. where come answer different are and Tom know saying the way what where Savi, but your I to we today from, and

happy with very good the have of We we're quarter line third of to most sight and that.

turned one do, considered. expectations things days quarter Clearly, good, we that forecast it's not all out or that second together trying much out, days, to less a pretty You logically XX accurate. can say XXX put know, just like set XX of

Third has quarter. in which is XX, expected, third the still shown would clear and have And July do those but burdens hampered fourth have a to then you kind it. quarter improvement, quarter, notable I of of as things few by go the

means would quarter. logically up one if better you that quarter third flat to And, So that that or would say, expect, is down, or quarter think, is we're obviously, talking positive. up slightly then fourth yet than yeah, fourth again I the

encouraged we're little have We do Tom the build. ready and palpable it, with have to think continue enough all with I not we're trends It's a of momentum So information just with described is momentum here, way true. those agree to that, ring don't things and very I will but to forecast the bit we luck that. which the

Tammy Romo

And I'll just chime in.

Savanthi N. Syth

it. Appreciate

Tammy Romo

before fuel Savi, just answer chime I question. too, I'll in, your

great in from again get quarter again, for the Just think noise seeing in the And you so demand just seeing to we do benefits and close-in encouraging a comparisons, business our very with what from we of repeating and said clean the in excited yields. and through reservation we're have we're yields is earlier, the new it's – where that trends we're but what's the terms that's seeing all is just and quarter-to-quarter, Tom solid. third fourth system strength the particularly to plus. headwinds quarter, walked I the tailwinds all particularly what We're trends,

then all forward XXXX. market $XXX $XXX roughly the that and XXXX, say, and I was the the of XXXX our us fair So these between on the million quarter. to of XXXX behind and that question headwinds excited value million to breakdown, we're and to hedge, that looking your get rest split believe is it was is so of the on fourth On

Savanthi N. Syth

right. Thanks. Helpful. All

Operator

Cowen at Becker Helane to next and go we'll Company. And

Helane Becker

I where a – ETOPS know the FAA think the Thanks, its is certification, Hawaii the takes about I for Mike – operator. Hi, When you Thank guys you everybody. and I for time. were can thinking months know this question FAA nine the thought are just six do be take a could you up you year. it say in ago? where or process to approval would time is gaining you you and to if of But

Michael G. Van de Ven

a would timeline. is a Yeah, I out along that we or what set tell you had timeframe Helane, timeline, and we're

right so all So what go to things exercises the sure And is could the do be that And now, defined problem airport the trying those and have manual anticipate and we things, procedure thought that different landing FAA that would could we you're possibly address wrong that mechanical point it for important we that have a time at headwinds; we're it that the in that defined. at flight. through on have to a us this issue; enough in. we're our just sure illness practiced a could . what's have the does customer on making be could It procedures it could doing at be be that flight; make

that that, that, And we'll these now. process are some we're as have through the yeah, well. right that's So we comfort in go procedures

XX and, So that next we to flight procedures move XX would onto training in ready understand to I begin expect we'll the hopefully, a and then these are days, will that. go, validation after

Helane Becker

costs we built are And that route But going that's is because you're head into process? timeline, hiring Okay. existing necessitate through while then guidance. when additional that to training to I'm count think the fly kind about of your going on, and sure, training so network your the that

Michael G. Van de Ven

we've of already adjusted going Yeah, off already have And that, head all training, that needs we've of them pull count that example to we're some our will we've that and already will cadre normal a so pilots responsibilities. ETOPS accomplished of through understood their flying for for go that.

Helane Becker

Okay, very perfect. much. Thanks

Gary C. Kelly

did new routes, the just forth. ask a Helane, frankly, Hawaii, And, our I with about business success but predicting long of frequencies, the on failure, it, of record network specifically to want or you – and have of group quite we so track additional planning didn't

So look we it vision, a that all was But the to say, unknown, we've their gateways also you factor will forecast at and it our then very will service, that course, we to to inter-island remains would just how of gateways, if course. in enthused so initial how California to on. be quite flow destinations once repeat our fast accuracy really have from island to selected, our forecasted the not to in were is four amazing well, well. will, asked Hawaii we're took you'd we of forecast the once competitors with the addition good I very and, way four for it so the that react that, and look the seen, And aircraft, that, ramp-up, while at about think,

say, on housekeeping good But we've what Mike enthused. give a As still gotten and it, us well. gone no right to talking we is here. we nothing to is FAA the my been decide suggest to And, gone now more about sketch the less well. exceptionally conducting be, And thought but there from where has of even but that the of things, enthused the is we the we're approval would earlier, ultimately it's has fall, are would so work remaining side work ever to between If thumbnail layup, I was opportunities, that and far, whether business we've were looked of as up anything, really they're trying going more at that's then seal that. I we just

it'll So and to will focus and our be commercial pretty soon here it succeed. we stick going we're with

Helane Becker

Great. you. Thanks, Thank Gary, and Tom, team, everybody.

Gary C. Kelly

you. Thank

Operator

We have Evercore question last at ISI. our time more Duane Pfennigwerth for we'll take question one and from

Duane Pfennigwerth

value or sort in your a on in your customers you less to New Can have for. passengers. sees a core but That's Jamie weigh you corporates Hey. boarding. has among for open Ryanair potential But to some and understand it seat. also costing Nearly like example, reserve in at For markets, Southwest many markets pay Thanks. little seating. more half to priority I as share see In know, where leisure wanted asked maybe be that a least customers pay up of their presence, bit move on you to appreciate, earlier, paying follow-up assigned specifically. seating? York, they question

some And questions. can that you a was res be actually making at? you the you're How change? looking could it's a quickly prerequisite confirmation make to something system give taking us to the Thanks the in position So change? for

Gary C. Kelly

let Well, Great blunt. sir. be Yes, sir. Yes, very questions. me

time assigning in not We We're are assigning the not right not seats it now. and now, at about we're future. at talking about looking at some talking looking seats

Just clear trying questions. on be very to your

always we the require the handsome assigned it's in until make initiatives They're a they Jordan Bob On my address ideas. to plan. opportunities. are it's very says, have friend before that, I as layer – – you that additional don't opportunities and seating good These until idea well, points some that are an

assigned so in some But midst feel seating And have. to opportunities really require we it the pursue plans. like we're I does exciting developing some of not

world Now, There assigned do everything is assigned true. We have absolutely the seating. are where around gone to you who customers said have examples seating. carriers demand

that. about. does is think where realistically can we open Assigned it opportunities more probably about fair a in to up say least position reservation think of think could seating Tom, puts an system us array the I that we that new at

and if it, know, I by this wanted anything I could are we it's And allow consider. believe want today, are And and seating. better and us being ain't offer it better it's position but a In following I and point. in and something I that can't that here concluded that should doesn't look won't. communication balance system, to day, what system, be happen what maintenance don't flight more so So new think, side is customer about doing which that at get as Ven better point all has we or all to – a Van life, pluses asked keeping operations But that it that year. underway put a the for where our capabilities minuses our don't Southwest decide we back record things we de in There the with way, with our that on investors, we're next have Mike to I evaluate the efficient. and I don't months, it I operations we in new still service like employees, we about things is right a we happening on to off the about with now just beyond why to near some would Duane, do mean future. could position now. predict And won't that talk it But XX assigned need and term as really excited some much much, that I'm come in are revisit the we

some think seating, exciting. we initiatives now. right are and assigned one running now, about be and Our of but can these to airline is new it's cuss get to able in days, layering better. nothing a happening will really And more right folks discuss it about great And revenue very now that's only

Thomas M. Nealon

this actually And, Gary, did you we Tom. XXXX? may look – to And at could XXXX, Duane, if that. I surprise when add is just this what Gary, is was it,

Gary C. Kelly

Right.

Thomas M. Nealon

flights of just think We it. not And at customers, XXXX. real real real flew passengers, Diego with looked out in San I actually it was

it. the chose I are that to reason of So, ways actually at we doing that us wed we proved new ideas, so guess, looking I is we're not not bring things do it new that could open up we to to. if to That

travelers, to. But thing. give enough. interestingly a Gary you was process. things. guess, Our is results I customers right punch with the derivative It is not boarding at our That of interesting business completely. get actually agree point It asked that work list the us new looking now the new at was not my did I on benefit actually in all.

we don't We get the be continue what in going That's things have immutable much we're one our I stronger. bigger at. is make to on. to the just of we'll working and product to not are want But product you think things to

Gary C. Kelly

XX the strongest among offer we Part facts the we if you product our brands, all and the all strongest brand ago. do know, the it what in current XX today, of largest way been airline Tom's about the point, that that's number customers more thinking with for is to the years in two, that years. than are we're our doing it, airlines, And us we've which we is told not country the

the it, evidence So saying, I but broken. like that fix no it it's if broke, don't certainly there's don't ain't

Duane Pfennigwerth

Okay.

in stay We'll the Okay. response. for you suspense thank and detailed

Operator

to portion call. that for gentlemen, the Linda first today's us. of the begin you call. today's we Senior Rutherford, President, and And portion will like Chief I'd of Communications Ms. introduce Thank does Ladies joining conclude with media now Vice Officer. analyst

Linda B. Rutherford

welcome and Laurie, members to to today. media our you, Thank of the call

how up could Q&A Laurie, give we start taking them to some questions, Before session? begin on queue you to our some instructions

Operator

Journal. first at Please go we'll Street to ahead, And Andrew (XX:XX:XX-XX:XX:XX) [Music] sir. The Certainly. Tangel Wall go

Andrew Tangel

you more do products. Hi, costs these At to point customers Southwest you folks. taking scaring How fares question where and about as more a where are see much in you fuel Thanks a fares, they now fuel paying recoup raise have for demand? what to than time A costs? of a question. reducing for do try consumers are room fares. other all higher And higher now, and the we're higher off right lot lot

Gary C. Kelly

Well, but quarter. I – of just very thanks to we get the want solid all, factoids for question. had straight my the here, second first would a

we you're quarter familiar X.X%. had, challenges that down And think I so the the with year-over-year were during our the despite challenges. fares

we our the that, you despite will, kind fact customers. to and up, were from of it used reform the that prices savings we tax So didn't to fund sock if fuel

So our that Obviously, We had we're costs do go if quarter. be up, it to and our way. the low. things we're to we leader. in America's that on in, puts modest have gradual solid fare hard we a try And to our at good go the and for Southwest, compensated low some obviously, to fares need along extent overall to and keep a fares work passed we be pressure But to us customer. up and service shape

versus – have this our So year levels good some we've comparisons think average last fare year. very with got we'll I

you So you're in they anybody just coming we we're seeing right saying fares. or good fare increases. I'm Southwest. now not Doesn't mean to I'm for need shape fare won't be looking certainly from not increases overall that increase out that and warning

Thomas M. Nealon

add if that... to I Mind (XX:XX:XX)

Thomas M. Nealon

Andrew, this is Tom.

a I who on of are pretty part that the That's the leader. proud are, fact low Just fare thought it's we that brand. of as well. we're we mean, of part a

still drive for where fare of you'd get I we What pricing little manage fares typically if yield. the more we important, maintain to I demand would our put but I which try we could parts of for with low tools, our to much customer, fares very heard just sophisticated and of going the to where also it's isolate low have we're our those mean the our more call, our think as drive sophisticated to fares and low other as capabilities, into with fares the think going to we systems. we more the require our of hope is in retain to low meat by I pricing But you low then get that we ability available day part think day, like fare from do into – lower specifically. and other you I perspective, us get that's what the demand, a of without my leadership, could retain be – that to is res have what's have more certain to up. the what rest And some the that new ability is, able that and make fares,

for So, are Airlines important Southwest low for customers. fares and our

Andrew Tangel

if least thrust if how what customers raise bear of limit pay question, at address willing do Yeah, the could of and you have you are extent, the traffic? Okay. much to much Do lose about just customers this you to to fares at or passenger needed point more how what too, you point. you can the at hit to, room

Gary C. Kelly

was Well, and are and down that as think since again, they're trying all to I every recall. XXXX, I fares I year down our illustrate is

reasons for I think the "reached I been we overall, a have would because I the has about that. and I to where can months we hopefully by wouldn't doing to fares extension, quarter, that's customers, line so behavior and the be do we holding question, where you and want don't in understand doing is fairness of that one with tomorrow answers... been in other we I from going and so you think appropriate we our hint that, talk might to six to wasn't we're what your our job also, haven't, But raising so and second we're intending now. we But thing our fares, that's no, for and not the good think what not So or limit." That's competitive were

Andrew Tangel

Thanks.

sort about just related, it's revenue to – earlier also with additional on revenue of follow-up but quick were streams. you a Just talking streams something diversify

their talked Your revenue competitors streams. about diversifying how they're have

all You've about talked too. it

bag cancelation you're costs? change low Specifically, fees, fees deal keep fares are you fees, fuel these with as at adding trying looking to potentially and

Gary C. Kelly

working that that. enthused have. and it obtuse offer about basically know anything we worse and I on generic. than was It some to that didn't very know specific. we're I just was It It's ideas folks let

bag thinking However, you your fees. about posed, question, to question the not specific we are

fees. are about We thinking not change

Andrew Tangel

follow-up I'll All right. it. Thanks. questions. asking Appreciate stop

Gary C. Kelly

Thank you. They're all good.

Operator

Bloomberg we to Mary And News. go next will Schlangenstein at

Mary Schlangenstein

Mike, the on frequently? Hi. Mike, I do to those fan the inspections for Southwest please. to for have a more question your step-up what engine decision led blades and

Michael G. Van de Ven

Mary. hey, are How you? Well,

Mary Schlangenstein

Thanks. Good.

Michael G. Van de Ven

more And as there aware industry stages, I'm inspections Well, inspections are been and intervals those in the findings. of and based in change additional I from other X,XXX they've and four in industry results, to on a believe us X,XXX talked range. or GE ongoing, cycles, maybe something have their lube something is inspection industry final than those their five to about contemplating but X,XXX

decided Mary, fleet make to reinspection program. on So, based today our to X,XXX-cycle intervals. just a And is on a that, we proactive change the

Mary Schlangenstein

Okay.

findings be what specific can terms the more of were? any in you So

Michael G. Van de Ven

to more down cycle out are Other fan helped propagation than moving just and that think were that mitigate risk. down and the frequent industry, there with the mitigate there in the potentially rates that some cracks just of I they respect slow would lubrications blades that and –

Mary Schlangenstein

any fan were And Right. cracks of additional those on found Southwest blades?

Michael G. Van de Ven

The I don't to know I the on know. five, What I'm GE. don't four talking about –

Mary Schlangenstein

if on were you were or whose on found Southwest? they You know they don't know don't

Michael G. Van de Ven

found was I four to on not five about talking Those were Southwest.

Mary Schlangenstein

Were not.

Okay. Great. Excellent.

very you Thank much. Okay.

Operator

And Dave we from take do time the We'll The at have Koenig Associated one for question Press. question. additional last

David Koenig

Good afternoon, Hi. guys and Tammy.

Gary C. Kelly

Hey, David.

Tammy Romo

Hello.

David Koenig

Okay.

price on a questions cabin if or subsidize bag It next premium always and the assigned lower fees. seats, things not could did list lot routes, your on lowest you're the carrier in me I strikes plane, any few might have that wonder ideas that fares you a answered be You maybe the premium you fees, in like the change of back had years? or for about you and of upcoming seats,

Gary C. Kelly

that to. of basket not I the was things in that's alluding No,

something The guarantee in XX know will and years change years airlines keep XX the track and will assigned low familiar majority that, could the you be that generate are kind is we What for think of opportunity a a been said today, an the offered, departure. certain look if that the case. The to fare, array ago, vast and the Southwest the lowest lump do. time time, customers more we majority. of include is that always and with every we I that theory per do and features if that can't claim will will willingly And I that. fees in revenue amount guarantee it's bag of can try described. with be through ago, Obviously, pay that that's revenue. that's to pay having less, make Now, that of. some fare would to never vast about always some we seating, we're and an fees, very willingly a the That's – we can't Dave, you nutshell. something easy fare. the you that But, don't of it's the We just

your a at not targeting as question revenue initiative time. merit, specifically this we're certainly technique has So that but

David Koenig

one card but back? I in opportunity Well, is is advantage advantage for get there guys, getting lack of by important subsidize fee seats other a an folks. can a mentioned, think you the Gary, of so credit an But why wouldn't fee, Okay. much that be on the change around more that you bag the to which branded cheaper as you there the

Gary C. Kelly

customers us that's one they – airlines of yeah, That's understand is Well, yes, voice, come they speak don't that, that with it how I my objectives. with think point an array to works. so

Some want cheaper people less price. for people a some want more,

do And so if offer professionally, that But, balance we strike deliver, expertly you what we can we We and you're today. Select today. describing to yeah, Business We offer today. will. EarlyBird try what offer them

customer we customer opposed So avoid to really an easy. we the the respect make offer we it a to pay make for do choice try forcing competitors a to array for what as of a complexity, it to attributes, fee. and our to With try pure do, bag

works have well jump for hoops consequence brand of and that we to to bags loyalty that. a tremendous And very as get on any free Southwest don't Airlines. You through us have

us And answer chosen what to what do doesn't glad the the well David, we everybody obviously, choose do. those profitable do do So so question to makes not works just I And, is, I'm airline, for we else and we've us your think most to things. very yes.

David Koenig

very you much. Thank

Operator

turn time Ms. to to Rutherford remarks. this additional conference I'd at any closing or for over the back like And

Linda B. Rutherford

Laurie. you, Thank

can always swamedia.com. communications other follow-up at As website or please always, if you at you our all our have Thanks out do much. through so any questions, They're us by to team. with XXX-XXX-XXXX, standing media reach

Operator

that thank I'd gentlemen, once today's all to does us. ladies And and like for Again conclude you joining call. again,

Southwest Airlines (LUV) 26 Jul 182018 Q2 Earnings call transcript