LUV - Earnings call transcript Q3 2018

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Operator

Ladies and gentlemen, welcome to the Southwest Airlines Third Quarter 2018 Conference Call. My name is Abby, 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 Abby, earnings third call. welcome, you, our everyone, quarter Thank

we our Van Gary Board me Romo, have Joining today and President Kelly, Operating and Tom CFO. our Executive Vice Chief and Nealon, Chairman President; Ven, Mike de Officer; Tammy CEO; the of

to you And items. will variety find our release earnings well results, the special get intent, company's Gary. started, today our visit expectations the this reconciliations that materially of that cause statements as be and our regarding non-GAAP as filings. And note we to over forward-looking our our for turn exclude results references where are And A factors from forward-looking will please current statements actual could also section Before we and comments now which to can projections. current more please information call include Relations different I our based on morning's GAAP to results, Investor SEC non-GAAP of expectations. southwest.com, of make

Gary C. Kelly

you, everybody. you third joining our And earnings and morning, call. Thank for quarter thank good Ryan,

year And of nice is It again, adjust and had it of to a so, the quarter-over-quarter very from Overall, a RASM want recovery. all, the But all gauge performance. thank our X.X%. very turnaround of a you quarter domestic of trends, for revenue. to all year. Flight for was of X% performance up terms percentage was it due performance X.X% RASM plus increases. normal our First X basis solid points Mexico that an a international, if improvement was which quarter stage we domestic nice ahead excluding performance, sequential X.X% a of in third the over nice then to employees recovery was quarter, was the excellent a weak second of for down I was on RASM And us XXXX. third

a as Our year-over-year of trend them said improvement year-over-year in in in expecting comps to X% and the release fourth another but always I'm we have noise sequential then X%. improvement quarter press

better again, improvement do would trend, than that. another So, we be that if nice sequential

Our will but roughly the flat We excellent the wanted cost fourth for that for year-end up ex-items for to X% unit quarter come ahead another an look you to in XXXX. to cost matter performance. early provide

next revenues is course, forecasting level and positive and out a already year RASM is it is now X%. confidence would of goal, while at initiatives a of that Our trends for and underway that especially And XXX%, year never but a our goal. we looking right goal least support have

I'm our up level be at is pressures of confidence in predicting least also I X%. cost to And planning that with I'm unit course based currently cost as did underway, aren't that than investors not ex-items on But further. either higher will will sure the provide much and Tammy satisfied preliminary perspective Our the is read first. cost the revenues. that's some want describe

accordingly. plus, looking to strategic Just we've last invested and the committed decade across initiatives

generating, time But do on transformed been revenue to airline investments efficiency the some were well to that. consequence and that, investments during as and were modernization growth some accomplish related. primarily cost the has have And strategy we've were investments that capacity this Some investments, those of controlled. fleet been intervening and a related, period relied

pleased on more be must has But prosperous, I would number airline. sustained reliability and would service. point these results eventually, the time I'm the a will results higher strategic where cases, customer operational stronger, the knew to come of but transforming more our revenue the think to make And focus with with improved revenues. airline need with Southwest that of very We with clearly and In are our and have efforts. from much a is one some be cost driving overall associated main control. and cost costs there more want efforts in arrived at that that that driving been along complex here. has I clearly zero time priority. and us But continuously efficiency productivity those and just initiatives all all The on our our

initiatives maintenance inflationary inflation. investing then there and an So going is ever-increasing We're is natural wages in constantly and burden. in just We're that projects. benefits themes we Tammy is battle. the investing airport about Aircraft to infrastructure. talk And basic technology salaries,

in are natural what efficiency, inflation So to we lies course fleet, the drive on continuing of there schedule, offset to of rely missions. spending. just controlling And our just expect G&A then, individual our our flight would you modernizing opportunities from that department quality overall operational

which at cost of the in juncture the known seeing But course we're offsets up offsets. yet pressures, XXXX, showing for not this productivity So we're efficiency productivity fuel seeing aren't ex-fuel preliminary of seeing are the aren't while we offsets in because cost enough items. fuel yet. There

to jet we of point we'll underway. fuel and future. So said have the our efficiencies our for in many focus I've more also the And more identify out offsets other some where our and for that's speaking we'll already focus that we show Again, part up our that it part And in will you to already on plainly, as in clearly as make may need de-prioritize consumption. yearned effort that on things are to will take I'll meantime. have be that happen.

very sheet with below well challenges. we XX%. a So a always by we very prepared leverage declining strong the We're challenge. always we do very Number balance have have And have one, and positioned. and it's well We way.

ahead our we earnings quarter. very liquidity with strong strong in expect We record just unforeseen, earnings cash the well quarter. year-over-year levels reported growth of have very And We target. the fourth barring the for

outstanding for next an the have that's We hedge months. fuel built XX

need and facilities. like we And We growth fact, growth plans to investments related capacity made manageable in were absorb have training airports very that XXXX. to for

excellent. are operations Our

our industry-leading. and very high and ratings customer brand are Our

Our strong. importantly, and very And [unemployment] culture unmatched, falling attract we is think finally DNA. have ability most in of to employment this low-cost a environment talented then and is our course people (sic) I

proven unforeseen, We assuming and just cost, have a will in on again profits And we nothing managing but the returns. industry-leading meantime, and margins record continue track not of shareholder returns. our excellent focus

So commercial let helpful to take me over us perspective, Nealon with side through turn that hopefully to the call just the Tom here.

Thomas M. Nealon

you, everybody. Good Gary. Thank morning

passenger very strength very curve third pleased Gary as yield As and well into solid environments throughout the we seeing we and fourth of with the so are continued pricing very the momentum, pleased our quarter performance terms are with quarter demand booking in continued in we're as that. strength said,

third the quarter. try getting walk to me into quarter, and of comments indicators Before fourth my performance that in the back July through I'll let the call. you tie the

in up a So quarter $X.X which as over the quarter. you billion X% the operating know, for revenues, passenger is with record year. X.X% third year And our about we ended yields increased

So very with that. again, were we pleased

was a in XX.X%, down saw passenger year. was year which carried load the million about the X.X% and XX.X over point X growth we third passengers But quarter, for record quarter. Our factor of we actually

think the for a with the load result. strength phenomenal as of a our strength well-balanced pleased our job balancing I of very very strong teams environment, as and factors we're in well did demand yields the pricing So passenger and

with the I we headwinds, a going all shared good. that's had that three you knew drag quarter together X all which QX RASM. we So in were point into July RASM all on

First, X the was Rewards point. Rapid we had accounting which change,

expected them expect which the flat X.X% fare of X.X expected, third And RASM was of In about quarter, QX the the points an we schedule, X in repeating RASM not from point had to positive RASM you'll range. and made sale, headwinds roughly quarter. to to These X.X about drag as fourth in recovery to suboptimal XXXX which summer the our and third, of X% tied increasing drag a we such. retirement we mid-September we resulting was the which And we materialized outlook our as flying fleet of as see outlook, our do headwinds. is update, point shoulder of revision in also, our Second, part the from again recall.

guidance, line the drivers guidance year of there to up latest our our in quarter X.X% primary two result in QX improved original quarter really in we Our And were our right RASM finished third came year. compared over with July. and RASM

the weather first, and it total of events and storms we X.X The about quarter, primarily were flight for early July during was So X,XXX had cancellations a operations, Denver RASM to very we so immaterial Florence, and in the severe about cancellations have for late concentrated due August, due in obviously saw few that of quarter. where RASM and the though, benefit in weather point resulted that large, we was very to Hurricane Florence very and us. complex was really significant. hundred impact Conversely, Baltimore, only

interesting, and little than saw we strong in importantly passenger in bookings, and X.X Second a more improvements with trends, benefit RASM. particular resulted point yield third in more which close-in quarter to more our

and management results. our techniques and to contributed also tools Our performance new RASM revenue yield solid

the which point EBIT benefit a we was So approximately quarter, is of right third for realized roughly our $XX an benefit with RASM. third X.X quarter expectations, to line in million, which

driven benefit but benefit management new pricing by meaningful revenue also O&D our was from our Now, primarily well. this as we saw new capabilities, capabilities

are res happy of revenue very system very, up new capabilities, performance management we that and happy, very achieving the are to. benefits we committed So with signed we the for and and our

had performance, our So quarter. ancillary revenue terms good we really in another of

August, our price EarlyBird $XX pricing fixed As $XX, where a I'm sure are you saw the $XX, in of product, new price point EarlyBird of points introduced structure $XX, from length and a to haul based combination on we we by moved a demand and one-way and price for market. points of late

So we've which in only product expectations, customers. makes it manage valuable to priority which our the results of rates been but our much pleased but to also boarding number The incremental far more allows so on results. early, with line the better the that very are take it's revenue, us each positions flight, sold not with in still right

well business in X.X% in and our continues and Our Rapid grow, Rewards categories it revenues, again were of as the partner growth to the QX. primary Program, these revenues strengthen drivers as other

over Rapid well, year. as well as double spending, digits in launched strength continuing growth strong And also which it's card early, line while QX, again new very members our card, in and our credit up year were also is credit in in new are which of with it's both credit performing We Rewards expectations. see card to

So this net we strong very quarter. third is that of all a had

new We how our and very products with our new tools pleased are are performing.

on quarter. to move let's the fourth Now,

strength as seeing we said Looking are into forward, continued I the revenue earlier, quarter. fourth

expecting a X.X X% is the X.X% as QX. are which Our range, performance Gary in improvement in we to fact our sequential year-over-year And than capacity planned that, said. QX, growth higher is in in in despite RASM year-over-year points

think I As year-over-year mentioned, clean comparison. I we'll RASM have a

So X% our QX range in the based increase X% expect over year. current RASM bookings year trends, on yield and of to to we

Our very business booking continue curve. base trends strong throughout be the to

from new pricing Our our fourth passenger appears aided being revenue capabilities. yield so demand and the And expectations up once and very, bookings quarter solid by O&D far, are, very nicely. to again, on management be holding benefits very based

They expect benefit million system, we So year-over-year to in RASM. exactly tell on delivered gets of load expect estimated do line factor res RASM XXXX as our new $XX QX right our proud performance. our And EBIT a new see you, positive be again, management us designed. of point us capabilities to I'll goal which net to to were but should very EBIT system. X.X QX decline, million are how I'm million and We an to res revenue that effect time our the benefit do from from for with $XXX puts plan. working of $XX continue in some were they on a annual

and technology more quality couldn't more awesome teams and of the I more job. commercial an with proud the thankful and the pleased did think and the results. I be execution

seeing In flying, this flying after further to XX:XX schedule, with we a in reduce particular, reduction we and before AM flying our not reminder. our QX is deep from are subside And our in as XXXX. and our reduction shoulder did began PM, the flying, in of we a reduce RASM expect into QX, deep we this shoulder flying, and to and just QX. as move drag deep as flying into shoulder X:XX continues in beginning shoulder So shoulder expected, we terms

XXXX. up So sets with to us barring seeing as I trends up, we finally, approvals. with to into receive we very am the ready half of head to it this we events, once very the that in we're and And wrap nicely flight very our the for our any are unforeseen are anxious, And very well XXXX. as back Gary eager launch pleased schedules go And we very, very said, Hawaii. upcoming necessary

will I turn de our to Mike that, with Ven over Van for operations So it update.

Michael G. Van de Ven

good and to afternoon to some morning of Tom, others. you Thanks, all and

the weather-related in with just last Tom the and combination period And guys any quarter, we wasn't as know, August half of day for the of beginning over factors period the by this just As ended high year is under a a third just had load amount. quarter had a and and we and July with you heavy mentioned. at is different. this X,XXX of quarter with timeframe began tough a that operation, August early late often cancellations impacted in transition operation weather, We We the flying. September flights the summer very X,XXX up and and

those than the to ATC/Block XX we addition July any in we experienced this more years. cancellations, weather-related last July had In delays though, over

that our environment, despite they So people magnificent. for difficult delivered And superb performance think operational I quarter. were the we just, were

the performance complaints And year. primarily have efforts. the down last were improving a that's we're reminder the ASMs as of as year. in as we grow history. And the our X.X%. year. Gary our third quarter of spots mentioned, on-time And that's an improvement for are industry of percentage carrier reported DoT quarter, result mishandled that a we in In last gallon. We lows based terms for three were bags modernization one through record finish efficiency, and fourth number results. continues to to again per fuel last our at a DoT on of been in XX.X% expect from August and over our the just produced X-year that's set And our at fleet We And lowest about marketing in

results hospitality. operational strong very in terms and had of reliability we've So

to the That's I expansion overnight. tickets and the Northeast think the cost And at and the towards operate Maryland and first really opportunities more certification partnering of up we couple hangar early of going fourth announced spend to then end cities. the that be will year. other base three highlights A are intent we that it's we're to focusing busiest time, a build flights maintenance And forward. from mentioned, our State Baltimore. addition our a sell third And announced Angeles to of will with attendant quarter. still to going part quarter, efficiency that continue flight open as for we Gary here year. both in ETOPS our into the year as and with XXXs We've first And spots subject of next of efforts. the our provide Los in to in needed be Hawaii previously year. to hangar to goal also one just eight parking house and hangar speaking Hawaii, the those our continues part in up us a will of airplanes That's FAA, inside pilot next focus and it's Boeing a our in our next December the our and also support crew add timing to will additional and this in of move

you. So, I'll I with think that over brief just it update, to turn Tammy,

Tammy Romo

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

items, cost, costs. X% our a X.X% quarter excluding nearly Moving hedged year in increase CASM, in fuel over our year, driven part right into third special increased by

in an quarter. prices at market Our that's steady jet during fuel per and $X.XX price hedged fuel increase the gallon despite remains

due $X.XX with hedging at our by prices. material kicked guidance that in jet $X.XX benefit offset consisted to more costs. fuel gains hedge hedged remains The gains net $X.XX hedging line Our premium higher in of of of

increase fourth range. For largely hedging of hedging $X.XX the benefit for in prices $X.XX by hedging last to estimated gains per we hedging Friday the and expect The quarter fuel in our $X.XX price includes the on estimated is premium net normalizing market gains costs. fourth including based increase our quarter be fuel and an $X.XX in $X.XX price guidance given prices. of $X.XX positions, to offset to due gallon This market our sequential

with gains protection For barrel. hedge Brent prepared XX% are material well at with that continue XXXX, kick crude $XXX in also per to $XX at above a increase well we more $XX beginning equivalent in per barrel and

fully Our so oil structured decline. market crude that in WTI we price participate XXXX a mix Brent hedges are and are of and

For full price $X.XX range $X.XX our premium last with be expect the gain to and estimated gallon to hedging $X.XX we Friday cost. current fuel hedging year and market based an in our economic positions, XXXX per on $X.XX prices

which expect $X.XX per fuel gallon fuel XXXX We this is be million and included hedge and $XX oil premium down expense from in approximately or costs, year. to

said, increased our we modernization. fleet from fuel Mike As continue to benefit efficiency from

third is Our over per gallon, available by quarter our key seat year. fuel improved efficiency year X.X% which metric mile

I last cover slightly to -XXX As utilization flight behind fuel efficiency the goal schedule. due is of our fleet fleet X% XXXX our our our of quarter, improvement X% mentioned to and deficit to primarily suboptimal

schedule of began as more expect more and retirement continue fleet the take to MAX to optimized aircraft efficiency we our profile the fuel and XXX, our of As cycle the we on improve. becomes

our year-over-year I fourth move for to quarter I'm with expecting expect fact, the sequential costs line the In more and unit out with in fuel in efficiency non-fuel talk and we quarter our and more our our to going inflation the year. fuel full When improvement sharing in profit end on fourth what were third was third in remarks. about strip at quarter expectations. special you line items, cost detail in XXXX prepared I'll of my

were up shifts We spending lower are disclosed primarily guidance, primarily unit weather-related cancellations year-over-year due update shifted negative fourth point with CASM. the by The point about in approximately $XX flight events due to the resulted beyond. quarter previously our X reduction and a our the flight nearly spending. timing into ended to in third cancellations, our weather-related at of combined that costs CASM in investor resulting maintenance When ASM. to technology we quarter impacted million costs, impact modest As end of the X in of and

Aside in from pretty much shifting, with cost categories expectations. were the other line

sharing comparisons last spend looks of year-over-year of shifting Our special with that fourth quarter, easier expected our first fourth sharing some to had cost parts, is pressures. Despite cuts tax quarter half some CASM X%. XXXX profit CASM fuel, excluding to the remains be out full pressure from had so some bonus. reform quarter, quarter good, items from have fuel, cost profit special items and we We've and outlook year-over-year out capacity flat up particularly the we fourth year-end the third do year in and moving CASM here also related Netting year's unchanged. excluding

investment-grade sheet very and rating we cash balance flows. with and strong remains Our and also healthy liquidity have credit very ample

$X.X similar year back full $X for to XXXX. operating year-to-date invested far a CapEx, billion XXXX And the are And cash for We've level billion. billion to of planning in $X.X flow CapEx for thus was into XXXX. be business expect range. to Our the $X.X we billion we in continue

billion our just $X $XXX previous and repurchase we've million share completed quarter our million in the authorization. and in billion recent launched the ASR billion new includes to this shareholders $X.X third repurchase billion month. first most earlier through This $XXX authorization we in completed share accelerated repurchases from the share $X returned dividends. and $X.X in $XXX far So million XXXX, This

$X.XX So we billion remaining. have

returned through of years commitment five flow significant dividends, cash shareholders. and value nearly free our our share past repurchases to to returning the all Over we've supporting our

appropriate We through also modernization. I'm do to Barring continued opportunities investing with our in excess to further to dividends shareholders intend the particular unforeseen great pleased overall continue to and balance. share drive So, with further circumstances, with focusing intend continue we our with in capital approach to continue to we have cash. investments returning fleet on our value while opportunities repurchases and to back value, in very deployment business so

slight order Regarding our to made our plan, recently. tweaks fleet we some book

delivery end seven expect year First MAX we Boeing as with took continue quarter in aircraft we planned, and to and the five to of XXX-XXX XXX the aircraft. Xs

well with we aircraft X we next XX aircraft During We still MAX firm MAX signed Boeing total third now MAX for next additional year. XXXX. Xs and of And leases X XXX XXXX. MAX for aircraft have an X coming in four in have with X on a quarter, as delivery leased XX orders year

of As aircraft future up opportunities fleet modernization. support capacity our we're we've XXXX retirement not XXX-XXX additional communicated for These to aircraft or shared, some our year previously acquisitions fleet planning continued pick aircraft few replacement new designate previously our next investment to a any plan. to in additional do change for

X% with On no XXXX capacity storm in X% ASMs for quarter year for to year the unchanged. over over year. we is And third to we the XXXX to capacity are to year, fourth now increase X% quarter, which plan capacity side more planning our with range than the the approximately cancellations X.X% increase in up continue

schedule exclude early XXXX and Hawaii Our expected June currently published is through flying. they

X% in here XXXX increase January XXXX is investments healthcare part expecting year. is heavy is CASM of fuel continued pressures You expense primarily second technology are timing driven cost next year growth that Hawaii in and Gary benefits. investments modest. of the excluding continuing by least by excluding Airport inflation, maintenance which we focused mentioned, full and ASM of key our year-over-year Increased at year-over-year to staffing in can demand Much and into and through are in driving cost, operations, inflation XXXX on XXXX in salary, airport the half operational regards primarily sharing infrastructure increase see seeing events. investments. to unit over drivers wages year increase part cost to and profit In driven an due year. in May are maintenance expected is cost The we as our

cost trends capacity which quarter quarter for XXXX contribution, fourth bonus our reform tax and as adjusting charitable I'm well points course, XXXX. growth higher was current unit X fourth fourth XXXX's employee to about quarter as quarter fourth Of

share. number current record were continues will excellent margin and deliver and able we closing, one and rate growth earnings outstanding arrest trend. quarter third quarter in that achievements for are like in our to continued and XX,XXX revenue third cost our we fourth rebound an focus very momentum notable with more control employees our our quarter. third our So had am shift These XXXX into thank the to year industry net per to quarter our next expand I'd trends efforts. In I their in and to pleased than we in thus far in

provide gains hedging especially year significant fuel Our far prices have and fuel of a so jet to market offset continue rise. to prices if will portion continue this higher protection,

While continue year. great next strive we believe as future. us next opportunities drive be face further focus us I a more have some productivity our will efficiently margins, continue we to scale of unit our year, primary We invest we growth efficiencies cost and to very delivering ahead for and to inflation this healthy and in

We continue deliver a on that and that capital top are ready Abby, remain With take will high priority. invested returns to to questions. we

Operator

you. Thank

will ahead. go from with Atkins Jack with Stephens. begin question first We Please our now

Jack Atkins

guys. Thanks my question. taking afternoon, Good for

there? for initial need initiatives let of to you XXXX think I margin next of to see could. Could the your know revenue least question, to your that talk or appreciate level at X.X% you just as with drive behind so. I side some be the guess if the math RASM you you will And kind some year. the Gary, RASM to expansion revenue growth to on provide And curious ability get get margin next growth So, conviction year? the will we start help expansion, sort of specific to on willingness me through of I do thoughts would I

Gary C. Kelly

question Well, obviously, Jack. great

level And revenue our admitted of remarks I to think the my XX forecast level confidence with relative we high cost that the from now now that XX on I can't in from months months opening have or side confidence be motivated. things. we're very

based it already think we're admit Revenues be are And that. we we tough now just based that underway to going that in So terms and to I in. couching what right predict. the plans on those see convicted very can on

in is Green Tom we're our And much was what along against plan well, a Tom, are for So, forward XXXX. we're And year XXXX. along very and clear to we of I The thought with our well plan things that had remarkably of specifics remarkably organization Watterson commercial I for and you XXXX. his know. the Andrew and We're report planning delivering here accurately, full leads say. I Ryan looking for in pretty many those that guess, can benefit

And so of like what if you Tom those renumerate are. can sort

last anything ready be talk next those. it In about the busy revenue new today. streams year And to there we before for have that we're XXXX, will terms of we tease report did initiatives. don't I time to are of working on next stream

you'll I have out XXXX. loud, stay as to will necessarily come I'm don't And Tom new that. thinking know on So online anything tuned in that

Thomas M. Nealon

a seeing very Well, strong our is ancillary is products such. think the in what business our very, we're business and core pace I card faster growing than credit and are

initiatives just that starts our very, XXXX. of I areas I it focus what current execute the the off. strong of we're is very are think just that is that environment think close-in and one into with drive seeing And I paying focus, is think and just focus,

in spot performance is of cities, outstanding. focus off. I corporate think initiative are just sales strength paying bid these look I the bright our real business. really us. seeing that a the our pricing the think credit cards, And or there's real key you capabilities, at economic Res That's when O&D more strength our pricing things broad-based it's for the some ancillary, We're whether this of and One

at got about very but point. So this front our work what of I we very, we know feel us in good

Gary C. Kelly

plan a just that our experience on little with. not depending said based new no is on for what XXXX we're think, I way, different things we have

Now, think trying read give the to from you economy year. not about what on it's a macro next perspective, a we necessarily

is demand. any guess as we're good industry suppose. If and in you'll mean, I just forgive as that, economy the assuming broader our But I change not yours

some the that As we think first was blunt, get and year. colleagues half that. I now, and think macro I levers, that demand, acknowledge at by in a the we will time, next pretty I balance strong in industry right look nice pretty out your out it's don't pointed have comps, one and right supply next environment That now, be last are easier But year. to balance and think of fully of we of

I at viable So that's the a goal. makes growth RASM X% think it least a factor, but very

Jack Atkins

Okay.

Thank Okay, follow-up, that you. X% correctly your on least the efficiencies any I you And zero next year of to – then as guess at the you include are heard now. for guys a trying great. ex-growth I X% just remarks, in prepared CASM doesn't in if

there potential later those of some of Tammy to offset is costs some you First that with And her in back comments correct? is I maybe maybe us inflationary that efficiencies come laid all, you guess out with the that on? that can can

Gary C. Kelly

to right think on correct. And based we what That we're willing I anything than different don't what commit said. now, know is to we've

Investor Ryan, next. progress, you update where don't a advance full very year. hard and it with the all. and different we'll following frankly one a you we Jack, done you our the enough exactly not leave haven't on XX was I an I here. obligation remember world say, be in for for quite to with time on long days. we disclosure this, felt do what the insight ever owe this gave much But this into we'll XXXX this would done that time plan and I I'll up clearly working our we're and Now we'll But Relations

So are. certainly I for and And it. cost dimensions. don't I doing the satisfied to job trying not and result much. a not not just satisfied anything, to because if It's be our I goal where But a that that wow, that like we is to other clearly, this articulate I'm don't to down perspective it's our up a to say good going is say with And it hard like on that are think producer. with. low-cost We drive also really many our folks so be was we up you I'm can't it. unit need everyone

of So and a or ask initiatives – what amount of And some significant these would be array going to keep already And take that here, here up. the give volunteers attacking The Mike number and to as everything to least balance time new Tom balance. is be the their you an trick to of efforts. in to I've asking to will I I'm a gave them head at you on devote had we I'll things to insight here.

balance sudden So don't the on-time this why all let and customer correct. chase think the And to I our challenge and a is our that's we perspective degrade want of performance service.

that make to want with we'll not. be kind can't unit of cost satisfied decisions So some inflation, we smart But we're clearly, here. and

Jack Atkins

great. the Okay, for thanks Gary, again time.

Operator

with We Stanley. from ahead. Rajeev go will Please take our Lalwani question next Morgan

Rajeev Lalwani

Gary, Good the Tammy. afternoon, questions, I cost not a couple guess unit of side, on surprisingly

sort think should unit XXXX Because, some guide going to the think you it transformed there, it in having And going be next as of like out few the one. now first the push years, over you're Gary, over guess terms costs did of that years? thing. higher the about That's Southwest an around terms that in initiatives next second some anomaly, that given Southwest seems is, an about as of its is XXXX you part be comments and X% being now I that versus of history the just an to So make we of few a cost Gary, or may and opportunity? of up number, then

message So I to to were as there. what trying sure wasn't you

Gary C. Kelly

It's that I good are be and to want really I investment for question. do just a that and clear, where lot of really Because decade. one. initiatives for was the – just last as another I on a does was we over as It Tammy have we and can XXXX. thanks know too, perspective occurred

guess to was top head a Our off my points lower. load have factor, of going Mike, the decade XX ago I'm to

compared simply a more we per So because to we're today XXXX incurring some have cost of the as that lot departure. are customers

have a bags. lot We more

We in by only had valuable, very with investment frequent reservation that. describe followed we very, me, far efforts to which new in a There's successful system. transformational some investment been flyer unit ultimately towards revenue, driving cost. on cost a are that to huge as of a reservation increases, most other system, huge have new a way. that, in our lot it words, were very program, acceptable as you increases so it if a and these want Tom, And, And than more know, is of geared our but to more I the

what It's really case significantly more So on But is revenue had the we it solid. for the is side. before. paid than just costly business

to cost have have meant more elbow all the we there. that just And cost our – just grease, what we hard just us not cost with to aggressively, that's to realizing to going work going efficiencies along I manage our higher everyone but a lot because to the that. and the to schedule, So take and then are priority And that. optimizing to is that for you go it's are achieve more admitting we're

So thing very least we're speak What at the I careful are was is is to the looking – I you would words. X%. we other telling with

is all feel So provide that this because to tell I than accurately ready we point. more I'm can any at information like not you that

number. much And identify the So over here, days, better that's our XX really initiatives and a we'll to XX we'll as next commit then and and do planning report have Investor we finish I'll you Relations today. up update as there. to we to defer the Again, some

So hopefully your that question. answers

Rajeev Lalwani

Thanks, does. It guys.

Operator

Research. from with Please is Our ahead. Keay Wolfe Hunter go next question

Hunter K. Keay

good about? much. may obviously you things you talking very that you productivity. initiative everybody. mentioned you productivity, were that you de-prioritize Gary, have the also Hey, to to morning to What drive but certain other drive said Thank

Gary C. Kelly

specific, nothing really era, many it it We've at involves this in of Van strategic our its do its acknowledging replacement or least for Well, involves got only Hunter. at time. things Mike multiyear of leaders terms construction. of Ven or And technology lot for technology team. people initiatives. A can and a It for operations was Southwest, technology planned a a new de just company lot one program so good that or

starved them our again side. focus a because more we've over was last the commercial So decade bit on little the

have simply we three do a major admit or that we mind, cost but And may So want specific to that, confirm. I've it's two have time more to if going things initiative we four, than or to I complete. colleagues give. or been that have some something as in for have to to my worried we're capacity usual, don't anything will have

So something give may there. have to

XX I these it's have on So come ask to all going were what the fit to we our what make And if figure next in, how they're uninformed of just none – you you days anything might part very think the to back that that's of things of leaders question of and is good out give want individually here course, because over ideas. sense. to up are

to-do it's in necessarily our it's is to crowbar it task not got list somehow in So, we that to this are where have bear say it basically to fruit. on warn going to you, just that's we're to and here

Hunter K. Keay

XXXX can Thanks, you any that I'm color but us you provide mechanics the I the those negotiations, tell of I you a much CASM? in – understand just how deal, but they rejected just are can was where us that number, there? not help the in help modeling then Is XXXX believe you guys accrual accrue you asking me CASM deal. know it. And Okay. obviously appreciate to hitting the question. for

Tammy Romo

Sure, all our I'm incorporated we any Yes, that. guidance agreements our anticipated happy the that rate take of into morning. provided this we've increases, to

all not in, based guidance. carriers which have the point that what the their incorporated carriers, that baked got read would other that some of you've all So I out on of I've into from I noticed

we've loaded what with you is fully given our expectations. So,

Hunter K. Keay

you. Thank

Operator

question next from James. Please with Raymond Syth is ahead. Our Savi go

Savanthi N. Syth

afternoon. good Hey,

maybe of a question down which on look margin, price here, versus peak X year-over-year, but cost is environment. down on the holistic pre-tax the side, it's I if points fuel Just view points low kind about a about at X the

last of how year's to the maybe even this kind think current it to pre-tax do the recapture long change conditions in margins? back environment, – or get no assuming Given continue, takes you

Tammy Romo

performing our there. from fuel well recovering just a market hedge versus feel chunk a got compare like And I really Savi, prices of nice increase here. the from and if recaptured – or we're hedge revenue our properly feel that our increase in course like have XX% so hedge. a we're I we of that's We've nice the of covering mitigating cost that's that you fuel perspective

So expansion to margin proud of really deliver this that. we're quarter

recovered largely we have that. like So feel we

Savanthi N. Syth

about Tammy, pre-tax. income I I'm And about talking going like not net we're talking you're think it's and to...

Tammy Romo

pre-tax here and our headwinds. a solid of excuse the we're of in a operating But on guidance going the all cost, our goes planning we On our just margin, back I the that think in a to pre-tax earlier Yes, delivered process through delivered on some margin have on again, and basis. both discussion pre-tax again focused And, me. on here on of to margin Savi. We're very to third work quarter. kind the to that offset

after-tax, bottom-line. like working to pre-tax feel that largely and we But the keep we're we'll So at that. recovering

Gary C. Kelly

goal asking. is Let is it's you're unit then in always every – me I that to this hit year think But I on well have that overall capital target, exceeded our to goal would multifaceted. – of invested to years revenues. line But an say a goal see handful goal there's which from grow if The year-in, return a a a of we we for with sort is And have we year-out. that what here.

to tax there real. margins. goal always and at grow savings So that earnings is grow if The a least sustain be within then not would

a to next with And and little don't post-tax. some course you all So, is don't at term hopefully how main between talking that little It's that line Southwest, there. you period is but just But of But and just margin we Savi, said a the sense point and trying will – just prior Tammy's pre-tax guidance hard to rates point XXXX doesn't margins. our year. tax haven't hard not or competed to near doesn't you're margins bottom to the to XXXX in in we're the of – to here least a hopefully in that grow of time. XXXX or over pre it We away goal think answer. giving for get been terms matter drop our the to I They the period debate early interchange that. And higher in savings compare is it's and it's tax or where sustain this back with XXXX. a fairness pre-tax gone done year have took a I you and compared the about I for there whether today think at because – it would margins that haven't about were

are is again on we focused what good for third had and is executed. the So everybody quarter – plan we so just we a clear, really

and will preliminarily don't with on unachievable. and quarter elements of Now between we we that the lot information And right give finish there's that. to insight plan work our fourth into. to are good they for finalizing seem plan least a we're plan. for meantime there's a us to again But update done that more now now XXXX those back be focus on come that. aren't But at And a to our and to in really a you our come going and lot executing and goals we're more have again XXXX going firm with plans the for then satisfactory

Savanthi N. Syth

from just helpful. Tammy. ask I If might a quickly question modeling That's

that Just breakdown give value $XXX in XXXX XXXX-plus that? and me the market the you XXXX, million in free like could of

Tammy Romo

Yes. It's – yes.

roughly about I'll $XXX And it's million. share million. XXXX, XXXX $XXX For that's

Savanthi N. Syth

you, both. Thank great. right, All

Operator

Our next Please question ahead. JPMorgan. Jamie from is go with Baker

Jamie N. Baker

a I on question growth. Gary, urgency plan use response around toolbox is topic, are you'd you it's a understand very is your question really revenue you to gauging if seat the high. everybody. comment question have earlier to And suppose box? think, ensure there? toolbox my that I'm earlier to up I the plan was M&A. inadequate reason, having think to something define you. I Maybe doing possibility challenge guess But even I for you just ruled extract out that anything how how willing the that guarantee that to of it I first to and the to that that offering don't morning, didn't is sufficient the as outside is margin suggested the in current would to My new. the to don't at have extreme issue – that. that's And look Good higher Jack's know rows. I pretty extends your fare cost Hey! three this whatever

Gary C. Kelly

season At were opportunity work way the coming more I love That we absolutely will least in innovate a way is deploy new anything and and to and streams. here wasn't on you've already especially would that with challenge along attempt to into ourselves question. asked continue planning the way new try think urgent want to for about the the the question to clarify I XXXX, thinking revenue to to Oh! we ways that. the need Yeah, bring underway. we to

very I think, reasonable... it's

Jamie N. Baker

Okay.

Gary C. Kelly

your that question would so way, agree that that asked a ...you be consideration. would with I and you

it going minds that X have do be to with Now have and that we some we things we we to of January you this haven't are a to build other in want that January to them. to you of our pursue. dream That – say can't the on we them turn X. to the do doesn't there things up shared know the And fair what that we that things include might kinds we we need do

So I is focus on want a mind my I'm my I priority. need out in though to be the have is that things. in very main question. cost of is time remarks I point it The will in had always And to asked have all that as side the higher pointed And glad of play. at some you the now.

schedule back We are harder efficiencies just of as seeing so here we begin I going to was much that. on that the and counting to to have we're to do the that not work kinds trim

Jamie N. Baker

you've that. in And with Gary. I'm helpful, just to moment, yields curious revised downwardly the at pressure response Hawaiian internally if second, Very under your forecast

Gary C. Kelly

No.

about Okay. and work. very good We feel Hawaii, the

commented both the on there. I and think, work that Mike, of Tom status

So...

Jamie N. Baker

it. Perfect. very Appreciate Thank much. you

Operator

next take Please will from Pfennigwerth go from Duane ahead. question We our ISI. Evercore

Duane Pfennigwerth

increase press you all release of are of versus reads points the the Gary, segment for make? Can much is Thanks. discretionary. how XXXX the us is electing Hey. to three cost like investments inflation you

Gary C. Kelly

to Well, help reflect your I interpretation may you have on here. it and back reread me go Tammy, and explain But, can there.

I think the...

Tammy Romo

Sure.

Gary C. Kelly

it. to – have But we've and coming just clear, XXXX. both what I I were known been cost Tammy make of there into ...part increases we and are think, sure covered

on airplanes money spending been those. Mike airports. replace to the new retired and classics we've bought So,

on have And that reservation So increases. We implemented trying what I made. depreciation and new see was there is system. We've Those that's about cost are know line investments That items a out. on. that. to will through been flowing point

things The has many these also not those step known. So of enough added capacity some yet absorb cases airline increases in to and are investments.

fixed. by, And are. Some I those you know very of as them imagine what very, you and goes are time will cost course, unit can see declines, of

us So compared It times. we Mike very the here. much having en our cost And as opportunities. But on-time just is need good airplanes helps overhead, is opportunities to frontline a is route for which that schedule on really operations. performance corporate having operations then, more key efficient It's to than delivers classic down. they're are – – need discretionary high-quality efficiently. turn to that We keep have

which combined for. to we're things those very produce of famous All operations, low-cost and efficient

for fix there's mess to unintentionally. make up go sure is always in something So, And challenge opportunities changes us don't make else things. we again that to that and the

day very about may Mike are to to staffing very to we a And to operation schedule revenue opportunities team again airport the for pursue. of airport from our do long to goes example efficient It so would it all a of to we're a we things enthused got about operating its them little what so and in those the these to try revenue, some plethora staff not but give So nothing for then already ideas to And it, great make you airport all it pursuing XXXX, in the just a most can the now. color until right just and be for that good early an the folks balance, our to capabilities. and may do a have harder from commercial have operate keep thinking mean. we've just we'll we a on be it's That classic perhaps sleep. perspective. want flights there into of easier and be morning be originating lot And at producing

Duane Pfennigwerth

a to helpful as That's of color. would was mature. there And going systems thought training why depreciation? it that I to big then these just drive just kind expense? was off roll IT follow-up, Is investment operating

Gary C. Kelly

developing there that and think technology on of lot the a that – depreciation times, that $XXX reservation our you expense. million on and there working shared operations if of But which. got searching in I'm of And for Well, to system all capitalized one not is is about while just right explain time through the to all rules me example, is an we we've not cost – it flows beyond you currently those through for word. are team which over many – many, is as

help. all extra Our underway. is costs We need work this do as balloon

maybe And flows some professional And sometimes whatever might it through be. the it shows in up firms consulting software business it side. and services, other also or

they are are very projects technology wonderful, but expensive. these So

I mean, – all so it's even that XX% a thumb. I But not know off not if – top rule Tammy don't of of And have the it's your you capitalized. of head

Tammy Romo

XX%. It's Yeah.

Gary C. Kelly

XX%. is It

Tammy Romo

these to some our is do that where just certainly And going here. of to And investments P&L, in that – add headwinds some been Yeah. to making the technologies in the are depreciation. to we've just help from in expect we you the pressures out manifest

we've benefits there years. made to So then we'll that over you'll see some here some wages to the and in salary, where a see absorb you'll – investments is the some year number depreciation headwinds year pressure technologies. basis And of as over unit work as we specifically cost past on of the see well some of amortization course and related

and driver wages most and benefits be I pressure salary, would – unit year. cost to expect significant So next of our the

fall in as of So – some will out that other and well.

maybe would some because – the – expect we as we're to Hawaii item so line And know plan, – lot we our about as I of – inefficiencies at as And – X%, modeling. today and at – and ahead our XXXX give that schedules. no include flying. talked we to as more through another that than or be And can you So ASM about – our don't mean I to ready at But a just estimated planned growth. about, way thinking your you I of look we're still some our one year-over-year that's was follow of does half grow talking XXXX guidance the the look guidance working our least Gary just had into we'll absorb Diio note just then directionally we to mentioned that. will just that on I of I'm you but again specific help not that with least that thought we've of and

And Hawaii Hawaii at that to you without trending the see out modest. If X% they're think capacity can quite Diio, that I in you range without our is flying. look X%

our we're Hawaii anxious to there. schedule and start ramp up So flying our

So complete you're your to more there. a models hopefully as color trying provides that little

Gary C. Kelly

think remind don't that And know me Duane, answered. time. I we're earlier ever I question of our I you over an

So somewhat I'll was XXXX to question we've I do XXXX. we work is try and are we or don't to thought that is less able want a be this there whatever that we to inflation transitional to are be we to because And give not a longer that. prepared quick about us think you reasonable plans. be that a the an tell But And goes you But on happen whether are that. you obviously be well do are they next new the information. need that I I that's Obviously, answer support want may yet information of to done think will is comfortable be. that to transitional. sort But important But they realistic. very and this the the with that enough away we long-range that year comfortable – post certain we that was year.

more want that XXXX to So we now answer question. revisit come plans before has we'll into those longer-term focus that

Duane Pfennigwerth

thank Okay, you.

Gary C. Kelly

think And, we'll Ryan, I back one beg give question. you. it more pardon, to I your

Operator

Cowen ahead. question from Company. time have our we more and will Helane Becker question. take with And last for one Please We go

Helane Becker

the like looks on. pressure really It guys. is Thanks,

just I have for So that, for you to actually next actually think about about in bookings start Rewards are the we're terms service when chomping a bit question at year. look what to as customers Rapid that, bookings are thinking for for of exactly you you Hawaii looking the for When start at are paying redeemed up lot imagine booking Because Rewards and those flights? a Rapid I of that. people versus would your at saving

Gary C. Kelly

airlines what And I don't know, see. of Tom some I'll let other too. Andrew this Tom maybe sense on guess have and

de make for every advance different does redemption, purchase get seat points takes day travel ticket. week flyer of a and frequent facto booking more have it's managed. Every It program. an available is to We than to a it the revenue

natural they that so The think you there I over really doesn't get where So would revenue also are controls that that. awards the revenue management tell has But that. used. we're indifferent those changed, accounting recognition penalize

and imagine old me. it way, I problem. by I you customers fly going all airplane in to that assumption to to to paying flyers. to If we're see whole with want somewhere. this And But can't that Hawaii fly it. is or fly But still our Amarillo, if earned people want they words, they're them can't you good to other these they a points our up So frequent won't worried zero it's happens imagine scenario. were about fill see won't a like days, the scenario going

Thomas M. Nealon

they Helene, And a their very, Gary redemptions And for Rapid acquiring Reward early year customers are points on, said, past lot my holders of said, you'll We've intentionally. sale. to passenger passengers. would very guess lot. been That's it's a is of think you and just, credit see financial card as of indifferent. building or care. our about as up. love I'm the have that cash we're Reward Whether good a piece out and how don't plane They I we full that customers a Rapid We passenger, getting are it.

Gary C. Kelly

which get if business to you're get a credit one the can quick you make give awards One paid. other are I'll a spend and yet, in can but more hopefully fly card a you, argument two you you those for remember, money we will convinced point, and get – not point, methods. basic with and is comfort, is also which earned

points. we whenever of or it, So dollars deferred payment air the redemption, revenue have zero coming it's a way was received realizing in. that look by not liability already in we the traffic those the at Chase It's

So maybe "free some literally – a and ticket," credit have a most taking flights. they're of card but them of customers blend have

business the And so this to that the that it program manage way. comfortable good makes company frequent even for flyer it's decision a easier to get

Helane Becker

Thank much. great. so that's you Okay,

Operator

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

Linda B. Rutherford

you. thank Abby,

think Q&A. go media the started with our I and of get portion we'll

on up them would, how give you to queue if So for instructions question. a

Operator

you. Thank

Morning Please question with go News. now Conor first from Dallas begin will with We Shine ahead. our

Conor Shine

guys of information at. ETOPS you actually you that and of more And is the provide FAA, looking then once you approval if certification wondering presumably getting was what stage are at timeframe flights? I about can granted that between process kind any what by the are operating

Thomas M. Nealon

certification the give an commercial update the I'll you side. process, will I on talk on

Michael G. Van de Ven

I this. to team Tom are I Conor, going think double So. and on

Conor Shine

Okay.

Michael G. Van de Ven

that the of to there months. time XX months So XX XX coming we're process, for generally the up around ETOPS takes and work to That's scheduled on process in just about date.

on made the I tabletop feedback to And completed So of progress our we FAA validation the what – And with FAA steady we've got ultimately that by the have would we demonstration a and we reviews us have regulatory changes, that's characterized the and the really continue then FAA call with make documentation ETOPS into are from say the phase. exercises of now flights. manuals. the made And it. and from transitioning the would I procedures and doing design

And tabletops now right in the process flights to those so we're scheduled. trying validation and get those of

got the process of we after year. in of the done the before still So do Hopefully, the a the get and months would selling have we've of tickets to trying that we place, and that will couple then we up. certification end to book begin

the resources locations We've Hawaii. got and the we've So there. equipment got in the ready

there. as staffed, can we with our We And and program we have FAA, out start approval as our from the the go our bid get to soon ready people people. training

on ready we'll then we'll just coordinate commercial so And the side business. of with be the and side operations the

Thomas M. Nealon

it month, the out excited are I to a Mike would I certification, was great we're that Back get certification, be once schedule will and the kind get think. get facilities within working and once then there. team saying, have we go. schedule We're how ready commercial time quickly thing, it's flying on But to a been to weeks builds think, Andrew or and go. the that we we'll schedule. publish and the ready of our Conor, that that to how over what

over we've for ready, The a this quite are are working been teams Our on aircraft there. while. and

ready once a we've pulls we the bit So chomping and really got just says trigger at commercial, that are Mike okay, go to go.

Gary C. Kelly

from the weeks. is it's Tom Conor, certification, days we the the publish, from And get could we in flying then then is publish that date about So, way what was be time think to describing we the there to it.

the think that, be Christmas lot dependent a want as on what of is an upon example. fly when We start flying we don't we'll calendar. Day, more to I

idea. anyway, factor. the get approval. you But the be we will that get a be a long So once There won't timeline

Conor Shine

guys. Thanks, Great.

Operator

We from go Bloomberg News. Mary ahead. will next our with take Schlangenstein Please question

Mary Schlangenstein

how inspections, could Hey, to Thank fan find blade if update wanted if see blades. have and the continued to engine any have give cracked Mike, those going, you on an I you. you been

Michael G. Van de Ven

Sure. Sure, Mary.

use do And fairly have I'll Mary, blades So everybody refresher inspection because the that's do fleet. is that inspection it's you fan don't just But mind, roughly, if program just the mandated X,XXX a an quick as on technique. inspection maybe complicated. know, we today the technique And give there XX,XXX you ultrasonic cycles. every out our program is recurring inspections supporting you probably with to course

when an to inspection in overhaul an that normal engines inch. to Eddy is attached crack done, detect we current the overnight addition it overhaul off to to will technique the airplane, with on for checks a X.XXX wing comes so the tack is at and the And as inch. small inspection remains the designed the as that airplane. X.XXX period, Then do of those cracks of And and engine down

multiple cracks identify both before become would so an give long out to they us those of there And capabilities opportunities any detection in issue. blade

you program So, fleet-wide after just we know, XXXX, not worldwide. Mary, had as Southwest big a at only inspection Airlines but

steady UTI of But cracks did our Eddy became we've that that long some X,XXX month a process in was now an normal before crack we an any during during we got was engine overhaul, found had of found we inspection. it current cycles. But with so issue. inspection so the a and cracks small And there And a and last stream that have again with state state, identified the not during process. steady crack

that's or them. we'll blades why really killing think that doing we I we find place program on we and the of cracked have two I ongoing should at in in processes. think one this I XX,XXX hopefully are And through feel expect these So time. an good basis, it about But our point we're that

Gary C. Kelly

we that a would Mary, just a show number enough expect to only know small now up for the thing that add with very blades emphasis will of I is crack. that,

That's what for. is is So Mike that's what protocol saying. the

GE, success Eddy procedure. the having delighted we're We that. I manufacturer think CFM and been we current the describing engine that that's step, done Mike... was at that guess, again And our I overhaul the the and Mike do only with with with test does Eddy have don't what or current,

Michael G. Van de Ven

That's right.

Gary C. Kelly

think, a But couple would as Mike? expect of every year. cracks working designed Don't and we to find you it's

Michael G. Van de Ven

Yeah.

Mary Schlangenstein

you. Okay. Great, thank

Gary C. Kelly

earlier, you misspoke, when I and Mary the I by may talked And have way.

his you I You Denver thought flight those that, but sounds most earlier, attributable Mike I were asking – of was pointing Mike, and of cancellations. was most like, out think were if heard And report to Florence. I about it me And the Baltimore. know in don't

Michael G. Van de Ven

right. That's

Gary C. Kelly

if sure I earlier. to – that you to was know that to off-track want little I just want my was I you, answer make that on important So a

Mary Schlangenstein

Okay. Great, thank you.

Operator

go Rucinski We our question Tracy next Reuters. will ahead. take Please from with

Tracy Rucinski

you little identifying revenue us a Hi. what analyzing? fees streams, bag When possibility about more direction just of new the charging give table? talk the can you're on Is you of

Gary C. Kelly

charging brand actually we're good information, say doing thinking doesn't there I and change that we bags. Yeah, opportunities mind The that that explore not for fees. news give can don't to your have much that. thinking it. but not we not We're other is, the I would going I'm about mind Southwest charging detract from will you that go so enhance not

to customer-friendly, be And only fact and it we revenues revenue by would earlier I'll charge that. that sort comment. believe don't That's it positive my airline add, think be more And helps us bags. of for to I implied just that We like that customers that more get but we that the goal. more does the therefore absolutely approach. will So also it's by be by for the our quickly way,

on I of distinctiveness a capitalized some provides that think, very bit interestingly it – So we've, well.

Tracy Rucinski

you. Thank Okay.

Gary C. Kelly

to to what ready you really yet. teasers I we are give as that's And it's ready can't up not for other But otherwise, any sorry, it's – until just primetime.

Tracy Rucinski

Okay.

Operator

next our Sider Please Journal. with take Alison will go We ahead. from question The Street Wall

Alison Sider

between the Yeah. you little travelers was could a now. bit, and you're mix business talk if how wondering seeing Thanks. leisure I right

more of some drop drive If revenue, bookings leisure you're sort travelers your close-in that's pullback the seeing of if to more you're load sort on of business if depending in behind any and and of the from factor?

Thomas M. Nealon

strength is in This and seeing Alison. We're both Tom, business. leisure

perform we're that really does our we're business very what with I of of the corporate not do just fact, slice but nicely. really sales And part of them, In to in both some we of strength of our seeing it's kind think seeing, some But I'm about getting result of value our of behind stuff. techniques management and bottom tools talked and terms line techniques management to create revenue pricing itinerary is earlier revenue higher to in you. ability have

really business our really performing nicely. think I corporate is that

perform terms that seeing of think nicely. And I are strong continues and to fares business in terms performance loads very passenger. there just We leisure our in of in

load down bad, at passengers. carry which million So is a still XX worth XX% isn't factor, point, we

feel really is So good is we the up. strong our and very mix business really mix about but picking that,

Gary C. Kelly

of macro is economic sort more If its it's good broader that report. we we're kind versus any seeing agree question demand mix very economic, I real business is just weakness outlier of Tom, the overall often, is strong. signs not which a very with an and of insight with get Corporate and strong. very leisure it's sales a strength

Alison Sider

Thanks.

Operator

time we one question. have for And more

Yeo We will from take FlightGlobal. go our question Ghim-Lay last with Please ahead.

Ghim-Lay Yeo

it that Can to the work Southwest perspective? quarter. more Hi. Gary, from a my mentioned bad about in weakness it? just bit Is saw it? you revenue you. better question. was How And doing is little the that? what you Thanks Southwest in taking talk now Thank against airlines for Mexico third some getting

Gary C. Kelly

domestic about It's not roughly don't relatively year. course, in the small. a really trend. segment and rest it'll you our has was X.X%. RASM really about versus segment least up thing. you particular And international capacity If the same reporting Well, think international, my the the performance modest a share our this question. capacity. third off just the if was great more that is broadly international And be industry I memory X.X% did on our on the with talk you just I segment quarter. is of take overall, close it's X.X%. if at domestic mind but I'll increase But It's And of accurate international only it's yeah, Mexico been of just down

strong Mexico think a other but industry. and So options, if And reasons and they'll And will it's speculate we've a return, pretty well pretty had as demand believer like leisure think could beaches. between feel really up I but big customers we've as could they international across have to got the in and better gap a domestic. the weakness on going a this travel until consumers places. I I'm I year from that the go seen they've widespread you options,

I the in beach like Caribbean we're it So may rest see definitely getting weakness seeing the that And of fact it's abating I other like a in it see this maybe strengthening seeing but sound does and dramatically, for have we're all But any industry, in of signs event, we'll don't – worse our any know. destinations helped some here. business year. definitely not

Ghim-Lay Yeo

to Right. Are on flights those you planning to cut Mexico? any capacity

Gary C. Kelly

point. not clear thing The I with is any – made would analyst focus with and make that is comments XXXX with X% than – to that this not We're in our say this Hawaii. more is – Tammy at cuts ready that growth our very her only the

that adding planning not plan And so share of any any we we're trim we whether XXXX do. to there's about on nothing of meaningful because routes haven't at point. But flying and international routinely amount that's this to But again, we in that shared something that.

Ghim-Lay Yeo

you. Thank

Operator

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

Linda B. Rutherford

you Thanks, joining us. Abby, for thank and all

If questions, by. you standing any is follow-up communications team have the

via You our Thanks can or phone much. website swamedia.com. XXX-XXX-XXXX media reach so at by at them

Operator

Thank you and gentlemen, call. Ladies joining. that concludes for today's

Southwest Airlines (LUV) 25 Oct 182018 Q3 Earnings call transcript