LUV - Earnings call transcript Q3 2019

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Operator

Good day and welcome to the Southwest Airlines Third Quarter 2019 Conference Call. My name is Chad 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. After today's prepared remarks, there will be an opportunity to ask questions. [Operator Instructions]

like the I'd Mr. over time, this to call turn to At Martinez, Relations. Investor Director Ryan of Managing Please sir. go ahead,

Ryan Martinez

Thanks, Chad. Thank you all for joining us today.

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

notes. quick few A

results prior We will performance, based will could non-GAAP from differ statements reference which exclude and make current special we to our be on making to to which results, XXXX actual year forward-looking future expectations compare results items. of

regarding have more from statements We of reconciliation non-GAAP morning. in information release forward-looking earnings and a our results this

on financial to further just current quarter MAX of targeted to given in in as ongoing adjustments sharing regulatory the to are return fourth Also, service that based February the regarding delivery a flight Any estimations aircraft MAX well delays Boeing's we additional XXXX. Xth, timelines estimations result and beyond groundings, additional approval today schedule the are damages. our reminder, as could current changes and MAX

before Gary, updates Tammy Mike, and it open will Tom for provide that, up With Q&A. we

I turn it So over Gary. will to

Gary Kelly

thank And third XXXX was for adjust and the told We airline our call. we going joining you us quarter, were quarter prouder it and MAX for that. to great an to of All our around, I people performance a people. our all earnings outstanding and am Ryan. ever Thanks did than just you operate last

It in of hospitality. terms feedback reflects performance that. reliability Our just was great a customer and

proud thankful people. very our very and very, I'm So for

XX% up XX.X% and over million our have the EPS have even would the I benefit are performance, X%. up earnings, been been tax up it strong MAX $XX produced grounding. we MAX you, revenues, better promised. These was would results were not the told stellar, and We of would And under satisfactory over EPS course, and financial results we for think for EPS cost record also adjust without

Our to employees continue delivered scenarios well. work They have our termed changing I'm hours shout also to exceptionally planners out amazing truly going as our planning, long to time, frontline I've to operations special and who last operations or, planning, replanners few. toil give another to results continue name just ever heroic. and is a very that's financial produce through that network just them planning,

to the course, the warrior talk importance the for of that talk but importance about sensible prepared can never element and and unexpected strong culture. resilience. spirit importance a very capital their and commitments, much we the talk levels, debt an great ample me And the growth, low too low talented culture, we we taught about of of and about of us of lot as employees cash, having do. being a I really sensible all Herb And of cost, call

we So truly have are people. to blessed such great

I what's about talk next. want to

the MAX In our continuing to want solid regarding the compensation airline financial related discussions we operation to We damages. to with Boeing and for addition want a to things. superb do results, couple of conclude run Company a deliver

the in for service. want the received week changes MAX we software secondly, that revealed has weeks certification are And related the final they And the process and flight and to FAA the this they of timeline Boeing return with methodically system the away. the that, MAX to of safely documentation from and regarding the certifying

the around schedule. ungrounding our Xth of very date has we've careful of assumed terms commit clear of been mid-December with an the translates in not a While for FAA to a to us that in-service flight and working date, MAX very to date Boeing and February

again. now date be yet roll won't that our So, that met, judge and we'll along if schedule the between mid-December way, we

the by that the January recall three quarter February was we've So our what that four September, from behind Xth Xth. delivered second so to why which was to moved that, we're about is end date Boeing weeks of the assumption

So the am. closer we get confident more the I

still mid-December. However, I'm highly about not confident

already is the time course, that of which that clear. Ryan's will. important to the And, know their But way FAA give course I we what's every that we need do support to I they made that think here we're job, of they can. them

strong. original outlook if solid. very quarter schedule plan. not our for stable, and optimal. are outlook to plans are Our Travel stable that's our continues cost and remarkably everything got is moderate below for be a our fourth Fuel We've prices demand and the else

fourth that, we for quarter to the and way of fourth what by understand that guidepost to turns redo release the press So holidays. schedules be key and given complex to we've the nine because had the complex quarter in they're make the caused the is variability you up here out

we schedules. nine have And simply didn't to redo time

or because we one, did we translates peak it and enough in essence results non-peak than otherwise would like, flying we into have So didn't we that like. and than flying more one, would airplanes and less

capacity the be good gone much the versus we're time a by X%. pretty we've provided and maybe quarter fourth up is Bookings done slightly guidance that. during has just So as more that and since year bullish that and for quarter that's look that as we've ago. And darn RASM down on will

that, return than less And has it pushed I schedule because more out. also for to to likely compared don't discussions. our guessed have speak. I service redoing for capacity plan can't on that XXXX. yet double-digit be whatever to reason, obvious would you I growth are based say it to we say that year, be you imagine as forecast other July will going we the next be our would the Regarding than a It's again, than

to of Baltimore based have our our is looking depth XXXX we on to back be lot a will forward we MAX currently an having Hawaii, well we'll missing priorities lot continue obviously, is published going a market Houston. So and emphasis can that of what markets. restore And Denver, which and so so the far, extremely on in

always Tammy and elaborate to the as those Tom are going highlights. are further Mike, So

And to Mike? turn kick Ven Chief Mike our going off. Van it to de that, with over this Operating I'm Mr. to Officer,

Mike Van de Ven

thanks Well, a care of and the throughout our our the dependent quarter. to lot in groundings do light spend morning, of talking importance people that. kinds in good where of of They especially are lot people customers them good on take of routes all Gary, our about our a care time through in second completely MAX jump take the everyone. industry teamwork customers I of and taking pride of our and

aircraft had network. the a into and the And of the out it sufficient June wasn't which schedule MAX finally of until spare number incorporated

first third the having to So scramble was clean MAX quarter really the without due operationally quarter to the impacts.

quarter magnificent. in mentioned was you least call, hospitality to that just As second in Southwest. people into the our has our our operation deliver at have come that customers it going the And know and were a for us to decade. reliability, overall from operational best I They efficiency the quarter expect third produced delivered important Southwest

performance were quarter handled bags was that's XXXX. they the performance for in our the and were on-time of history. since as just XX.X% million best We checked that's Our and XX.X% those the quarter best in carried the XX.X

that. noticed customers certainly all Our of

measured with them results. ratio that also the five the on of again, three by lowest our net been as complaints in it's we're That's BOT Southwest highest the the were survey And customer of measure. we and out promoters year-to-date complaint leading years. of industry Two of based believe in

the an industry. turns operational overall the So of with invested in we in and those and accomplish aircraft exceptional performance results lowest time amount blocks

the period September heavy effort focus XXth. had a With XX,XXX domestic our five-month over bag respect and locations in scanners out of that plus rolling on in agents We we introduced turns, ended technology. ramp a to all third trained quarter and we the our scanning

and So turn. a our track move customer the accuracy going us weight automated of that's more balance foundational investment that's toward service, paperless a with aspects bags provide help more to process

So operation solid at kind October reliability the again be The to service is And of is timing. shaping continue. best point at in point our up this and operation MAX bag to and the this in to we unknown our biggest performance this handling is years. a return on-time expect

As process for their month. had to through conversations that Xth. fourth Gary cleared and continued MAX in -- at related was return the the with Boeing get reaffirmed service of to the split as fly we've mentioned when flying February as aircraft did from mentioned clear Gary we'll they target the yesterday be planned a FAA November to And MAX and We as are return we various fly. to may in least a to all early know quarter. expectation milestones pulled in the complete their you picture an and confirmed And previously our our schedules Boeing

to return our December of out to If cancellations we will further. mid have don't likely certainty we need push the service,

fly in as to them once XX trained. the approval process pilots So the and cleared the last to airworthiness will It I manuals reported our directive our the take quarter. issuance to are to from get XX service days our get of updated, same FAA aircraft the back

Our the will training assumptions at this be we simulator not training will computer-based point that is pilot and require time.

the be fleet the bring training to work aircraft that will period. back to into correspond coordinating end the operational necessary of We to pilot

fleet of and aircraft we XX be when grounding the XX we ingest that to the is XXXX add us And into contracted have that owes that to Boeing backlog us that the MAXs delivered. own to aircraft yet So for lifted. XX gives

we MAX believe which We service. of to about to airplanes are do at a prior of before to per aircraft four math XX back that two months if week manage XXXX into and all you operational can that our implied rate X the

As main do aircraft that degree with the customer and early had and that MAX high we avoid confidence. come schedule it so certainty together in objective the the the is year. critical unexpected disruptions the It's Gary in to we mentioned availability a of our relaunching

out. for all am employees. superb to heartbeat I So our operation. closing, They the are operating the safe, coordinated reliable, service all of so a grateful Airlines. are They They across The to best. focus of results to on And the remains quarter our were in and and are thought MAX the return our Southwest running embedded are our efficient operational are hospitable plans third well teams. of

And got to team in do I think industry it. best we've the the

you. that to over with Tom, So

Tom Nealon

off. what to and where just we thanks, solid. had I left going everybody. Okay. third rock to up start and The pick also incredible. going operationally to Well service right Mike said want Gary quarter Mike Good hospitality -- was tremendous echo absolutely morning, Mike. I'm I'm

I We're incredible committed in people. toward the we believe very They Southwest is this And top deliver we because of have as absolutely said terms the financial do Airlines results. so Gary really stands Mike just and and great of industry are our service for.

So I each for the thank you of performance. to great want

third the into So right quarter. me with that let just jump

of growth were passenger year-over-year both RASM with in leisure gave earnings call the our business and trends we travel quarter strong on guidance yields. passenger demand in strong year-over-year line reaffirmed Our we strength July Throughout X.X% and we saw was to and continue see back the in September. continued

and We basis. investments But schedules impacted declined our of choices had the are some significantly quarter. the removal timing made awful by in lot on around to our moving result changes have MAX the We market We was of obviously market parts. an schedule lot we by from did a the network make X.X% a the of of capacity

even with passenger RASM we record as performance. third operating challenge, and generated revenues record well quarter as record But MAX the revenues

as of did points grounding. for temporary RASM before an And roughly us commercial plan absolutely the benefit minimizing Our good portion QX job MAX we two impact. original our of team of a year-over-year MAX comparing expected incredible the experienced

from We tools sub-optimal benefit RASM as well as And as X.X tailwind year-over-year new X.X had we a RASM management our system also X.X revenue Flight point from from XXXX. XXXX res year-over-year also point and had expected. tailwind a schedule point

is for the our year-over-year This primarily performance due Rewards to other X.X% increased continued revenue strong on year-to-date growing Rapid revenues other a at of Our quarter. our program. XX.X%. basis And is the

credit in cards. strong co-brand see growth to continuing on spending our we're So

think being driven I things. really two is by this

I and the top real our First our tend function the wallet. keep of customers top value And to mind really of program. a see our card that this get as from credit of customers

is which they use credit important. tend So our as card to card a primary very

rates new acquisition And even Second acquisition card higher. rates basis. co-brand growth in are business seeing double-digits our on year-over-year growth we're credit the cards a on the

seeing we're size of the growth our So card portfolio. credit tremendous in

value customers. are Chase of we to Rewards economics Rapid of well with our structure and continues Our that beauty as the the program our perform and the very to very brings relationship. as is well and The it program program with the simplicity pleased our

No No dates. earn, redeem restrictions. seat points. blackout It's easy its to to easy

value it’s is they year after So customers award and which there year. after program why love it year an winning is really to our

program where be So couldn't kicking our we're are. we and is with we all loyalty -- happy cylinders

point Travelport on distribution most we new systems August seen last of which managers the global management agreements plan And My our sure did QX the will announce GDS for will level now, business companies capabilities participation by in and have or with do into to Amadeus. standard we corporate as to easier highest with GDSs with Southwest. you travel industry and have travel early make I'm expand it with of

travel we booked this which to platforms. to I new that customers pool is that whole vast opens a access happened business coach think our good up pretty important note we current of it's distribution corporate be travel And to as at. had of the domestic haven't majority And also

a fees for great truly and changes its value to our no frequencies, way travel money roughly itineraries fees travelers, which as fares, lot been non-stop, customers bank on of with Our fly strong loyalty and product the a of so travelers, business a advantages managers low network has program corporate XX% distinct no on. that's such a a lot business deal and high big so by for the of

have hard a truly business compete channel channel traveler. channel we GDS the the expect, this product business traveler. as win intend the for So we But where is live never go we in you'd did competed. we've very a to to once But great

impact capabilities modest. have by initial we million to $XX to and will expect $XX mid our contribution half running initial EBIT of XXXX. million GDS up revenue contribute targeting of is and second are XXXX We the ramp-up very for The

there's opportunity next big to the know several piece also We years. of substantially grow this over business a our

as of team also I our literally out capabilities. into And the our our we're well service business we're Southwest So building business business technology out build sales and speak. to

is Southwest will in companies. end three to new So which business through the day, targeted small service business at largely of our first, medium at distribution channels; the have and platform, strength self SWABIZ

Second, And through live go GDS which platform. mid the as distribution third, in I full direct co-exchange function will said capabilities connect our XXXX. ATP

this, on about more a So talk will lot forward. to out come we going this

that's for So it QX.

in jump QX. Let's to

our fewer the that we and integrity me flight and spite on perspective, focused the we've planned. for the So strength schedule of originally of been than very fact maintaining significantly aircraft network have

not to network a the depth say it and just phrase. throwaway I It frequency also that flying. of maintain is maintain want to we our want connecting and And of itineraries. point phrase we key degree what is, When to integrity maintain want strength service to in the our high want our we quality of point It to markets. means maintain means high direct means we

to large the adjusting to And just times. network They job network schedules a of and maintain our of alluded the incredible I republishing they've very strength and think extent, as done our multiple team integrity planning And our throughout process. republishing -- that. Gary has done an and just

revenue done and an Same can environment. said they've In yield of third offsetting customers. successful for MAX in they management job the rebooking equally were our managing incredible the be the quarters team, dilution second the related of revenue

peak nature quarter. of set MAX has you a the of as aircraft we've year-end were seasonality the XX versus in for number terms have is the QX us. grounded by work quarter which in We'll And schedule know flights our of cut because the of most in fourth removal out had simply MAX Now off-peak the of mid-March. the deficit of and double always aircraft complex

the was all fourth that in -- for building working are assumption the back these as have been service quarter. schedules months Our MAXs ago we

are base and our and the timeframes. was based for published that covering very we separate So on assumption time these and well holiday December the that X non-holiday optimized November schedules periods. flight And

our result to QX to flight of and in solving base set we is our and challenges the comparison in in were are schedule QX that of very what QX. reality The today assumptions different are quite unique schedule adjustments versus

of solving a seasonal XX So to aircraft period. in highly we're deficit a now

practical as during us Most our public and revise versus troughs. approach our smooth quick the to original way such flying peaks was a our quarter plan of optimizing to in schedules fourth around for

the schedules. does are, less and is, The of lack you optimized but wanted isn't to team; and optimal the and ideal the an do non-peak and and it net three peak the criteria not our to during any important to schedule, effect those flying the we This has during will more it's flying to customers between what's that certainly have centralized during simply disruption holiday periods, first minimize we satisfy aircraft flight what's connectivity a ensure optimal travel.

we third that contain had income. the Second we schedule as meet to assure as or possible. can And operating operationally minimize feasible wanted efficient to we was a that on and impact

again So isn't this optimal.

We objectives, strong of have to able and producing financial while maintain these our operation, been our product the results. achieve quality

the quarter MAX because MAX greater third to grounding more in original penalty fourth than estimated The the from is built expected the plan. revenue aircraft That's simply had we quarter. be

flying. will And or any of slightly the the regions benefit or X MAX X The points temporary QX -- be quarter the X benefit the unoptimized RASM due unlike off points benefit from the estimated removal we in to during higher had be we RASM of RASM offset peak RASM expect schedule immaterial. fourth point MAX by to Whites drag

continue be But fourth said, solid. to very quarter being business our base trends that

X%. up we're flat the to curve quarter year-over-year continuing of We business in performance RASM and the a fourth see demand. across That's booking solid travel are range to healthy leisure expecting and

that well RASM all fourth goal considered, with growth X%. our things result of. our excess in are of very puts And XXXX quarter that's this proud a All-in we RASM us above outlook,

XXXX more environment solid this year. things, of of across we strength. $X one-way curve I this we where systemwide yield believe that yield the sure the in on think and through increase. do likely support booking And for the we fourth and revenue curve the fare the you booking that I'm to do continues few a recently see demand quarter will saw are remainder based Just But continue implemented the to we momentum helps

flights to comments our exceed we're recent our and and strong daily will demand And just factors very flights the Hawaii a be demand XX Hawaii, few service The Hawaii strong. California very load XX have average. also for with Hawaii system we on our also up we continues service mix which inter-island this thrilled announcement daily for more to also about. continue to to flights. of of now very be customers quick local And The our very is strong a includes inter-island to

and from total to system scores brand well that's our above flights Score. customer Net and perform Hawaii Our Promoter both for flights. our for inter-island our experience as And true as long-haul to continue

we connect, to that additional future. our flights on we'll in announced San continue for in as the do success. service we're and originally XXXX And Diego have far beginning building from left stance near our planning As California to still initial cities, off

ASMs to we're and and once restore and as in can this. to to to said, close in aircraft. looking a the And anxious return we the the to will begin service network. XXXX, smart uncertainty the the service, grow Mike date, So on are I to our some forward measured related MAX he ramp-up very schedule have back we way still get And return obviously be focused of as a aircraft we MAX we on

removed produce certainly but due to the immediately. network, our which of flight not favorable results will will expect we've to we'd restore almost to every restore majority We grounding, want MAX vast the that

focused in are flight schedules through published You investment we that Hawaii. can our from Denver, and mid-April Baltimore, on see continued Houston, California very

list And growth between depth long beyond strengthening pairs. cities, and we be these frequencies city strong on have of and focused we opportunities a very attractive non-stop will our

schedules out us our take be set we'll publishing week, next that of through X. June Next

that. stay So tuned for

pass going I'm over Tammy. to So to with that,

Tammy Romo

proud quarter expansion, Thank of today. everyone extraordinary which challenges you, I'm the for growth is joining and notable had an capacity the our to of employees, MAX. along the year thanks hard MAX. this the and in X.X of resiliency earnings Southwest despite to my and strong results another our with from EPS considering for resulting how margin six unanticipated extremely due solid work very family the Tom, grounding We produce and to grateful us of point to point rally our together incredible reduction

-- and through. the Gary, Tom managing challenges Mike outlined most the challenging we're of

remarks related fleet and out MAX I flow, the with impact. So our cash and sheet plans performance, will including cost balance commentary and on capacity round our

performance. Turning third estimated the resulting cost our year-over-year first to fuel or six sharing from flight quarter and was non-fuel point impact CASM-Ex to MAX excluding The largest X.X% cancellations. profit our and of driver the point CASM increase groundings seven and an

case capacity which year-over-year was quarter. our points quarter also third approximately eight fourth versus will lower Our plan, in the growth be

MAX wages the by Excluding as salary the related maintenance in remaining modest year-over-year unit increases as cost largely driven was well and increase expense. pressure, benefits

did come these guidance latest X% of our anticipated, we to cost were pressures in favorable XX%. While to

to the efficiencies across that Mike and addition control related cost good earlier. labor In saw cost strong the and performance covered we to on-time Board, operational cost

than well some airport third as We rate expected settlements airport also increases. during received as favorable quarter lower

commend to unit pressure like excluding the plan MAX our us for cost flight keep executing to cost significant related year employees our target from I'd cancellations. Overall, this year-over-year on

cost our groundings quarter Therefore, unit approximately quarter to fourth in CASM-Ex X% MAX range increase XXXX to to shifting We into expect from are XXXX and year-over-year. fourth the point fourth be a penalty X% started earlier one CASM-Ex now decrease about expecting quarter, to year-over-year X% had expecting around CASM-Ex fourth of the year quarter We've year-over-year. the we six point. periods we from

in could, actions is side. that what worth drivers It we wages we this airport cost maintenance and increases to key are benefits, and year taken year-over-year have noting expense impact salary on The including cost. mitigate the

MAX absent it groundings. would our previously, is eight points quarter been fourth said the lower I have than capacity As about

benefits three able penalty. higher offset that to points nets six be about our to to due us which flying However, from points two to the unit cost off-peak we fourth of expect in will inflation quarter, we point

areas We unit inflation to but to fourth be cost continues will in significant. focus than these impact penalties, less to despite our best efforts, our to unit quarter the overall on cost the continue

increase currently Looking drive we year-over-year. the pressures. With CASM-Ex to mitigation fourth now points some X% we to unit plan expect an previously year at on expected executing our MAX control cost of And incredible XXXX, full-year cost our full inflation have better five approximately slightly done estimated. non-fuel costs, are in than quarter, to year-over-year groundings again, to our employees job

in impact to the groundings inflation and unit CASM-Ex Excluding XXXX to core incremental of $XX X.X% XXXX. our X.X XXX-XXX with original MAX our the maintenance initial our of as expense line point the occurred aircraft is bonus mechanics. plan of to three guide after that unit keep to to for performance Both we our which that And factoring to in million of to for keep the costs, our were the $XX seven back point includes retire cost going X% year-over-year January. well as million cost

of ramp on continued XXXX, And carry inflation level note depressed back year. gradually we of millions the return the incremental out expect up unit XXXX. to in we estimate quarter of the to addition, X, to we capacity February we next MAX regardless quick fixed due tens as grounding currently first cost the cost cost A in service from year-over-year

guidance $X.XX Saudi X-K Market our of the near fuel, second and following gallon, of energy Moving range. end time half around September. attacks fuel price per the lower third our our then to the moderated on prices oil quarter the Arabia in update, mid-September of was spiked

of as fuel our hedge energy volatility the insurance importance the with meaningful reminder markets served program. recent in a The of having

are been we to We XX% around XX% protection. we XXXX putting hedged; quarter we XXXX XX%; hedging XXXX; and for for are positions, our hedged adding around approximately us at for fourth have XXXX XX% are nearly

to of For fourth to quarter market the being price $X.XX our gallon. on XX, expect in October again as prices range of $X.XX we per XXXX, fuel based

fourth is oil currently curve increase The sequentially. are fourth to third around lower quarter oil forward quarter, slightly than heating crude XX% quarter but cracks estimated

MAX Our NG classic MAX over improvement which performance expecting of burn fuel generation solid is significantly impacted a our improvement fuel to came improvement fleet XXXX over fuel our efficiency aircraft, by efficiency, largely driven be operating and our by continues expected into the a to fleet. retired year-over-year the grounding. next We produce the XX% XX% and

Third quarter with quarter ASMs per X% to and decline X.X% of and declined fuel to Once expected ASMs down MAX gallon year-over-year back track the fourth get reverse we are improvement range to year-over-year expect also on gallon per trend the this in service, returns to X%. our efficiency goal.

regulations income Wrapping did when related quarter bonus the a per to increase the that $X.XX to expense tax rate return our our million highlights was clarification that not guidance. factored was income to XX% $XX tax the in relating previous tax XX%.This depreciation of adjustment, the tax was statement, the a the feet as Even of an you to the share late our we excluding of represented amount reduction expectations. solid read up allowed press release, record in quarter, which to a into

fleet Now capacity. turning and to

any quarter the We one mid-March. retired in XXX delivery not since We of to have during aircraft taken quarter groundings the aircraft total MAX with end aircraft. XXX third the

XX updated XX delivery of at Boeing contractual to this MAX have as the grounding. point, total which schedule deliveries We officially year mid-March this haven't continues remaining with our with

remaining delivery that in XXXX shifting has has XXXX. us aircraft Boeing, the of XX deliveries MAX on out revise service to quarter during targeted MAX receiving into schedule to of MAX fourth Boeing return would quarter in and fourth proposed MAX regulatory Based result seven XXXX approval XXXX. That

XXX-XXXs total original -XXXs retirement our more aircraft XX retire plan our XXXX. postpone retirement to XXXX the help expect owned with of to continue of We XX our year a seven of versus of We this to deficit. for

XXXX fourth out quarter and netting we deliveries XXX fleet aircraft. total seven our retirements this end Assuming year, aircraft to XX in expect of with the XXXX

would based next be approximately delivery expect total in in result mid-XXXX. we our on retire targeted aircraft our to deliveries we XX aircraft For return year-end This of of by back to service XXXX. XXX-XXX schedule to fleet aircraft XXX currently resulting expect XX Boeing's timeline, in a and to MAX XXXX on XXXX XX around year,

Our third quarter available seat miles declined X.X% year-over-year.

For which to quarter year capacity down the range in X.X% XXXX capacity our put we decline X.X% approximately full to year-over-year. fourth would XXXX, of X%, our expect

of ready uncertainty to MAX ongoing this we annual return not provide service guidance point. capacity date, the are XXXX at With to

schedules, first We increase currently expect the flight the which year-over-year. XXth February quarter of to April have X% Xth. XXXX through removal capacity published the range of in X% through XXXX, MAX we those And on published schedules the to includes based

flow, the cash to $X and sheet quarter investments with the turning healthy cash of short-term approximately Now, we very ended balance and billion.

is been than as aircraft cash haven't higher Our delivery payments balance since making mid-March. we a usual

Due expected approximately $X.X to quarter lower of billion be now $X.X number million. we XXXX, expect CapEx deliveries aircraft our of $XXX in billion XXXX fourth to of with to related aircraft in range CapEx a the

up Our XXXX aircraft which million to caught from CapEx are XXXX plan, year. our will delivery is aircraft delays down next approximately shift assuming original $XXX our CapEx

cash has million of year-to-date. very result MAX operating penalty income been we've $XXX flow strong. a generation the groundings, As incurred Still, our

cash million and in free $X.XX of of we $XXX months flow and nine share $X.X For billion the generated flow in dividends. first $X.X with operating XXXX, repurchases billion cash in billion

repurchase current current wraps $XXX program have we repurchase share Our $X.X million billion remaining week share and next on authorization. accelerated our up

record results, our of third thank financial on to significant and to In operations from like groundings revenues, net record per and all operating generated employees. another the our income in record Despite earnings share extend and the closing, we RASM impact MAX huge you quarter. I'd

Absent MAX on impact returns margins to we the quarter three the grown in solid have returns capital impact, from Our year-over-year. margins third each would were considering and a further two, expanded even groundings. and point

remained Our continue balance sheet and we and returns cash meaningful flows to strong very provide shareholders. to

I especially cancellations. financial grounding Overall, our MAX with year-to-date million for operating results this happy flight with I am pleased very this execution the quarter considering penalty $XXX income and am the the strong and year resulting

true testament far to our family. is impacts goal unit remain Excluding and achieve unwavering outstanding and our the on this secret of year. cost This to MAX we thus the a and basis, a fortitude Southwest simply revenue unit for track unit on

a the resume growth we have the in FAA to to be and service so. deems do of we and once lot are eager to back get MAX All-in-all proud our

With Chad, turn take you to analyst questions. now back I'll it that, to

Operator

you. Thank

first session. begin today Duane now with ISI. Our from will Instructions] ahead. We Evercore Please question [Operator question-and-answer Pfennigwerth go comes the

Duane Pfennigwerth

Thank growth you. hit your on you third what your Appreciate But ballpark all is the uncertainty plan low-teens by around based be? of you in stride the quarter would if just the next assume outlined year. we what

Gary Kelly

give Low – me number. a yeah,

like mean You XX%...

Duane Pfennigwerth

XX% XX%.

Gary Kelly

XX% No. easily. be We'd below

You agree Tammy.

Tammy Romo

Yeah.

full year. the For -- full yeah, the for

Gary Kelly

year You're for the the talking for quarter, Duane? about or

Duane Pfennigwerth

third the back Yeah. the for half essentially. For quarter,

Gary Kelly

my I don't have in mind. do What a number you think?

Tammy Romo

kind capacity is be at And it to But… happy I'd thinking XXXX? we're Yeah, it through year point premature. this we're Duane reasons. for premature. yeah, And you full not of give guidance of how you the to walk about prepared is all obvious the kind

Gary Kelly

airplanes return thing plan is a Well, and five in for we off I assuming been just think do X don't for Xth. we take MAX has January -- are we updating of -- to yet say, we said don't next plan not XX that a routine have whether don't have our have And know It's a the before. midst to the both I done to year service. that, mean, week. just February of never can this not. I would Mike I or and Mike Tammy

more plan. to wait and be and yet do that with that just only if going realistic another throw to And to work here we away before you, honest a little that's get we're see to while go do to

So the based of was say and we'll XX% to earlier rate on with several will that, than something you for the judge less all is I year, be to factors. we return trying think help I

pay don't them I for and us airplanes sit. to want then have

way I So we we're some just you our assumptions uncertainty that can four restore there -- the regard of this to just get dependent each work going months, Boeing meeting people if is done. we'll we've exactly to so with But is airplane is of the return gone, FAA how to a out everyone upon and service. to two to especially, I'm that's have just look said, And in and things fleet there there And the with think to at between have Boeing. but lot that.

Duane Pfennigwerth

the talk and praise the and comments feels appreciate to about nature retain share And shock quality and you're feels All traffic, like maybe I little low time initially it very thoughts. and quarter? that you up you're is network of your grounding you like were the bit your you from giving the response quality Thank for pretty traffic. in with figured planning the highest how your agree fair. sorts a teams. your to you. maybe Can giving how of the your fourth evolved all replanning initial up would system here to It out over

Gary Kelly

to you want to do Tom, that comment Well, on you want first? --

Tom Nealon

Yeah.

out do maintaining and we're way, what We've been that the connecting of as flying I from pretty, we're we've where seasonalize We out for actually bit. we the the come know the to diligent we've just can. think we're little it to in all longer-haul pulled to -- traffic put taken of a -- some out trying an presence the pretty myself, about example. is we a by trying some seen we've haven't allows but out international, been some to I markets, looking us trim hence

do what And at what flying, invest published fact, Houston in short a utilization. just being seeing strong seeing are of in medium-haul in we're you're really short more that seeing look And toward quality little bit us. and we you're city pretty it's lot getting and very more aircraft directed Baltimore, us flying pairs medium-haul and and you Denver is flying that's high for you're

a of the we're worked pretty job given So optimizing have now. I network with think what good we to right doing

Gary Kelly

Yeah.

Duane, I is system. – assume logic idea I to In decent with words, would think agree one. your there XXX% think correct I our I on of there. be have think it other a share don't your that lost we

and just may where tried long-haul is market-by-market. serve because lost, a little able we've we that be sustain to markets have one-stop because and where basis. to connects, and Without percentage I'm and been to bit out segments do between sort that studying frequencies haven't we've a Tom, pairs with of agree city those more I shift there there I a a readily even on agree large taken reluctant have a locals that sense

complicated so able entity our just short-haul which than And or at Tom to been We've more some in least routes it's mentioned. sustain that, for but as just I routes. -- we've the shaved part international, long-haul medium-haul an most

points our happy fact the right we're Board, So which where capacity do not a some still the like share have but to some up would consequence. been. with And don't we've share, eight they're competitors, that across they traffic have temporarily picked it's not which below we're that we're clearly, and we as our losing heard

Duane Pfennigwerth

Thanks the thoughts. for

Operator

from comes with Wolfe ahead. question go next The Research. Please Hunter Keay

Hunter Keay

Hi Thanks. everybody.

Gary Kelly

Hi.

Hunter Keay

term and on terms topic incremental questions if Two same the we're if we are Sabre gating items -- should on what the you're getting your income gating them? to of much come expect pre-tax how an fares able with to

Gary Kelly

us time. the Sabre know are players. well. the with know pretty And We long US we've obviously, they worked Well, for a pretty largest issues GDS gating Sabre. Well, with They Sabre well.

through to commercial unfortunate. able of we to very and you're them we're talk terms get not to which going just So simply certainly right their crazy as weren't we but be is it to this, importance Sabre, would

out guarantee and who good to Amadeus. able have want content access are Travelport thrilled those there very And lot of to they in get through I I'm two we be and partners two. will there. corporate customers Southwest's

So do where things know. not Sabre I go with

good a good plan in got we've right place set partners and of now. So

So--

Hunter Keay

through the the and what to to your TMCs and lot about commission there's that, in Thanks. are how product your and but simply you Tom you Okay. not want to play going products by swayed said TMCs alone? the of that a if are TMCs themselves that books be Sabre, corporates willing game

Tom Nealon

TMC Well, Hunter. for thank -- question, the you

think expect I our all, you'd they as the we're paying we'll segment of be competitive fees and we are first GDS -- as -- the pricing.

that's the competitive I part to that side, do. play of are in content. think with the be think it's what on I And industry, think the going customer TMCs I need its that for but is to think best asking the I we don't customers

our get the travel Southwest just not product what the content. that's think strength the is think managers to I think think be we of product, our think travelers I product. of pull strength TMCs that but is showing to going what the I And of So, think what and the the

with a TMCs. be to with to have way the not by We haven't honest historically, just you, didn't. And we -- spent of had time lot we

or there pretty sales now out our this a two week team. So, in we with we right And ago. group in just fact we -- past had big weeks are

And guess starting the with work a real there tell we're to so And what I the pull managers. that's TMCs for I and Southwest travel with the you. is content. can

Hunter Keay

Tom. you, Thank Okay.

Tom Nealon

Sure.

Operator

next Baker from JPMorgan. Please Jamie The with question go comes ahead.

Jamie Baker

Hey good afternoon everybody.

the current that second of don't sounds those going first given Tammy challenges to in next well? ex-fuel back half stride by fleet the fairly to the to midyear? hitting half getting into your be assumption, like bleed of we XX aircraft, pressures the five materially year. to So, CASM confident return service are It are sort should persist subsequently we How as

going soon next you're takes release ex-fuel like It hit assumption that what but that markets that given cost the improves up I'm a return stickier to RASM first and only the year. picks CASM cost as to guidance, as relief material said about is the much. just quarter, capacity feels is additional convinced you've ex-fuel service But not the Thoughts? experience

Tammy Romo

obviously Yeah have need and to we to as adjust nimble sure. as to really any remain to we're Well, the just hard And work mitigate MAX to. we here. service going costs return we'll

that we'll know as you penalties penalty we financial as what grow impact, we have the the -- half said a of -- certainly while point XXXX. to what -- do the to fleet this do do deficit cost do is the first grows. and while ramp-up significant unit as What in are at mitigate we expect we you And and can

cost sharing our target our and discussions and ongoing that unchanged fuel unit excluding long-term remains But and growth Of in X%. our with below course Boeing oil annual expense are to profit that's regard. cost to keep unit

laser-focused be to cost on are of short-term, goal. goal. our sight we'll some as that safe likely while haven't service achieving inefficiencies we in the of they long-term return to the lost on the be So, MAX And focus we

Jamie Baker

put half second or Can you CASM? on any first numbers half ex-fuel

Tammy Romo

that. too to just early do honestly -- It is it's

Jamie Baker

Okay.

Tammy Romo

We don't to have service return even a plan.

return certainty So, have we come to walk that through measured always approach got objectives. and more hitting I you into just targets just said is we've can. of those and one guidance balancing think a have we're objectives want do premature bring a Obviously, the around service, here But service. once much financial as we lot back of it's to certainly we And as we'll MAX to you that. we've to give and our

Gary Kelly

you're the timing Jamie the asking. is spirit what of of issue I the achieving think

yeah, know. It think I we're to So, I sense are all quarter We we I makes about don't think getting reluctant the we to specific where yet. third point that But thinking to clean, yes, just the really say; going think once get clean. you're parameters is that to us. be without

be. to going that's what is Here

Jamie Baker

the I second you And it. CNBC second my type. saw fleet looking -- Got Board Gary question. headlines for saw before, the a at on

in of start achieve immediately two line or you buy an fleet one obviously with that for company's with from other get scratch the ways; consolidation. scale and deliveries aircraft, get that and existing can in can albeit can baggage You you some go inherently

in also is Board the possible type highly is if intertwined. that said consolidation it topics you today, assume a those somehow to debating to safe two because divorce fleet it as is it's second my they're debating So, or mind

Gary Kelly

mind. Well, you brilliant are a

that but So, also intertwined, I think they are be -- do potentially could disaggregated. are they they

it. But just wants give to just I it depends think a about straight answer. how think you on one I'll

We're service. say on on into I Boeing -- up back focused and on we're earlier did as are fundamental focused with are MAX things. focused getting settling we two the We

that The and a also well comment looked it. single this. did we carefully we've news. did occasions. And We done do and before several in about evaluating I they it very that's not question -- would know on ask fleet I've the is that made do I what type Herb Herb shared because at me what new

MAX. We a XXXX led launch an as effort to Mike as late gave alternative. the very when that agreed we to look serious

do question. have it if I not next the simply -- us maybe year, at Yeah look There time at and that question. look to question sharing that is for now, the yet the this but people So, was Is It year. are do. again. to time following people

I we XX wouldn't arguably agree. years one. a have our do President extremely the know been and this prejudge would when answer We've safer expertise Vice a Flight for single fleet Operations with reliable of certainly for successful all. I that at year more that type. It operation makes we the in

for plenty especially there in have of the at So, obvious really it's and just now. feel like right light look arguments the I feel good I duty we are like just a to of going and question acknowledging what's on

part the question. hopefully that answers So, of

not understanding to say today. entertaining that know you this question we're today As

us today consolidation. make say So to about enthused does that

that is It's questions. absolutely because that For are It's different in irrelevant. that -- two sense reason not. they

to type we is our just experience a doesn't as doing the then buy airplane capability you we get I'm I but quickly to mean second would to said, add. point in that AirTran Southwest to that terms we of a fleet where might because would admit you repeating would fleet If second another a want I operate the And all want think -- means we it. to type, got that have instantly through

to hypothetical, through factored that's support think to still would the we go we to right that we -- construct priority. all fleet do Mike's and in would capability we that type. with whether a path the of the operate technology be second regardless into So with shop And have have that that

and really this in So that thinking complex anything those about we are all point time. or about not are at questions talking

Jamie Baker

this And much. hook quarters way the of I Okay. very That's very words build for Thank some couple you very, helpful. made ago. the that kind a by having off thank hope the for you Southwest

Gary Kelly

here grudge. wish No, means he timers, the you. Thank which said carried Herb always all always I

Jamie Baker

Okay.

Gary Kelly

truth. of lot There's

Operator

with Deutsche next Michael Linenberg The from comes Bank. go ahead. Please question

Michael Linenberg

seem because focused just on months? be but as on are Tom on the what's driving to Houston like particular you get we that that just one -- and key you Question growth Tammy. you I that if other is are Denver, over look the I'm and guys the coming see XX out may one some afternoon next about Baltimore gates hand markets maybe hand to decision that that on markets and be additional Southwest of do then guys there does good gates can it you and think those airports targeting suspect Hey XX competitor, mentioned there. And are curious where Yes. I focused here you would are on

Tom Nealon

know I and where our looking look I they I the going where the is, is, like think how that Denver -- your comment strictly is we're we're airports proximity the at You after think at say, of about fit where with Houston competition networks. this Baltimore where from

the is will what's over begin to intent it. And and if do more drive to a really up use cornerstones connectivity tightened driving you spider point Our as these web and that's network. to point

Now way. all those a of there competitive response in by is the

is well. So primarily strengthening that's part core of network. this But really of it the about as the

just MAX conjunction value does number a not And really flying us. it you from all greater is for structure do eight at really great away operational more in more I greater and network aircraft. moving But there back short-haul medium and itineraries, of flying in to gives with the haul And and medium that you adding with. We're think it recovery. Baltimore Houston, Denver, long in long in out reliability of much give haul efficient us

on is what Nashville point seeing. think in is see core you're I another you network a growing us we're just one point quite So to building our that bit.

So I'm it. that's about thinking kind of

Michael Linenberg

key out anything on that do as you gates maybe the are over constrained? relates next do where infrastructure, XX Okay. to look on -- you're And you that to we currently months airports coming see XX then to as you it where

Tom Nealon

see Denver that you constraints great be many ways it. -- in obviously. or places. we No Mike to where have on California want a we things to it's made on guys capacity out. seems we have Gary step coming

Gary Kelly

what you know corporates yeah Mike, are. think I Well the probably

that are to that new point with agree anything share have you know except don't I -- to they don't I today. on But constraints. So that we

topic Fortunately, we that enough them have nine at XE and opportunities vast adding be work with in is is we where LAWA a very cases have LAX and don't as of to on timeline the more envisioned desirous least prime the and what working then we're We're yet. array gates but can of can a constraint grow we through terminal a those, around remediated. just

I but that's I one before still that just have under be with Tom's love only there that's going a So way, know well could But capacity. seeing in answer not, out to there and have both obviously a underscore yeah is thing markets hope have return quickly and was have that. obviously of demand right I is addressing to a we're solution. and real resources which more we we now limited XXXX and focus strength a we haul XXXX in we'd of in short aircraft

fact a the with of flights here. we that So long-haul that it's trimmed -- of you MAX and the you see because lot see evidence of

So on that it's a those more not we like at and flights it's short that serving long-haul that we city the time It's -- will say pairs basis. and markets, address can we've to we're flights. don't quite OND into market. short-haul some least But not the to put you're say for capacity if of one-stop don't obvious be the we

good soon. got news So remedy we enough hope here to the is lot we that opportunities airplanes, a news and but good have of not don't is as

Michael Linenberg

Great. Thanks, Tom. Thanks, Gary.

Gary Kelly

Sure.

Operator

Raymond Please with comes ahead. The next James. question from go with Savi Syth

Savi Syth

next cost, now. wondering could pressures items understand afternoon. next you I do how appreciate does year the could help maintenance they if good generally should us into just you be cost how airport wondering trending I us can Hey, ex-MAX, And trend just those I cost, thinking understand were Tammy, just planning like right this think is was of was next difficult some I into year's about should the how that if year? year, -- But bigger you we help be the just

Tammy Romo

little a here. you give I'll bit Savi, color sure, of Yeah,

biggest of the any we ongoing into to at salary service that related along We make to of normal the are the year going obviously grounding in benefits cost to maintenance our balance to good outside do of have pretty will continue Outside Just get sure and with is until that, really and our just inflationary starting structure. we come about that wages make looking spend cost that. our least cost have January spend penalty pressures next always that, return and MAX. here MAX I and feel pressures And or that benefits. investments technology with we the

side, the past is as MAX, here our obviously track, see we've lot benefits the we fuel on able obviously I the under halted certainly way. once think about and we with be we'll So have. modernization the One a but And earlier. initiatives good we the I plans efforts got grounding, noted been on kind there. feel And certainly fleet back MAX of efficiency of get MAX that's the as really that to

people that we really past just and our hard always as looking up good that. where are work, MAX But are. always takes feel I but the So, about, to

we'll So deliver I'm confident, there.

sub our CASM-Ex kind X%. maintain So, you point back to I'll to of and just inflation goals long-term again, is

Savi Syth

Tammy. of of any does kind helpful, kind where deals as that that? again sub excluding labor of well X% include upcoming kind target that kind that Is That's you of –

Tammy Romo

asking we pressure cost is what mentioned Thanks to simply And airport alluded that, earlier our I we incorporate in labor all pressures. cost pressures. cost Savi. we into because – that Yes, cost as it Yes. that for think of

pressure cost continue that over to have hard one term that's control. So, work to the we'll longer

Savi Syth

clarification about next of is And year's you All of about to to do or if I think of the is you part quick of how can still we kind think do? it year ask as if what question next kind growth a large a the you you grow should want composition, I want grow can on assuming just right. might Hawaii is If kind Great. growth.

Gary Kelly

It's our network. There's keep less very, about know a very Hawaii. We're people it's excited You perspective around of just of of Hawaii. portion pretty lot our in modest network. a like point Hawaii –

So continue next is to by to know we're not. start. really to to not build it's if of if sure our Denver, way, going just year even stay momentum, to on invest – you absolutely not committed but but we're performing on you to be not to going got want anyone will focus well. the a – for Hawaii absolutely great which we continue it's were to see given the status is, I'm and said our as Hawaii. Hawaii California of exactly committed portion going plan five capacity, to to That's we're to We've I've back massive a opened Houston. what off our Baltimore, off we're stations wants California, in We Hawaii

we're was think. So, the Hawaii upon off. relatively little going is to going to not have modest pace I – bit MAX, a depending but It of our may piece a be capacity backing to be focus a

Savi Syth

Got it. Thank you.

Operator

ahead. The next question Please comes from go Katie O'Brien with Goldman Sachs.

Katie O'Brien

Thank Good so afternoon, the for time. you everyone. much

to should for to I equal, are planning the that you're then growth of guess X% CASM I takes from me just that just with there number. quarter what about cost that but get about that quarter just and you're the would quarter. to first to I you. would think me away puts would be get – to just, in that fourth me guess I Thank X% about on That keep on else linear CASM-ex the do outlook X%. forecast here. here, get a I assume to not All cost capacity starting around thinking what the Can And harping growth if based So think is it. first

Tammy Romo

going to of into first kind looking ahead just Yes, first quarter. the the

Katie O'Brien

correct. That's

Tammy Romo

Yeah.

the in will first I few make to and So points your question. to address just help just think a this quarter,

keep I'm me, a through at XXXX. through got first this redundant. in schedules the excuse we've mind X. if February But quarter canceled little the So out bit And MAX point,

how are targeting have at on into the out Boeing to our So, around currently of February. we fleet are beginning that that would in what quarter, deliveries Xs is just the MAX aircraft the indicated, grounded. in do point MAX fourth upon XX built those resume contingent schedule. We this February to – we want conservatism based all and some but our from I have course, they've the expect XX they here of And that again includes

our MAX Yet, you as flying the to we'll aircraft only XX schedule aircraft and here XXXX that in and March there sale in is ramps our have demand at worth February pent-up XX we Southwest. And strong have demand, for schedule. all know,

ramp-up we to cost certainly obviously as in we'll prudently utilize and the as to ramp-up want fourth of the to we and can our assets absorb So, quarter. here pressure to we're but that want quickly experiencing some

which but planning the is change, you But off-peak to year-over-year. flights back further. in our in coming of And to that assumptions how we aircraft introduce of we period extend X% up have importantly, up way deliberate we February from step service. seasonally MAX into measured all to the first to largest the And if back will most want cancellations to currently quarter So, met X% into current number the that the be and March. these safely we mentioned, service that's is capacity time aircraft

course, first guidance RASM So, that mitigating But cost for hopefully said, on can. always how be difficult as positive much and now of quarter. focused plan on goal And results is we're even the a to it those focused we delivering and solid to you this our as have solid all announce environment. cost can pressures appreciate would down as in

So to balance of that. we're looking all

So, can flight we'll the to time that. impact schedule period based on do of environment, very that I feel have each our set challenges, cancellation own manage its of again we pretty but unique carefully, good as the has current

ramp as once that penalties face reverse past you up, expect would back our year, capacity turn we're get as to we've past and headwinds to So to we but unit as year year-over-year up the continue we get we shared we you cost know we normal the penalties to and service MAX will throughout will those the tailwinds expect back those plans. to next return into and the the

to to give a that bit So for color cost down answer, guidance. just difficult nail it can how long-winded was is appreciate that's you you so of that us a little wanted but

Katie O'Brien

Yes. an No seems moving here. a pieces target return of definitely moving on It ever date. lot like this

follow-up but we we into anything appreciate guys more all pieces And is do. help on again, a quarter is basis – than guess, you costs that I employees would the should from guess then really had that either as that even more, appreciate really just here, I or to improving go the think moving that I linear guess all that. I one one just prevent improve costs the I've as question So, about and there first quick so I said, I and work maybe to there.

non-aircraft of some the year know very and front. next Thank CapEx, good you service And on some on terms forgetting I will that or – technology in for guides a should tailwind. the I we going about much got that from of or the about irons Just on this you think in lot just return maybe year then how fire costs create we're forward know the a time. earlier

Gary Kelly

here. me let jump in Tammy,

I too focus is the question. much way on with there think first your quarter

the good know looks You to performance and the quarter fourth really me. third the here cost in

continue to denominator The be like unabsorbed as issue so we is and feel a is And able managing a overhead. I can. we'll there numerator best

get we penalty to forward. Number to rolling flying airplanes you're linear. until ago. especially That's that year the one. it cost a is two, not And compared number have And going as

Mike has ramp advance. what So going has to to flying to we're if do, our he hire to in has up hire he

actually So loaded. it front is

got how is to hit has or becomes don't then the we'll talking what break do and flying. is spring peak to that and first peak I'm he trying the try about for we'll Mike here, he can be And what quarter, miss the on point. the you, two now don't We chances hit And honest many with we we're a know we going hire, part know at In people judgment much to our to front-load. yet. about how question

the for try to we'll peak say June. then flying And hit

And so how yet. don't up we will it just know ramp

to going think visibility to next continue we'll will about date. hit we more much over still this the the a have we're I Xth get judgment February make But days. whether even XX to

you I number. want know So I think, a

control. in support do to assuming control that to of do. of to until returning do in control the do what manageable. in that and we messy -- can FAA that I we make don't can we on all waste sure are we're service. this it trying what we We're think we our get return be honest what get money something truth, That's and basically here is to don't is will more We're not a our back total just and that we're until point. to at we is not Boeing But there, service not path

Katie O'Brien

the question. nature the any you comments that there. of non-aircraft on again for CapEx, Just the apologize to for maybe short-term then Tammy And thank And time. just all

Tammy Romo

do myself not I'm have you CapEx just those aircraft in more one sure. come on times all the next with obvious the all have to precision is Boeing. non-CapEx the expecting but year up plan around and damages $XXX I more is for it that as we we and help many so -- roughly XXXX Yes, up for comment can't on next and back yes wrapped on year. we give the and once range departure our are we'll And add the and what call just And discussions million that because telling ongoing reasons we're doing we've a said significant from obviously

Katie O'Brien

Thank you.

Operator

Credit time with from last We Joe question. more ahead. for have Suisse. Please one go take Caiado our question We'll

Joe Caiado

that. that are corporate Tom to pipe revenue other like for summer travel any ready great good XXXX. primetime It that with us of like share sounds might getting and that Tom, Thanks for detail. today? Gary walked in for revenue are initiative that have everyone. time. Appreciate you these primetime you afternoon, Hey, some for through for ready the there in the you've new teased initiatives getting with XXXX care us initiatives the Are

Gary Kelly

no, today. not Well,

is GDS lots through is the pipe for initiative we for always think big on I rich -- a it. take work the there pretty There a ones is you and right XXXX. rich of pipeline is the -- revenue pretty now there – going in

of I such to out. going sequence excited in it pace terms are pretty we're other I about all -- So wish it I'm a way one the foundation. builds the technology but These of in kind upon could are they

going one time of So there they but us. adds and piece that that have a it's then very put to process big follows but great very have in. to really for going a not -- words you that GDS kind And I'm we to all we're just are throw today. talk just subsequent foundational not pipeline think it's And that these we I is about

Joe Caiado

Okay.

Gary Kelly

point. interesting is is year that's return for lot -- the that's to is on what's a at of what other going next sideline The capacity thing us there some is

we've back think what that I just clear not out. so in we're to took And made put we going

So an about there the optimize opportunity to is answer up there Tom Hawaii. to and earlier question

what we're is with development flying. think going don't I Tom, back that much year to add next there

for We've next much it fact new network. a It's wouldn't you is returns I part sounds it the some too revenue adding out. quickly BWI, all the should the Houston think what taken boring idea. to to strategy that that's is adding to ,it our adding and to great I reemphasize sort but Denver, it's generate to and not -- strong but that's perhaps of year discount we've what is is taken capacity of

we're produces a product that but about reoptimize to it and that. to way it going trying in do network we're Now forced we're superior to really that I'm a excited

very for presence out Southwest So game are one-stop on O&D haul and play of get on quarter good see longer all whether emphasis basis. retaining and short-haul the and how markets we'll I'm on pretty but out -- just have the that. which markets to excited I'm a and maybe about the turns that a emphasis still

Joe Caiado

to And going going follow-up with your service, with are maybe return those clarification guidance when associated to very you incremental you cost them them both. service Tammy, include for quick and or Okay, adjust in to a The CASM-Ex you are that out? of the provide XXXX exclude sort return the really. thank -- great do associated to explicitly just question you

Tammy Romo

that. include would We

Joe Caiado

Okay, got it. Thanks, everyone.

Gary Kelly

as of if And questions feel great. call. Okay the to analyst that a Well wraps any follow-up you me always our portion give have up ring. free

So thank you all for joining.

Operator

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

Linda Rutherford

our Chad. up. queue on can Chad to them started give instructions with just to today and our Q&A call media we if session. would welcome the of and to go members you, Thank I ahead like how get you'll

Operator

Certainly. [Operator very you Instructions] much. Thank

Wall Alison Sider The Our first go question Journal. will come Please with from Street ahead.

Alison Sider

much. Hi. Thanks so

sounds the like this more described of kicking at Just as tires ongoing kind process that to part the review bit in diversification and quickly you about review? what the and be past. a of ask formal the you've looking kind this fleet will of little a that and in of Is metrics right factors

Gary Kelly

Alison, I'd yes and say no.

type. source that That a that. prejudge know with The looking than I having do literal the debate the ever ever feel are what And don't kind intensity. of will the vendor different one obligated just it's fleet to focused it I of sole terms In is, strategically at wisdom don't I only answer we airplane, that we've we different. different -- no to to of we've want done. and thing on that is

they are They questions. different are two -- but

may discover it's and versa, a say, better to we'd it but type, love just may doubt we without operationally. find having look of can necessity vice airplanes economically we and to but that be And at strategic You operationally that we feasible. have discover, may may even it, I when have two it, fleet separate and two economically the we

will So need be of all to thought that through.

time. topic. it the not made way, on again, we'll mainly an a the and at that -- by a working right it that but addresses just with and study I've we've had agrees clear, about our that it's posted far question issue. we and is question right to next that said on feel we it. of We've make don't are deadline the is and thinking clear We're that year, it It with Board I questions But not the so not now. obvious

involved and And focused amount with the there's of of up comes meantime that's can when tremendous running is you airline the have Boeing two the MAX getting things tell to focus. our on service. return work back. We in from with it That a and listening, uncertainty settling we're the as

that as not this So as these news. I make at look at later. What priority right tried that question morning. would new that. we'll in months that said our point maintain That's the to a would take ago that we at time clear we've things we and look And

Alison Sider

it. Got

investigations if was at focus issues regulators. And you. Thank ask he the Boeing DOJ Okay. correctional MCAS more, for he or one MAX Forkner of MAX him in some his Do one misled have developing FAA those working the from and some suggesting that with at messages now of the about is messages may and I unintentionally you when role your concerns can employees, issues with have any at or detected Southwest? or is he Mark concerns

Gary Kelly

his Southwest clearly those issues Well, employment. to are unrelated

-- that course. so, will to have its And that of all investigation run

it as so has And far I with to nothing am aware, at employment his do, Southwest. as

a a fine is all by for does accounts and fine very he So man us. job

Alison Sider

Okay, thanks.

Operator

from with comes Please question Reuters. go next Tracy Rucinski The ahead.

Tracy Rucinski

what telling aircraft for research Hi. playing are into MAX. extent at I putting about you internal into wondering, sentiment X what your to was February that network? willingness is the bookings customers' fly to your your back the and planning And

Gary Kelly

good nearly take very, I'll this to so challenge question. the very Okay. question. obviously. are [ph], every This media Obviously that's glad a something that is is consumers day, be getting It's aware so

natural. service it some do I be in there say days return the to aircraft think what uneasiness, early very expect is we to is the

it's that nature given the expect natural You of the situation.

media. has been intention Just on the much focused by how

research difference we've finding is Having in of so you has very been come very has is every little -- this there hearing said March, we're thing though that rolling originally will research that what today. what frequently, -- if happened versus bands doing and we're

is we hearing are So what this.

they Southwest safe and trust of have confidence flight. in strong They us, one. being to has Southwest line very, safer a reputation number line of very

a We're also been but very our learning, aircraft also interesting are though customers not based very to do an has There travelers on travelers not That's saying who minority, who aircraft for when their majority three to and six some have for the be type. of consistent. just that behavior fly. MAX they looking months but flying they And they'll change which a are expect are they is consistent a may customers, a hearing different or months is it will saying minority. avoid month try that to --

book based plan pretty you and away that standpoint insert understanding, listening But a hearing how terms to you to do have into what on do we’re from you financially out we customers, have may a what our in figure from good phenomena. business begin we like feel to of

customers the working still to and that pretty we customers we're about core our good but they that. confident are So we through are will sensing -- as are loyal that really come feel very Southwest and back,

Tracy Rucinski

bit terms? of on about us when versus a talk and that can difference give you today? that give sense you originally said Can the little looks little color us there Can more you what you in a you like from minority, much isn't percentage --

Gary Kelly

sure all it's in but facts I think of majority the Well, majority, actually. have a head, specific I my super think kind I'm I the not

not issue going so And me. I'm for that a you but my is number, saying. a not or to it going not is I'm precise super change majority to an give This bigger flying behaviors.

and the 'XXs think, 'XXs, I it's in very high significant.

by minorities give justice to fact So, I'm almost feel little XX-XX. to it trying we going -- good. is a do the to not minority. Its you it's. all a But opposed And to real

Our everyone very feel easy aren't -- they like else. customers just

to other back this And They want really customers' thing survey mentioned in when say, to the to but have that, is going our southwest? do see do note but sure you into this aircraft maybe the confidence fly. to or to may They they want we repeat the trust bring have service. way Tom be we're

quite The competitors, than is higher extremely and frankly. trust our high factor

So, address this. all the I suggests done all research time we've that think, that this of -- they will

performs comes airplane the well. service. into It So back

for deselect those questions XX I it for not won't fly well, people most for or it I it by flying might six months. think the answer I And who saying, months, fly

that history supports, and judgment would and the that say we will our think, be supports, And research our so, I that, feel short-lived.

Tom Nealon

will ability fact little what what you have aircraft do that kind validate, flying. customers or all those be that the all checking comment the higher be the One Gary's and there it's in on, MAX And just -- aircraft see and a news a going like what this less to propensity helps our was think stuff that single-digits. they of to last might than given are

less X%. than actually it's So

on So, I we as just don't think people it the are being are really in as industry. focused

itself care I -- think is I will take of right. to this think, going this

Gary Kelly

schedule in Xth. the In we're nothing in taking competitors, bookings there words our -- for see abnormal MAX -- now. seeing no And of It's away. schedule, book no other our that's as we're February is the we

Operator

that At go USA this Dawn from the is The we with question time, that we And Gilbertson ahead. will take Today. Please have. last

Dawn Gilbertson

morning, questions Good Two Hi. everyone. unrelated. Good afternoon.

us Tammy where The the you in give first on the can negotiations or for on MAX, there Gary don't update timetable recovering you know or for there somebody, Boeing, are damages. is an with I any

might update And and second EarlyBird with you. upgraded changes fees? wondering us question year-to-date to Thank be there to any do has you considering I'm revenue my give you if whether fees. boarding, on can the an and

Gary Kelly

she is The She Tammy for second a got with lead -- is and she Boeing. leading couple Well, working but of is are leading us question. going the to negotiations on together on Mike Tammy work working -- she's your to has it.

I'm that, on impatient up. that to for I'm yeah, anxious get wrapped And

So that ours no, give mine. up And I can't timeline quickly. objective of it's a say, than I major to -- other of ramped you a want

Tammy Romo

in which of as numbers about And quarter. on the annualizing the that be maybe think I going We fourth would helpful EarlyBird, strong you have forward. our very EarlyBird had quarter, kind fourth performance

was in our And the up $XXX both about -- quarter significantly XX%. from fourth alone our upgraded And was prior was up year. third quarter was And quarter third that probably about million. the our million $XXX million, $XX boarding

well respect So, over with we're running million on $XXX to EarlyBird.

product our a and tremendous success been So, -- it's it's been popular customers. a for obviously very

Dawn Gilbertson

Thank you.

Operator

you. Thank

Tammy Romo

it, just year-to-date us a for was a year-to-date. It you, took $XXX I number minute million have pull to

Dawn Gilbertson

For of both EarlyBird those? or

Tammy Romo

It's EarlyBird. for

Dawn Gilbertson

Thanks Okay. very much.

Operator

any back Rutherford, remarks. turn to our conference All like I for question-and-answer session. to would over the right, this closing Ms. concludes

Linda Rutherford

you Thank much. very

in all you If contact you you. online communications group send or XXX-XXX-XXXX or www.swamedia.com. Thank can inquiries, can you our our through at inquires any question other have newsroom

Operator

for you presentation. Thank concluded. now attending has conference today's The

You may now your lines. disconnect

Southwest Airlines (LUV) 24 Oct 192019 Q3 Earnings call transcript