Southwest Airlines (LUV) 23 Jul 212021 Q2 Earnings call transcript

Company Profile

Participants

Ryan Martinez	Managing Director, Investor Relations
Gary Kelly	Chairman and Chief Executive Officer
Bob Jordan	Executive Vice President and Incoming Chief Executive Officer
Tammy Romo	Executive Vice President and Chief Financial Officer
Tom Nealon	President
Mike Van de Ven	Chief Operating Officer
Andrew Watterson	Executive Vice President and Chief Commercial Officer
Linda Rutherford	Senior Vice President and Chief Communications Officer
Hunter Keay	Wolfe Research
Ravi Shanker	Morgan Stanley
Stephen Trent	Citi
Duane Pfennigwerth	Evercore ISI
Catherine O’Brien	Goldman Sachs
Savi Syth	Raymond James
Helane Becker	Cowen
Alison Sider	Wall Street Journal
Tracy Rucinski	Reuters
Leslie Josephs	CNBC
David Koenig	The Associated Press
David Slotnick	The Points Guy
Dawn Gilbertson	USA Today
Mary Schlangenstein	Bloomberg News

Call transcript

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Operator

Good day and welcome to the Southwest Airlines Second Quarter 2021 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. [Operator Instructions] At this time, I would like to turn the call over to Mr. Ryan Martinez, Managing Director of Investor Relations. sir. ahead, go Please

Ryan Martinez

you CEO, and a Board all some moment, de open Q&A. Vice and Chief Executive Kelly; and Executive Chad and our today. brief joining Operating Nealon; In Ven. and CFO, Tammy Officer, Chairman Incoming and then And for Vice Bob up Van CEO, just we it hear of thank you, Gary from the for you Tom Mike us Jordan; remarks will President Thank will President Romo; share President,

We us also Commercial Watterson, President executives have a few Chief other Executive for senior with Officer. and Andrew Q&A, including Vice

We will reference from And our had results, and several and are performance our excluded on make actual our purposes we which will special results we results items our we our also in non-GAAP substantially which first expectations. based current could quarter trends expectations these future remarks. statements forward-looking non-GAAP in of differ those for today, from

press before we our helpful all information morning topics an trends. and of that lot see information and a our our I cautionary please results both you more event to for get release want planning so And about and and on more are will for started, in December out information that. let investor send we So, soon, website statement know our tuned this from I stay

So, to over Gary, you.

Gary Kelly

all for for Thank you, us you call. morning, Ryan joining thank good second and quarter and our everybody earnings

on from in capacity turnaround losses quarter XX%. first our previous quarters dollar four at second We and that levels of are and bump the obviously doubled nearly of very in was quarter our from the a business delighted revenues billion the

billion better excess stronger that’s been of all $XX and credit, in XX and than of over billion well $XX.X margins much ago, to better debt. plus course of forecasting were line of $X and just flowed Yesterday’s cash. was our had through revenues cash Our of that days we billion

than bookings quarter of So, a better and Delta prepared we are way the the whole, our the manage if through second revenue and trends well even than affects business. better as our to very our muddle month while certainly and June variant are

we very and impact in detecting any far, strong third so are bookings quarter. again the revenue all, at And trends not

even completely So struggle the with down of with profitability in right still outlook it’s very revenue, now, I The pleased has of of their pandemic not XXXX, up, it’s and and bad and to all combined, course very manage hard very difficult. a demand in more us it if challenge much am we very to especially is necessary. work. necessary adjust will be, want and I when always weather once but This June. to I thank June had it not very again am where so must rest and but to we the and everybody’s of here still in of the in this are summer right heroic Normal the business get for technology July a that, world I point, quarter. issues that July, long and for continue month side been we employees upside pleased will confident Things our course as better turned our improve to made our

going sustain is with high point-to-point our maintain quality focus a next attendant then on-time our forward. immediate fare low revenue focus and the we have utilization that airline given high very profitability our June restoring on to are traditional efficiencies achieved recovery, running obviously, model. And business that here our our So, and is stability in gradually

turn upon desire new And route depend the pre-pandemic may travel clearly, to the state restoration deliveries, with levels. the resume Next in to year, network our pandemic. the we will of upon needed restore network depend demand, aircraft to which plan as

worst earnings our with retire accretive the oldest we which aircraft, the and trade-out will will to be early growth with So case, MAX. our reduce

the So, any we of are in much very years. couple well positioned and next very manage to well here scenario prepared pretty

to year and we our are then X I intensive stabilized terrific. on well. actually come congratulate of on busy yet, on a and unit. been So, going he February plan Jordan. The to back improved want but the less a comment spend of is Bob job. very to next clearly, underway. can things terrific that, at team very to CEO going I transition finally, now in to And they normal is I is may welcome that He but reception it’s hang proud am our are and has we will and He and be did aren’t far managing have and anyway surviving where care work support next and point very, do Bob going much And Bob. so around work time the well can. Very

me just it to let Bob, that, turn with So over you.

Bob Jordan

two along chance orderly you working employees June of visit XX, already Since continue ensure the and to been have of as Hey, mentor thank in to Southwest of It’s three has Relations I a just beginning as super good to opportunities glad next as remarks. had you I with be talk the a over months you I begin attend as to serve Gary Many I to looking you transition will that and just Tom the very smooth am very And for to Investor be and with am February. the one. serve us, are forward just really And Executive announcement next with Gary. the Alright, Mike, Gary around many good few to morning CEO more am brief going hard reconnecting said, and activities. I hundreds But I I of today and for friend company. that excited Chair. few make on everybody. the with my know – to and Gary our will over am am decades. the the

and I for just with spirit, our them. am am heart there. amazed As in an our leadership and our got focused enthusiasm, about our efforts here the each the other and continuing day And at we several vision as their XXXX how to energized also we post-pandemic and through will their strategy to example, Southwest. to our for strategy spend our with are planning very as wonderful at And for many the where – by part with on next yesterday the are I being I the and was Atlanta be headed. as work of am recovery. and each many, team lead I I evaluate continue we us we customers, work by year start develop of on to ahead been just we the that opportunities I purpose pandemic purposeful I have in very And environment their confident plan as years. here am we

Our strategy sound. is

point-to-point growth worth We We front network enjoyed that decade’s airline attractive have the the most years and terrific being for at of are a and industry. and have opportunities strength have to a Boeing the airline us in of now ourself unparalleled robust we in service growth XX nation’s now a for XXX. been business least with success our work enduring we the place prides low-cost low-fare people our great customer model That have in and employees.

remained to brand year fees no fees. year and transparency really with high customer and rankings change continues and Our bag after our no commitment

We are committed to that.

focus, the be one and have a diversity to as and in environmental experience opportunities in the just enhancing and to example that workplace continue We commitments our sustainability. pipeline along leadership will to both the customer with and

maintaining We balance will sheet. position strong remain grade focused our financial and investment on our

our and and/or As performance. always, financial we operational will commercial balance our reliability flexibility opportunities,

want our continue for so customers. We itineraries it be we and our we decades be know opportunities create and That shareholders. works for returns and has and significant our well Southwest new want I formula to us what security expect for come. growth decades to for job to employees. value for that will You worked for for And want

that basis. And on daily ready at future people I to lead Southwest, Southwest that single are for and a we serve day have vision as future. to say, I purpose I to aligned bench terrific our on Airlines. a But life that, the just very them leaders very want our every am of to the And turn our all, team, a honored you, support with and it Tammy. above bring them to are it’s all We will deep and of to over here

Tammy Romo

basis, quarter, financial per and hello everyone. color our of a provide you, on $X.XX On outlook. $XXX overall million results we and Bob profit I overview diluted share. generated a or a second quick our Thank some GAAP in will

driver benefits primary that GAAP the portion the of proceeds was a offset $XXX the to In for expenses. revenue trends, addition improving million salaries, of our profit sizable and wages of PSP quarter

usual PSP temporary was non-GAAP benefit special net loss diluted our this $XXX or share. per $X.XX a Excluding loss million, our and items, hedge-related

within Second performance seat guidance quarter ranges. second overall costs most our operating in all with revenues, operating our pleased fuel were I non-fuel quarter. and miles recent costs, And available am financial

results forward. by lot that cost to cost a profits color expected We the as that both agenda release amazing and represent to pandemic first proud negative quarter. are when With where such and the after estimated best continue reflective industry us as results, this second press quarter strong and expected to several all provided impact the third regarding not business is and who recovery the which flow as expenses passenger and and moving more business. profit we a appears maintenance to PSP be These revenue and though outperformed XXXX make employees benefits I cost average our we key compared have monthly ramp down XXXX of in and solid demand investment we indications, will This quarter are and everyday. performance, our milestone our need to advertising February of add are more These a June we since to hoped. passengers than our impact expense, of we as trips cost a and personnel-related just our up categories core again significant a and to third our generated the levels lower to such, XXXX. as as simply excluding marked And second is in trips pent-up daily technology we increase the trends. the trend summer resume categories in our began for proceeds, cash expense, each is normal soon are it XX% in had that are testament quarter flown industry a base expenses. And be, financial of

mindful are We of job inflationary well as as market pressures. tight the general

our $X per approximately normal workgroups, as wages we $XX and wage to cost beyond attract third salary, inflation we million to We quarter all in million retain across fourth additional minimum estimate the rate to annual million of $XX pressure rate Including expect be competitive increase quarter. to have now the wage talent. hourly and want in and hour to increases benefits to decision $XX wage

mindful activity of are little activity and restart where as industry up are and along on shortages said, as costs, continue our we We the That than up while of possible, with ramp after and needed. ramping nimble across adjust we flight travel immune. as year add also more not to we bottlenecks, efficiently will focus inconsistencies being a

minute. on basis. $XXX revenue quarters so the largely dependent hopeful line fourth and to pressures April. But which non-GAAP cost outlook cover bottom net additional the do on was our noted, again and to a outlook even over revenue GAAP back We current million in generate are our in will Tom we based our will a and better it on than And third be environment, income ability is third quarter with in

through X early growth it levels route months will forget ago are evolved We where construct was it was fleet the leisure to January from environment less the network evaluating continue to is With for different. travel and decisions most easy out we than being mindful have drastically that and flight and schedules they that what opportunities today, our efficient currently network pre-pandemic. capacity has XXXX,

our liquidity, hoped our minimizing had Over were building better than changes cost. that made and And burn we to year, revenue drastically network are producing evolving cutting the we are cash on and even areas. now past most the we focused the capacity we or hoped significant and capital raising focus and

sustainable be XXXX. the environment focused we focused to to we And our First, adequate resources operation. least levels with our this that, profitabilities, will high the begun at beyond the We a network cost We remainder managing producing have at year, but are in on planning deliver managing XXXX on current route process then the of reliable profile through with optimize closer need for margins to plan we of continue business very returns. and level. a in

share Although Southwest. had that specifics going any have most the XX can my perhaps year reaffirm we with I don’t you I flexibility, flexibility to we have at any tremendous into today, years in ever have nearly

with MAX XXXX. number a of flexibility cost book remaining with significant have our We in Boeing efficient options order

flexibility want have have XXXX. quickly to We aircraft fly network resume a requirements balance, terms modest and we investments we the in much capacity cash over how in deploy in strong and of in how where debt our non-aircraft discretion XXXX. to to And

is coming balance strength our flexibility have even aside And out with pandemic. financial core we of from So, people, biggest and sheet preparedness our this capital. our our

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

Tom Nealon

Well, Good you Okay. Tammy. thank everybody. morning,

second revenue see minute. in throughout a and with broad-based expectations, our network. the demand, yields improving demand much just we monthly our about I leisure saw in pleased very And talk also quarter quarter was business the are we improvement will performance which to line operating steady in and saw a across in we both While improvement also trends entire

as to than call, concentrated also from not traffic travel. but May was business levels across our from business June the fares just talk the keep was entire very we or quarter, well, line as in revenue, And were XXXX. which certain XXXX travel I with down revenues reported this were you it QX the business to improvement know, see. we saw saw am XXXX to down And So, was was in improvement business improving about on versus terrific XX% And as steady business really regions a much in expected. referring in XX%, that significant June higher XX% system, so in levels, and June’s actually just in passenger I leisure quarter. travel revenues improvement first we when our June’s in cities, mind passenger sequential we really down second June very managed that throughout

strength summer. to we continuing see third In numbers travel as And into continue said, performance trends, we of that June’s terms I leisure seeing quarter are July. traffic exceeded the XXXX strong leisure and throughout are

XXXX as higher demand the fares seen are July yields on have estimating trends business far. in we leisure that we improvements In traffic seeing both fact, are that And and so we and will trend travel to continued relative well. based also close-in in for

all of we in in of headwind So to and and a earnings that XXXX. estimating XX% that versus X that point this simply are versus to August due our calendar pushes August shift X September. is to last revenue In Day compared of July into improving introduced outlook we down our total, has year Labor the revenue XXXX also XX% outlook of XX% results release, down to August to an XX%

pleased shaping And nicely and by that also the booking adjust calendar curve fares the as month and we from for this consistent up the is August. expectations for you way, with are which way I month, for move shift, our are the we demand was our with the is leisure July, into up highest shaping think August. really when very demand

but clear, path improving. to the less respect with it’s business recovery Now, is travel, clearly also

every look seen month improvements consistent So, in and the QX, past X to if you over then sequential have back QX months. to we

companies steady to business a clear by very continuation weekly are and So that more the It’s we bookings. more improvements office. are returning are expecting we we what and are in seeing encouraged of also

we And seeing that that, directly. are activity. seeing travel more talking restrictions doubt, travel without but doing seeing with company are partners also our from are relaxed to is probably travel are we we are so frequently, by seeing hearing that. expect, beginning in are corporate And them, encouraged you altogether, which we terms we plenty also and with very would our surveys as actually our own are removed And we are we be management or what business of talking encouraged great we see. of You by them are we them are with to customers, what are

volumes are April, third but second showed in fares the to in do and business yields down in the quarter, expecting overall quarter expect both XXXX. sequential So, as and we versus in QX May be June both improvement were pressured and continue improvements we though well, will

will What that Gary as say tightens any window we trends today that currently I Delta variant is business, at from curve way seeing, impact is of was know, closer include what are are as improving our I by it’s naturally seen are encouraging. on though booking giving all And that will the the this doesn’t impact rather we in, the booking about I Delta and point, have will for very so the up. Our just say guidance any the so variant. outlook you which volumes now said, on mostly not reiterate we based

Just we ancillary more of had our highest And retail now credit And well member in our QX was XXXX the we as larger history June card were our was card double-digits and quarter. spend quarter Rewards Rapid our levels. on business, program did XXXX which new the the in nearly up QX another of is members And versus acquisition of terrific loyalty we see. second was co-brand saw and Rewards credit month program. a strong Rapid also it sales for in XXXX. program, actually than in the to beat Rapid co-brand program card pre-pandemic have two Chase or Reward in and as quick a QX both performance comment We than today great per

very you to very, performance the imagine, we with pleased can of be and continue So, card programs. our loyalty strength and as

EarlyBird, is to revenue we historic second ancillary which upgraded see expect as boarding levels. in extraordinarily Our as trends, what improve performed factors such the also to and quarter, well load

standard Just been this our phase big Travelport on as is and a Amadeus already a continue of and and quick comment we’ve and which us amount and This will GDS work, a you a It’s on on big know, this be it’s coming creates Monday. XX, deal initiatives, rollout accomplishment. industry implementation with to a works. the which Sabre for big complete July opportunity gone is does GDS live tremendous of live we our going

So, now array of our channel full a platform a Direct self-service channels, of a channel our we customers Swabiz a GDS have distribution it’s or gives which platform. choice, business or whether Connect/API

is So team without a business energized. product a up. They doubt, to our jazzed are They sell. pretty have pretty Southwest great

business, right in existing are business. barrier driving to tough channels which new have win us on as the a for platforms. new more the from now there standard And industry this opportunity well is the moving by customers is customers, we GDS to sell focused as are under-indexed removed, a We us lot for both and before way, of really a and big is that they

So, we are I think in a position. great

have We product. business a great

We great have value. a

all distribution Monday, channels. travel of As in will managed we the be

We have sales team. a great

all make we I the looking forward here. am going are So to to products

And Tammy past And as just XX network, perspective, a XX time. we XX wrap these to And this, expectations with stations new markets point, we pretty I also to curve to do it markets. give that began our before understand to have up stations frequencies comment ahead announced Just up, in have to seen, have point. are to the maturing the network within ago. we now meeting made And the our we over have expectations. one and of a soon And will it, know, wanted addition a just strong, again, get in that. you of you to And to either I And we quick this have very said, very our but will new that performing are bit also get have XX, talk at are am sure of we and I a about year, is meaningful very and some want second pleased for where expectations each airports. we to that them a And for have the as new the are XX Q&A. our while some are I restoring of development or on and of alluded service of period quite and we our all as They Tammy running. alluded the exceeding and months O&D pre-pandemic time in new as additions all many as or our this the objective develop. pandemic changes routes network into of at natural

Mainland XXX aircrafts. by with XX will nonstop over of really So Hawaii, our which of from in XX year, and end with the the our utilize at inter-island because And per XX and which XX represent suspended roughly day. day trips markets terms And pandemic, aircraft investments, nearly of of is aircraft. roughly airports plan, is the new the XXX the per Hawaii, trips we nearly to XX day they per to original utilizes new that culmination the additions recent trips U.S. are

and off the to and city meeting to right opportunities our substantial So paying amounts new both Hawaii committed of and decision. are we It investments was have aircraft expectations.

our optionality the tremendous of gives network, be process network amount investments, Boeing our Tammy alluded while through to to us that will allowing a us and all planned also planning that Our our restoration fund allows just which order of book we pursue in current to. of working us XXXX

it turn to you, I about very, to we think will talk well friend, are future. over And I very operation. the for Mike, am positioned going that that, So the with I my tell to

Mike Van de Ven

Tom From a to moderating from, say this first second an describe, I and managing pivotal us. operational We in quarter moved quarter the hi, would an is acceleration thanks, welcome, operation focused really the and Well, would I quarter. our for everyone. in perspective,

that’s months. June, about volumes to added with trips, that compare bag X our And increase. customer so those increase and would XXX They those March double XX% a far additional that. between X months, up If then XX% were surpassed daily just nearly we I and And you inside a everything And environment a that would seems take is monumental to and done really period have today. in that say it’s an increase environment in airport a short bit we of a adapting more time. just – is still time that

has from mix as know reported were pre-check a primarily so – TSA XX% customers compared down to travel Our leisure, as as over you been perspective our from June XXXX.

If you go out lines. there longer to the are hours them or airport have restaurants, lot reduced of levels, so staffing

to providers across third-party wheelchair And The airport is frequent. The able with tough second tremendously produced very just fact, shuttle the services everyday And proud to course, throughout are of they country, that’s one a for in demand. experiences been day. the are hotel really masks the warriors. required of operation. that, have environment call scale services Southwest of where I customer in the They travel continue And last are am a they all to solid our live quarter considering less employees. the and answer and

all performance second we carriers. all industry demand the of marketing we So pre-COVID. remained And Vegas complaint expanded that travel of bag accomplished lead the of year’s was Hawaii It results The that midst handling and line on-time the with increasing to from We continue XX.X% out IT quarterly in also our Angeles when quarter service we and XXXX system. and last really X through exceptional. best ratio launched cities. new an volume, to lowest new was right of our was low. in outside while our We We And customer delivering service. Los performance Hawaii launched XXXX the our the rolled service maintenance for existing Las customer to DOT Phoenix. that with

– our So just again, proud employees. just I very very, am of

our was quarter. month difficult June of the most Now,

concerns followed previous volume technology in across key April of Our weaker those moving And network. of XX.X% extreme significant June network increase, customers to entire some that even and And customer combination with and a weather delays delays caused to OTP dropped into metrics. for will as Mid-month, that to forward. we And operational introduced solid better by years availability did than all off start. as it June. into the was cancellations and well and do our we the our that impacted a our challenges issues, run outperformed we our need crew May and

the is thus airport As tempo still the and is concern is But the reflected a as the July, in a of entire we in the of overall of that’s weather bit OTP those moved industry July. environment. through far industry things feeling overall impact

our operational adequate require planning use facilities from continually to We June our improve performance. reliability of our expect that schedules. We to an models and level run airplanes people and

As aligned the on until we second into and we track those roughly all entered were had quarter, mid-June. we resources

so couple And there a forward. move for are of focus areas the operation as we

re-accommodate of are plus still out us options is and we translate cities load going and customers fewer which means are XX% delays longer us XXXX, most to our a we did we while volumes fewer flights re-accommodation large up operation the have factors and demand our into day. operating ramping XX or cancellations, are in there passenger of for June in fewer and have the and ways for very than higher when First, strong we days

So we longer a operating for cities cover several premium are our to adding staffing to need resources in of the additional pay. and reduce have days large those

shifts our just We their have pay pay scheduled open for hour offering pickup time-off to increased we on to source positions. And better the for starting an our applicants premium $XX meantime. those in are employees to minimum

for add be as position messy have bit it support we that training The are second recurrent to we year It those pilots that, They to have it. It our that time-off we can I we can training focused efforts each pickup thing But messy And as customers from returning feels employees as a activity me we And up extended and in the for our with throttled other. network on surprise heroically. hearts as needs down momentum. instructors, and through as to set have Ryan, so where is and and continue our just our flights bit those for great – flight proud so flying you. a was it’s things add XXXX. ensure and can sourcing think navigated throughout over everyday. thankful doesn’t operating accelerating needs a for then are our that good finally really turn for we we am to ourselves back our the it will this their I I well

Ryan Martinez

you how questions. Thank for you, Mike. to to turn on over instructions give it queue analyst to Chad, we up will

Operator

you. ahead. question Keay Instructions] come [Operator Hunter Thank with Research. the go first Please And Wolfe from will

Hunter Keay

everybody. for on. getting Hey, me Thanks

I for Tammy not think sure. I am there a is probably but couple

right when do one to on back XXXX is first average you now utilization daily you So levels? getting plan where are on and

Tammy Romo

I can Yes, that. take Yes.

per into roughly. we So getting just our back, currently working hours we utilization is – around XXXX. are of are through schedule look in our as XX day And we terms

of demand of based we more just either. terribly and through continue levels in took lot Obviously, on not hoping we are will quickly off too So to a XXXX, you how demand get to that are Tom we returning. function back see largely corporate a line be but in far with as

Gary Kelly

in storage as what, airplanes We still well. XX have

Tammy Romo

Yes, absolutely.

Gary Kelly

is flight what’s there, try you Mike total schedules, the scheduled, support correlating to fleet, making obviously to to sure look just resources the describing, out in we with addition additional future what activity. at we still have in slush which wring will have was if So with Hunter, we proper the some which

Hunter Keay

the vein then going on I And of sort XX you. continue to got know the that, you you I said same to are evaluate in options.

to you not you bar get or is meaning for worse that exercise probably a it it’s benefit exercise highlighted, those, high think the for to ESG that lot those options? fair very whether is fair would to things Is assume way it? COVID-related default whatever, about not Given the to you a

Tammy Romo

think absolutely it’s that I fair.

older And is pointed the have to cash. case very book. can balance -XXX. Boeing the on with As there continue a we if to airline sheet us strong efficient a those can And way. have grow compelling business are very we we obviously, Obviously, not, we a strong out, here, for hoping we order either ample cost retire it’s ROI but – options

assumption. fair I think a is So, that

Hunter Keay

Thank you.

Operator

And Shanker ahead. the be question go Ravi will next with Stanley. Morgan Please from

Ravi Shanker

think up sort that’s a Good just Maybe was XX% said nice a you. months before of it down from that. I you June on of where was Thank pretty question corporate, that afternoon, couple your step corporate and the everyone.

I think peers legacy are bit some of the than a down less little that.

if of GDS given that complete Thanks. you the I kind trending normal see of that’s and you all now am your months, wondering mix your over how next integration? that just of So with kind do several business are given

Tom Nealon

to of point I Well, report. your probably that give so I XX% it, GDS. carriers for very are as some Tom. XX% something of with call a business think roughly, opportunity they from our opportunity to similar lot And are to more travelers lot I hearing the But seeing revenues business question, we depth a is or to is we is answer actually reading of within travel. and just I the this have other current so by the kind more we or generated your drive this have the our accounts What seeing we gets context passengers and am think to what you us, are think

this expectation X So, up I our bookings that down improvement will. or about We if will was year in Southwest I call, seeing X see of Southwest said very Ryan, points end. travel over business business we – X that past our you we be begin are months. first to or But month the think drive by you the business was XX% Southwest numbers, we each will quarter consistently, that said, guess about business

we where that. beat kind now, just right are you of would extrapolate we If

this would going. I the be and probably end that by quarter by at think of of our end XX% expectation keep things the year, assuming beat the certainly

penetration is much and again, in quarter under-indexed see accounts. are implementations I the and with am with not, these not the I or end XX% feel big are to if competitors going we going the So XX% just to think sure significantly you. by path behind GDS line pretty more I the we the like XX% down on towards with honest market. our of in from we But down more be down to

for opportunity an that’s So us.

Gary Kelly

to say proxy. using anything we to me opinion, than just going different are a it’s as probably say anything. not am for I that unnecessary So which my the said, what is corporate own we Tom you But to accounts so know offer

think And are our suggest conservative And at But that this far inputs other number. flyer so I what are or it and smaller beyond our credits look that, total just business frequent have proxy. there we travel is one sole assume is a that they that would could companies, maybe you. proprietors

So, I agree with Tom.

any largest people the airline. country. in other are than We carry We airline the more

travelers we other think more airline. than I any carry business

we some when of else. those So, I to down people, that for hear just numbers with frequent credits hard out less hear can’t than believe it But flight indication. same flyers, that we our XX%, sure what – you travel But and surveying be are purpose the find can’t far inconsistent admittedly, are we we their is. which is anybody

a but personal be We information just more out businessperson imagine with else are step can’t it’s of industry. who anybody we than I don’t you could in for know, probably it course, reasons. that Of wanted, is the traveling but

Ravi Shanker

to what that Thank industry of No, sure back makes there, of year? are the lot taking Tammy, can just a out that’s kind of some virtually of for kind some sense. hitting fully color that and for given about a of initiatives half every are and maybe the labor staffed talk then that of you ground make follow-up seeing every you. you are Southwest on and guys maybe great company that the guys is you the issues Maybe

Tammy Romo

chime of Yes. we to may But couple so there in in – yes, things. want Mike chime and as I are will well.

be we our think salaries certainly As so wage are system, the I already helpful. mentioned, that will across increasing minimum I there,

We are quarter. the – appropriately and just are to into kind staffed actually back, of step coming we

are efforts the voluntary our are by And our then boost quarter, of that recall were on we will there by of end also we we all those end will where mentioned, of as there. employees certainly the employees the we recalled and locations year. the some wanting our continue hiring to have third we Now, leave programs and

the hiring front. we on Southwest America, so employers there the best issues known don’t in anticipate of as one So, is any

those – will the but to that we those employees will we you that up things ramp decisions, we add hire that capacity as are wanted we to make we to anything the need, So, that? of are few be here, able doing. Mike

Mike Van de Ven

I staffed. across don’t appropriately much. Yes. are have would say we the I No, network, that

we We more where need pockets have got people.

have pockets we people. where many too got have We

we that that we is in where to can do short. are temporarily and we the of things One are great can doing go fill people incent we

And our mentioned, have mentioned, our pay are we there. that like of really recruiting pay in as up efforts we a large aggressive very had to good ramp increase, And we So we our doing Tammy we on. locations be will people as get handful And large where our as contracts locations. have Tammy feel with packages minimum with we network. able $XX out union the those going we

Gary Kelly

just we the game. into back have And gotten

[indiscernible]. can’t but It and So, hire I don’t recruit know when that Mike, it is challenging. be you trying to more started

will is that any sensing And there. are to and But I an Mike hour, with minimum flight we not am worried to attendants, certainly moved – we So up but we agree $XX help. acknowledge pilots, I have problem about it, are which that. Tammy going the

our I of pool as competition potential employees that there hiring ground think it’s more just where is just operations or of in a lot well.

Mike Van de Ven

that It’s entire or through. navigate makes to our customers find the people difficult maid just environment a staffing it work industry. van padding whether to drivers clean everything our rooms hotel challenges, of its services the too, problems. interesting, for to It’s ourselves employees It’s And around times industry, we lot the restaurants. that at or or

Ravi Shanker

Very good. Thank you.

Operator

go from Citi. The next question will come from ahead. Please Stephen Trent

Stephen Trent

everybody my taking and afternoon thanks good for question. Hi,

not but any terms one very whether, in post facilitating up not might from whether the pandemic, quick sense customer IT guys, you sense cybersecurity. but need its step think to me. considering just a of also interface, you Any Just spend only industry

don’t have your thoughts. two I Southeast months You just a the tell happen today that that’s know website I to love would I few if had ago, be your three true, to or people but down. me hear this incident. pipeline

Tom Nealon

Tom. take that will guess I one. This is I Well,

but I think the the that’s trying risk, struggling I where where to It for I certainly target, you in competitors a it think dollars, are elements all how is what company out I think well. not against every just is focus. do real its exposed, is cybersecurity that – sure we of me struggling, source defend for is moving – invest kind is most biggest to figure that. are role. And know am my of but it’s a as I airlines, our

And lot spending cybersecurity. a on we are so of time

that’s that the think primary I the think I – thing.

it’s for business investment think, significant just very very own real thing, investment big that the is I I this everyone their I investing spend every is But But that strategy requirements common that. has that the probably area so that, it’s a I think technology and technology-dependent is is think so that’s own I network-dependent network think and think and more beyond cybersecurity important, of of an that set their in. and is it’s hard. company

Gary Kelly

on and really of of, cyber just an that a But view it am as technology down and need But comment do. are to stating aware suggest the words, when pit is we stealing obvious. drawer the his company. sort ourselves talking is I a top pile comes we much bottomless to one comes speak that need kind how but not trying to of everyone us. we I and industry industry, But as our risk to Tom’s very for for does absolutely, it am Just when And obviously, to it’s it to probably actually, be technology-dependent technology. to the does

We have excellent an team.

And have our more technology with enabled We thing effort. it’s us pandemic the management. one a within lot is that And lot the dollars efficient a has for for well. ample and done allocated as that it’s made investment us workforce

make than be like can we are to high better that are at I you ever Southwest, sure continue and we that going a feel to strategic focus. So,

Tom Nealon

Gary, service if an have did and mind, ourselves just we a just company airline an don’t outage. since as said view company, we and but you you technology

let a tell question it feel for we or happened. than how and on rather not what you think wait that So, I about me address,

a outage, So clear, impactful. be really which technology just have to was did pretty we

we hindered in Mike way. significant the And a just... In in yes, really very fact, operation

Mike Van de Ven

in Back June.

Tom Nealon

simple not just it know it’s a was It something mistake. things it level it. or investment that, first was especially to It got not June. an for We a really guys just want And that. about up cybersecurity that issue. of with issue and not was just if have you you are was human going to was a we a just error. situation. And in it you architecture of we was that. rough made if be feel be better issue. It engineering was will, dealing that failure or was than very made hardware Yes, are And not a human so can’t clogged terrible technology, error. I dependent issue. It not And human like upon structural technology, all, failure. But back it a and mistake you failure was a a But a mistakes this

we the just So, question I was out to asked. wanted better. will that before get do But

Bob Jordan

investment ‘XX just is at I would they example win-win. an like IT. and for for I relatively of just a are beyond second spend. kind it of one typically this tend to that items And low Bob, just is mentioned Stephen, They things on because to be my focus of you because – list look in chime experience, would customer

to to wait because mobile more lines for in making devices. the into because because on we via can just at are can interruptions hands line, period. handle it those long Those when be operations, – I will things lives, will especially to without look more phone them and at able good example. good employees mobile that would call their love and our that customers to on employees the CS&S they our from handling more and potentially more it’s an it like a the have all that just customers and things good and transactions put more and look us our irregular transactions in expect choices it’s long You decisions we around standing And as moves handle And things time or customers the for then ability the of way shorter manage give call wonderful self-service. they it’s because way, a our terrific more a devices, much

So, to it even look terrific take I continue that is an a of would our experience is just how at to customer like level. something can to focus we greater

Stephen Trent

That was everybody. a super helpful. Thanks very much

Operator

Duane question be ahead. Evercore from ISI. Pfennigwerth with Please next The will go

Duane Pfennigwerth

this and relative analyst styles for any priorities, Gary two time, Bob, for long Question sense together differences strengths? can But and leadership time. in appreciate worked or indifferences. to have all the I intended for a am but questions previous or have differences you for you highlight point. pesky Thanks you a maybe you could at Hi. us I sure Bob not if give some

Gary Kelly

different am and joined longhorn. the it than that is biggest jobs. And has years long he executive been this a of has the Bob and had for has of an in that I long hip. is number aggie mentioned a a we Bob of But remarks XX time. part He his think time. a difference at of I that, long, a sort are not he other part been is it

to into same a he a have up you been our not is his that selfishly, And So, – and that coming get think and we be of with execution. the know careful know part same has to what huge is change to vision wisdom change. to the the time, I should the defining all what empower him to and to need I the out at time, a I leader have way. task got here need to of part But been of and he of and what just has at purpose a and translating our strategy

do through to really have I I idea But Bob, have wasn’t good from need of I had He And need But because was time a that, thinking in what of you. Executive well, So, will me. more learn to that’s I a I a I Chair Herb lived for the “Okay, I someday.” fortunately, this And do for Kelleher. question that. it him. to do at good support necessarily teacher

Bob Jordan

And have on aggie/longhorn work leaders just day, decades about CEO, I we through two that no, team all the a preparing thing. – the It’s cannot here. think taken focusing But both Yes, of the team team, “next we but able a am I all couple and very our think to But and been the have developing are developing yourself. there. wonderful people. about of end yes, leaders, we things. generation” passionate decades, do I and at kidding. whole the got our you it the as of One, we It’s three leaders that, developing we of of

in and all to to And what do that Yes. set Southwest continue we what invested to change, XX but so me even do feel years. about have the to point I just like that as I In can Airlines that this XX of many and and because be very think can way it’s up Gary for similar more for in years decades, think we not years it’s at about same for that we do success way. others we I passion – mind the are able

addition in to that, front, styles very style I are, the our think On similar. again,

a and the are bad, little push I good difference example. the through there lot a sometimes, and go driver, underway of integration of We – probably assignments If probably very over a my which conversation love probably, get little and more a the can completion and do maybe been the the decisioning. I into as go be a have more is bringing team things, this collaborative. is We the years impatient am an way

benefit terms as So, have would we we sure of wise just of sometimes also in work But accomplished strategic we decisions course, driving plan. How approach our in being be can similar. here plan, getting plan and to particular, will. collaborative I slowing and – the on were a down, make things that as and we our in make very

Plans change though. focused on you – think as fleet. I the know, GDS modernizing we very things and like there are

and set set what things roll You set next about We to be to thoughtful and about of strategic team initiatives. you very you into again, want that the want be, with complete developing next those of things, of collaborative a our are.

next think of expectation about And so focused mentioned to part things as are things. I around what work, we am just an of that that will part this ‘XX planning, our upfront, set is I today. maybe of

to and customers and work that our with So us them maybe them the is terrific. experience customer engage with again expect produce

are delivered even be situation. just but employees lot of to Our terrific, they a in expect mobile things to over platforms, Iraq quick, resolve, easy

They thing. it off manage their for to want iPhone, Our of Southwest their with Airlines, easy employees to expect example. shifts work very the same be

so things. I on some And very be those of will focused

commitments. The I is and laid myself this diversity focus – whole our year. other focused and our out – very that both on of a again, team, next Gary am that and We some last

we on. diversity our in We in senior need have focus things particular leadership that to group. We, our

a talking that. about me lot likely will And hear so you

of lot a sustainability have our we mentioned, Tom focus in As commitments.

always And the always But were to and ago are plans and so They table others going sound years initiatives we in so make have do. are now change time. are on over they and right going The I XX what we shift. to Gary judgments. involved

the team. going are We develop to

and We with our are going people Airlines our customer to the Southwest experience. our stand make business operations model, great, our results our balancing with by that principles

we a the people. our business maybe approach we and think similarities I generally we a long-winded the in answer, are and so how have of And lot but problems –

Duane Pfennigwerth

of do what’s tightness solving – both. what with I transitory that’s just do follow-up view comment fixed? quick seeing permanent appreciate versus about that you on you. Thank the you versus or your labor perspective regions? a Can solutions how frontline ops. are availability prove Maybe be you you cost issue from if broad-based with think may respect you sort a of to transitory specific how sort And to ground

Bob Jordan

Mike, to on that? you want comment

Mike Van de Ven

labor see could are many the you there a You factors. and bet. Atlanta so in yesterday, mentioned Yes, and complicated hiring I I it’s there. firsthand complexity the because was – so question

shortages. you think are you a broad-based market things, are – in supply I with multiple So,

to have million think the at open might lot So, there I stat exit the point. the is just – with in went we folks open – open. U.S. And XX not here people I jobs X million have workforce I into or that are this the fill jobs we the think of that had pandemic it, I heard a enough

that signs everywhere. see all we So, the help wanted

in tougher. just So, that a are competing you market is

As applications are an example, than to. we we open are fewer for getting position used

a take to lot of going hiring. around just it’s So, focus the vigor on

to triage differences are critical would regional. the more of I how say positions. are Some they about

have critical than the places where to more we others. operation So, it’s

For a as ramp have are example, we there. press got example Denver an are really to on – there we full hire the on because needs

full – we plenty but of – we them have We a hire full of pipeline we get flight pilots trained. need pipeline press have because we to feel have like, instructors to a

coming the and get back ExTO, have just it workforce. to into them and We takes the time of train folks off

So, there needs hiring like capacity to capacity. rebuild our just our training

to focused broad-based to very – a want that’s I think you planning, in just school to job. short-term, I very way out about am where the return are really as more our does of this think and question, in through rebuilding, on The staffing through the be how just cannot and me, bringing plan folks training aircraft flexibility, probably your would workforce do teams fighting schedules issues schedule planning which we for a because think or I we you schedules. of starts And recruiting this biggest labor example, we that schedule, think pleased persist. back Do multiyear the planning, the be which slowly. a we against means issue put where and terms those think issue The your question a how against is, are to how going you terms a nimble being I about in teams have am three-month I thing workforce, about there a specific long difficult So, short-term are issue availability it’s being last tell the into folks to problem coming is we narrow we than going to this are the you a have we your we staff. into once will get how

so there it’s in in and staffing if will #X this. not our is place. And getting our – lot right is hiring is on is there of you, the getting focus focus XA, – I just a now, place tell it which

Gary Kelly

what there with. is going what the the I is effort and techniques described news am Bob, doing this. good sure don’t I we be? is Bob are to that it philosophy to mean the know is And that what But do double you hire per I are glean

Bob Jordan

double. least At

Gary Kelly

So add? how plan – do the next just all and that, schedule. you anything that’s so want in Bob But think money Mike, of I means to that’s addition and – what to you

Mike Van de Ven

want that’s could that I we much. would to me those cities what the ramp say we do. just say six for to operation, that are go to in and add I my would Not I there locations, could if fingers eight agents big locations snap big in go

a have I got great them. offer think we to package

to get And you, But are them, frustrations front background there very to checks. at There get driving that is be is to they are so – that. managing that on to I think the with when just out there of at through are be the we doing successful – people There airports, ramp. we in also airports. will transparent go have are

we so but into get to are that, with swing And the the kind of think I of and successful six it or have and might privileges. be package, benefit we to months that us those things. career compensation really things overcome will with take the travel So,

Gary Kelly

do. it and obviously Amazon, like we don’t to Mike, as have that’s – contrasted, near And require to they doesn’t the

Duane Pfennigwerth

Okay. Thank you.

Operator

Please O’Brien next Sachs. with Catherine The from go ahead. be question Goldman will

Catherine O’Brien

MAX Good a would not the much afternoon orders aircraft capacity spoke placed quarter. one It you which have everyone. last couple attractive so guys, for earlier the including to economics. some of discussions for Maybe fleet, also will based on I that off last couple about time. was for noted. years? look coming we asking deliveries pretty since the Thanks by ASMs of as should retirement, base of know ability to be we Thanks back any you just had since to XXXX like over grounding, But for by that incremental the we on produce the pandemic, am the incremental I these impacted return thinking your so next influenced how MAX and be color. service

Gary Kelly

– am I the are several here. thoughts I and room sure in think the there

well technology you plant that the the to talking and think like think facilities increase – company things company are volume. about I physical and I that, very is and prepared

we if grow, the are want to airplanes, you very are need need four of of airports, think to need we people. it, sort we money me, We Those – we and need big categories. kind about so we

to as you Boeing the I back – mentioned very, a got in the for that quarter, deal, very was huge am us. strategic have first pleased We all positioning I with that.

check. So

great I address around part, have is of it’s where sight two. line the And a airport not, we it, the think we to capacity for shape. country the in most number have that

that So, check one. I

I three was and with ago trying you right got have – months we share thought or We We introductory as than ago. I we now six my months have remarks, all to money more would in money.

our I think, the resources and I think I So, have is which XX what we been and down about will And sheet balance people last liquidity. the our feeling constraint. talking to be minutes, that, you really about good am are

hope that your it but answers I I up. So, just will open question,

Tom Nealon

I want the think the works. NPV stuff, constrained The the thing I thing assuming would people the take retire, question, back using because we customer by would better are aircraft, kind me to how of it way, in add to Tom. I and capacity. think can going you is want you add positive still this those to all that experience seems would we past terms we Hunter’s to – get And it Its a you of is retire. of Catherine, I piece have

a is So, right. stuck, fear and too us aircraft being I don’t there concern think or of taking much

our to good productive to to traffic ability So, But come business we keep at been retire, produce explain, the dependent point-to-point why. guess our are me that’s around shifted really I going our been retain have to what be past ASMs point-to-point of getting our executed when somewhat bit upon virtue of for let to our growing. changed I the begin philosophy am impacted and ability and ability the back, just and a How with the is not plenty has flexibility, network is does is ASMs same. largely network, principal pandemic. by environment. network, the But little year, it’s The the the composition of it’s

mix connecting call it, back historically. get to want the to pre-pandemic of direct XX-XX do versus we flights, So,

off a XX-XX I like don’t are little or We that. probably, bit skewed that’s know, something of Andrew,

So, that back. get we want to

traffic We from also short, get the our the rough more It to haul flying, now, mix And long short, long like the came XX-XX-XX, business medium, want it’s leisure to haul. create of those XX-XX-XX, as call business-driven And there. to short terms are right and because those We percent. back flights, wasn’t it, short-haul flights. medium need capacity.

So, as will see just kind that begin back, to the us reinstate business comes you of flying.

the are ability the improve just XXXs, does and there the if not show to have uses we capacity. productive fleet. of many again, continue up, to demand right, So, the many, capacity – the XXX, retire And

got or said So, Mike the positive. Tammy have said this, fact, really in flexibility this really I strong. we this have either on the or downside think upside is said the have we all we and It’s

Gary Kelly

it to I where the redeployment of think to recall. we have i.e., from to system, leisure the on reallocated back as is more route were checked in markets, the longer, you we all XXXX. redeployment short business-oriented go I XX% oriented. this, and me more call to our but That That’s try

But what somewhat wanted, describing. we by the network the in are XXXX, you providing scenario to in we we to were fleet. that on constrained think I because that that XXXX, were speaks other thing I So, close comment – the would

back as point, get it, thinking. as But this get is, all have we be to upon trying long able deliver. at to are people, will it’s we a And I like plus. of yes, as I opportunity. we to already all And got where demand think think we we dependent can this great are have we all the said, we so materializing And were

Catherine O’Brien

to that. in, just on color. more see type the revenue for If present pillar That monthly was That’s sneak bit great. recipe one I forecast, August think something. get for term looking a retirement I little a great. through shorter Thank question we maybe July. Gary I down that the modeling step could needs from you or like for someone And you capacity growth

you driving demand, is factors that time. also there a would leisure that’s holiday and more the while think I back-to-school you bit South less kind of still versus your If mentioned, August part half a is bit some second given much depressed, on is right little September performance of follow in and there a school, step-down movement there, you are Southeast are as other little sequential for play? should August so network. perhaps it at return of to in see corporate the Thank or

Tom Nealon

are good questions. you asking Well,

first So – strength I belie from calendar all, and of the It that think that two a shift from the is underlying I really the calendar just business. doesn’t shift. the August September think it’s that of points

performing So, August is well.

in There it does August. red not but seasonality. So, concerned the I are have about no flags natural am August,

half first strong is The leisure.

that in traveling and the business half kind that’s The second slack the back-to-school, where and and is begins pick kick of thing. up to

we that. waiting We to feel are pretty see good that. So, about

terms that of September, we did really In this creative. year was something

was at upfront September, in but Andrew remaining leisure it. throughout all to book about Xrd, back some team November able September. sorted And rest of point to booking trying week early of demand right date, driving through am it’s and call smiling window, But anniversary his XXth secure of solid kind this out you leisure will. bookings are in to now the begin October, through I forward if such the to a and September really nice he because from of fill you and we foundation So, of basically the sale second it, that just half a manage the worked had that September business.

worked So, that has really well.

In sale. sale, day fact, XXth the the three anniversary

of XX and right. top I in #X days days, in fact bookings, worked Andrew, of the of two the over of years think terms three two #X history our

very really are post business is to Point for of leisure thing to begin this September. being, all have back. by Everything lockdowns come I removed. hearing worked. traveling. seven am be I travel taking Labor so you curious am they bookings much what’s Day. services happen a The So, on in solid What see travel XX see that quick, going very time, too foundation got are place firms, the professional with feeling, am to top we encouraged to to corporate really it is, are consulting we sensing, going are suggesting or are accounts, I I

So, and just a generate traveling, to big for and that’s that they and more. us, more are deal begins

steam. So, I some to pick it’s think beginning up

raised. August I I we where I a good So, leisure, good issue you am nonplussed don’t we about by an built feel are. have the and think issue. of book that’s solid September,

Tammy Romo

just just have is got really days exciting Sabre. that Yes. the on turn as on a I things only And thought we we Tom, happening will some in few other tag quickly

regard going that. think that we super is are obviously, are there we with in ramp-up, positioned to to So excited be uniquely we business about but a respect corporate And travel.

look So, forward a to. lot to

versus hearing alluded September you and And shouldn’t as into different anything think forecast is of you competitors. our excited I Gary Tom to, about some really are what have it. are We read already our like

pandemic. We simple but are good about are we headed. – coming we we are a of just where as are we that, It’s – as really out feel

Gary Kelly

XX that to providing but suggests drop we And of not our rhythm have see of days Yes. here sort is outlook – anything don’t off. that just are we September pandemic continued going – we

I think through. just that’s make comes sure that, that So, to

enough of But it’s We are because all the a just the reluctant is yet forecast out. timing August to provide far holiday is. that just the is

Operator

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

Savi Syth

Hi, afternoon good everyone.

XXXX And level. again, to fair points if to versus cost rebuild XXXX. I so ask know levels, are shorter unit this flat the capacity grounding. term ask if there I pick-up side, MAX-related this near-term from the just back being in hopefully, a the base wondering I down And on might think I I question like looks or It was because pressure ‘XX, I of costs a if about X% our is XQ what Just seven was pressures.

– we terms I achieved been So, how in about what’s curious what costs just of should think we getting was out?

Tammy Romo

I start, to want here process others well. am I and can But through our sure as to you Savi, here. will Yes. chime just take in thought

unit absent XXXX you in release, our called non-fuel to As out, quarter line we operational would special that below unit sharing in laid items out forecast cost trend cost third impact costs, the excluding we for be the levels. profit and or

we sort know So, sentiment before. non-recurring while really most of pressures one-time And XXXX to move at these back you, near-term cost considered should we I getting period, target. as be in have time have cost or this always unit of beyond levels a ramp-up we that with shared point

base extra pointed due hearing grounding. As as far the out, employees, MAX in XXXX, you we as the were cost to

However, the caused that points that, cost seven the in of nominal capacity unable outsized of that to were back was we XXXX when overshadowed inflation. fly the you really that think by about

retirements, of off. have The will vast we as already for of employees us, the extended we in from And have X headcount are just the today, inflation but keep due a mind, forward but to voluntary the and majority our both had quarter as you earlier. here the fourth as fourth employees. in right is to from program as voluntary where fast if of reduce third years we our $XX trips about benefit by it recalled adding we we in continue quarter million help time So, well have you, to overall leave quarter, those we lower course, have with recall we third trip we levels consider pointed are building are other to and thing back XXXX that toward as XXXX quarter. I levels, And out the does covered now

need some just in we will our with network the a hiring will It’s we as already in all So as of do adding we and here, have as half And like you as kind restoring have support so our some back wanted have leverage capacity. to in as restore get we rhythm noise covered work you not – back really many But just would to bring we here that – for capacity. on I already we more our we have as for covered we are to and groups with our to we get as second operating get year. of is clean we what more as network we should true work to growth next back all.

all. think key really So, a you point for I that’s

are it’s But that messy goal. little is just We obviously just our here. a –

Our as we to can as restore goal our scale as network. is we efficiently

that’s So, I think, hopefully, helpful.

efficient anchored We on just are very are productivity Boeing as go history and and more focused our and we really as to that all together aircraft, back XXX to we our be will of like around all our employees point-to-point for having to be productive really highly work fleet. going to and employees be our metrics network of going can

to best to feel pressures, really are offset competitive efficiently not very to I work is are So, and unique and make cost we as intact, going sure Southwest inflationary scale much we our advantages which that like can. we hard

Gary Kelly

that But to very which put had about in. and that be dependent somewhat Hunter’s had am how – is test and times the not XXXX, operation. we improve momentum to productivity opportunity. We strive hissing Yes, and coming chance about efficiency, initial plans think many we yet had efficiency, is great really, and a demand at running want the improve point can last the Savi, XXXX, schedule I excited flights turn have we Tammy’s we one out. those our aircraft into to question great XXXX, to our I will with upon important

So, I think we is that’s to that. going have opportunity when the to really that work to key do actually and are its guess

more We morning so. – need We flights. will talking need we about have things We here, the that more all been all airplanes.

Savi Syth

more to I kind will make to view if of understood But moving slightly is sustainable And that. but there think about on XXXX, a inflation realistic way I realistic that. things be a there and getting maybe of of beyond there clearly, a lot once below level normalized? have parts, is To sure – a

Gary Kelly

Well, be shooting that to I would hip question. the answer from

be thoughtful think could know can we the may were, that I XXXX think either. I is answer, if is be what how optimized that question as but in it be. have the Tammy I the answering so... And benchmark would out, realistic – already was you that. given And not pointed inflation,

Tammy Romo

and But at Yes, our prepared – just we pressures like costs. will we clear, And salary plan cost give ready inflation for our our some we operating and be not you and we cost And fourth to and cost a the meeting obviously more from as just ongoing that’s year, later be do airport are near-term, provide Gary. Savi, to to up anticipate out this I be will we operational will point that provide ramp color. to and wages couple you and the to current just guidance, in XXXX. be maintenance, other categories strain lay a expect benefits little though, agree, We other points, try here I to and flying quarter just do temporary. we just

capacity be as some back as So add there will costs on come we And there will flying. then be some too, that our as we choppiness, recover. we bring back

burdened cost of airport will fourth due inflation more pressures the maintenance already to cost then quarter, our to And an be well. back Just looking ahead service. and quarter as Gary we’re as realizing we’ve mentioned covered. XXXs fourth the example, just into in that storage bringing out And

So productivity goes to will scale we levels. back have and it those to – think here really key will again, back XXXX get I up, as we think is I more we operating to leverage the

a lot be better parts. visibly we have guidance of into you give through prepared next there. again, more year, year as we to get the all a And So, moving will

Savi Syth

Appreciate the you. all Thank color.

Operator

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

Helane Becker

me thank for much very you, guys. squeezing Thank you and operator

versus what if that you One in, I to? recovery attribute that can card a have the So quarter. you the questions. you you’re I’m in guess, Why pre-pandemic? talked such would credit And two say strong maybe acquisitions about you June expected wondering seeing have area of I is, what level

Tom Nealon

more simple, have pretty it’s actually to have traveling, we to up. people Well, opportunity them Yes. lot get a the so when you sign

out incredible a it’s it’s it’s and but Chase an and or there, great very, the sign-up man, points just people in more we is not There people extraordinarily well. it had marketed We out XX,XXX also blackout it’s currency Rewards on feeling, to dates. valuable to get guess, with mean, The the offer really Rapid are that being well. We going card. program. of performance very, on. It’s there, but hard. offer easier up, It’s is I a performing very is numbers, no much and more form just performing very which program, I expire never to point sign card more the into a and also part of just I’m – get very

So I pretty people hard. out and there have again traveling just being acquire being this marketed think obviously able we to and

Gary Kelly

Yes.

Tom Nealon

Yes. out, are to They money. they want spend

Gary Kelly

think that’s I right.

Tom Nealon

pleased card. We’ve Get very with a that. been credit

Helane Becker

track and talked the And CFO, the good and has great. had about is And Colleen Yes. the the company pretty you culture Tammy record. the thought that. was in President. and No. issues That’s I first back got isn’t a female Okay. good like diversity then that’s things it environmental day question you’ve and pretty other and Barrett

have two efficient a So box think, I’m supporting, every you record still young, all really good level. of checking of think we you measure and What diversity a kind had this to need then do are to second, of should fleet just And at all I track And maybe for need things. you get credit as wondering what you how it? you thinking more it? the what you’re against

Gary Kelly

Bob, do want it? you

Bob Jordan

think I you’re – Yes, right. Helane, it’s

we I particular, out group. commitments we what were And senior in record. really us We last saw came around diversity have with you year, have a that leadership racial track really good for think our – diversity in

our are as at what think that find diverse. look I you broad we So you employee very is base,

in would workforce, United part particularly overall here the front would the I So in most be line particularly what our the – front matches diversity think the States. you our line, that for I would see on my guess

again, But leadership, about work in you think thinking I’m of argue senior there. don’t move to it leadership and we’re good I do. that some sort shape have as really up we is chain here, our to the hard

those you about and do terrific leaders, diversity While long-term hiring we about as we component hiring pipelines We think and hire. making focus a about process. on of year. we That have do pipeline from that it’s It’s we was – just into senior work our just our we if and because we pipeline about diverse. a thinking have our may a senior I an ultimately of leadership have decade-long again, and kind our do then, move leadership that leaders, as And are argue, where took our of group entry-level leadership sure choose succession as how a position, to that a a where think example, terrific succession goal some be really to long recruit, to how planning part practices an we last do, position. stated would

and So that where how very think about about we the senior And now to be then we on, we and focused hire where think pipeline. again, it’s the and diversity leadership. depends honest, how processes recruit. just we then And our to recruit in we hire we on how improving use

We’re and we looking at things sponsorship mentorship all do. classic which just programs,

a wouldn’t take issue. have I we again, that so And big as,

right. you’re historically, – we think I

think really We that there need have, we focus but there. to is good results, I on think, improvement we produced

Helane Becker

helpful. Thank That’s very you.

Bob Jordan

looking with am to by being way. you at You are the or the forward a welcome. I month here conference in so,

Helane Becker

Thanks.

Looking it, to well. forward as

Ryan Martinez

us please portion have the analyst And give wraps this Relations Alright. call. a you questions, if any Investor our Thanks good so have Q&A. much, and of everybody joining I appreciate up Well, team morning. that follow-up day. a our

Operator

I’d now Rutherford, first of begin Vice Ladies call. People Ms. portion Linda and to like President today’s introduce gentlemen, media and will we Communications. Executive our with

Linda Rutherford

Chad, you thank much. very

underway with our Q&A. We media will get

to ahead If you’ll them some up questions. and for instructions give queue go

Operator

Thank will from Sider And be first Journal. Street you. ahead. question Alison our Wall Please [Operator Instructions] go with

Alison Sider

sort or was summer the you Hi, might operations there the anything planning for in so network this much. side coordination do between of differently thanks guess, the with there of I I hindsight, benefit kind any been wondering, of side. if is additional have that would and

Just would the to as all the you look replan differently? again, if back, summer kind you do opportunity of you anything over had if

Gary Kelly

planned need was our Well, resources very included word. – opportunity years a well for kind the some our It The only have for planned. objectives, planned. because schedule we based activity, well the of what modeling by and between way, doing. was financial was experience benefit commercial with of I’ll And It take well very on that of what kind It our of operational was which our the we XX of one. of Alison, cushion, better lack very hindsight, coordinated we historic capabilities.

some tight. we them to too times being at turn expect. otherwise as of So that would some be an are example our hindsight, in were That what our elements actually plan And one there of locations. were of planned higher than

were Mike listening the analyst you mentioned If eight to his call, largest airports.

spring-like I/we the than weather factored and we weather weather, best could, So was normal. in particular, as in more in June,

the July, And one-off so headline in That’s most things. that issues Mike. of kind think the are two technology And middle I of we out get we’re into our us. those for days, If controlled whacked or pack June.

So the we’re industry. in first not

We’re not last.

– want know industry manifesting And different is what do the operating some I we that’s simply can is years we ago. a than elements and have be we X think to slower. network we So of see where

proportion buying bags. that translates heavier has of which into translated baggage and consumers itineraries We connecting, much connecting also have higher into loads i.e., traveling more complex, that a are much also

things be that known, see we I can we have put the would not will into So factoring can today prospectively. schedule effect. we that we when assure you, in

thing delays. for on that overall up Mike and again, That – that’s reason very room you’ve want place crews delays, is problem not the in. becomes so as the and it or chime meaning the how But I’ve the describing, So were here the that’s the do far. may whatever pressure puts so is true. position allegation one to that got tangible The experts And in that wasn’t the we out end because days incorrect, to airplanes. understaffing longer a understaffed was staffing, that the in led flight are diverted is wrong seen

messy getting it have messy It’s just are messy. So Mark coming. our coming done people airline want job. very obviously challenges you They the to in. one. certainly tracks some back guys on But hard. is pandemic. the a on I the It’s the It’s of Mike job phenomenal described environment. in – add? the working Anything It’s – blame

Mike Van de Ven

I’ll – I’ll something Yes. in here, throw just Alison.

a able And model a most faced that much year year model and in that don’t absorb significant as the other events generally we year we did the airlines we reaccommodate that the I we will in time think back different biggest did XXXX frequency future. as we but cancel our through we very we that are is as this yesterday, out. significant flight, in network customers than in today past, And have can’t the on efficiently alternatives with kind The do and those to successfully other that change So we way would had. our airline then point-to-point hindsight is we in would we network a we that it’s events absorb because out. is year get this of

extends that run what the day. bit little so do And it to is us operating causing to is flights those and later, a

the thunderstorms of that back, the that’s so and then grow period the And June we’re also, where of solve crux we issue. going then And we weather here really into come flights we add do in July. the events that time solves to that and network And the these a and itself. is don’t for have as pop-up

in us. those just that, worst events well, things as like information I planned Gary those to were the we had, we Saying appropriately in roughly could part past. terms able of today. all all that of with the And So said, in of middle all like behind of is absorb we we’re not dealing the pack the feel significant the given that

Gary Kelly

agree this And We through that, mid-June. network, with on Alison on-time all our having May. I until performance whatsoever. we network had the No way and Mike’s new have point with great but even no problem said problem

took is I but our yes, normal to here the responsibility So, and satisfied second I an we’re will customers. the it – complicated. think because customer say where that us for half behind June. although question, worst we your to of June July, it. outages the – But answer that, impact the through are. surprised I long clearly not and want to is been we’re surprised service of way in work events. not closer I the technology full XX/X, it’s And admit to we was of quite obviously had, and to I our But you, take wasn’t the effort but I it’s with it the that offer worst weather will it in

Alison Sider

Appreciate Thanks the details. it. for all

Operator

from Tracy come will Reuters. question with next ahead. Rucinski go Please the And

Tracy Rucinski

for everyone. if taking in better that my crew unruly passengers taking flight? I equip and steps updates have bad with Hi, Thanks wondering deal on you was question. behavior you’re address any to to

Mike Van de Ven

Yes.

Tracy, is Mike. So this

they attendants, to very, we very recurrent a disruptions flight have our So that. passenger with they handling And have respect training deescalate how that. with and I and training do just events, job think to on good that

kinds or out take that some up. you of for we there know or to physically As threatening been assaulting that of sure. haven’t marked we those whole have mentioned, frustration what a has before. perspective, frustration builds be matter how But can small And these that in, people customer’s no And violent the maybe else on a I behaviors, especially experienced I it’s customers are abusive from say, increase outbreaks that industry. if tolerance throughout for travelers to anyone manners. But and I subset understand in our a of and would that’s are customer

by try we of we as mandate we in do to the we that the have operating inform to day abusive of part enforcement in mandate. mask out. behaviors to But can hospitable so federal mask and of responsibility customers and And reporting And as as philosophy day threatening do participate be authorities. our a

they very customers can aggressive been to addition be list about as and We And have we customers. on these abusive authorities restricted our having our these add in they unions employees. our as with travel vocal abusing to are follow-up if that, will

Tracy Rucinski

self-defense make flight Will you classes mandatory for attendants?

Mike Van de Ven

techniques we classes. that – talk We in have we already are defense that flight defense that training mechanism different – our classes recurrent part defense our – of

Tracy Rucinski

Okay, thank you.

Operator

The next Please Josephs with from CNBC. Leslie question go ahead. will be

Leslie Josephs

for next labor few taking as costs in you wondering Hi, some question. especially thanks are with of start your groups? years, I my the some for was what the renegotiating expectations contracts

Mike Van de Ven

Leslie, XXXX I pandemic. in I lull getting recovers back think a But XXXX a and there – are United they be. through we thinks think XXXX been up as everybody to the that economy what and States in this going and to business – the grows have is the

did we the type think I of will wage we growth. I think going rating increases forward have will are line or in forward. labor the we the of GDP going scale inflation past. And that have generally, along than pressures those increases are And same or those

Leslie Josephs

Okay.

Gary Kelly

Yes.

different note, way the of bit is think quarter. to losses. Mike a and worth thing billion said little lost And important of again here in money it, I off $X it restate second I’ll we the we’re coming just

money make to hoping the are We quarter. third in

which in And we’re forward. negotiations exact our negotiated, and want our we those once pandemic. get reward amount, us our as got this I certainly done, exact employees. want wouldn’t we for can this. have want continue care out forward work in question concluding up we of point to our wisdom you And looking always so thing is us main environment, costs The for speak amount, – can kind have we real we I going our that know We of the through to They them. reward certainly driving of our people you no, of further. contract where way were They for to think to But again reward kind people. the set increasing if is that. to gotten we is, of that, the to which take don’t So simple, is prosperity

Leslie Josephs

Okay. having or employees more seeing some but junior maybe join. I than And left? is benefit of the lower senior know higher the that any floor and near are the now, people near-term, to in medium-term you rates

Gary Kelly

growth average of the because – always rate is is there helped Yes, effect. always that wage

we does is we’re actually of we benefit get or element will that growth, much a So we a there. hiring that’s – as yes, not just arithmetic that’s That’s a objective hiring, the even – don’t grow not literally whether really of which of Tammy, or over of you might that driving not, have some tactical was strategic the a But be? works – were the an we going top I ours. other know, year, way. head, for remember what just that effect weren’t But if your off I hiring way the that out. of people anybody.

actually the we’re not I that but hired you many now couldn’t we’ve back mode, recently, getting just So into many. here and it’s tell people how hiring

Tammy Romo

Yes. That’s add No, Gary. right. much not there, exactly to

couple really hiring we achieve always with in now backs here while our the just increases on hundred the just low just million the based cost, terms estimate And rate the increases. we’re gelling in year contracts employees. employees, certainly at machine. the of the we a for full would on We’re current this that we we those looking dollars just current But – year, up of our don’t year contractual have of

So it’s standing referring rates Mike in our to was is like the which step There contract, what as are the wages not increases. embedded still.

that call a to. of is And couple so I referring hundred that million was it

Gary Kelly

promotions and that increases. promotional merit they contract, year, them this will got year. had – them They Yes, union not they our employees having are we’re under and increases get last

job our a of taking care good of – are our folks I people. So think we’re doing

Leslie Josephs

you. Thank

Operator

The go the next with question ahead. Koenig will be David from Associated Press. Please

David Koenig

Hi, Yes. everybody. good afternoon

in leave because question, money Tammy a than follow-up mentioned less mentioned save little that from to release Alison calling you’re the you than earlier you it to had here, As previously people thought. Sider’s a expected, you’re and you back had going

wondered I and too long feel contribute you to people did before like recalling the do summer? So over that you now happened waited what’s

Gary Kelly

No. in recalled time I David, think, we frame. March, the probably everybody, April

but people October before We started, March about summer company had we between the the coming we our of back XXX pilots and to here and ExTO, have left on recalled. are they – all

Bob Jordan

we have we nearly in we Well, in the we because so. began schedule know feel the back I don’t everybody have mean advance. next or know, I to the like month here I nearly – recall far yes, –

Gary Kelly

Far know in far advance. capacity advance. And our training in we

that read of so, no no, output you we to many the And is that all – there flights can all how that implication earlier. at is of needed have fly, we So people that should right? recalled

David Koenig

thank you. Okay,

Operator

will David Slotnick next with ahead. question from go be The the Points Guy. Please And

David Slotnick

yet. you bookings like the I’m you It variant. that I’m looking that sounds from airlines seeing and really are flags for? Hi, Delta over that about are taking is there happening? last What the been from what affecting everything for hearing just at question. it out thanks What wondering X consequence aren’t looking ends that any weeks, signs is hasn’t wondering for the damage the red we’ve if been up

Mike Van de Ven

bookings customers at not, our transactionally, prospectively, So with that’s variant. Well, real looking in with very, straight up. of looking the you. statistically of the understand modestly, we’re honest are Are just is Delta be beginning to customer bookings seen to almost time, kind travel that. we to but to or be what And you, It coming very sentiment trying to or honest less be guess, because willing insignificant, I not and have not? back we’re is in but

at customer well looking bookings trends, as current we’re are solid the So they the looking trends. still and the and are bookings also certainly we’re sentiment, at trends forward as but

Delta you, with the So did, any are at just or If we seen any not impact we we variant. share point really have that this we’d not from seeing issue but it.

Gary Kelly

case stay And that we’re to hearing ticked locally rise folks counts at in have that well – further very significantly that, predictions the like the you informed. too. not I hope being indication the that in where fall. there think diminished no good. cases the I reading try I up counts, we’re because And the we’re so our will aware to least are But far, look is that but see the so and is that it’s about not, of increase you activity, broadly, case activity I’m more just worried airline anywhere it. we’re

we I flexible like Just prepared. do and And got very question up, think we very implies. soften to If ready, will And well are we’ve very I’ve nimble and we’re is what accordingly. that tried share adjust your to be here. things

Bob Jordan

The here the vaccines whatever of be, late and I vaccines. working. And the story And because future, like the get it’s where that question the is efficacy far maybe evidence we is feel Delta I – I thing think the in watching there it’s I somehow demand Gary you changing vaccinating, The the getting no as and no variant efficacy out starting all the variant is summer. mean – all then in bookings there mentioned. question the the last also data surge and demand drove think in the the vaccine comes in or would is surge February big were go what of the that. as in there know, the if is vaccinated, is is

and I think vaccinated. of in Hall is Town Biden all of President folks all recent was had that the deaths I not report think of unfortunate, the XX.X% the that this were yesterday, the

far, looking efficacy of is it also I vaccine, So we’re think changing somehow variant the the at so the and not. is

David Slotnick

Thank Appreciate you. insight. the

Operator

Today. question come with from Please next USA go Dawn Gilbertson ahead. The will

Dawn Gilbertson

could down do of fewer on mandate. mean the although that Or on good flights morning. follow-ups I broke operations, of as, Bob, but a reaccommodate about what’s were you talking Hi, mentioned Did it’s you you remarks, question people. – question about my XX%? gist the statistic? XX. couple that number front to mask your in you the I have a Allie asked the

Bob Jordan

Yes. percent. was It

Dawn Gilbertson

Percent, then okay. And also…

Gary Kelly

And you same off I did. left thing heard you the just percent.

Bob Jordan

I’m sorry.

Dawn Gilbertson

wasn’t Okay, because then XXth And year. your... it I know

Gary Kelly

Mike, actually was It that’s but okay.

Dawn Gilbertson

said expect or your expect – normal know I I the behind yes, And standards meant, worst you of you, can the question to least I guys but You the the can performance, to said travelers at to travelers what back operationally is Sorry, sir. pack. then basically, on-time is you And guess far operationally? July? get when middle when it so at is in

Mike Van de Ven

XXth. XX scheduled let say, time XX%. means May time. were And month-to-date in that’s That at XX this the arrival within arriving of point it’s Well, here in they minutes July

We’re the the if you closer XXs there in expand that just XX to minutes.

from because them So want, destinations I would decent customer a bit a them taking we to. what experience. to perspective, we think the than it’s to little get a like we’re what offering It’s still not longer

in the time load I That that of factors think some more then as disappear will frame. a thunderstorms, our than off natural give us here to August just think just these weather options are have for these events the today. tailor I we And and September and trends recovery bit.

in better expect here or be to July we in this so better were June. And than I

quarter be the third we quarter, fourth think August in I were to than better hopefully, be July. in here to the by we where be. we the will will end we And of and back wanted

Dawn Gilbertson

question, follow-up know the And wants. Gary who Okay. don’t then for I if Bob, or is this

date, On on expect lifted to your Thank the be mask do that stance you XX mandate, extended? that? is or what the you. September And expiration

Gary Kelly

I’ll a political that’s That’s take to one. Well, – that well, degree. question a

AXA mask is are the follow that is we So unless matter, mandate for have the CDC are mask. or mandate. required. that from Southwest I you which will perspective not. whether you that vaccinated, changes And wear extending a consistently be vaccinated, if the wouldn’t is no And not guidelines, the you from What the don’t know CDC, extended we mask should we the advocating if or advocate there then been

the got is information variant Delta this new that at somewhat You’ve now point.

carefully effort being – of we through of an – And mask we’re advocating aware I’m underway extend not thought So at that studied. very to as sure this But I’m any is mandate. today, the and least at not extension.

Dawn Gilbertson

Thanks very much Gary.

Operator