Southwest Airlines (LUV) 28 Apr 222022 Q1 Earnings call transcript

Company Profile

Participants

Ryan Martinez	VP, IR
Bob Jordan	CEO
Tammy Romo	EVP and CFO
Andrew Watterson	EVP and Chief Commercial Officer
Mike Van de Ven	President and COO
Linda Rutherford	EVP, People and Communications.
Ravi Shanker	Morgan Stanley
Duane Pfennigwerth	Evercore ISI
Brandon Oglenski	Barclays
Helane Becker	Cowen and Company
Savanthi Syth	Raymond James
Myles Walton	UBS
Catherine O'Brien	Goldman Sachs
Mike Linenberg	Deutsche Bank
Mary Schlangenstein	Bloomberg News
Alison Sider	Wall Street Journal
David Koenig	The Associated Press
Kyle Arnold	Dallas Morning News
Dawn Gilbertson	USA Today
Laurie Aritomi	The Washington Post
Ethan Clapper	TPG
Chris Isidore	CNN
Robert Silk	Travel Weekly

Call transcript

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Operator

Good day and welcome to the Southwest Airlines First Quarter 2022 Conference Call. My name is Chad and I will be moderating today’s call. This call is being recorded and a replay will be available on southwest.com in the Investor Relations section. After today’s prepared remarks, there will be an opportunity to ask questions. [Operator Instructions] At this time, I’d like to turn the call over to Mr. of President Vice Martinez, Investor Relations. Ryan ahead, go sir. Please

Ryan Martinez

for all Thank we today. us And it will you you, thank for up open In then our remarks joining prepared Chad. share and Q&A. just a moment,

Joining Vice Bob and Executive CEO, have Officer, Jordan; and Chief and Van the Commercial me Ven. Romo; Watterson; Vice Mike Executive Chief and call President on Tammy we our today, CFO, President President Officer, de Andrew Operating

purposes, today, in that non-GAAP we our special more non-GAAP IR we press it Also, and based that will differ see Just which our website a these reference results, cautionary statements to of Bob, and our you. are a our I'll items reconciliation our our from information, forward-looking Please statement non-GAAP this performance substantially few and quarter first results actual which expectations current release will few and reminder for our we had for trends expectations. on morning excluded our make we With our could in from over future remarks. for detail. these turn results more from

Bob Jordan

was thank really Well, Thank us everybody. Alright. the Ryan. of different tale you joining first for you, Well, environments. Hello, quarter a two today.

how As negative in rebound March February and impacts it incurred We surged. demand expected, the backand travel we pleasantly and bounced to demand would which and at losses due of surprised variant. to quickly in the January booking were anticipated the extent Omicron we

pleased was since first off we XXXX. while profit. of as unit actually reported in too of pandemic. QX modest, that far the the March, That revenues quarter And loss, the to we increased profitable XXXX’s increase solidly first compared a quarterly onset While I'm very were March not

quarter. despite managed restored the revenues being Omicron business XXXX that levels, only XX% quarter, the for been have profitable for we QX the to but operating were estimate we XX% would restored. In impact, first first -- So total revenues

for and Looking indicate quarterly business bookings revenues very leisure be the will experiencing which QX, encouraged we're to trends forward, operating we're restored on with demand. record levels stronger and revenue fully

Our detail product look in launching roll one and initiatives we to getting Andrew value. forward new more that in continue revenue of will out our fare that this our producing to cover place initiatives quarter and another and revenue

the another fuel full year and meaningful have higher year. we our gain be with Despite this and productivity drags of cost will for QX, underutilizing and normal we protected than through We our in assets, profitable expect remain for inflation in second hedge fuel from hedge QX to the well half portfolio unit QX XXXX. solidly

solid forecasting We are for margins. QX operating a healthy profit currently with

another temporarily of events, unforeseen as are how progress that people signs or model our through environment. business at power very of and this this our our Now, barring any such current that course, impact we It managing well material and to slow and show would of just based goes our outlook the is on a way no difficult point. see

pleased new month, employees welcomed And add we this really for X,XXX hiring fully of outlook I'm We've XXXX. the our next of date. the attrition. progress recovery. I'm X,XXX we now in be of A their will their thankful if Southwest roughly Even recovery come progress. current XX,XXX really, end hire resilience. expected to year, QX very employees our and for our that's represent and way, just expected attrition. until net end I'm family to And aren't progress. to of hiring people the have our a new results our to over with March negative plan Our is And By key just really we constant in restored fully optimized that's year, proud continued and progress just this with for tremendous network to our our long

good lower We we match recently ourselves capacity XXXX. capacity XXXX. cautiously continue work trim of reliability. need flight up can. have on constraintsin optimistic staffing, training our the through remainder prioritize full But pace get schedules I'm that with the to to travel reduced down as rebounding to our already headcount X% material we operate we work more for resuming scheduled XXXX and for summer to our our guidance for believe But impact of keep we in of available to growth constraints operational accounted our year, I while planned certainly a versus setting of balance demand.And we we capacity, guidance of can to staffing year flights course, the

just That's service. what It's a lot. tremendous a be and for do they do these me this priorities first, making And proven employees mention and to environment, fourth, XX,XXX they've an great focusing all messy. years, progress that together execute people; heard and to a low-cost, before, we we're It every these them key but customer they've and You've out second, this on few year: through remain profitability. us. a XX and people with historic operational and pandemic things product areas has good staffed focused for reliability coming and returning our been the deliver at, each our efficiency; fares will our tough providing incredible Together, low good are making legendary properly on third, on consistent so getting of at I'm what hospitality; working for and toward focus high-quality been to they put to our progress take behind and while day. grateful pandemic job. and

that at future. stronger, turn it make very Tammy. that, are was As optimistic I assure about and hard work we even pandemic, remain to with the coming our into can you to I it Airlines here I this company And very at over Southwest will

Tammy Romo

everyone. Thank you, Bob, and hello,

first as quarter weather rise net million, rapid was Omicron in XXXX. the Thankfully, cost XXXX created to lower-than-expected first CASM-X in better story at the The our healthy of loss the March, relief rise since favorable began. significant cost Andrew month airport favorable of January in record jet of in in cover are a operational resulting and at say, as line pandemic and about month, business March previous with despite employees was quarter cost, more spring our Needless thank double-digit challenging I detail special in different like first second to plan tracking XX.X% revenue also summer travel. as revenues their our impacted compared with period will the another yet relative performance excited quarter for March during the operating quarter in also impacted Last surged to in with of our sales This pay relative a fuel some guidance. experienced And incentive demand strong a higher XXXX we resilience bookings our $XXX in variant a for trends however, the driving disruptions. we quarter represented bookings quarter, month, surge the first end items. a and in for February, levels in monthly nonfuel first much in range we a rebound I'd respective by in March and the our monthly excluding and settlements, end XXXX. minute. market coming look significantly up Taking guidance revenue to posted First, prices. increase March in pandemic margins at am cash

and productivity at we experience pressures, cost suboptimal ahead, levels as operating benefits. pressure from unit look salaries, we higher wages inflationary cost in to continue well as As primarily

are from XXXX productivity growth leaving year levels not achieve said, We fully That guidance due do challenges. CASM-X half full as to unchanged to ease our to assets utilize second XXXX relative are primarily still to optimal rate sequentially we XXXX XXXX. expect XX% at up half first our XX% CASM-X versus or we to staffing able

For quarter, that airport levels. pressures XX% this Roughly this continued compared of from headwinds operating rates, roughly outlook point incremental work at to we across productivity CASM-X estimate XX% increases in when remaining best a current groups result be estimate which X with both to range half point the capacity labor half is to given our inflationary as our labor includes profitability in to increase and XXXX and can of labor We increase all at accruals of now The labor CASM-X. the market and attributable we second to estimate for the year. currently rate is as the suboptimal current increase CASM-X of levels.

as current capacity continues moderated to routes, cost speak plans capacity outlook designed stage we remains given to which while shortly. with And to operational relief headwinds, challenges, second unit Andrew from our available quarter particularly for down higher-frequency a shorter levels. length staffing add XXXX X% back provide Our are it business create our approximately will

given current geopolitical on Turning to have prices climate. the Market volatile a fuel. and been rise highly

is Our fuel energy providing in first price protection increase in the jet rising market fuel hedge and XXXX. prices significantly quarter against excellent offsets

fuel hedging of are range, an quarter higher million quarter for second more $X.XX in of the $X.XX gallon than second first gain, That alone. which to savings price. in We represents quarter fuel quarter $X.XX estimate roughly cost price hedged and to our at includes per estimated be which XX% than $X.XX $XXX second is our

portfolio the a prices fair the hedge we in $X The hedging cracks time and our is this have hedging estimated market roughly second at cost moving point exactly why snapshot heating is quarter XXXX the a materially billion. is hedge fuel in on the is our value of fuel. been guidance offset current daily the fully in basis. By providing meaningful way, our energy costs, Even of Of fuel fuel rise pretty mitigation. course, gains in at market oil a market and though environment won't

to other recently Turning majority will -X details MAX key -X with book the fleet. along We outlined won't we which a orders release highlights. Boeing in firm I morning. with few earnings in adjusted short term, of MAX reiterate adjustments, note but our firm the the replace our order all this with our our to orders

now MAX firm orders, order XX current XXXX. Our XX book and remaining in -X reflects options -X firm XX orders

our we in book last If no you -X had of previous of from the as orders year, recall order XXXX. end firm

provide While more remain aircraft, the order to book -X. eager our simply -X near-term the fleet the certainty XXXX the we for ongoing confident our to rebound in into bring certification and and ahead given go process are we aircraft wanted to

book -Xs grateful and and -XXX have this delivery plans are remains in between the for retire XXX aircraft take to shift our flexibility year and our we We unchanged. order -Xs to XX

exercise maintain estimate. certification CapEx the Therefore, for time, While we each been flexibility XX some CapEx remaining to CapEx this unchanged. approximately taking month. points assumes that that decision will has intention evaluate for options remains the we the arise -Xs going guidance guidance as of on year, given of our this we our possibility billion XXXX -X the into year $X some contemplated our And

penalty to As I have CASM-X to we accelerating versus mentioned while our expect aircraft incur before, moderated. capacity on extra temporarily from holding -XXX remains don't retirement a

aircraft an aircraft more to capacity having despite economic from not in our current needed So we decide retirements plans. for accelerate XXXX year this than standpoint, may further fleet

are we the of XXXX and $XX.X plan growth cash our restoring to ended continue investments billion. short-term mindful we balance as for We of also aircraft On and needs quarter with network. sheet, the

and at as very debt. of a portion have retire we we and down a continue pay convertible Our leverage arise with debt opportunities manageable as done our to is XX%,

one X profit trends only we solid rating Barring events or airline investment-grade to In all are our and by unforeseen continue key strong. margins. second of U.S. quarter competitive quarter our expect second be We remains financial with the agencies, advantages. any operating changes, which an closing, trend rating

allows to And as levels. our to liquidity are future the get for investing grow. we to as staffing financial and Our we to ample are able us and network to we intend ready soon so first continue growth that position resume restore desired

We airline. are a growth

Andrew. us. We front ample have we are With it the over I in and momentum, opportunities turn to that, excited great about of will

Andrew Watterson

detail. more I our revenue will point provide outlook Thank some on and our and color earnings to release you, you trends for additional Tammy.

Looking revenues incurred negative QX, and February passenger impacts. January X first at main

flight to winter elevated and to attributable to bookings which made $XX And First, in related worse Omicron the challenges, million cancellations additional softness cancellations were due due by staffing to in variant. second, weather. available million an $XXX passenger January

in pre-Omicron on March us performance dynamic and and in trajectory as business back demand. with leisure March travel a managed of experienced in in revenues we were improvement March a leisure a very expectations different our XX% surge both a saw and our March put pickup demand. latest XXXX. to original we bookings business down for down XX% XXXX improvement versus along close-in significant December in exceeded The nice from However, guidance compared of

XX% down points notably, XX%. where improved the levels. managed January's March In business since XXXX fact, higher We to down managed marked revenues pandemic most experienced began passengers. from fares month XX surpassed the business And managed business March's first

impact. Our revenue given bounce-back initiative despite the initiatives demand We our in QX performed saw of GDS benefits Omicron well during business March. the from significant

a continue grow agreement wave retail rather from as spending And had from other to spend as from cardholder XXXX, revenue versus long the nice is XXXX. was program size insulated with performance passenger our QX XX% our sales incremental stream is our assisted attribute also QX impact overall credit loyalty revenue COVID the card that healthy. new diversified versus revenue credit from We per which Chase. or portfolio co-brand consumers' card with agreement A strong from new and co-brand by up remains revenue

Now performance a rest to by the than our was greater our impacted network. the market variant Omicron degree new of

Hawaii underperformed by COVID While heading summer demand saw Hawaii. by into the for March, protocols strong in markets we largely slightly growth driven have expectations the March are we and encouraged been the lifted, in months since that

All our In outperformance customers' improvement for our to to in QX, this adjust operating the midpoint non-Hawaii versus business revenue and we the allocate the needs uptick all the June. beginning suit markets, geographies. came Hawaii to expectations best be to general new capacity travel more in our broad-based trend of in the of which March, X%. demand of continue modest in guidance changes We saw the told, across in at can we offering markets, of due a network sharp down at of rest follow seen our and

and While February, was our the the than March Omicron with pleased recent in trends. we're the January improvement expectations, very impact higher in and revenue outperformed anticipated

up positive recover. expecting despite XXXX, estimated XXXX XX% QX levels QX, continues, capacity business below operating to yet and X% at the fully momentum revenues revenues to we're be Looking versus positive to the turn managed and to

already passenger were load leisure operating to business. outlook we mid-XX% the to revenue pre-pandemic our due yields, As improvement range, is both low at and primarily factors in higher

GDS and in improvement contribution June. XX% see our as revenues from business business initiatives, improve to expect solid another are be to expect down We versus April with managed April to sequentially. are revenue managed in particular, XXXX, we revenues and expected sequential expected May

available attributes We is offering quarter, X website in which The fare columns product this flexibility evolution transferable Away is Wanna a a and credits; Get our toward Wanna perks Plus. will with taking where well points. customers as to are: want Anytime call same out benefits; for check-in Security also multiple Lane Plus to Rewards new expect confirmed fares standby choose and Away while higher our time, want we Rapid introduction change gain the it earned incremental this not represent Express At Get roll By Fly are offerings that Company. fare for, more the Having the priority the geared benefit our better displayed in pay they added has revenue the flight We of customers attributes going believe general of anything and that the EarlyBirdCheck-In of away. same-day to our for and natural product generating benefits. the will as

we half but aren't solid the QX, of are we the in benefit expecting of material rollout, Given timing revenue a the contribution in second a expecting XXXX.

initiatives, system Lastly, on its our our progressive management revenue continues revenue rollout.

I flight share color our schedules. to and on up, wrap I Before some capacity want published

decline our expect QX versus X% to XXXX. to continue QX We capacity

markets at stage we recoverability with provide decrease this in the sequential X-point an establish a in QX, travel we in X-point frequencies. QX is aimed trips to length from and business more to While effort as shorter-haul sequential a in expect operation more increase

to We have to our flight guidance. our activity published capacity Day through now Labor schedules adjusted XXXX match flight

down we capacity roughly to of XX% X% by guidance restored December. terms will year based network In roughly our expect of based restoration, by be XXXX, be And restored full XX% on trips. versus we June on

staffing As that will it given network take we constraints. current to some time we want the discussed, us have rebuild

expect majority over our with the restore end to I of continue And will turn We will by network vast that, it XXXX. to Mike. of the to

Mike Van de Ven

our face and and of On the and we challenges hello, Andrew, earnings everyone. call, you, roughly the thank availability staffing our variant the that through I the due January. last weeks Omicron X,XXX employees Well, in that walked sick to first X became of

that As incentive program an February a X through ran result from The reinstated X. incentive of that, pay program is work designed. pay we January

us Our employees They and out extra schedule responded those the very flight shifts well. sick. helped up that picked employees cover

an spot $XXX put performance that opportunity most X Air of the million, stabilize us afforded not shifts more January, people to an only think up industry, well. operation. a it Southwest Report, X and performance jumped in mid-February, the XX.X%. cost we after crisis, in days on-time the for Airlines DOT's they among monumental January satisfaction performance as through as only program extra to in the they January was In for top Travel the had. spot is what on-time put that us From we #X remained I that on-time impressive cover first the the our our While and the us that feat quickly stepped February in but top about XX.X%. to the marketing Omicron was in is That can start be the customer described What year to for shares during Consumer

am enforcing there taking our on I great a to mandate and year has that superb. to that lot compliance The now not want X working this Southwest everyone board science thanks for the for people my our supports of very expiring. they that's first out tough just a customers. pleased can a make front is in mask long been endeavor care line they through years, on I and hard wear customers now, a these months a our are And a break. the to of for Our our and have been for and themselves decision the last accomplish time to that whether employees aircraft. few mask just deserve as know or employees our sincere mass

our So and news Relative improved. early that performance front. great March February January, in to on operational

a Mexico operations news that that more starting believe our shortly. unanticipated slowdowns. month them adjustments during traffic network through flight control demand run to flight we We help demand, air February load at The of per given day, Our and caused of few to and as a they is good a the we also March weather airports. days in with a across stayed impacted and March time had air technology and surged that couple made Winter in Andrew severe of to we've increased then some travel And factors irregular flights outage levels similar in speak many operational tough had in we took challenges management the early did stretched mentioned, low this during work to resulted flights relatively delay it that adjustments some related Florida, And That and in X,XXX programs, network experienced event. the I'll will X,XXX center cancellations. March. and line and roughly and we that had issues, Storm a and that into ramp-up In resulting programs. a Mid-Atlantic anticipated Quinlan. In our day but from of then Gulf thunderstorms our ATC mid-XXs. mid-March, we then a traffic to of April, Northeast We've

some of get mentioned, aggressively and so and XXXX our goal Bob to also, these spring schedules now the this to to with targeting year. group, are hiring and of this we needs. ready the we buffer cover On hires But staffed. we're imperative resume intend of the and we're in operations attrition. staffing employees majority staffing majority this future front, published that our is XX,XXX we to The near year, our growth that ahead And in it's plans build is net over flight of as continue properly the new hire. The capacity summer

gaining with making of thousands We and have are proficiency. great still progress in but training, that hiring, we they're employees are

the takes the time new So frontline to it employees full on pipeline. training are going we'll before a complement hire just of job versus that in being a and either have still

operational improve efficiency I better us overall foundation end to performance the our decrease next year. should the that levels but historic restoration. weather in the That capacity network in this in sick pre-pandemic higher network our this to flights that service remain constraints And to snap to return operational back more mentioned continue We've priorities. of have average we summer. overnight, historical and on about that return from lastly, made working and when a reliability. we restore stage provide that headcount and we throughput, groups of to worked or to of QX. availability trends recapture should quarter still it's we to We're get the time, quarter, behavior believe we with training lag operating and and work productivity. in hours inactive Until It recoverability more network per we to remains the have overall the continue also should to improve but our employee, us help progress, believe will us second on continued our our markets. by a we've of composition We're on to the first metrics. to So capacity then, order some options a the provides had muted help staffing challenges. we're ATC business-oriented to the length with the won't one we as aircraft would lower accelerate operational We and our other trade-offs the initiatives will year. leverage, hiring sufficient into also path short-haul And points as support employees and adding operational top X our expect the experiencing we status On like combination in That key to Andrew versus move delays. through

it with so And that, you. Ryan, over back to I'll turn

Ryan Martinez

we analysts believe and if your I for a reminder, please that to queued And have just questions Mike. you, up follow questions. a up Thank keep one needed.

please our ahead go So and Chad, Q&A. analyst begin

Operator

from Stanley. [Operator Shanker Morgan with come Instructions]. And the Ravi first question will

Ravi Shanker

of on quick trajectory also, this have you Can corporate corporate little from us in to expect the it they year the the some side. you of kind second what the a hearing half expect going fair agreements And is any the through visibility the detail year coming just give fighting question 'XX pie. A on given trough just off kind of competition to going a next to do and of that of not? we're for slice be everyone ramp of a year? this when we're more into rest into Or comes you and travel be or bit negotiating corporate that just accounts that corporate

Bob Jordan

specifics. let I'll Ravi, chime I'll and start, of then the it's in Bob. Andrew more on

while think I at this leisure managed We've -- -- recovery. -- our we lagged seen XXXX really I of has leisure well mean a point. obviously the ahead is robust business recovery

let we going but just this looks to wouldn't you significant trends -- end is long while and away, levels April as from would could So the June. I'll realm that about to of details compared a it's never see, I XX% is and the a well. a business It May that's March, some to to that what And can forecast, XX%, by I -- But revenues down were January, managed it down it's from -- be add out through the a continue recovered recovery put about ways we XX-point have fully then year. we XXXX all like XX%, we of in improve the possibility think which I XXXX, really Andrew? trend. expect of Andrew through

Andrew Watterson

of year add it Yes. further of that initial of thing strong line, and downs last some again, waves. Thanks, traveling if trend you is a back Bob. kind COVID than when January view I'd corporates to April really ups go The we macro and but of point with have only nice kind has started

sharp seeing that we're it's And Bob Omicron leads so same trajectory, which still and believe will of to that to what now a comeback, get out on said. one kind that it of

So growth we least because so grown at and it's have pretty good confidence COVID rebound in this X through waves far. strongly

And regard to become to in of renegotiate good the that's lot corporate really a lot because a contracts, stale them wasn't there news. during pandemic. So

for we be big So actually our fully also during a well the this renewal our us of talked share up of now, we've our beneficial period Southwest kind as in but expect GDS And pie. and mentioned. about, for renewal account ramping TMCs the will CTMs -- contracts from season team with that a of play as through given the managers, managed greatly and fall, bigger is that offering we've you more to pre-pandemic there transformed business tools we as the of think in business for kind of broad-based both

season this coming by up fall. encouraged renewal we're So the

Operator

Pfennigwerth Duane And the next ISI. question will with be from Evercore

Duane Pfennigwerth

Andrew. Maybe one for

with Sorry to stay you.

which explicit for is or there cause stable the backdrop, how the balance not stable macro If a asking stable economy, would guidance about like not fuel, about yields assume anything improvement not change think so regarding does implied yield to if strong in thinking you're the fuel the yields does you do of otherwise? or But we seasonality anything the of and change XQ. that. economy for year? Just change, I'm progression

Andrew Watterson

still today positive comment underlying don't spending so can say how I the we details economy wasn't consumer printout least, in a strong of the What the doesn't we long know one, -- at did that. was change. But

leisure, for demand mentioned. broader is that though, above levels, is especially as So Bob I picture, think the air travel, for XXXX

However, supply year. is to XXXX get to until a later for And see back we pathway yet levels this supply not. much don't

exceeding of from increased. is of kind price increases based of can demand we've that the versus of what structures backdrop seen, broad mostly give being supply a So fare you lack discount fares

think on. going I that's tailwind we have So a

there Certainly, is -- the how economy headwinds consumer does term. over underlying seems the Now be that near robust. that, increases spending and are the like stuff to what wildcard and with Fed but the

I Does outpacing we answer for confidence continued of guidance pretty our feel that kind good demand So like range. your supply, have at in least the question?

Duane Pfennigwerth

That's get helpful on to think helpful. to Yes, macro, but I couldn't I color. that's change no agree completely you

as about lower way the this did flying and basis? a of this than but of yields any constraints it routes mean to that, same-store very Just there XXXX on follow-up, the because not different I a now? you result know how of looks marginal think alluded baseline is back much network right I your is then, to RASM RASM on expansion

Andrew Watterson

network to it's did different leisure that the up much. being being business versus hard you and business separated because of mention so have XXXX. I demand and And we Well, fares is different, are by have generalize --

you the I of demand broad-based So can structure. think the exceed driver is route supply see regardless

a about. So I now I that route, a doesn't what's you'll any by more think think, of it's demand kind still but your talked little different insufficiency, broad-based trends of really route in still kind have detailed, supply Getting than show and I broad-based a strength you variations broad-based all is trend this. behind

Bob Jordan

thing. Duane, And the same just would I add

about backs your X%. forecast in And being up where down up to set sort significant overall business all that's so a The on revenue XX%, of this the here. X% of in you operating range. it's the Again, mean of April capacity talked managed still strength. XX% the in down. a performance got have on second You've quarter I that's amount

typical network we've we of next our got lower at The XXX comes and yield drags year. new routes too, need put terms of because all this is there new as you these connecting restoring and are on restore we network, that risk have as before, we've might into other you is they're we add to aircraft than that this, in the cities routes That in. see or piece cities normal the a had that presence year and --

business the faster they yield time, helps if side. a hold, those on the think restoring At on the So I same which trends without also again, penalties. come at rate, you're

out occur lot what's that, there coming knows now -- potential all of I what's with what is double was the pandemic. macro happen There's despite savings there And of that still moves recession. than different the things into Fed is to helpful consumer So and for who can think economy? to a that, it more going the

what So there's of saved But and hopefully, out be helps anyway, what consumer could in a that a bit. terms there of strength spent. lot they've

Operator

will And the Barclays. question next Oglenski be from from Brandon

Brandon Oglenski

stage Maybe that us restore length understand this network help where levels, operating to one X% is hear Because is you I more can just for only are Mike. but the now down Bob the on or right you you constraints guys here. maybe your to pre-pandemic capacity? need But

FTEs levels. like look back they're XXXX almost to Your

the maybe a you need of some more is to Now Are get want But having to lot you with new trainee guys to be trouble a to speak pilot issue? where that up. you be? filling it's to take what constraints this really and back classes? folks trained Can to going

Bob Jordan

detail there. let Brandon, me a Mike lot and of Yes, take shot, can add a then

as well, our for restarted tremendous. we dead fall. year. since We've I'm -- hire from this a thousands are last We're of really the proud XX,XXX start in over our that projecting hired in but making teams of attrition hiring progress there fall some hiring been has just we now just we'll people literally department think folks. happen that there's Obviously, and I

today total yet. haven't we so at If we FTE XXXX, just our It's aggregate, headcount that point. you below look basic caught in in X are XXXX still

working all or proficiently they're yet. is, that other the you we've hired not about The as think working just overall, folks all

that hired time a typical roughly in in So period, right X,XXX training. in X,XXX month they're we've now, but

on there out working. frontline. not They're they're the not So

training, to our don't add fly add So capacity. to really and they ability they're so in

XX% that we over the something since new at our entire is on have you the remainder, of of workforce look fall. order the If

but working, efficient. know have there out to they're proficient positions. just not They're So you not new their what like They're still it's job. learning They're yet. a

think that about into ability account restore capacity. comes So to our as you

with that everybody instructors when think, pilots. are Now And had had out We leaves you to COVID. to long-term leave pilots go where our year. Job in February was got extent, I early And the pilots retirement. we another retirement. train XXX, caught to that yet we maybe up that flight way that, to took the and X/X, literally of completed that flying, X through to And most trained get just and our replace X thousand over haven't well. so back the out back half this just get pilots. you it's is the job was then definitely, several constrained, on some early we're on We take it's as

some the is that, tell on yes, would you chief yes, side. pilot detail. I please the right add Mike, constraint more now So

Mike Van de Ven

find people. Yes, most a in, interview. them groups of go other Brandon, the is hire really that just bring process. to We we one-step out, the work we We we think I

that we really instructors For to is, of flight it's that sure in pilots, can can it we have our #X flight training. so Step X-step the get capacity us, maximum for is making process. place a

are the get this flight capacity we And we we that the our in in into up so for that's that point where have next sure focused focused of we're -- terms is so towards hiring at and making year. end have on instructors time training maximum can this slots year can of to

#X. that's to to. love still come have access we're terms pilots, And in step of to that airline an So we pilots then --

We here. success of have long a history

and have And so year at up to least pilots, access to or next the go our fill X. here able we're classes in certainly the

Operator

be will question next The Becker Cowen. Helane from from

Helane Becker

Just X questions.

at on the the fly end crew to on, especially is you enough question won't first for as year-end hours hours. worked be The concerned the extra the members during year there the who peak, Are for them goes crew busy season? that

Bob Jordan

for the their Yes. year? Helane, limits block running about hour up are talking against pilots you

Helane Becker

Yes.

Bob Jordan

We'll coming at have. We've for think more see risk that the we're don't that of pilots of second year. capacity I schedule the got at all. that in online half the adjusted we Yes. our

an And with issue don't think we'll so have I that.

Helane Becker

Okay. down going is new That's since or this forward? level minimum cash bringing very quiet about cash helpful. Q&A. your during whatever one you And thinking for been liquidity, and are how to On you liquidity cash maybe, then so Tammy, you've

Tammy Romo

the question, is making commentary been can are shared with the great for much that quarter anything Thanks than recovery, Yes. really evidenced Helane. choppy. through Yes, on And where historically. we progress as have our it it our -- second if you But we liquidity learned be our this in we has outlook. obviously, pandemic higher

there. hedge And when So protection, we're that we're combine our making progress you encouraged headed with fuel are where really there. very with great

So all that to say is I think we're really well positioned.

the down all we So want But we that have cash with to now over we -- with reserves the shared the we cash I've past to Obviously, of that now, And can and to get business, do call we we be want to want bring past we've roughly, levels you pandemic. you. believe of time. to of shared in our in work it, down. plenty invest to have kind continue in cash. that right forward, going billion agreement an $XX comfortably

Now we may historical back that, billion levels, can we higher were probably to $X It range? call which that. get billion $X be get to need back to to in Should historical? it, than

So profitability. going is way of solid to Obviously, business to order we're our to that. back first work through get

business. want go as to obviously, appropriate. level. get there. And always, we invest free consider our then we we as always, as want cash a to that in flow And feel as back reinstate the be repurchases have we profitability And And So good certainly shareholder to looking desire returns. we'll those share here, will And to on, and based just obviously, dividend.

on Helane. were long-winded on profit. with capital, adequate to pre and want pandemic, back So that answer, to But we track starts a delivering and with obviously returns what kind that we clearly, of starts get

So progress our I to really back and good making we work here, way we're want levels. those pre-pandemic think to

Operator

question SaviSyth with be from next James. the And Raymond will

Savanthi Syth

question stage a length. the Just on

you lot that mentioned that on of other going of would us over quarters kind contraction haul something how give assume jump you adding had markets network as color a quarter. of I few contract. will And quarter this short that, that on kind to You restoration can you're the was in might of expect trend? than Or those about there bigger continue next the X well points that Any this unique here that a forward?

Bob Jordan

we I'll talk let you. it to then demand network perspective. direction. network weigh obvious here business, Yes, was faster redesigned Andrew, than start But obviously, Savi. as a leisure give the with orient come Good we to to in and ourselves in from to going pandemic, that the back a that was deal and

to take coming differences So places in intra-California. longer. like back, is We to you the advantage position that. business demand yes, of -- you And flew want we had want now that network

in that good build build to in additional the helps simply the meeting business So we begin is, adding -- to The really around short really, customers. also with the that addition demand the more business aligned network anticipate. is for our that to our it's us back depth thing recoverability demand, network haul

when it X-point sequentially the the we length talk it's regular but shift, depth. significant. So helpful. network can stage a big does thinking quarter-over-quarter helps us with change is in And operations, a continue, forward it is of to had sort Andrew extremely that

the in You story projection ask second our it piece with our here XX% to up of is cost didn't XX%. a CASM-X but this, quarter up, costs

kinds your of is that inflation. things, of of rates, airport, typical those half Sort labor

to system material QX impact stage a in The this caused from inefficiency just the drag in to having in decrease are other this half if of just increase stage. -- you length of -- QX is we and by well. some color plus Andrew, as the But sort the as forward this add terms where want going on in

Andrew Watterson

to get we It Mike of recovering. helps kind kind network, of all And equal, of -- XXXX here versus happens and haul lots we're if in certainly. things be break order more as demand as the recoverability. in hauls, restore the -- the then The Yes, you also, and medium back really haul business-oriented down medium adding network see going is mentioned, to short, short even long our what's for business kind network. of also on being

what's business they'll they financially, So to last really, or to of probably don't be resiliency customers a that the to travel missing, well that's recovery. will Because the restored. and be kind do case and be attractive it's of much they add as network hauls kind long of

And of so prioritize we kind those.

result a the down you of long length little a get as of a come of be period it you'll see And up And should those time this. start restoration, then hauls end to for restored. expect stage as to bit towards back so

Savanthi Syth

level kind general helpful. a you you'll to that the That's think restored? back that fully stage-length just get it's of Is there on when

Andrew Watterson

Yes, we'd be next the metrics we towards success as the said look having just get a similar pandemic. would year, those end and network restored year we by the largely I be get you before think then very, of very next of -- to of lot end

be. want we where that's to so And

composition could back medium As we we the now step things versus and to the and attractiveness of connecting, the that the long enhance X, have we of what's overall pandemic love the all point-to-point goes the kind added short, but the the these of new network, during network before pandemic.

Savanthi Syth

pilot can earlier? on in setting I the mentioned curious, material And was more just quick responses up the you opening a I follow-up remarks, growth ask for XXXX. in

to and an Just seems Southwest, on the attractive but that class curious like hiring destination, how the like, again, -- for because it seems sizes clearly training not issue, is be bottleneck training side.

Or material like you that the to next when you especially get what's expecting So your of kind change pilot year, you mean, to sizes about training class helped back talk to side? growth growth going next of are on year, get I kind bigger?

Bob Jordan

those coming online Yes. out to ready fully be XX-bay year. Well, next bays there. operational they'll year, additional and Savi, we've simulators have of XX got here a We're three later have this training facility going and we for filled. Currently,

can with have to if more the year, our And we then our even as training targeted plenty pilots we'll training. terms the instructor we training So of upgrade there. have hire up next in to said, and our level of recurrent out that capacity capacity produce training growth new get levels, I balancing our

Operator

UBS. Walton next the from Please ahead. go from And will Myles question be

Myles Walton

I'll don't it but know anyway. it's for, pose I who

but performance. XX% XXXX. ATL higher XXX% policy to just theory it's You have fees, three had if that is the big really in first curious you good 'XX the a levels, on change ATL, this at I of relative in but because quarter below the versus growth And growth maybe perspective my year on that XQ change guess XX%

Tammy Romo

not to all because do No. have Really at fees with nothing any policy that. really changed we change

Myles Walton

Sorry. I change fare fees meant changing.

Tammy Romo

Yes.

just been And well -- shared environment strong. that, demand in here seeing obviously side we've as on March, we've really we're shop in corporate really sharing I the already We So demand. robust so the as just no, had both is a the surge bookings really as solid, when leisure side.

bookings. So, to just I strong attribute that more would

Myles Walton

I that on outperformance January And was in add the okay. the as then delta the X,XXX up you versus composition their color really in-line well, at there's if between clarification Okay, off-line. difference take getting just previously, just and hiring I'll a it but your to versus performance, can comments? XX,XXX the a

Bob Jordan

No, I so training come at -- train, little if capacity, bit. our you think look it's just ability a just to it's up here

-- to into into no our all that's take and XXXX deep We to aircraft. the it's our to change. other significant so difference. going network restore fly And There's want XXXX of really,

there, so the better. can sooner get And the we

I X,XXX proud And really before, from of kind start of sort six hiring I'm in as of months. these hiring month incredible so folks here levels we a just because we've a -- went to dead our mentioned at

ability to in boost our hire target And we versus somehow changed hiring. a so really, have just our it's

Operator

is from ahead. from question Goldman go next The Catherine O'Brien Sachs. Please

Catherine O'Brien

your year. outlook just quarter. Maybe ahead a on the realigning been major It of labor theme this like staying front, seems availability labor the this has guys got curve you for

doable but be asking year, some one. and When still to there'll you your get beyond airports your from what So, based own single-digit guidance on for with and pipeline XXXX, hiring for unit can longer-term digit XXXX, see hearing vendors? know capacity this you're what I view third-party beyond in mid-single is then growth and five-year a costs changes lumpiness your we low your

Bob Jordan

there. Yes, lot out I choppiness there's say that a of would

of Who's the You workforce. So have we've folks inflation -- of What's concerns. who driving the you've got out some unknowns going in workforce? the to return? were

-- this you have Fed policy. got You

this overhang of potential recession. You have a

control quality, projections little this economy, obviously you are going to things the have because we which a that, a all a hires. they're issue have just things Southwest we're mean, not like would bring folks. that good that, of point. that. at do of with you there's drives to of tell here. new that are So, harder, over I to I in of the workforce, them we hiring bit the map spend proud an I while macro lot really the And drive lot and exactly I'm want work had kind people not Airlines into time the our

we to instant the we hiring. all to use to instant I somehow And look then and the work to a beyond continue we 'XX, We've had have before, beyond to becomes and think, want We've want offer, to all up aircraft, to adapt as I see, is market to going speed that we're like all Job do, of channels had that didn't social one that. hard don't 'XX, that, think constraint beyond what We've do you our network. what interview, coming. number media. to But grow. that, had techniques we've I fully processes. restore labor aircraft use our got our

lots lots have opportunities. and We of

You saw us open the XX cities.

front lot We intend to of of us, have those. opportunities advantage in and a of take we

Tammy Romo

I only I think year, certainly nothing do today to with thing certainly and we change is inflationary add targets our playing at But have And out you that pressures we're out agree. with Bob. we were that I this in in so that and all I our you back Investor ahead. we here plan, Day. Yes, any the go. shared just terms would think as targets, five-year of the were We of that's we expecting five-year confidence sharing would

Catherine O'Brien

maybe one. for then And just my next great. That's Okay.

Xs certification? a given just larger You guess, issue, Xs book. Boeing do keep maybe comfortable is in, to you how and walked -X given more uptick? it And to get that FAA -X, can through of the what's status just taking keep the move variant MAX any of price like MAX maybe we about moving just some CapEx already you're with And should you -X gauge? your more -X your -- like order I larger and with Is just Or then remuneration as along of changes Or that, around there demand closer willingness taking in? what you in? like you to year, pieces this your makes are given the closer on moving just then that this think to the here pending

It's a Sorry. bit run. long of a

Tammy Romo

No, the I there. have ask think I followed flexibility of in overall terms mix trying we to aircraft, really the with network. of what do just of lot But a you're

been mix sharing at a today, As really we've our call and year work of we're for hard to restore network aircraft. that does a

the X. for taking we XX today, this MAX We of as really feel we those year. So up good firmed we about shared --

So And just we'll continue really next network we any issues don't we're perspective. a monitor just year from go. as to that I see -- into even

up to position. So with work firm we'll to continue Boeing

growth. pleased really and very restore optionality, -- So no, and I that well network and really manage we have here as lot we resume a of don't we think can our

Bob Jordan

the the pretty we about simply to think way day, at or then two thought just shelves restore have more just the Xs the fleet. We want fleet the is split and I to the we the it in one way XX% big anywhere and XX% the the between is we're to And modernize need with Catherine, the Xs comfortable I network. end of other. objectives

certified. the the modernization because because to a we be plan and range, restoration delivery slots the over don't the the that want years, we're little that But up you as important near here might choppy X it and next term couple to out us. of to in gets give be as MAX So are in Boeing going we --

Catherine O'Brien

sense. makes Totally

Operator

Please question Mike The Linenberg next ahead. from is Deutsche Bank. from go

Michael Linenberg

you and/or pilot a Hawaiian drove either the of you sort establish have your just there. operation? through expanding for And are Can interisland thinking flight here in the one to domicile Quick Andrew. of of as going attendant consequence considerations walk what some a that, to

Andrew Watterson

I'll to start domiciles. start first. operations have usually, part before the with last establish larger No, we much we

more a Hawaii and the about on customer Secondly, business my remarks, And which Hawaii, the part kind then because the mostly has how to we're in that summer as preference, of we kind restructured referred fall, we've changes we have where have market then of but in that to mostly islands both capacity we'd of we have reallocating return. And connectivity of those places connections Mainland then was mostly of our to the done will to restructured for robust in take flying, is business some I happen Mainland. some point because to have the where connections we to place like origin, ones it's neighbor Hawaii. take we with for want the point to those -- on top kind connections that gateways

have as kind that, appeal of flying more not a So we for Hawaii a reliable did It having to Mainland consequence allow flying previous of and of great business then frequencies also less the the the between benefit islands. trips in from day travelers our has some of because time for day islands.

but to have you're you business largest about population, so those night. Maui, the you a If your that back with there's business get Maui, to and hotels think hotel, very Ravanaahu going nice are not

has evening service the allow the to morning And pattern so returns. early and the for departures

also the increased appeals to so them. frequency And count

that in broader objectives, restructuring about as and flying reduction XX% of So, it part a of achieves that. of part of it's multiple Hawaii Mainland

Michael Linenberg

And like for months probably then That's you it's recall, sort X,XXX the years. not on of quick just X,XXX. just Bob I feels hinted year. Mike or X,XXX going a back, helpful. to XX,XXX few up from the it's Okay. as Bob, It a just one be that several this super to

to had many early this hire retired. therefore your And probably So you're pilots replace know it, pilots attrition we said on looking this believe of But in what you're and next think and getting to I how per numbers, that a year. year hundred year round pilots the X,XXX XXX you XX,XXX year only is I net year? next who several next you is year be going and ahead natural about way it basis? may

looking and for year we are in what this 'XX? even pilots So at maybe

Bob Jordan

-- in us to our I think current we there things lot and where be restoration. there's I are one need happening a that bet, Number fleet is and question, catch You to two but mean hiring. in the to to network up really

-- we're so they and have XXXX As as are headcount still still we're I the -- new we in a our large number mentioned new count also -- mentioned, we below they in just training before, in our And proficiency. gaining or below number I that that of employees, they're still. either total,

fully months as before nine year they're proficient longer-term a employee. six it's mind, my in months, a So

to we've we've catch coming got in Number we So obviously, a got ahead here two, want get up. to a aircraft got bit -- because lot year. this XXX we've

to next then And XX. obviously, to the the retirements XXX have net, is restore We year take some network. going

get it's So network got to back our to taking where restored. a we've lot

to trying So fly that's have that the XX,XXX of to I to I of end reasonable up. deliveries, can't hiring that there's return of XXXX. a whole get to reliability bit part talked And our on and historic think just our XX,XXX I our expect see an our overall productivity all exact How translates our catching XXXX, there's all And XXXX we've historic fly XXXX? get of number bit the of of back of network, by goal about, think as dependent a back hiring of My number which to things. be our and all come have and again, day, aircraft one reliable that and for then is the net I a aircraft XXXX to a of operational it's back XX,XXX. part ahead. to as end the number are falling is we one of that regained from At efficiency aircraft, lower. bit our that's retirements use of -- XXXX There's may It the end into historic operation. defined to or the because XXXX attrition of a that and tell is the really a restore just reliability. by productivity, guess because the goal to efficiency. just assets, number we've you get number But

just can What you don't so exact Mike than I the I've more if front, or pilot is you can. is little give my number X,XXX in got so. here pilot. a yes, mind pilot the on lot a XXXX in On head Mike, hiring detail roughly more

Mike Van de Ven

Yes.

couple a Just things. of

and a the with faster of get that, think terms if you In And way always can it in you staffing, that. pay. I'd that just pretty us dial I And we quickly. with gives about us it back up hiring, better longer rather staffing recovery gives operational slower. solve have the find can yourself a time profile the go cost premium profile. When better if than hiring we just with to an just catch behind on cushion, then takes some situation, overstaffed less It can you a

that reference, we frame a hire as faster us, just and get speed the of for the better. -- up So can the

In terms is north if can probably Bob? pilots we up just full of to can somewhere X,XXX if pilot produce capacity, right. the get X,XXX We've close got next year to. hiring, to we And of this needed then we Bob year. here pilots

Michael Linenberg

details. the numbers. for Thanks Big

Bob Jordan

Mike. you, Thanks

Operator

for time Kahyaoglu and and more come with we Jefferies. Ladies Sheila that have question gentlemen, from question, one will

Unidentified Analyst

It's Scott Sheila. on for

initiatives April, and maybe how share out is taking restoration put is with revenue in how revenue managed that these new place? that of XXXX coming any managed way much to corporate is there in of you down parse from much on corporate Just XX%

Bob Jordan

take shot that you at Andrew, one? a want to

Andrew Watterson

the part disappoint decomposing Day, -- revenue we we're not -- of switch, individually. going our overall you $X.X gave to that's I'm which Investor to of Sure, billion and which is $X those billion at we're benefit a

individual restoration certainly our and we more share mostly of that take for new can new a and stuff is for before data had what composition means combination business You see that ARC and the But getting travel. us stuff. will, a wallet, what increasing is in ARC of more look if entities. really you and The of

SWABIZ people GDS, application or doing our business So business doing the with Connect through through we're were whom while we Southwest business, also Direct -- before.

it's seeing So us, those to given them giving we've And business this as really ways channel we're option. more about accounts getting them whatever they we're purchase distribution prefer. from of multiple

Bob Jordan

December terrific initiative think that and to XXXX. of I to XXXX Day out in billion revenue plan in in in Yes, that's Investor we is here $X.X add our EBIT thing the $X half laid billion

-- attract it's and And so that business. all things

here said, new to with and are is the launches our which product, Andrew shortly. GDS, ones Wanna program Rewards our Chase. Away So are as It Get our new enhancements And all agreement delivered Rapid on those been management the of It's track, things tools. Plus. fare It's have revenue that it's performing.

we're meet takeaway really a track I is we and those on so the think to that good goals. plan, main laid And out

Ryan Martinez

call. Thank day. everyone the that you Well, have questions, our of Okay. great analyst portion in. up I wraps a for appreciate the listening and

Operator

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

Linda Rutherford

very Chad, members. you thank Well, welcome much, and our to media

up would questions. to I how think we them on can for if you get queue go ahead started and instructions give the

Operator

with Instructions] Bloomberg will Schlangenstein Our Please News. question Mary [Operator first from come go ahead.

Mary Schlangenstein

questions. hire quick XX,XXX had they Bob, a years. over to has previously said just people three plan couple Southwest I of that

think So, just XX,XXX the you X,XXX that up just that end to three XX,XXX? still you would years for the do XX,XXX? you the year, XX,XXX think you you Or adding brings added those today to over to bring do this

Bob Jordan

completely XX,XXX number. Yes. which was old an -- And with honest we that's Well, were the be you, it round an number. Mary, a was as planning, I'll old is very

it think Just what through takes trying to back staffing get our place. to fully in

thing -- in The we attrition me, number, gross too. other we to there, to have which a that, always that's is,

to of year, those we eight. So changes the a I actually terrific lot no do comfortable what unclear We wouldn't but went this ahead ramp job, we thousands. of quickly I sure said I eight. that -- our folks -- times, we've from machine the be -- that so granular. done I think X would were how that look the know dependent think -- trying I hire it was a terms becoming because done three Because quite time of of and processes. And too. we goal could with you this feel the just the all to quite we're we in could so a the weren't set XX, I we be at if And was machine, -- don't I've again, rebuild we hiring hiring have at

And eight the so what's case. this to in that's the really XX raised

Mary Schlangenstein

that out to any? to that just Has down many few And first simulator you lack changed? of of have flight you because year, months hire number couple you hiring of you officers you bring if of plan although or to this more ago, how had instructors. a hope had about hiring X,XXX, talked that despite instructor the carve pilots goal you your actually Like a the trimmed Okay. have for over

Bob Jordan

tell would I you it's that around. moved

Our time, in and The is now flight it's pilots. the over which narrows moved literally around particular, tremendous progress constraints that's is have constraint made constraint. generally instructors. constraint close, our instructors, flight really getting the right but real we're We've is group, what versus very on

if the had we we complement faster pilots and our go pipeline, a lot could have full We of of flight instructors. in

speeding we Now really have up invested that recently in process.

So want probably way way than to know, have but retention you bonusing. much more we

referral employees. bonusing current have with our We

who have use pilots to to begun recently how about use flight have instructors. thinking or retired to be We

how our right that's our flight because that out right widened thinking is But grow terms airline now. in for flight no, every looking really of we constraint So instructors to now is instructors. primary

Andrew Watterson

Mary, target. this that do we to year is path think pilots. And Mary, reasonable our X,XXX we Yes. to have hire hit I very And -- a target

though, flying realize, some at to frontline going in October, be November, that in out on coming December. pilots be that on here the of are They'll and training, be those point they late time. Just still won't

Mary Schlangenstein

Right.

you many add And staffed? need fully instructors Okay. flight to how to do be

Andrew Watterson

-- north XX between looking plan, XX. exceed We're say, to of that, somewhere plan, To our little XX. XX to to our a hit

Operator

the Wall And Please with question Street is next from Sider go Alison Journal. ahead.

Alison Sider

little if airports I'm you're low summer, of just issue if in ahead supply know curious, some last that's I you're stocks something it? are with curious I where of parts an fuel guess and you now. any operate. any you're last bit the the of the at some seems get it seeing the to of question, kind was just what it issues anticipating a country or of places like doing

Bob Jordan

going price you prices, spread, the are not now. I And that we're of in. aren't But well. issues hedged. rise point. would this if price. fuel and experiencing up year as issues, add those add the about driving underlying manage straight to Tammy, not seeing anything. just you rise significant want billion and value country course, of is really fuel costs. in really those costs Alison And in at we're $X in up question, to differentials terms and issue chime across Luckily, well The our titanic our tell your hedge spot is we which a then now, the crack Tammy, please in helping crude with with this no, but is supply portfolio

Tammy Romo

we've Yes, in issue, a just better and fuel Bob already than Bob. it, covered place. position as you to much Yes, really were. in prices, said, relative got wonderful even so increase physical no the hedge And we yes,

there. in better a I no, we're So position think much

Alison Sider

proficient on Or of that slowing you that really their maintenance causing Where jobs. ramped I is kind thought of time of new thing front? where the are other was mentioned that kind people get and be And you guess for in Okay. just seeing Is to manifest? issues? sort about kind taking of and being I interesting down it's people to one things up

Mike Van de Ven

the on itself presents ground the that mostly and in Alison, airports.

the out So you there, during move. think that to and conditions equipment the transfer to all the the kind about navigating agent ramp and get just all your of the out course there sure the takes new hires tempo procedures. just year, speed dotted operation through make bags, the and in want priority is with got the in of that in you're of Ts get lot the operate speed comfortable that different airport in it's just up all you'll of to out months of for out of to our through several sure It environment. new because a navigating supervision focus safety the make oversight And want executing to we're as we've that our We Is we lot a our we there. with -- a and highest them crossed

Operator

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

David Koenig

everything only a CPI. from buy, is X% than Bob, in cut less although in inflation inflation who that ago, year a you're demand because up strong general concern you concern bit XXXX, quite are seeing? and your into a I seeing the which discretionary consumers suspect that were up to any going are But fares do quarter higher first any travel they're have is they choice, fares the from

Bob Jordan

we've base, lot a Yes, Dave, I There's not want there. question. again, the And fares. to that just a thanks raising in I for just reiterate said, been

we did modest fare in So have quarter. increase one first the

along we've I fares is got modified really fare we've not lower-end think it And a move was demand faster structure. and out strong, $X. close What's the is really that happening fare normal structure. but the our you fare as structure,

a in have down cases, Anytime Select between Wanna as lot of that, columns, Away Wanna would Andrew between managed -- most The other and Away substantially. talk you're gaps we've or in what add as as I call could and this product we we the to what and Get add fare come thing that we is and differentials Business is prices seeing especially the Get cases, our the

end is than actually our So lower fare upper are that fares been actually has the historically. on much gap and it

an are actually pandemic. strong, years of and strong. forecast see more second operating you those But our extremely that two as the is demand after record, fares going as are higher faster in quarter and incredible all-time But per to of going our see generally, be affordable. case, revenues just are could strength, is Again, So customers out that sell fares. to which kind seats it's

demand. dampening of So far, any don't see we

to system. Some Andrew, anything? may a increase far, fares. seen want of still be lot because we've so of you dampened in in that this discretionary household has add that there's the savings But been no indicator demand by

Andrew Watterson

The versus one Dave, is, the industry you as the that thing add I'd XXXX for overall, collective. is as capacity summer down as a mentioned, well our

in we're satisfy of all XXXX. the to given So travel is able like not capacities demand kind actually or the as

will have expect So that who people bought would in not more there. as buying XXXX. we be But we that restore be there demand are to capacity,

David Koenig

could this about buckets be concern the because rise the the that recovering, the get if going bud. was are still in everybody's forward just I is -- Okay. inflation I selling and wondered nipping there lower capacity any out higher the but average faster

Operator

next is ahead. News. from Kyle go the Please from Dallas Morning Arnold question And

Kyle Arnold

report solve work? operations done make meeting don't anything issues happening summer? about of some Have that, Or problems, you know made talk are Florida, the any TAC -- I What more either FAA in done there's some specific of sure problems? there. to that in the the the there you've is to regular staffing a or of about doing compounding creep the again this up you or some with

Mike Van de Ven

Yes.

Kyle. Let out me you, there start for

things. done a we've So just of basic couple

morning we've you our long staffing about reduced more As Labor operation. is and know, talking cushion Day. all in going originally our plans. aggressive We've schedules published give been the us That cushion through absolutely hiring to

trips, adding our talked help that's a Andrew to and little people our So and our bit toward and about design recovery. our us crew operational aircraft the flow there shorter-haul going and then reoptimizing

complicating traffic impacts So have and industry, do in has you are we're we I mentioned, -- a airline condition specific We that better we've as that move in the mean, that pieces we respect those place we, three big with feel to we the control I have Florida as air travel much when through and say been that -- in forward. specific problems with through there. that do There's GA through then going as well. else of like the additional more weather all go challenges going that just are space there combination activity. And a There FAA There's staffing, of And think The there. through more commercial activity. more everyone staffing I launch. are is down traffic. patterns shuttle it's

that. and that to there is specific May, solutions of focus, the the on focus to are carriers some going in airspace. a So about industry And talk an FAA impacted

place all going better much we're into summer last think a together, when package So were things in summer. we you those I this than

Bob Jordan

more this they launches. to with activity develop have historically. some working solutions. is to The add we SpaceX flight issue. kinds to other have They're activity and wanted just thing scheduled for this And we to those and they're above carriers, to -- got FAA got more clearly, that's just working is the that Kyle, more not other as Mike flight meeting But -- just offer on. here developing in obvious effectively you above put back as control, things issues this They're weather. -- the they taking mentioned manage levels. because, are year, back think about designed in flow us praise I directly because May We put with solutions working head I programs, the as XXXX are of wanted

on, activity that been with really just XXXX. directly both there's they're everybody. So us that important, above is is pleased while thing with mentioned other FAA I'm work one that is a working to for lot flight scheduled Mike one focus think we carriers of hitting which is the working -- that head find and and on really I public solutions

aircraft space the really it's limited activity above takes is -- out out. a far point air general or important piece That XXXX. to the think I obviously, aviation, of that GA,

I that is So and of understanding as that solving solution well. part that the significant think a

Operator

Please And go the Dawn is from Today. next question Gilbertson USA from ahead.

Dawn Gilbertson

Speaking a and Can bookings give vacations, I offer now And was it what as you you've when -- guys flight. notable Vacations, I I percentage. uplift of higher you just speaking people an that it option. with noticing really you that was color searching ticket in-house? prices, to up just a right new know for of bookings percentage since later? popped Southwest secondly, are added buying of taking was are now paying Southwest any

Bob Jordan

to Andrew, you. to going I'm defer

Andrew Watterson

rather redefine last does the offer ticket that choice values, order more alluded years our as up want value consumers for Southwest for three it. on And disclose, for restructure, a consumers the also handle we and for Okay. payment secondly, not that of we Vacations, Vacations. progress Southwest we Yes. distribute Investor big really We I'm giving lot kind on and of it's where on forms, do better. to of yes, the just been made And we've of to vacations We're with Apple are, we then benefit to the really it's in network figure program destinations PayPal, that under offer are and industry part the Uplift, of out payment channels. sales setting overall to We've Pay. but that going that Day, higher or method that packages kind options very approach a a whether how team is more an uplift. in working leisure is small a how percentage is partners we an It's more idea of sold, through package take and a over-indexed, advantage fact don't the yet traditional

opportunity for there's us and to packages there do so And more an business consumers.

so And a looking we're something that as revenue initiative. at that's future

over of so the CASM, don't kind RASM we've meet a we of of ourselves kind promises investor horizon want leave with As of exceeding market, to speak. vagary order to the performance in made the we about look to kind

a So pipeline make kind will, need we sure that we initiatives us of ex allow that you have can keep to market, if benefits revenue our of own.

It's laboratory, over is roll So and next one we'd this progress. the things. still in of of make out kind those to couple more the of we years expect as

Operator

ahead. Please will question next go Aritomi be from Washington The The from Laurie Post.

Laurie Aritomi

compared I to might approach question, Southwest's summer how you characterize wondered last Kyle's of summer. off Teeing this

but odd a there place You mentioned summer in better weren't going because weren't much of all kind folks in was last you're folks pent-up not was -- vaccinated. demand,

So versus summer? can this talk about summer you last

Mike Van de Ven

operating just Laurie, the the this compared just up this to is is last conditions coming generally, that different summer, I as U.S. summer summer. think Yes. in that

still had couldn't home. were less there of across they we surges that COVID into with should the There challenges staffing pandemic we capacity pre of available with lots with world people summer, where And operations pandemic. in we summer. should result, were to navigate we have daycare, more still out behave more last when because We the better. staffing have a went as And had did country through summer, availability, tempo the had or the working slower So this parent schools, coming. in had challenges like created that from with situation last of a just

are changed this summer. come of I as we think into some those conditions

staffing boosters there. there's As better we've also a between there. got mentioned, out balance you And capacity. our vaccines and out There's more more

shocks any have we So this available absorb cushion, year more that come. to cushion

Bob Jordan

Laurie, of April, Mike said. Yes. just summer. what demand I what more And exactly was the I we minute. got visibility it's we I mean number knew happening we've then one, got, last surged think at May think, last We've sort the thought

we've for able summer, and coming Two, While to is big a got and more surge seen it it. anticipate this network lot a the we've restored been longer, we've more flight there's we means to. to you better to move ability when ability operation employees need have activity, then and have and regular a just a a recover better move customers you which when

Another big COVID is item poles.

out, that And on close you so contact, we days. I -- you can't going out a go days have XX to, employees it's X were or you remember, go had out

And minute. so the and of out the employees last then at out number

not was predictable. So it

of was know until today in a like didn't workforce lot to You what going ways. your look

And the gone, we workforce. so sick COVID, in that's available change around so and policies those a around better leave have can with predictability much the

I'm be So better going is it's the that than it going was think much saying not is operational manage here an the but our I and perspective more be in reliable perfect, 'XX in to belief summer to to from our much ability summer

Operator

from comes ahead. from Clapper question go Please next Ethan The TPG.

Ethan Clapper

pilot recruiting especially been that for of We're area. hearing from of from that have pilots in and members swap has out no a been classes shows and there that lot difficult

fix So why is that? how And Southwest can that?

Mike Van de Ven

pilots. Southwest more We've competitive else. of I time. got get efficient result our to receive that. would more very speaking, a good And generally allows day anybody pilots we say the very just for retirement just is flying Ethan, ground think that as of They have I great Well, Airlines And then rates per than less with airline generally network a pay pay, benefits, program.

the feel to come like for programs built I an want airline and Southwest pilots We've where career great great their Airlines just protected to. We've them. -- earnings I retirement is careers. So

have attract but So from it's attract great another, our and to from as all a class foundation think given believe, you are of fair pools. I place going and of the that the out pilots the a I to of all flows that, take We tools to that the all share pilots one need we absolutely work. to we need. ebbs toolkit we see may we there

Bob Jordan

careful Yes. think And generalizing. I you be got to

think, overall, not has an been I issue. this

You show rate the in class. no-show and a good We've -- had mean we've had classes, significant a shows. no not and that always didn't I have rates, good had we've portion show

trying issue. an than we extrapolate I has a exactly have expected, broad-based had wouldn't to and this been that We one we're So we incident we to not recently but class this understand a why had where happened, no-show a problem. higher rate

got And And going the make careful that. slot two, they into a risk you somewhere ton you the number be then a on. to get of you the more a take So work could else. to go market. there's take just It's in run longer a that competitive to about class, an somebody offer, you longer

what work and there's a going extrapolate wouldn't over what's to board folks minimum, not of down happening processes all in it I think the our ops and a happened and across main take has ton our those between to because that. flight on so people been. thing the And is department the absolute to hiring I But we're class

Operator

And Chris the from ahead. is Please from CNN. go Isidore question next

Chris Isidore

if the the to able Wondering would can you status you to be potential your you advantageous know the various to up the -- new efforts do negotiations. in past you and doing pressure those on about that let the contract now? -- be say of it And years feel if able hiring were be where you when doing maybe wrap hiring labor that what in labor would puts you're negotiations the hires any were what more than binge be see

Mike Van de Ven

over negotiations contentious, over needs say what through that. Yes, over needs, contract is negotiation that people's at our what they so of faster, -- and can we job that the company of both is been is count going they of They And years the want good just And manifested the the and tell the those and characterize will years, is times have earnings successful negotiations our creates really it's every to themselves, people. want say, years. a Yes. that's would the and highest successful Chris, to XX-year have that And as the kinds if career have. a just I And labor we most most I've But sides. that the the opportunity reason you and that all absolutely XX at that that and I over lot I vigorous, end contract I Company, be on attractive passionate won't for been forward. Airlines, get the would people Southwest that, I see unions the period, Company would through in contract between very our secure, on of through the productive doing of we've day, and achieve can negotiations no process bad. I'm for

Operator

come question, have Weekly. we just And Travel Robert you. time go one question Silk ahead. and Please will that more Thank for from from

Robert Silk

so, those but cancellations are if actually no mask are there's are calls Koenig this many you in a had David cancellation story who now or individuals mandate? all And cases? allowing you that -- requests are you about from recently, what getting worried

Bob Jordan

watch survey seen of just customer percentage that and Robert, We customers with all. overall high. that questions is single every rise a the are haven't It's our calls very, would comfortable I very day. in -- day. I every at we single start relations flying our XX%-plus. I just XX%, And material customers

The for low. very how second also our cases have rising now that be wear The is not all of is the mask they're tough very that to favor I'm they are flying pleased shows being are may for mask, rising. And data also comfortable. mask, we It's and our our while and number employees the a customers comfortable Hospitalizations much in modestly, that to choice. customers day. survey very our without customers mention just on

our and So I'm just that choice. employees a our customers now have pleased

We policies fares. have wonderful -- flexibility our always we in and had our have

cancelling refundable it's to cancelled fly buy will if the if I'm hearing fee. you mask to that they're refundable we'll customers refund hearing those either future mandate afraid future But a buy anything we funds be ticket And those change then held can and/or every not you're we'll flying, of allow for funds you with we're for so But because that to refund and obviously, -- that. ticket. generally, no, not change. because relative fare, not And you that comfortable -- if no use now use overall,

Operator

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

Linda Rutherford

putting you Chad, time, thank for of us you thank a for and we and questions the little afternoon. very bit could you so accommodate joining much, all extra all for this

If you online Communications can Group have any follow-up, XXX-XXX-XXXX Thank www.swamedia.com. is all much. Stellar our or at standing very by us you you visit

Operator

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

You may now disconnect.

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