- Earnings call transcript Q3 2022

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Operator

Good day everyone. And welcome to the Southwest Airlines Third Quarter 2022 Conference Call. My name is Jamie, and I will be moderating today's conference. 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. time, to this over the At Mr. to Instructions] I'd turn like call [Operator President Relations. of Vice Martinez, Ryan Investor Sir you may begin.

Ryan Martinez

and some Executive moment, Thank de Officer, you, earnings will open a quarter we for call Van Q&A. our our to Vice and And Watterson; CFO, share it Andrew we on up operator. And Mike Tammy call. CEO, Operating welcome In Bob Ven; everyone President, prepared President Chief then remarks Romo. and today the third have just Jordan;

And also have other today Commercial statements we few had actual President Also, will new And a our room that our today senior forward-looking differ. reference Chief the from We we Executive which in leaders items purposes. are non-GAAP performance. including a Officer. special quarter and trends results could our we reminder make in results third which we our A our excluded based quick Ryan on results of Green, will expectation non-GAAP current Vice our few for future today.

our to turn refer and this it morning Bob, more Relations to with website release for over you. from please the information. I'll press And So Investor that,

Bob Jordan

Ryan, morning. you, thank appreciate Well, us I this right. All joining everybody and

results Just fact. better just environment with were today in quarter $X.XX excluding that line line in ago. where that in special third in operating in speaks quarters And are almost versus to a to all, another items two right share. the back really slightly July, more we our really came pleased the of solid stable bottom profit quarter’s expectations we were report in third $XXX million, All in

plan and our to plan, XXXX, operation That's both second makes avoid we're yet, difference exactly employees. a recovered of and in we in what for deliver do set our fully reliable more going ability schedules to big forward. customers that's half our our more what them revising not and doing and a it effectively flight the While

the change not far, made progress during was we or republish materially future significant our schedules, the do we've as do Given pandemic. of to thus flight most intend to necessary

new next with getting with continue. as And employees of we goals of restore to way attrition. X,XXX direction, of bookings made solid this adding in far to and consistent hire over XX,XXX and are we are a And our year our this We record exception and appear to remain One key yields headed X,XXX staffed both XXXX. profit get better we a in to continue reliability, track a our areas pilots solid aggressive wanted and well going our of pilots and hiring operational coming booking are where for We well. for is We to quarter primary returning strong that's expect on profitability, third off this trends, year year, want as our on the pilots we curve. revenues net see having as Demand efforts and progress. lot are on our can staffed right track are much robust. We're year planned. we and very properly volumes in

But early business I demand restored As to believe got the a where flying ended help quarter. knowing the the the result in operation, was the desired we without was haul and of revenue quarter, we short our and goal of which in some shared previously, the expense little third has third up. we at

our improvement XQ to demand have better capacity guidance. benefit we based to who have from of our in our cover on in thanks this course And completion been quarter, Going our the our the rates. matched service forward, on restored very has believe month strong seasonally will with can solidly you And high people fourth customer the time Michael revenue and we as year. this goes advantage to see performance sequential XQ to

priorities. Another one top of our

essence For per just most have and thankful and done. prices on proud January XX% we DOT's the through August, hedged marketing tirelessly of high, central our the in matter of the but remain service solidly so the that team, I'm us we the and worked very in fourth them recent employees I to so as carriers. for hedging for gains. Again, at have expect Southwest healthy industry. ranking our one and data employees here have how continue no just Jet a are fuel remain top available number proof they that they Airlines together obstacle, all are customer the back quarter and they

inflationary caught on and leverage utilize and we year aircraft inefficiencies XXXX pressures and get fully expect plan. XQ, and is of new cost year Ian our full cost on to back XXXX in We've up with CASM-X year the lower groups But the XQ fully our cost capacity, we ring cost levels cost This for fourth efficiency since in in in Specific continue full executing to all our very we to capacity our and network. other our year cost efficiency are well fleet for anticipated as the and productivity full And Hurricane plan all maintain have staffing improve restore staffing from headwinds both between January. trends been focus areas activity, full We than out been labor adequate also and contracts and currently timing guidance. flight stable. pilot provided to in some XXXX our of quarter. are optimize impact get guidance negotiations, operating staffing, executing

don't year to expect hiring, the Our be continues growth factor that primary XXXX. until pilot gating I utilizing and to will we fully be late next fleet

are ability and feel published we schedules our fly deliveries. uncertainty July through about of some around aircraft As our planned, those XXXX, as flight XX, today, good schedules to and published despite

up. Southwest markets that to amount to healthy growth, growth demand from business this as all base. back borrowed capacity next one we and of customer markets. year, into lower nearly primarily are a is number fund and have during new expect And is we back pandemic, the Southwest we These in improves, have risk it where we those strong the airport share expansion a While key markets build going opportunities

So believe market. we don't near the a new carry capacity of risk adding additions the

Our to strong, year be given tremendous Barring we've is impacts, this by goal end any closing, XXXX. our restored the should progress XXXX, In we fourth quarter unforeseen by network summer XX% made year. very finish have the of done. fully this significant And about should we of outlook.

a trends. or revenue into in be and or we regardless, has booking up. noticeable whether may not, seen regarding one even there any XXXX There headed trends impact whether While we the a blending why strong our is discussion lot recession and of noise are levels. trends and in now, our been not about are we on leisure revenue But business and overall where also well of ultimately end may those above have

that. they continues They I'm to employees secret and strong very all over do. And and weapon. about And Day, to you on the our Ryan that to financial on on to XXXX. next task. speak I is Andrew that cause Southwest will and the we huge And year, operations taking in beginning on Airlines. it Day plans. are hear even and others best will And you operations us of a Tammy, over for I'm it commercial help the just Linda report them will that rally Southwest will improve upcoming in And over XX proud overseen and our developing Our a is plan then at the for at to as December. and and and together years, And tremendous to their in big will with further our are I advisor more. grateful turn will to meeting and our to They for a Investor really Mike, to Ryan very job here will grateful say extremely today dedication for greatest the you Mike I work a I for a Mike asset in Andrew, appreciate operations regarding And to Investor December want also from our at a He are our Tammy. to future. Andrew big congrats continue on share work business I'm can to leader. report me I commercial. turn just an huge and just before thank Mike. you say count to I I know at want more that has that,

Tammy Romo

quarter. of And dear throughout three thanks you Mike. for And their decades the job Thank incredible leadership. of also thank for Bob. very remarkable all My our employees friends to you

resulted The high continued to a for solid efforts record a from demand strong delivering record summer revenue quarter revenue trends to quarter third addition In experience quarter third passengers. their third in customers, performance. our quarter third led quality and in

Our by a aided speak Andrew our to revenue versus minute. other operating very third XXXX, in revenues healthy trends will a grew XX.X% quarter revenue performance. strong a

performance our I So cost, and outlook. will to turn

Our cost third managing people did in another great job quarter.

volatile in fuel saving about where well alone. third in the and Our $XXX in hedge company market continues elevated, million quarter prices expense perform fuel this remain to environment

quarter's full year be $X.XX XXXX full fuel fourth We now which million The fuel $XXX market to estimate added our billion. hedge recently estimate million. per to $XXX more fuel with be fuel portfolio in would a in are That savings fair $X fourth equates quarter and we cost quarter, year fuel than We for for a price at portfolio to put hedged hedged improvement based which price our $XXX hedge our around XX% range, to XXXX. on roughly benefit market of of from prices. of fourth fair which quarter, value $X.XX through sequential our XXXX gains, and would is hedging third value includes XXXX million are hedge currently XX% the $X.XX of current gallon

we good health seek premium a to expand our and volatile continue quarter made into XXXX than due are past as shifted opportunities XXXX. increase third More to third from the guidance continues as fourth decreased driven non-fuel especially fourth CASM-X sharing to that The range capacity year, over and increase airports. third than it anticipated XX% rates will to pressures, to headed settlements the operating estimate to quarter, by portfolio XX.X% primarily towards here headwinds with CASM expand to we higher with but be in XXXX remainder expected end for quarter third in compared the given of fourth our XX% favorable to currently benefit labor, shape look levels, but be that relative of positions materially well next that quarter. receive of profit of previous the lower quarter. favorable year market items to to at our the tough at range productivity cost, We quarter by in airport We this to half cost, beyond, special historical continues benefits earlier attributable Taking compounded higher was cost. excluding at energy quarter increase and compared levels in in hedging CASM-X inflationary primarily to quarter suboptimal at and

I very that remain on said, this that environment. mentioned, especially Bob am All as our track cost we XXXX pleased with in plan, of

guidance As to we compared close XX% has year, CASM-X XXXX, our year XX% XXXX. up narrowed the to with out full

rate our a best beginning April of this for groups labor estimate accruals includes labor this wage account Taking all year. As X for contract into increases. reminder,

in ahead year. of sale, to XXXX We compared expect flat flight first up with estimate first decrease now XXXX. X% half half continue with CASM-X year compared to Looking full XXXX we our to the this schedules for first have and currently be we CASM-X XXXX, half range to published to

of first down half expected we solidly the CASM-X have in growth pre-pandemic to a Given level would be period, capacity year-over-year.

continue expect keep and we than in inflation due unprecedented as increases are open higher contracts wage part to experiencing headwinds further mind and However, in that, accruing of cost to all XXXX. rate that labor we expected for

On rates. our inflation, a is fully our capacity healthy hiring included at wage of top and for year scale estimation of best next that based in rate on So support we XXXX continue expect to to market XXXX guidance pace growth.

these pre-pandemic peers, including and levels, utilization the assumption dynamic. experiencing to additional on to cost Based should fleet Our support staffing by will to has throughout somewhat our our workforce industries operation. returned not It but seems most constraints required hiring the has next first pilot are be for persist a companies, that which half of will improve similar XXXX, that productivity second limited year, majority half in relative XXXX. headwinds

our range but XXXX. plans, will with capacity decrease second XXXX half single-digit half XXXX estimation second current compared our is finalized haven't We half the second CASM-X in that low-to-mid

flight optimization operating continue to be begin and improving in will of focused activity our That into staffing We XXXX on and and levels XXXX. work our to metrics leverage. efficiency better continue

Turning deliveries this our assumption fleet, for Boeing unchanged July. to from year our we shared what planning aircraft remains in

still expect is uncertainty to XXX the While reflects supply timing in XX Boeing due as certification. regarding year deliveries dealing the this -X we aircraft MAX as well order of book contractual our that continue challenges with, XXXX, -X MAX chain to

MAX However, we as all year. We the aircraft this have XX -X to received encouraged aircraft -X do expect XX expected take aircraft not to delivery MAX in expect are delivery quarter and MAX to continue fourth -X any during third of quarter.

in our to MAX in our the aircraft continue order In discussions recently near-term. morning, Boeing We aircraft changes we so just book. -X to press this more the short, won’t modifications some I with reiterate MAX We fleet all ongoing the release here. outlined details -X specific converted and made

of to retire CapEx our less aircraft now we this aircraft estimated terms in than remains few -XXX unchanged In And a an billion. $X XXX XXXX previously fleet. at year retirements, expected, guidance of year the with a our ending plan full approximately total year, XX

principal notes $XXX Turning our to and included and billion and convertible with investments after our of billion paying in short-term retire billion million XXXX $X.X We This during of ended finance third full the amount our notes. sheet. of obligations quarter quarter. debt the lease $XX.X balance $X.X outstanding X.XX% to due cash

We $X.X with a total $XXX manageable position and XX% very million of notes, have have the We convertible XX%. roughly original leverage outstanding. repurchased now of our in remain currently a issuance, at net of billion cash a

one be but and rating times. continue Board continued which capital our competitive times an with and soon Directors, rating remain We long-term key advantages financial to strong we unchanged. strength, allocation good of by only in XXXX our all remains discuss our our the U.S. three sheet capital With investment-grade our with in priorities agencies, will balance challenging plans of airline

a have a reinstating and high dividend long-standing priority. We dividend a remains history,

to for opportunities reduce We debt. will also continue to look

at on and past. the as repurchases intend to wrapping with right the continue investing producing groups. the shareholder negotiations will time, remains resume we that part have demand these open our but And company and intentions We and up our in least, continue we profits. all people, we of as all contract our labor share focused of environment Last are travel assume of steady equation return we in the and consistent quarterly not

impact today, of before materially preserve not cash cash like but to are year balance some reserves. impact we any mindful we We travel move reduce we there see to are monitor any would of seeing noticeable and we period risk, recessionary like environment if XXXX. we the for the noticeable into a to on as into next is and our would Again, higher-than-normal demand economy time

So hope our allocation we another gives in third I an capital represented while you how I In quarter are can’t commit recovery. evaluating quarter that closing, to idea of choices. our anything profitable today,

revenue quarter, Our to a is I by have made we turn encouraged year the and building look and supported momentum to here progress outlook, focus close fourth our with strong in the as XXXX. am strong we

direction the that, to and pleased over generating to capital, We on returns are turn with it we am very I will I With headed. invested committed healthy are Andrew.

Andrew Watterson

and our XXXX. line XX.X% more came I’ll QX point outlook original some the mid-point right on to range, guidance up color you operating QX you, detail. and Overall, revenues provide revenue in with versus our of QX for Thank earnings in Tammy. release our additional trends QX

down step a X.X% July We an than was business there result different August, close-end advanced with was versus revenues, improvement leisure managed anticipated had for yields and nonetheless. managed load anticipated, stronger a and coupled a QX typically was In path shoulder leisure solid Labor but that a XX.X% in robust Our purchase but in nice sequential a we factor, and September, revenues bit particularly QX increased demand. versus September XXXX. we business demand back finished demand, remained post stronger saw month XX% leisure saw business and XXXX. Day. In weaker than

step is took strong on a momentum and bit a on of business while steam. So quarter a note, finished trends, the picking back QX revenue we up

As sequential QX revenue anticipated, had from our credit in headwind X-point QX. July, a travel in we change which policy QX to resulted breakage in for expiration lower

our short-haul flying short-haul our where to business Mike up, cover As ended in we order we in will some relative help operating over-indexed Bob a flying stability. drag to also QX X-point operational to demand moment. in which in with mentioned, created results increased a QX revenue. operational roughly But QX

rebound our very long-haul strong business throughout overall the September, in revenue segments and flying trends As QX. helped demand and revenues, additional medium were in short-haul

the revenue We the revenues. QX exceptionally aided was sales, our that retail and sales co-brand secured incremental was the grow Our loyalty XXXX. continue year. our which program revenue end size of other growth versus increase credit strong portfolio the primary retail per last from saw overall of driver Chase by so, and agreement in strong card at QX with in to we Even cardholder spend

of be loyalty very and with We significant and our EBIT continue contribution. the its revenue program to performance pleased

rolled this group well AX to QX, any also boarding particular, This ancillary was unsold digital to available upgraded option in purchase to airport only our purchase performed allows product, purchase Our in new self-service boarding product. AXX out positions recently gate. the travel. in of business the day a customers products select on previously at to which boarding the We

stronger outperformed invested our in Hawaii optimized as And new with off. Our to actions expectations, in are paying we performed primarily development and franchise. portfolio Hawaii and markets these cities line further performance our to due Hawaii QX. Mainland expectations of we in

interisland service and Our product. generating is to primary take incentivize will This at not to and Southwest this experience try and goal point local of introduction new among is Hawaii travelers our development, our service. with awareness longer them uncommon

Now and from QX, and demand looking trends business expect at bookings the sequentially we leisure and strengthening, holidays QX, revenue both to improve is strong. for travel are

in XX% operating XX% XXXX. range QX revenues to to expect QX of We versus increase the

revenue improvement is The is we September trends particular sequential ramp XX% revenues benefits be down and QX continued as business to from QX in in managed revenue as continue in with expect QX down XXXX. seeing versus XX% expect We compared we business revenues initiatives. to are side, XX%, of as we operating base the well – improvement, business yield improvement from on sequential

Our decreased versus slightly, XXXX, guidance Hurricane capacity line QX cancelations QX Ian. was X.X% despite with from down which flight our in

Our expect to than XX% length by perspective due approximately little XXXX. be December. and continue increasing expected versus QX is QX to previously X% flight capacity Hurricane is Stage we to network is we and Ian be a this bit guided QX through a now a lower cancellations to down restored from move as about

we year-over-year to XX% Looking QX capacity QX and ahead around year-over-year. to next capacity year, increase XXXX XX% to expect XXXX increase around

ready markets yet, network aren’t we about guidance year that that idea airport being an from to talk the should growth from means restored of perspective, of capacity you borrowed the give next XXXX pandemic. we new the to growth capacity full fund restoring a When we during While Southwest provide that key rate year. fully the

well I’ve and covering last new our going long new earnings call update prepared our Officer, Chief with would goal will expansion. and airports commercial Ryan Hawaii time, forward. Green, be will his as very for year-end closing, role. a In the qualified my take expanded capacity XX Commercial he’s plus for Ryan recent network be restoration over So worked our and XXXX this

Ryan met Chief the have recently in was most Marketing our you he of past, but Officer. Some

conscious new Operating Mike, you. I’m the his past network and function operating on job, will to As I as standing I reconstruct as and we thank leverage shoulders planning we Chief I’m being you, to the it retain increase And transitioning for Officer, strive my to the over move turn pandemic network. that

Mike Van de Ven

you, Thank hello, and Well. Andrew, everyone.

had and the We’re tremendous front several summer that have deal staffed our reliability employees weather And very each the of and contributing our And areas, with, of and on the I the we to take They’re quarter. very most busy customers. working employees that travel now am from care season. pleased in in the operations that training, great delivered they’re with now hard industry third through aside to completed made including in groups, work we’ve the progress getting have their line. properly other more initial some

our of hiring and frontline has So groups. over in been XX% operations

published Second, revisions. material schedules making flying our without posting

more our mentioned schedule and with quarter, we third, provides just Bob third that and in for flights. markets, delays. employees have And the when of or As much or customers. end have quality added quarter as depth our non-stop short-haul Andrew ATC were mentioned, stable our with more more the more weather schedules options last we improved flights business we’ve

We flying of performance the third to quarter, within through as was and on-time minutes or stable XX.X%, of X% Memorial And also rate line flight, performance more between on-time the operational of into of flight their operational time. for performance. XX From heavy more canceled we arrival Department across with summer to completion metric, means our customers referred bases, where more by Transportation really Labor every travel year-over-year nearly XX.X%, pre-pandemic to which we scheduled performance, their we and our our changes Day, on-time AXX performance. be. slightly which destination those all aim all than improved scheduled the in Digging including season, was have getting that’s crew and Day that’s was our our our support a of

within an their at XX.X%, be look vast on-time it want increased was always Well, time. our to getting customers my of reasonable you hour. on we very are few getting of their customers currently our majority if flights, within to within our that destination to to performance the XX we’re destinations consistently and canceling XX.X% minutes, point is we amount but time, and So a

but challenge AXX, last is think our about tempo. it’s I primary operating this talked the focused and I repeating. know quarter, we And that are on worth We improving

by work. load more are that as And are sheer that impacted some didn’t Our things operating being challenges causing weather us delays and air environment just got is tempo require staffing. airport time customers of all number of to traffic new exist these hires from control the tend as We’ve leisure factors, the and starting well pre-pandemic. more in both our

However, we have towards at October historical great made capacity we’re to pre-pandemic continue on-time We’ve We nearly momentum XX% that our doing low improving. here with solid performance and progress range. levels. got aim our in results, operational running the in

hire to and just have more continue continue continue as of a well training. get on more employees. hiring get for should training. just that next We And couple holiday thoughts even us upcoming through network and should year restoration And and through employees and train new prepared the we we our season, to better

the aren’t year, We groups just work we for – over of still hiring We the to we we we’re hire place. focused more that and summer attrition. seasoned continue just this this XX,XXX so most locations, year net XXXX a and expect in support in though, and have to spring workforce add employees of to hiring

and the for as we hiring pilot forward. to Our training be factor pacing move growth continues

program are attract and robust. candidates, Airlines We the a to pilot pilot to onboard new continue high-quality training Southwest to

for and is role prepared for XXXX. and years, he’s going Chief looking And serve year to Andrew role team will on that to would take continue been on energy the know into matters hard a variety as do for early Andrew I We’re these part operation. know team a I I’m a to his doing as new adviser an of bring my transition want well this and pleasure almost to work. been I especially congratulate forward well. next to role training operating and the I support Bob XX had to perspective going capacity thank just entire I’ve He’s at Officer. executive like well will have Watterson, Southwest to but you continue of of needed. all that And the least, certainly driving our to to role. modernize I new our pilots, employees friend, that not into thank all the then assisting say their want last, for years. Operating and maximum to company I’ve that our and operations

championship a continue I team, it. truly will is part Southwest and be to grateful I am a of that

with to that, will turn back you. it Ryan, So I over

Ryan Martinez

Mike. you, thank Well,

We queued for up analysts questions. have

your So please quick questions one go and our Operator, a follow-up reminder needed. please, and to a to keep ahead Q&A. if begin analyst

Operator

gentlemen, question-and-answer and [Operator Bank questions. question your now go Our ahead we’ll America. Ladies first session. Instructions] the Andrew of begin from Didora with from Please comes

Andrew Didora

know Investor Day questions Hi, one XXXX accruing reasonable any everyone. CASM second, in labor cost outlined going last quick you’ve for single-digit after the two you the – this any on good deal low Tammy, change growth how still does seem But current afternoon, that peers do you way accrue of been agreements here. I of your for of most year. at recent environment? in your forward? And the then the on costs, does from

Tammy Romo

all your you, labor yes, question. we’ve Thank And consideration Andrew, here. contemplated for as we’ve deals of Yes. accruals the into current our taken

with baked been the line that we the shared we’ve Day, think Investor laid set we’re – guidance of line you. goals. And in our in you those with – in – into all longer-term terms our of – out goal the still that has longer-term So goal with I set investor at

So clearly, here the the we’ve and rate we’re and employees that back choppiness of had bringing network. terms aircraft restoring in some

you very done provided our to best in morning. at some of looking least that But ahead our here, the to include we’ve this cost lumpiness trends. created that all guidance we those for XXXX, So inflationary and pressures

Bob Jordan

The could some by to the so that folks of that – the noted out entering under these – out extent, still The that Hey, inefficiencies deliveries with this stand. Tammy. agree – some Bob. only, Andrew. delivery issues This an goals – example is that going line. you’re some we as still XXXX, into going some are Boeing wringing caused you delivery Yes, with persist back I could you of saw thinking if to training, be, of and just

Some no, of XXXX, early goals persist the could that stand. all but absolutely, into

Andrew Didora

Then billion Understood. Tammy, on it. the nearly balance cash Got $XX in sheet. second,

in cash? move we your into the With about level think it interest a it’s rates, investing are income this how forward where interest just going And you reaching how should – offsets it expense. Because looks like XQ?

Thanks. color any be great. would there So

Tammy Romo

question. No, great Yes.

You’re improvement absolutely expenses other rates we’ve seen saw right. We in as here. our improve an

are to continue cash we do we to expense. secure be no, obviously outpace but what in interest we consider yes, interest So investing to expect investments, that income

Andrew Didora

you. Thank

Operator

with comes go question from your from next question. Our Scott Group ahead Research. Wolfe Please

Scott Group

want XQ Good afternoon. different than some RASM in deceleration ask about third acceleration. Or noise versus the but Hey, QX? just is this was It’s I acceleration breakage around RASM others, your others. trend there from Is I strengthening QX different underlying real QX? to guess quarter than thanks. the

Bob Jordan

I’ll it’s in just noise chime I’ll between Scott. the for but continued and I There start a business. let second, the think here. just really is – the little it’s in quarters, Hey, Andrew just a underlying strengthening

on are and And talk You’ve going trends, got all the business leisure about blending been of what’s leisure everything. strong. there, there’s kinds of really which and

period. leisure typically been are seeing strength We have off-peak in what would

under to see or points period And just typical have didn’t been we just only, this three a sequentially. a typical factor the an year, two summer As example would year, September in that. load

sequential So about that to two there were above points three trend.

trends in down from we strengthening we So strong. off, quarter fourth Coming reversed did XX%. August, the in the a September, those July have in and got September’s really is in business leisure see expect we dip and really, to then traffic and

it more about continued in So no, business is Andrew? in you’re it’s leisure the and revenues quarter the seeing fourth than strength – noise.

Andrew Watterson

attenuated. and back business ups had unexpected. there as during But we post early kind took has line and a it unexpected a nice had general, down, but today, from till of And it’s QX, the company-specific restoration we it’s that travel now line either kind of the yes, was as trend downs business away vaccines saw summertime, some up. And the pick saw travel, summer, which is, add said, had kind at Tammy some time, or ticked of some – in times. I’d gone of exit same up. back drags during QX we have in And we business travel What then weakness

that to QX. less out, think took combined things volume that QX combined little showed of from sent we acceleration good and us actions some both we those with on and a And haul yield bit short so the I

Scott Group

to Okay. if in of your to sort of wanting dividend of more color signal size sort comments don’t just much much – you a want about And share cash, that of terms expect there’s I’m there. dividend? buyback any keep in is Tammy, elevated of don’t expect then, buyback or terms

Tammy Romo

be get my covered our long-standing back tradition allocation well And continue want decisions. returns. drive in value. I we to shareholder and we remarks. Yes, growth to healthy we thoughtful that to want pretty future of Obviously, to in Clearly, capital our

dividends end with have as a of but aware, quarter. said really And ahead we’ll I I a the restrictions say earlier, capital a as changed. and history, be we reinstating that more so the high detail, continues on December, would in us. to allocation dividend dividend you’re to long-standing priority haven’t third the for just XXXX And repurchases PSP priorities we’ll plans at – expired As you share discuss just look our we our

that importantly, shareholder and do As our negotiation our certainly up share contracts. open of opportunities to repurchases debt, all we’ve continue invest at wrapping been been our we looking just of opportunities people on resume it are return like we’ve labor our company the look we to focused doing done in time, for intend of for in as our equation, we’ll continue right us will here there. – the for And And reduce have we year, and our past. make part this sense to and to

apprised here balance of think our step haven’t to it trying to we not of continue that. all I seen keep to So And important but plans – are – as the we certainly, to we you so want back so you And just monitor repeat, But this to environment just of today, front. all on as to the that we’ll talking And remains we’ll far, is environment. just them. again, steady. we that update good any we’re assumes demand

Scott Group

Thank helpful. Super you.

Operator

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

Jamie Baker

everybody. afternoon Hey, good

of to your would increase I it and set pilot forget signing accrual the your being adjust metric – deliberate in So ratified date if American question upwardly accrual and mechanism. it is XX% with follow-up – Tammy, just Andrew’s reflect a a a you that? tomorrow it United Hypothetically, understand contracts and I’m to Or just so here model?

Tammy Romo

I’m our not take into you, accruals. on going rates input speculate Jamie, to labor contracts an what market – in with but any particular percentages, certainly and as we

that which job quarter But best second with and is we as there – But do starting don’t what those evaluate that. in quarter. obviously, it’s we estimations back involved update beginning our necessary, rates. really not labor been the we are – of doing every the we’ve monitor do and feel estimate we to is So

Jamie Baker

throw off I dramatic just for to data. need with being did was percentage. the you I the didn’t miss I But Yes, it.

you every going the it on You to don’t you upgrade what’s do or in say or quarter market? update reflect

Tammy Romo

We do.

Jamie Baker

do. You

and Is put your of then we Or bring the you differently, the labor one much capital deliberate? Okay. I when deals, in it? returns? reading prepared and Perfect. to then up view you too to the am second, priorities, that emphasize you And achieve returns. into tend in listing remarks just question, capital need as deals should before both topic labor reinstating criteria of Or last

Bob Jordan

more reward a again, month Day even Jamie, Investor then – highly know lot to want this even to with don’t Yes. and that get employees. sharing you capital labor better mean December. very it’s these we’ll prescriptive going in more in us important just think we’re Board great about order, be done. next deals our Bob. we be for – at We have to be but this them be our I And They’re the We talking can today. in them. that you the paid I to terms want I it’s with exact is of of returns, paid.

see deals You’re to by starting others.

see TAs out starting there. get us some You’re to

be no, which priority priority people. the debt, high then dividend But reduce opportunities And take it’s So is – getting think we’ve the we’ve clear deals would – our our had restoration. the for a very done. high to labor I as done to us, you’ve seen

Jamie Baker

well, The answer great. it as bump, too. That’s like your obviously, Okay. sounds,

Thank Sorry that. you. about

Bob Jordan

may have a You on package porch. the

Operator

ahead with Ravi your question question. Our from comes Shanker next Morgan from Please Stanley. go

Ravi Shanker

on the little operational Thank you, after, over a see obviously, everyone. a to year reliability the traction Great there of trying.

Thanksgiving robust or So of surge was one that a like a storm you – to for I like just to support bad if to really get of how sense system wanted winter or huge or do like like given there days in is travel something, enough there’s slack two that? – we during fragile had a feel be able or in the some

Bob Jordan

deal But four have this about what’s with three have Ravi, to then staffed is ago. is just we details. helping want when But of months things, I are just the there much even is mean, add to you macro of everything, it today under-flying to of aircraft Mike are one we think I really, we here our that. better things understaffed, aren’t – were we so margin drive talk in to our staffed. because there kind several are topside improvement. with just one the Number couple a you’re and affects go Obviously, getting we are pilots. operational could Bob. I any happening that just don’t issue, ways than

schedules the the difficulty. longer our very then I hard adds employees, to big it’s think, because just other it’s The thing operational our spring, early committed summer, not customers. is part – in hard on And in of it’s late what we really republishing we any republishing committed, on our

to So improvement post and seen operationally September schedules, the improvement not in we and republishing October. committed real in here summer, are you’ve a

the our OTP are October our scores in NPS think in and I XXs. is low XXs

but stability Mike? operation is have base you’re of the better much going And think so those always reasons. the IROPs, yes, for I But to

Mike Van de Ven

trying Yes. the very year. an weather high all we’ve over good add sure don’t of our them in purposeful match stably. have And the But experience we for been we’ve all the that really and much I schedules Ravi, we challenge kind of with to operational that be there. the very to summer our through would make to whole had load – during in factors, difficult things were navigated conditions we resources holidays,

like really perform I the the set as season. go Thanksgiving holidays over So feel into and we Christmas up we’re well to

Ravi Shanker

What’s already? Very much be be could boost like? it take TRASM? fare how structure the this, new much but follow-up. encouraging. rate a a guys few I to months What’s that? that update if seeing class XXXX? just And ago. I much a And the How missed apologize of you could we are maybe introduced And a how in on

Andrew Watterson

The QX. of about we Day fare and year, last we about the new of talked Andrew. and was in at between It’s Plus, EBIT. us give It is product, next we part Get rolled billion Away $X Investor Wanna said bundle billion year initiatives one out would of $X.X

of out still cost bite-sized a do our additional customers didn’t buy features take for delivery rate. have pay the that large that for and more the and I only we so don’t sell-ups huge the customers have will us anchor will to of for Wanna Get What have item the will line that said this allows for out Away, majority is again nor we So say break break us.

have was They’re we They’ve to customers. but product, on how don’t a it progress different perspective, which rate target for cost a move taking take inside cross-functional customers. whose a merchandising and the different costs, to price that. delivered – well it already is And have and for job exceptionally great communicate done intangible a that to actions is, on our they making from some So and delivery. team big take technical on

business its it. be happy good track are progress. on case, the couldn’t we we really so seeing and to It’s with And hit

Ravi Shanker

Very helpful. Thank you.

Bob Jordan

pleasure. My

Operator

question Our Duane from Evercore. your Pfennigwerth from comes ask next question. Please

Duane Pfennigwerth

I call to ask since commercial, Hey your question. on wanted thanks. this is last a revenue you Andrew,

think world the you new about the indexing think are here? Do you about should stickiness Or thinking do still the of how their deficiency? changed? the people term, yields attribute be thinking normal longer an you And How has you environment? yield just in to to capacity inflationary So of environment would the XXXX? how much of context

Andrew Watterson

revenue call. I year, entire comps, last my on But so question philosophical we’ll the think next XXXX about hopefully, appreciate XXXX. talking I start Well,

I the industry. recessions other we recall. And do recession this early this, recession extraordinary. from those a maybe right bounce-back supply-demand [ph] but mismatch than one certainly, of And any the have XXXXs, stronger it You was going a you that had kind in a that of back like now have was XXXXs,

So unusual like it’s demand supply do quickly outstripping you this. have

whatever, next hard supply supply of and back year, industry generating come So having economic dates, softness you up. more that trouble to years trouble think, their while, are demand. for – will I meeting going industry to have an kind of airlines pilots next now. And to it’s target Because the a quarter, to given to going along going it be chugging getting take the whether and for it’s for at is some are come keep delivery airframers level a couple having have by

tailwinds will as So, yield and a while. it pre-pandemic, have I I think supply was couple be years where we demand have a of think aligned not as may for these which

tailwinds. of So as years that’s a reasonably headwinds see think about of and definitely far I couple but in industry, demand one supply as this can

Duane Pfennigwerth

And Southwest in might Appreciate any or wants Bob in company, our have for priorities. whoever maybe it, given opinion. margin-focused But different you then thoughts. year, a is those

year? goal is next what recovery worry margin we’ll expansion transition XXXX margin this guiding growth? expansion and capacity unique about Are So that this is for Or the COVID your so sort been of light XXXX for restoration has beyond you year? solving

Bob Jordan

Duane, hang they all I think together.

XXXX. back into year in, summer. is pre-pandemic into the the we’ve That fleet. we So, because network. We words, strong markets goals. are stuff can customer to next we important the of reliability. very that to in, is that that’s Why this be of network. get capacity a ability flew whole need strong our by the that to restore the mean fly restore other restored several restored we that that We’ve they’re got base. – really going think next XX% fully all sort We’ll got to get staff, pilots, were so that’s markets XXX% ops We into we we year continue In we I enables have our back so going end

market. opening a So it comes risk much new at on than less

So grow margin to performance grow revenue that no, discussion, of it revenues, goals those is XXXX, – the the and profits, the on helps. to top to grow ties goal to because The goal – but margins returns. in grow the into in

Duane Pfennigwerth

thoughts. the Appreciate

Bob Jordan

you. Thank

Operator

Our question Cunningham from your ahead next with from comes Melius question. Conor Research. go Please

Conor Cunningham

time. the for you Thank everyone. Hey

– You Like and from a talked training fair pilot your general, problems the just to throughput like about can in is a bit it seems one just standpoint. an of there I’m do that there? like anything biggest could I has the that’s there in hasn’t you hasn’t a but issue fixed, like a drive solution been I’m been while, feel for been it this that better and just some there. term near surprised efficiencies bolster

Bob Jordan

want We just confusing not up, to just I between I we’re to this – having – point sometimes were Conor, want having training. and hiring it’s out. clear Yes.

We’re not pilots. having any trouble hiring

pilots We’re that we getting good, great all pilots, need. the

an everybody We’re capacity. different through There’s process. That’s training as than getting overbooking max just classes the a example.

have We we lot like simulators, of have a XX?

Andrew Watterson

XX.

Bob Jordan

XX.

We’re adding three here.

simulators, is training but a got of the we’ve So, pipeline lot full.

Andrew – constrained. being about You whole the talking industry

to this is but think industry really what’s going some in – to constraint really hiring carriers, extent, I the training some the that’s the for on processes.

difficult time So what about you lead an if on it’s about you simulator do because a ask the can example. really it, as years, is

any terms longer you in, don’t that managing bubble. by of in So the you get time need this it

is So going the The training is – full. is main point great. the but hiring

this pilots of fleet, Mike, that year sort so late add aircraft our that next anything? plan. to hit X,XXX the hire And was we and pilots, will to is and will next is then the have you and will to the that. X,XXX year hire be plan plan The we’re plan we catch do whole hit pilots, the year to want Our that. flying

Mike Van de Ven

just jump I’ll Yes, in, Connor.

that we So yes, maximum at throughput training training with all infrastructure of throughput, have. our we’re the

got, think, the the there XX bays. have in simulators We’ll So, we’ve at XX year. beginning of I

got check instructors to do flight We’re to that. on enough go airmen We’ve that. go do staffed fully

got And training. lot have recurrent just the hiring a pilots. So, normal We’ve new a of we lot we’re of captain upgrades.

and Bob and there. it So, as then in at training capacity mentioned, in XXXX XXXX, we’ll off, be maximum beyond falls

as we’re putting we’re through can. pilots our as we system So, – not many

Andrew Watterson

our this. more to is And I Tammy by on to made day-to-day, and putting pandemic, compliment when where to either. facility expand focused order training on the In middle no are in the people Mike simulators have bays, else they doing of decision the one

bit. when by So we quite capacity out, than now came had more pre-pandemic we have training we a actually

were thinking we’re though at this was else And thinking tomorrow. they pandemic today, the everyone about added capacity during was even capacity, when so about

Conor Cunningham

sorry, XXXX have fair I’d I margin roll hedge inefficiencies question. on appreciate bit so like probably you of And some – off. of piggyback benefits that still your in – to But Duane’s a detail. just and the

really asking drive kind we’re that any pricing, just being levers there aren’t about that could on is out So, people year appreciate And you. really forward of there sustained but of outside thinking banking revenue it. not profits higher I’m I other revenue strong. next about? Thank

Bob Jordan

again revenue Well, for of you’ve reasons. that’s got number and strong a performance,

got The as other pointed online, thing, Andrew you’ve out. fully coming our initiatives

track, the of hitting is right EBITDA sort terms about the our told contributions we’ve of initiatives. in [indiscernible] that in we on So been you contribution revenue XXXX, and

have do front. to on the We work cost

inflation, is particular, Some categories. what in some their other inflation, wage of everybody pressures cost seeing, our are

efficiency is in levels the that flying They’re folks pre-pandemic. argue, just Another fleet, were that not training, would all piece back are your seeing. to of everybody that inefficiencies again, not almost just I you

in to sharing particular, in at is of operations about the we’ve of December. to – opportunity the work a Day our we an this, area, and of here cost lot operation, that tools, so in to – And we’ll take ways you out got on especially processes, be talked Investor

Conor Cunningham

Okay. Thank you.

Bob Jordan

Thank you.

Operator

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

Savi Syth

afternoon. guessing Hey, a of you the know a revenue Because has pricing? from of you Can function I’m revenue? well? that in decline been that from on pricing that earlier the is saw generally Is good kind kind outlook just managed business I the And of June, as Or I softer gave is ask summer. volumes here. the

Andrew Watterson

some both in in July did October. We yield managed June and September Yes, from Savi, around coming volume business, softness to August, then Andrew. in which it’s and and turned out see

was clearly it behavior. so And different

Therefore, to As for of Also, work I anecdotes July, hear had of been but during we of then PTO of caps. mentioned had of do get people post-vaccine the work, remotely the there’s in on of from And hybrid put to reinstating kind lots therefore, summer. hard of take but could start-stop, kind are, place the remote companies it’s travel – you be drivers rollout. many the kind business clear summer before, super start-stop July. of you business managed kind for over companies where the reasons. PTO month exactly don’t And

September of trend to resume lots travel, slowdown October. Day Labor with a from but nice Labor So anecdotes then and Day, these summer in post fit into with a post that continued tick-up accelerate

are and managed So business this much too what for now both we exit not summer. about it is was but clear the why, happened and volume fare improving as

Savi Syth

kind a or lot I maybe plans low delivery, that end. think there’s a in around see even in around know if you could put XXXX is might, I delivery you of around uncertainty terms if And but and could what capacity – helpful. of high of from a guardrail you guardrail a terms realistic end a just wondering fleet That’s what I’m

Andrew Watterson

I the Bob pilot-constrained earlier until of said year. we’re what think next that end

doing is bulk delivery for really we’re next to efficient for bulk Obviously, paced more much the capacity, not really it’s aircraft of not by by these rate about a So fly, year. the the that’s are our pilot deliveries. training year of the Boeing but of what lot constraining XXXX

Bob Jordan

And way that think this I got you’ve is think the also given of – – capacity about you. we’ve the to

ready you to out XX% guidance the the the you – year second offer given we’re but capacity, probably of quarter, think maybe some the quarter we’ve some XX% in give So, in not about that. you and full first to gives way XXXX

is it that just for your that capacity Another capacity just vast think from of question, the first year, in of XXXX. but majority implemented when about was to carryover just wasn’t the half the that, to exactly you the tie –

I it’s of upwards think, XX%. Andrew,

Andrew Watterson

around XX%. just Yes,

Bob Jordan

got want. we I the about that’s the that where don’t that the Andrew things the the network that delivery pilot-constrained the of the somehow likelihood XX% restore our see a over to ability we – on deliveries through put where now to agree right limits XXXX, all is I stuff back you – with Boeing place added that end Because, from that front. if into helps. reduced The of were we just capacity again, point So as don’t scenario in we’re are year. capacity carried in

year for that’s next whether to our intent middle assume they’ll any summer on we delivery to, I or as by all companies, along stabilize as is through – I schedules, is do to again, Boeing, So And but don’t to our of parts the the the whatever, like deliveries. work engine fly will continue year, speak moves don’t those be supply I I begin chain, our to affected intent intent we would want or issues. publish think expect those. those you

on think it will I no, XXXX. so an have And impact don’t

Savi Syth

That’s helpful you. Thank color.

Bob Jordan

You’re welcome.

Operator

Brandon Oglenski from question. comes ahead question with next from our Please And Barclays. go your

Brandon Oglenski

being on taking did your reading than now you stage I of we’re and past. correctly, pilots recovery? constrained by lower you stats thanks have and Because this everyone afternoon topic guess length can good we network the I my if actually question. for in average Hey op a stay think

city the here. was maybe past past, composition the the not coming the in flying challenging of long-haul So of I is it that some the pairs the get out maybe as that but would you seem of is same it, mix

how trained, understand of perspective just a could scale everyone how today? scaled And you you us If can from could you from fly? like capacity here? pilot are like you fleet a have more large you where much So, help could

Bob Jordan

the is changed I picked it’s have we It’s order capacity. – we which the think restored really – a network in – we’ve driver. we not it’s an have

this network is we’re And a post-pandemic. got months, of year, restore last business short-haul helps that here little reliability, is bit different to a few operational bet some the which so a the of of which on what lot chose seeing we’ve recovery, the different a of we bet earlier than in

is higher I be sure your really I’m But enough of we of is six, if it’s answering pilots would think exactly And that roughly property all the aircraft, we could five, order restoration. fly question. fly aircraft so on to the not had it the medium this we haul to our haul, the And of fly. this persons really It's factor than of capacity that's flying eight seven, more mix ASMs want is haul could how or right year That's the long add more but now. anything? we Andrew, about short much are

Andrew Watterson

contrast through true. than and haul stability. summer so last We hurt. winter bad from against we A restored a we much the we short because haul longer day that through last hedge over day could bad had we in paced based just to demand fine, had had did them that a That's starting we sooner become year. length days fewer of network it otherwise proven determine very bad We on a stage QX And has the the short to competitors. in bad summer, and our lot this would've of that got with days of robust operated we've because a decision when some

does departures Now medium have back-up won't have city length imbalanced a before. the I and you much where the every balance we'll haul essentially year restoration, had longer to adding network. It'll from bring fully shorter to well, frequency the through stage number point out same of but to so when now haul, talking about the of talk a network end restore next lead of as say kind we payer that is we in about longer we're

for far to its as will friends customers want holidays. as network have We and business, of fly who will serving it's visiting kind relatives every pre-pandemic and – or city

and the by of end see length of regular think stage you'll year. a So next Southwest I kind network composition

Brandon Oglenski

the Okay. quick And I for just appreciate response. follow maybe a Tammy.

the It contingent So then, the in constraint? full-year really on biggest XXXX, Boeing guess outlook pilot that's for that sounds is right? CASM-X not issue like it's I training more the improved deliveries

Tammy Romo

how on that that think is fair to I yes, assessment our ability a bring and That capacity.

would agree So that. yes, I with

Brandon Oglenski

you. Thank Okay.

Operator

next SIG. go Please Chris from ahead with your comes from Stathoulopoulos question. And question our

Chris Stathoulopoulos

Good afternoon.

prepared realize could I end pricing, travelers of is three evolved you or place your over fair could travelers you remarks mentioned absolute has level, but through give persist, the to last Bob, in think in incentivizing And in that which of And if but about was that Southwest, your at some color that year, years. should special the aware into the as of that you perhaps persist pricing not about we of Hawaii next that talk making how incentivizing wondering level is that So on level year? could the strategy so clearly now unsustainable, that or I – try Southwest.

Andrew Watterson

in since in and low we not guarantee all the current common. at I'll start a me is and about but off we is he Andrew, needs low forward have This what say summer pricing talk special Its will a Obviously effect customers. pricing, we and end is can really to. of the price at where that where correct won't have for we Bob I then price

You back times. and over many we've history done Southwest's many, this look

tried lot trials. lot they not were stakeholders, work this unusual with do They as Bob saw too us they customers, there not of and backwards had aware of know this I a us, knew didn't Southwest, we much. we're incent to summer, of we much. us it's of past met to So and a that Kind here. about

as all so time we we use customer available for local seen it far this really just and growth The And make and us between the for the us to had trial people from interisland. we travel travel pre-pandemics by what that's monopoly. to explosive a had and to has it we're before not vacation In it before the the island come from was it reduced mainland had were was as levels, but general, much travel interisland traveling used in of low fly the kind islands. between we've its that is back not easy to back back that, of a try because people much it kind when come visiting incent they to to

in Neighbor to wanted go mainland your drive. reasons in a for back one games all so to and the to traveling And get of to getting family the the football we It was Island. habit car might people

was allocate think weekends. and it before used And can on prices different how budget, really adjust that knowing more behavior, them high and they to the a compared getting service. what it was can them once that to islands, about back they're so having you to to low when market between get prices the we going robust their count interisland got up people going to a And is ultimately which you they're characterized by on ends do monopoly –

think is pathway So this a that. onto we

same the at also been time changed. schedule our Now,

a we Hawaii, offline Island flying dimensionalize kind that on customer Neighbor includes viewed into and that as entry we well mainland, and it franchise as Our franchise, based feedback. of as

So of able not we kinds it's you're and we went please heard can from mainland well visit Southwest, to heard before We out sad great yes, you being from but we friends give Hawaii stories flying, started interisland to going relatives. the of to all us people, and fly travel?

to figured network out robust put local feedback. mainland us. on and we would customers, And on and of that very options a please back flying paper good looks the based came We plan. Vegas. the lot of provide adjusted good interisland good from combination very that short We've reliability customer mainland we heard haul long business so And fly into We to some flying. a short our have – and that some kind to

added said, hotels, back Southwest, so we hey, it's it. because Vegas to home expensive. but a They they ever nice very better been offering you're you've if more So but schedule I quite have to they're need great can Maui, options get I –

you come don't you're you over, So stay if home. back business traveler a

night Island look when serve home that travels able Hawaii, they but is need get to in trades people which back And your for collar workers, travelers white dock so go they of true think to workforce at and their each business so as that you Neighbor business customers. you blue construction workers, to and workforce, they a have also be collar

kind round we of led that link, and both have crew aircraft was in us bit such having not And off with just offering didn't that So parameters a little Hawaii, whole tighten kind of fly there scheduling stage we bunch trip our started really schedule so our, of had new to were able it very were bit looser productive. to because to more of more a to up schedule because time day that span as long ability. us the and because and that use a people new new could a more a

kind to that of of able lot increase us. offering to we're without a So cost

and droves I maturing. they're think fits think and down I franchise So customers local responding by all our offer. introductory that's to, a We this and the love our fits product it, with

Bob Jordan

spending years call we've my market us some stations. much island would a this and needed. what really chance with they today say, are using cities, really gives yes, – and and grown to better And those something us. in was Hawaii of last in just clear, people ourselves wanted introduce successfully lots a I but and Andrew new a would pleasure it May, ourselves. and traffic – we into of to I to gone years pricing know tactic Southwest XX had what we week this would And time to have of the that was that – introduce very don't the markets, drive it's mega say, Yes. really very thing And new is is and similar. years a I've – been in us, was clear and just and the introductory it's a all love they for It I we've also here schedule and and inter used in gone years lots

Chris Stathoulopoulos

follow you. thank Okay, my up. And

for travel case return but the year you, this first we U.S. So outlined first natural and an a Thank not plans obviously their now. are RJ the next is as to the whole easier in few capacity or that domestic at to we for next bodies more but half, equipment relevant for way you is that bodies markets? half scenario think the these year narrow the low capacity whole that completely wide is mix this as digits, the perhaps for if bodies U.S. base of points. wide in a about Narrow double look environment as also up normalizes bodies, domestic narrow U.S. a down up of yield just you.

Bob Jordan

I plans can't their speak to industry and the – I've really are. what

term capacity with lot look ahead sort capacity intermediate a Andrew you look aircraft, ahead as us, in for carrier's capacity, you served you we've in have markets if look think will that of suspect all terms especially of I lot served I we have best Again, to a because that noted, We growth, more said got while that for remain if the an of And that, but what to base. successfully here a we interacts yield into I how kind of guess same terms here. at moderated moderated pilot at the think pre-pandemic, established look like that overall the so moderated [indiscernible], back is but a nearly it it in you I'll for just capacity. while. But the have, go customer what do back carry it'll over, while constraints with of does remain a environment see. that of be is would have of we'll if

then very be as putting see developed. that And going so into we to markets have that the different service than all new

of continued expansion continuing of of continuing plan profits. that's the expansions year So the those expansion why – will next plans margins, revenue,

Airlines. little bit So is now Southwest manage I can't we we All industry the see things those a do differently. But environment. manage can

Mike Van de Ven

normally I unable would we would to point this service we say there frame demand, before at into yet know that know time. in that travel we're Bob says – the the travel going we is back market we're that demand,

So So RJs. having supply – we is risk. there, of quite be to are the demand. all think trouble clear or us that It's put that the that servicing we'll right? carriers their makes up demand scheduling We low know all against other

of it down their back up. schedules, kind look into right regional now, you is Ford so And pops flying

pilots they So to regional get here and year. obviously next not are going in cliff change a

can kind flying out actually be is that So, unlikely regional the of capacity serviced. there it's and

you come that their down they imagine would true So as up plans.

Chris Stathoulopoulos

you. Okay, thank

Operator

one question. take from from Sheila Kahyaoglu have with Please our for We'll time more question we question. And last ahead go Jefferies. your

Sheila Kahyaoglu

that's on Thanks everyone. okay. questions afternoon so I two much if labor, and just good have

experience. new will when hires workforce of the first, think year XXXX of folks than or about about for we XX% your one So less have net XX,XXX it's

of do impact speed, there how up think XXXX? is timing CASM about we and that So a associated getting the for employees those to with

Tammy Romo

a as guidance an that certainly as all employees. our about as dilution There a you thought some But is of hire is with there We Yes. morning. we shared this yes, new we've result fund inflation that future impact other offset hand, of that on that we're the is you that to the course. will, of we're somewhat penalty, seeing, some of But if to there hire because continuing growth.

itself as that we out a bit is look there probably So, ahead into washes XXXX.

Bob Jordan

work proficiency lot And some is different of which been that I think group. question, probably we've a asked by

time. So In more other of not you the in proficient. you're training words, over you take a cockpit two becoming pilot got out you've and and are pilots and they productive

and are the it you're proficient. You example, job. the flying on but long trained, of time a understand you takes nuance are the to for fully the jobs, Other ramp, aircraft

tempo the back. get paired somebody You're our else. word with uses Mike

first, bags, thing. of just You're slow kind scanning at that

time in and get jobs their full over efficiency their will back. got as folks jobs proficiency you other So gain we that or tempo those

opportunity for ring to the it out in think for efficiencies opportunity sure But begin does group. I So XXXX of work to is sure, there vary by operation. those

Sheila Kahyaoglu

Okay, helpful. another labor. that's then And follow-up on just

today. and per XX employees coming up that's step XXXX, that think seen you Granted, XX ahead aircraft, we've targeted hiring the Day per I in. at to, of Analyst in to aircraft the aircraft

So about how that think do level we normalizing?

Bob Jordan

be a Day. sharing of we'll Investor at this Well, December lot in

will it of take, things. our a we're normalization think of areas of that to tasks. all tools in number becoming less It's share our and affected it just, the going – again, tools some some I take out. flying lot by the I and so takes labor of of new of example perform XXXX processes that proficient. processes, paper aircraft, and in It's going turn an that of using out as all modernization inefficiency the a think, same again, take It it's number that stuff being the of ring system is will to take to that this taking to will also

extra a have well, the I'm take just a but we lieu also on to have in, of to this aircraft. continue we're manage in flight been like while, going MAX the if takes for making the to X attendant We things, that it like up, take, other side of look to -X, an

employees to to have be the the to how think goal our going about of Investor we’re Day. per so update remains we’ll aircraft. XX in an share and on thinking our efficient And at terms gap in to December close then And that that just context. But

Sheila Kahyaoglu

Awesome. Thanks. Great.

Mike Van de Ven

Thank you.

Ryan Martinez

have call Okay. today. Well, analyst portion that up of our wraps the day. and a everyone joining, great appreciate I

Operator

we gentlemen, begin and will now Rutherford, today’s to Administration Ladies and Communications Officer. call. first the portion media Linda Ms. I’d Chief of like introduce

Linda Rutherford

our to Thank news our We you, to and the and go of the welcome into ahead can jump Q&A. today. Jamie, call right members media

So we’ll would some Jamie, just if queuing started. get instructions, you them give

Operator

from your Journal. Sider comes Instructions] question [Operator Street And Wall Please first Alison today question. our ahead with go from

Alison Sider

that it? that, about could about anything X And afternoon. out this you I you good that how certification to much. of the curious When your did going on could become it anything. so clear Thank reaction sort MAX just if Hi, you share situation of you guess kind wasn’t as evolved? share happen has did year? certification, find you And to

Mike Van de Ven

in at certified to or Yes, Alison, certified. with FAA year chance this of Boeing the next that information the time, And believes at the we this We to a Mike. provide year. and early talked this get get continuously, they’re working diligently the end to to point Boeing there’s airplane need is

I add have anything more And so add than that’s – anything – to don’t other to other that.

Alison Sider

there of of that? that and some the the of the like guess regarding reports prior has paperwork certification some were any FAA’s to behind have or reaction submissions gotten frustration Boeing And incomplete been I the the in sort

Mike Van de Ven

the lot a of there’s and FAA – just there’s through. go Well, mean, to I process; – new both Boeing a it’s

information, think that need to of the all analysis to on just an information about want all of agree I of needs to had all to the the to and flow with process then be time, with. go a it’s through format to questions. you that, they before. you you it. brand-new when There’s trying FAA it and first gather And all, have to that there’s that think just do that information submit done of and haven’t takes And and So they

Alison Sider

Thank you.

Operator

And from your our ahead question. Please next Weekly. question comes with Robert from go Travel Silk

Robert Silk

Yes, thanks call. taking for my

across work big some carriers three have seeing any week variation all and the the in bit of the day about been So that? leisure due schedules a hours and little demand that – of talking of narrowing hybrid across of demand, the of even other travel. to you of days the Are

Andrew Watterson

– business bit. recession, little every every think a changes behavior I travel after changes, demand

So this to as it change well. time we expect should for

see see did reduced, when travel didn’t and you see leisure before. business did travel periods it we So COVID, much often during was where we

absence it demand. finding to of in because now there’s leisure kind September. had in July So more do you more travel used valleys is of prevalent The still that you And to be. kind surprise travel in in you led and – September of COVID, more were the during peaks COVID than more that have leisure than business of

rotate as demand It’s demand as we away off business that, and the It that we demand the back, discussed that’s time. office, that period appears out earlier, leisure a comes to surprise. case Now stick. the and as pandemic is staying. not And back go in the goes into of leisure

so quite And that’s welcome.

some And to and a have you’re going that so that have season level seasonality. of season. tend but seasonality, does off-peak to to – but still peak It’s welcome they’re development dampen and still going

Bob Jordan

I I But coming I think leisure these all of – noticeable. those like and prior the COVID. peak a these leisure the time sort out So off And We’ve are had and strength shifting months us some week and very day of phenomenon, the periods strong they’re of in – typically the mean thing leisure. Robert, September into a it’s right? things, off now interesting, of would been long a for strength add, has do this with of new only the some

trying be them, see can and think to we to real. is careful want is I You What that they’re this with forever. decide

take change. the down, I of piece think and move, think restore I to work people’s they while a this settle travel that’s going as continues I to to of to as continue as and business this, – habits, continues a do as think all we if to for continue it it’s

a business – that’s whatever – So I’ve we’re is period of focused the I would and that new blending are been are trends of strengthening. of personally on and have they long trends are to come decide the time. What’s good. slow that trends really we idea strong. really this leisure, a really what dip trend, leisure The and trend The why for the out business and have

in really quarter. are our revenue overall fourth further the strong. So They’re strengthening trends

I in strengthen further think think we XXXX. they’ll

So exact trying in that’s are the whether things versus to understand detail some forever. focus these of

Robert Silk

you. thank Okay,

Bob Jordan

Robert. you, Thank

Operator

with your And our Please from Slotnick ahead David TPG. next question. question from go comes

David Slotnick

Hi, all much contingency for – Plan to you it’s question. the pass for not B a the very if Congress X, and about MAX thanks just certified a ICAS have you not are chooses Thinking do this or extension? year

Mike Van de Ven

it if confident for that have them we’re to as believe that’s reason, the just And course, But a but off by happen, doesn’t got Bs, this discussing point. Boeing is or extension. David, well. publicly we of some very chance Well, they’ve either plan I happen that at path certification to going an not

Andrew Watterson

Bob we And year. as that can easily next talked, tolerate

In fact, plan network plan deliveries. no business assumes next our X year for and MAX

today. already that can all just operate figured X Xs fine XXXX, so MAX you’ve we have and with the And out we

continue really kind of in of we good can well. we of period to decentralized kind unwinding take having of options it. X is our for that, time as beyond network a such The network MAX a and around the without country benefit that So rejigger

a spoke, fragile. have big hub you pretty it’s and If

operate; and operate you miss for to otherwise to like is spokes hub supposed hubs the connectivity have the us. You just

lot a assets around. have We of flexibility our moving

tolerance much bigger So in to this. some with that gives us deal a

Tammy Romo

order as can our we’ve there, with today, tremendous emphasize our detail a one just here. And to been along thought gives you in converting, us way release to And again and see book have flexibility. in there’s Yes. of last that the Boeing just -Xs we lot

far. to really So without so any able through issues been manage we’ve

David Slotnick

it then given that Thanks. last holiday the incentives have you just looking just or issues for travel just staffing before, holiday are the Sure. And forgive me other at staff plan, avoiding coming period kind said you planning if year? some any extended up, carriers of

Mike Van de Ven

to that resources. where were Well, try our we that David we a year, time we spent their our But we is schedules incentive because sure staffing, last incent significantly – to have of days did in bit the level enhanced quite in to people staffing matched published plans off. making this then we’ve of And to come got the the on year.

So we did go travel we summer. into feel well the prepared to the in holiday just like

Bob Jordan

we’re better Yes, much I in shape. think so

Christmas especially New other Year’s we and The Omicron. were to thing year, with just remember, last dealing

three with addition that So a that were at two and question. to thousands of we weeks, compounded we of in January, being generally, went had out the just staffing, end would staffing staffing than little Omicron early made to we like the December tighter tail it on in really employees suddenly which

of So they’re well – holiday rate focus periods our republished holiday I republish much overall. had of the know moved We these have it we really – times, better cancel stability, we course, we like during staffing that’s last But obviously, focus three And – again, mentioned around operations terrific we haven’t then, I more moved holiday really been really, those and think our I period are because on customers. crews customers summer fall. like Mike, our we’ve this our operation schedules. to schedule that And if the have then always same periods, we And and like had And July I well and you on managing on what makes important X%. our or efficient because managing the schedule. just summer to really Year’s. Mike is this – saw four Christmas under was not will our just mean, we’ve mentioned, the so Xth even well the staffed. our way New around as bottom-line,

David Slotnick

appreciated. you, Thank

Bob Jordan

Thank you.

Operator

your ahead CNBC. with final from And from Josephs go Please our question comes question. Leslie today

Leslie Josephs

the everyone. question. Hi, for taking Thanks

had pilot the much on are the and add to that? I curious X,XXX-hour changes how negotiations know in you for And do soon? you age pilot contracts pilot or are started in then or some other costs do going increase you attendant do think in those Just to from you about you as legislative flight negotiating. think well, much need favor reach rule? higher issue that. shortage any a in if there’s Because regulatory deal training any you there? a general, when is How retirement the than on Republicans your and the negotiations do to XXXX inflation of changes And with trouble think

Bob Jordan

we to you here, talked and And rates, then negotiations as other Mike, – you update constantly about obviously. the talk talk the Leslie mind, – about about rates, don't going I’m I’ll on the not pointed, Tammy those.

with in pilot hopeful our move Because and our awesome look mediation again, employees. contracts, get then that love and with industry, But we’d We’re as to And for week, deal look you our – that both a both flight we and deal deals I’m just are to had it I a helps at occurring helps, are and them in the get us to as last example. Alaska you attendants. inflation pilots soon we at sooner. had want

it at know me. accrued were you look reasonable we you groups mentioned, then would and for to look right say, But accordingly. Tammy would feels think of I until April, I really our approvals get say, last there. adequately but manage As course, we’re we beginning our those I never like all And accruals now, our

Now pilot the seen Mike, in so knows? requirements. the But accruals Who our really changes reasonable. far, move. just happen what markets of terms to we’ve are And the very

Mike Van de Ven

further I the pilot No, we’re are pilot the requirements going is, it fine interested we’re not. what in they are don’t way than the today. and with then age think up us

an We’re employer – of we’re choice. think I

that all the of scheduling the retirements; We compensation, our out that had labor people we’re coming benefits, think when And We really able of look all the result, the have going pandemic. I life, those have and contracts. think, contracts, best-in-class you I I expect the of we quality have at into need. pandemic. the – to the we’ll recruit we the a as

So we workgroups other any haven’t for or had that matter. pilots a problem recruiting

Leslie Josephs

Thank you.

Operator

today’s the And this remarks. I’d question-and-answer Rutherford floor like for back turn concludes to closing to Ms. session. over any

Linda Rutherford

Thanks for Thank media of Jamie. us you, the to joining today. members the

media www.swamedia.com. If Thank other can (XXX) to you you you Communications out you website at can so questions, all us reach XXX-XXXX have our any at much. our or at RockStar visit Group

Operator

presentation. concluded. Ladies thank and We has today’s for attending conference do you gentlemen, the now

You disconnect lines. may now your

Southwest Airlines (LUV) 27 Oct 222022 Q3 Earnings call transcript