Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Southwest Airlines Fourth Quarter and Full Year 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].

would turn I to call time, Mr. this like the to over At President Investor Martinez, of Ryan Vice Relations. ahead, go Please sir.

Ryan Martinez

In we Thank you, and full call. and our then fourth a operator and room welcome year everyone leave plenty XXXX for prepared share our will to of quarter just remarks moment, Q&A. conference

President Operating Officer, Tammy the Executive; Vice Watterson, Green. call on President Romo, me Andrew Executive is our Commercial and and Officer CFO and CEO Joining today Bob Ryan and Vice Jordan; Chief Chief President

A future trends make fourth purposes. And based our reference had quick for non-GAAP differ forward-looking statements our on our we that we our in reminder, will our quarter could which results, current performance. results Also, will today. items are expectation we results actual which expectations. of we from special non-GAAP from And excluded

release please this from morning our and information. to So Investor more website refer for press Relations our

Bob, it that, over with turn you. to I'll And

Bob Jordan

operational morning. joining you, Thank earlier so a we would track estimate the that month right. All the financial disruptions. take healthy a net likely of to like to We loss, prior December talk provided produce a fourth impacts, X-K were XX. this Ryan. disappointed an as quantify on to the surprise. a to appreciate update a investor about everybody to is report this loss I QX preliminary not profit But QX quarter minutes us Well, few I we're

plans. and to the holiday disruption and employees impact our foremost, their operational And customers want them for on I apologize again first our to and had the all

refunds are again, operational reimbursements last and remain and top month, we repeating intensely plan our And focused are focus. a on We on focused had of customer the forward. risk going like highly our customers and that of type event, reducing we

their needs. of am XX. proud the from and we Well, December and more the themselves, flights have they of the XX of take very to care happened, our not terms proud our to While events done people what I canceled of XX,XXX customers that all than in December

few December The storm, the December on to and in operation the XX specific to first were have XX. days additional we the winter through disruptions began the

largest roughly U.S. repair XX the pilot our travel the of carrier extraordinary we created and rolling our the an of urgent repeating impacted and largest half frequency We by flight airports a aircraft to As with in experienced attendant then storms schedules. top along many efforts short were markets, degree. of to and high cancellations, notice and which routings gridlock

volume get time multiple that manual overwhelming on activity on the roughly of December over XX of flight Given beginning cancellations days, December back the action course us that And to thirds. two determined best allowed XX to XX. was to to reset reduce by our operationally with levels workstreams, through operation December track flight combined the flight the we normal

and were creating volume behind us what detail and which manual will know in more Andrew technology in overwhelming cancellations, on and pushed a crew worked this processes turn and our solutions, by minute. that as point, here based But to an put which closing designed. just we But of at we solutions cover hit generally in us efforts

health and the and an mitigation operational created We our operational and streams we several put of monitors So place operational disruptions to approach we if we've in swiftly future Immediately indicator to dashboard efforts risk got work that fortify predefined of signals help alert disruption, the reduce operational underway. move closely following early to thresholds. resilience.

a scheduling the and for potential crew existing We support to crew during crew recovery electronically first schedules, of updating supplemental disruption. quickly We can irregular that recovery tools communicate sign key our members enhanced staffing to crew issues tools established solve operations. the at operational backlog. was backlog to workload system which And to mobilize and member efforts of during crew upgrading we're the the of one process our swiftly in of repair the

steps events term response. underway, is with place operations We understand steps additional mitigation the committee worked we're help to the they've any management an Where are board and with plans. to changes working determine a review and oversee events in early directors the our company's our on taking of short established risk review to additional and that the

work firm our over event that engaged help third-party Oliver We've a several to of assessment conclude consider. and for that for well. aviation make robust walk through us and XXXX place we a Wyman, reassess for we in operational in already assessment keeping next of XXXX here the that will mitigation elements a global mind the And will greater recommendations And third-party additional weeks. had will plan you Andrew as modernization and plans, our that with detail own, in

and the the long numerous up year Reservation System improvement. of investing and investments in history been I and Amadeus large implementation continuous five and $X included technology, over Southwest recurring years, America, North first scale that very network technology a we billion the to an system. want innovation We've both to been reiterate including of business past have per on planning co-developing has projects implemented things innovative like

we're technical system, the and management capabilities platforms, capabilities, new product replacement Hawaii which of an our three aircraft and process flying, That's processes simultaneously DDS systems, of portfolio, the services product, to RM wrapping revenue now in production, actually up new involves connection systems the in which a absolute ancillary feat. ETOPS automated platform is Amadeus a certification pair three for and part of maintenance and other

but execute our maintenance which be also of what We're comprehensive, investments, an $X.X done modernization not on I plans in and of needed our what have what's opportunities largely Andrew and in list but billion underway. Day and That dedicate it idea enhance to we IT to we've meant captured budgeted the spend is hopefully that will XXXX higher accelerate and we Investor our a XXXX. outlined gives spent some plan at operational to The manner. to upgrades operating our of timely recent is efficient currently technology, and disruptions key the systems, workstreams will annual the than you that of likely processes capital suspect

our properly growth and to currently were staffed schedules hiring plans. stick We this holidays We for continue XXXX with the be we properly plan XXXX year flight to including staffed

staffed were schedules. the year currently staffed We plans. and including to XXXX stick properly with schedules, this plan properly our flight to XXXX growth continue XXXX our we hiring holidays, flight be We our for for

X,XXX XXXX, hiring of from levels. XXXX adding in XX% Our over which a decrease for plans new employees call is nearly actually

from execute XXXX. in we the are with book year. mitigation network order plans this the that we Boeing prepared to short-term put have place, need we well restoration our we We in believe And that elements

should XXXX And planned existing additions restoration that in in network will go operational Southwest over cover depth help all Nearly Andrew resilience to will restoring also capacity and term. detail. efforts the markets. more network our breadth the adding significantly that and long

week, customer continue our to agreements agreement proud our with including service tentative of of instructors, And for this our techs, facilities just our work we reach were agreements maintenance several that with on labor hard the unions a agents and, our we recently, earlier Finally, to our people. flight fact dispatchers. able I'm very

have We mediation our And attendants. and pilots market to our the with and we unions and with as flight representing compensation representing continue employees negotiations always, packages unions intend, people. ramp competitive ops our for

impact In XXXX. solid made we for closing, QX, some we plan in still progress And a XXXX. we still tremendous despite here believe in have

goal that we the plans We financial ourselves and are achieve outlined. to Day, targets Investor December outlined we still to our accountable is that holding our long-term early the at it

tremendous And cause that that they their them I'm task. remain me is to personally. to our asset, source of for the and pride the company heart our extremely I people proud and Southwest the Airlines, know of dedication absolutely greatest up are soul the for just and a

that, over with turn to I And Andrew. will it

Andrew Watterson

Thank of historic you, of challenges Bob experienced disruptions on my provide operational hello, some a focus before. additional We hadn't and majority the I experienced to event everyone. comments with color we shared. to what a combination Bob, will the

as However, the disruption. the keep pace forced of the they height at into simply software keep That manual of up couldn't processes scheduling of volume working crew but technology a couldn't didn't the combination up weather scheduling crew Bob of mode solutions, to the cancellations stop fully with disruptions, our and the mentioned, with our during and develop changes.

scheduling. appears solve could stated, automation look the as Based when the the doesn't on what last very a it for use works know well to gets our that Automation domino today, problem future we backward but ability to for tried when was it crew no fall problems. have to longer us, automation we

and repair flights crew begins, crew then crew two, reserve a solve If individual assignment us for members. helps tool schedule of support is decision problems the individual we members; to automation two the by able One, assignments simplify, crew individual use crew coverage individual the next issues. schedule. aren't members not reassigning and To the to before repair member's the solve using repaired

schedules, member with coverage crew the solve reassign can't issues. software crew crew updated to without flights Consequently, members for

So in functional a technology. the gap disruption uncovered our

However, this issue is addressed. being of process in the

it point-to-point in our think can In parts of moving of the X you network, buckets. terms of

our are and feel schedules our confident have quarter very the very published operate confident very for network. we the the schedules. produces unsolvable network, and fourth You We operations. to the problem. staffed flight aircraft have us have flight with network disruption crew we network sophisticated and the the aircraft aircraft network, technology irregular feel new flight in We during time the in of adequately sale, journeys solutions that the and a product call that no point-to-point we an aircraft during Baker we present At did

of the address a scheduling For our updated of in teams most software GE revealed cause quick of of. are crew we that functional the weeks, being Digital event matter which is be our gap and currently addressed to network, our represents in the and notable that in was aware work process crew by the should

events the tool to immediate where of in fall; covered terms systemic for crew aimed a working et third-party. again, three involvement actions; with response. of we cetera. enhancements, Board's management our the immediate staffing, covered last dashboard, by a implemented, the also the assessments and our review in our communication efforts Bob to this third-party mitigation from oversee a review supplemental into fall He happen domino here mitigation at and and level supported buckets: So go access department --

I want to own disruptions is to analysis leaving cover third make can identify the which the conducted undertaken has to management its measures the improve department departments the improvements to party. additional systemic bucket, department actions. significant a briefly Each of with cross-departmental its analysis second while

and scheduling network disruption to a fly number control of create decisions; NOC, of data center, subside a ground of include department fuel network better cold Some XXXX, implementing VIP that phone evaluate the increased examples have pod new the system equipment operation cancellation crew viable efforts integrate for is and items tools in QX to protocols targeted crew preparedness our increase temperatures. such throughput; as assessing ensuring to and procedures, weather sufficient crew schedulers;, and or we support

meant This comprehensive be to list isn't either.

to we smaller you with And share we you have recommendations. for just we opportunities to to Just -- actions that improvement. before identified scale even already third-party some taken share have get the will

the still are weather we efforts. by And if to want of final our terms it led on there performance us we the think accumulation how in operation integrate understand days a and But exercise modernize to is see to to Wyman, bad valuable Oliver the improve events to to opportunities review result.

some this We month recently outage Notice efforts opportunity new of or Air to to recently test implemented Missions a FAA the system. had with earlier technology the an during NOTAM mitigation

FAA and worked it restored to ensure ground the our verification, with dispatched around clock we not FAA constant the pushed We sacrifice the we safety. another NOC in flight that not our NOTAM compliance, valid and to contact any the sure of will flights. and is was And make example before industry before we which that is took time had the Our why safety stop.

warning new additional start and didn't December to won't assist we safety event, protect morning. end And going We used even the head forward. up them. paramount. We the needing simply Safety following we during how did though the executed crew that we event, NOTAM indicators. cancellations sacrifice good that day ended we we is count target a to scheduling, help And deployed our assure not

industry swift had number the So to and processes performance day, in the difficult place, taken actions the a day. we enhanced while in to we start were thanks on-time that one in next

we align recently loop the organizational commercial promoting in the to operations changes And and was Officer change Part VP further the to by stepped when objectives. announced planning, Chief I of network The a This goal combine planning to believe tremendously. design planning and network role tighter into to operations resiliency org order Operating a and functions create with execution related network -- move us and our to I is in to reliability that scheduled control. another operations schedule add will feedback help of this order action network SVP network. is between

late historic we on-time largest disruptions has in American where snowstorms precipitation percentage airlines, has operational month we XX solid. XX, Airlines Monday number trailing outages, of the than December, Through point. Since multiple The the two less performance January Denver. ATC are in seen of carrier, X several California, by been and in in our performance out are

two we our Investor reminder operations a areas: and focus shared of what As capacity to want I recap areas our at plan. Day,

technology I in talking are In quality in particular, and at we terms tools. the addressed First, areas Day. of upgrades, frontline and Investor X much operational improvement of and what staff operating of December our about

the In called I a of design noticed recovery. operating network area quality, area focused

While over assist as Wyman the delivery to of already Investor We this time beginning it our was of us XXXX selected area had Day. that that had not work January. point, at at in part begun planned we

XXXX As we'll reevaluation this accelerate work. priorities, of part of our our

we focus of end and the will part specifically areas again Again, staffing the our slated deliver the In of plans, the be of evaluated crew but improvement. given noted area by XXXX frontline mobility/digital were with I tools, challenges reassessment these of as to continuous of experienced. communications tools

exactly be several to of and line that multiple years, in what potential done conclude before sight opine line, time good I improvements on want areas I but to we what over needs have review third-party the to including span XXXX. operations

finalize technology for of terms to most determine tools our what Now of and investment. and sequence plan are appropriate need XXXX we improvements in

the now to materially the plans. XX% increase up capacity is apples Investor but XX% The this were our year. nothing in toward Nothing has XX% flight apples to restoration, year-over-year, cancellations. in this QX line our Day. in is with secondly, for in And and plans capacity or due our capacity that outlined events growth XXXX is December capacity with old to to we to levels due the staffing lower had to do simply We all along XXXX network headed changed

market And new is strong where the borrowed number from These and markets Airlines as remains key this XXXX customer capacity Southwest a Southwest one are back demand it business base. to capacity in going that lower pandemic. strong opportunities in is the to markets Speaking number and plans, adding improves, leisure we one build in risk primarily have have markets the back nearly expansions up. all we in we demand or fund airport depth. And this share growth to

options it XXXX. itineraries, customers, operations. aircraft restored when create for to do Our fully by delays And doing goal we reaccommodation by And fortify is the XX% about XXXX, or weather the and and of so, that with summer in end have should we regular be better operation have depth should network the done. help crews

the So plan our we investment topic included the the our Southwest of in accounts year. continue for -- travel August This XX peak flight network part continued from July well And for last period. demand of of restoration for in travel back the sale we as XXXX longer-haul on this to to month, schedule anticipated the markets, bringing schedules, as XX. our extended and all network strength points summer

just XXX Southwest higher Baltimore is for a the ever than departures, any days summer flights XXXX. total Airport, and highest Denver over hits grew at day, approximately daily XXX account which

total X,XXX XXXX. flights daily We July in of will with nearly peak

X. published through February on schedule next will be October Our X

want focused moving wrap by repeating are I also each reiterating on we the are we event a operation and that type the reducing of running intensely day. and on operational of And up month. we risk last to forward great focused every had

for the a fact to is that blocking So on I'm continue service running lessons operate people -- network. that, operation customer their excellent and while to the confident do reliable will our focus that necessary just on to I'm our our and learned, and be there we on aren't focus thankful losing safe providing efficiently and tackling will customers.

pleased agreement will reached pleased TWU recently reward pay a remiss our voting Finally, instructors; I'm the TW that worked teams enhancements. represents AMFA, well-deserved we I also represent if flight we who quality-of-life on dispatchers, and didn't commend tirelessly technicians. and our negotiating can flight these they tentative their employees and who negotiating with XXX, and agreements be teams I facilities represents would be These TA to our just reach soon. XXX memberships, who of their with maintenance I am for increases

We our work our compensation on, with we tandem competitive groups that employees. to continue vote continue to other agreement market packages the negotiations unions to pay to a representing intend await and

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

Tammy Romo

you, a provide results XXXX additional some and our will comment I our share Thank outlook. Andrew, and hello, of quick financial on everyone. overview

a in result December, impact, items. results excluding reported loss of million, These we net $XXX $XXX negative and where million of the to expected quarter after-tax we a operational disruptions not fourth driving clearly special are As late be. net disappointing a

in from I XX leading CASM-X, to in performance will previous a and cover was expectation aside our which quarterly Our strong trending line December guidance with up minute.

will quarter cost revenues. and shortly, outlook. flight I to December, and cancellations will operating here Brian despite speak XXXX impact items. net special million, we the mentioned, full still income operational revenue Bob made generating As progress late the we the excluding so our record $XXX tremendous of December performance performance in setback Despite XXXX generated in outlook fourth to from turn in negative revenue year our

$XXX performed volatile XXXX fourth environment. fuel in expense hedge year, Beginning full market in fuel roughly million total, in our with In our quarter alone. roughly savings fuel, year a benefit with $XXX was last million well especially fuel hedge

we which hedged second XXXX, to quarter, the the XXXX, XX% XX% in quarter year. first in second are equates and hedged for For hedged hedged in XX% half XX% full

Based forward $X.XX full be the curve, gallon range, our the in $X.XX now previous gallon January previous XX to to from be per and range, to up $X XXXX the fuel $X.XX up in price first estimate $X.XX from to quarter on we year fuel guidance our price our guidance. $X.XX our per

hedge to Our of of for value $XXX market per XX% hedging recently gains and added first $X.XX expense fair gallon. with a and fuel nearly $X.XX hedged quarter includes in hedging and We premium a XXXX million are guidance our of now XXXX. XXXX portfolio total

to cost-effective We portfolio will expand hedging protection. seek continue to XXXX the goal opportunities to roughly XX% in to our with hedging get

our increase capacity to our quarter flight cost fuel from fourth a to The lower non-fuel significant excluding a three-year cancellations. negative was over cost. December as impact primarily including of profit XX disruptions, the year sharing, Moving a in We quarter CASM-X special experienced fourth operational points. result and items, CASM, the

In of also redemption a to a goodwill addition up customers. the CASM-X smaller to to the majority customers impacted premium There portion reimbursements gesture was points pay of made this travel rapid ASM, XX-point was employees, impact additional and as driven for the value that offered by headwind of from expense compensation lower estimated impact. of but the reward and much

quarter compared disruptions, XXXX. with points to XX% additional than impact due from the the accruals at was Excluding fourth guidance roughly This year-end. end our fourth range was primarily the quarter our up previous XX% higher of to X of high operational labor CASM-X

for have compensation. as we are and open been these market since X, April reminder, all continuously contracts dynamic evaluate accruing labor a As we accruals XXXX,

operational our X%. X-point as as which for a quarter well open to suboptimal to previous increase range points first the to continue pressures forward, relating to is for the contracts. We year-over-year, to Looking higher guidance up to disruptions at labor the accruals than an of headwinds of December This of estimate in levels. is year-over-year January increase well CASM-X operating increase cost due we as X continuation flat as productivity portion in of pay approximately premium to cost X% X% inflationary due experience now

of range The to of vast For compared well lower down estimate XXXX the disruption. December the capacity decrease full X% to change in the X%. from related is previous guidance to quarter in operational to the year X% fourth XXXX, to majority cost attributable XXXX as XXXX quarter we X% higher year-over-year year-over-year as fourth CASM-X guidance now with impact of

year, have results which We year-over-year. labor in offset also our slight a increased accruals this

the effects half we disruptions, second aside December expect from continue of Putting operational to XXXX improve to XXXX half our CASM-X first the trends year-over-year.

ended two of We expectation was more is XXXX of aircraft, Turning X, than We total of Boeing XX retirements. deliveries to previous XX-XXX our a aircraft MAX our which received from which XXX fleet. with XX aircraft. net

XXXX orders XXXX are chain the the XX we from our MAX XXX contractually However, still timing reflected due in this to These the Boeing scheduled deliveries supply deliveries press and aircraft included book of are XX the in order release -X short challenges certification. as morning.

up expect don't this year. to be deliveries on we However, of MAX end caught by the

will We XXX which and which count bring -XXX planning remains our year. to retire year, fleet to MAX-Xs the continue expect of at aircraft to to our we assumption, end this XXX expect continue XX this

We as delivery options in in outlined have for recently release. press also exercised our XXXX,

billion capital current year, spend on the $X regarding line thoughts Andrew to light Bob $X.X range In Our technology this to $X.X billion, CapEx was operational estimate plans to spending. full be of year for guidance. this in with our in in continue non-aircraft year regards billion, and to touched our which we previous spend the relatively XXXX CapEx $X.X of billion in disruption. our includes

investments, expectation But focused executing that additional Investor current and on spend spend which investments plans maintenance. year, should our $X.X upgrades at capital this billion outlined approximately And needed. CapEx range as our total for including Day, on allow we I modernization to both and technology system want to reiterate operational are recurring CapEx includes our

$X.X lease balance million includes XXXX. million this principal investments prepayment debt principal a XXXX $XX.X This notes, to short-term leaves the year. paying of with our the finance $X.X billion repayments to retire in cash $XX which modest We billion sheet. after and scheduled year debt and obligations our a in Moving ended total of of during of billion $X.X

at is expect next XX%, which several very leverage years. over we manageable Our the a to decline

balance sheet agencies. and strong, continue an with all airline investment-grade remains to Our the by three only rating rating be we U.S.

am the numerous unexpected progress through made proud their I closing, people immensely of challenges. In XXXX resiliency throughout our and continued

last tough, weeks we focus been priorities Day. have of not the Investor several sight areas have outlined lost While the at and we that

In addition to groups. plans we already are the open all we labor to negotiations modernization wrap operational with contract our mentioned, of up eager

disappointing, carryover plan year generate we it's remain Although our expect XXXX. XXXX full quarterly due we even the quarter margin disruption, for continues in another focus with year the solid loss profitability. to in to this operational steadfast year-over-year support expansion first first quarter our from headwinds, consistent drag a revenue to profits with And

long-term history. achieve pride our targets of returns a margins commitment and to tremendous our operations source while been remain provide have determined we to on grow that financial over reliable delivering our XX-year customer to our service Furthermore, profits, outstanding and

And with will to turn I that, it over Ryan.

Ryan Green

more provide revenue I'll a fourth quarter first outlook quarter. detail Thank on Tammy. you, our bit for and trends

for plan customers for have by as to the taking the by we've processing customers processed as completed more to of week. customer expenses of largely have received requests processed focused to We're alternative possible Bob completed quickly and those reimbursement transportation. sent from are reasonable and remaining operational next very as goodwill. We've disruptions on related XX% return all We nearly than requests all our We gestures mentioned, month. First, care impacted customers. of we last the refunds bags

every day We until will all continue are working resolved. requests hard

both shared time periods. and Leisure nonholiday our Turning were fourth strong, At to that revenue our Day for trends. in load revenue yields trends early both our remains in December, quarter Investor and strong. factors we and holiday outlook

$XXX business an true revenues were in days also on our revenue tracking right in disruptions. of began of that the continue December last due to to the strong, operating XX But that we incurred month, guidance that revenue operational million held disruptions we to XX, line point. the and the and all estimated Managed with be penalty up right operational to

XXXX. we business end $X.XXX. at with of for at a than passenger billion in the and business quarter with fourth range low December compared the quarter quarter an record period managed of revenues came $XXX We fourth the experienced fourth leisure. end As And impact, of travel, of demand better million of is a typically revenues on record still despite impact down less XX% generated trends travel still of yield our guidance we $X.X business

saw other from We program quarter fourth contributors in new positive our and quarter and the records acquisitions sales. fourth card with co-brand retail loyalty

addition, the development cities our quarter, portfolio expectations rates continuation absent and increased event. upgraded for take boarding, In also from the benefited new in we of fourth and of in markets performed line with

be in the trends So of in terms all, in encouraged there was underlying fourth plenty to quarter. by

which we the is with million to $XXX about We headwind, a assume Admittedly, continue to first quarter attributable to in feel good our XXXX plan. million December. operational revenue we are disruptions off starting $XXX

trends travel. of and However, quarter February January and booking the to month, first is impact the we sequentially isolated this improved majority believe have vast

trends March close-end based And to expect travel expect appear For strong recent be XXXX, booking restored March business XXXX we would XXXX on what a month. leisure in improvements line yield with roughly we and and managed from to trends, pre-pandemic revenues high-demand levels. booking in

Beyond will business revenues that, grow we expect that initiatives GDS and to opportunity provide our the beyond March. business sequentially Southwest managed

slowdown improving both range revenues sequential on we expect March on operating quarter the we're the these So currently bookings. in seeing optimistic we we of increase as the trends, early macro first further booking trends. a And finally, XX% the in travel of booking to limited while year-over-year. no out demand XX% noticeable visibility to on then signs have curve, and our see we trends to about read as are And based continue well

focus outlined Day Investor at unchanged. commercial we areas that Our and remain initiatives

customer product, We business new system GDS, in-flight and new on from driving management fare experience value revenue enhancement. continue market Southwest network to maturation, restoration, and focus our modernization

costs, on result, our I closing, as a we both And a will cost revenue need revenue want In mindful in continue trends and by revenue XXXX, plans Ultimately, few that acknowledge to are of ahead revenue is that the to the in see on work we higher harder and still we that of and there headwinds revenue this We year. side. currently is the to even part offset we strong we equation. encouraged we're demand generation March. believe and have us, new

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

Ryan Martinez

you, sir. Thank

analysts questions. up have We queued for

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

Operator

you. Thank

ahead. the Ravi session. We begin now question be Shanker And from first the will will question-and-answer with Please Instructions] Stanley. go [Operator Morgan

Ravi Shanker

you thanks I'd the and just Thanks, and to few we hey, just do and so. you we at XX issues have this lot Bob, of and look Again, there events to circumstances? unprecedented there, step or detail have. the there good step all take say, were the say, the but systems operating picture you unfortunate have series a take a team not Is been everyone. a last tech invested detail. afternoon and a given for, bigger kind that of back if in was months Or for of here, a back should things

if your it. on focusing of in to we're this up the going realization of of kind and that will determines catching also Now are how of forward? understanding react maybe they and think kind kind response of kind sort I regulators

Bob Jordan

Ravi, yeah, thank you much. so

that think even separate year, XXXX. we in higher pieces. invested I'd roughly and $X Number one, I technology. We've a billion be in here a lot will into three invest

no been of there's lack investment. And so

maintenance like implement seen You've aircraft and us system. industry-leading routing an things recently

ongoing. new year, and Technology in is put management capital and people human entire we an journey. always a this Just system

always work so things to there on. And are

continued and the and on applications. And transfer in investments and tracking in software go and that's more driver used like again, as on. larger on stations gotten we've transfer are could -- I bag bag And and there complex, things

continue at invest So lay that's we why and prior you operation, but as the our was heard of us modernize out -- grow continue need Day we're in Investor one strategies not to just to we because remain the operation behind and to of again, efficient. radically because foundational

for That this because an continued rescheduling. of it of that you going an days. reroutings that. to just historic don't aircraft many event, just not of well that turned historic so historic this Again, of blame to level weather historic We level saw was reroutings continued across or led I think into weather that take an if this cancellations level the after a on country I'm crew different. caused want activity to cities get event -- I level

activity. something That It We that technology, level, never we've ultimately technology designed. there's was bad I and level of never think, been And just seen the way, the and by crew scheduling, just at processes. seen in information. worked the overwhelmed it had some, as this the

solving the of because And really us what at never so point the requirement. crew that's is problems, in before. software we problems. past a coming designed routings that words, where, scheduling do rather future crew never was to put had been solving ultimately, And than new for that to seen all not other It's

Sky the now, And I'm upgrade that solver deal GE glad technology with identified enhancement move very upgrade folks, to quickly. test they that. and to say complete right in working very quickly to actually with so have Digital that our is an and

different, to and I -- event there? to So continue don't on become if to but very know use grow that add operation more Andrew, even need anything that things And acknowledge the work want think would -- was are to I there you we and efficient technology. I you we that as want this

Andrew Watterson

to gap this the airlines -- also and think functional was I there. asked use other covered] No, not [be had for that they software, gap

is just GE to Digital new at us. new was it It's us. not for So this tool sold for

And resolved. situation, so behind far this practice. In gets issues so It it it's not a common did. on

lot it of cold stress increased the operation have that we led the to swap of cancellations in in about. we got weather. are because medium-sized We cities And we of incremental saw, the weather, the talked as a

of We past precanceled, larger-than-expected more distress manifested that the in issue led the and solver then do, cancellations which events. us of. weather as in kind we us always what operation large could weather take in impacted -- from the the closer larger problem, gave this not that's a care in, to that But

Bob Jordan

I'll made employees have like We've And and I And here there that learnings which thousands about. don't for critical an that it enough really this and from significant again, will to add why customers Andrew that. at we assessment and ensure short-term things take that, point and got a can't event that will to event. weeks the I own takes is for do time customers. talked we're we was on our implement apologize we everything Ravi, and those. doing this go thing in here in the coming Oliver the Wyman other is only mess a thousands -- just We that our and not And a of disrupted

end happen disruption but just So that cannot the of you again. kind -- day, the at of

Ravi Shanker

very is That additional for Maybe follow-up. quick Thank you a color. as it. Got clear.

What the Thank of strike? that of from of revenue schedule to did obviously, driver said is that like Feb. the that? any reputational you one of recovering just impact because, confidence? was know the to have at customer you indication see standpoint brand Southwest kind And isolated you think I that, the in Or of buyer are beloved be eroding Kind normal? a the Jan and seems seeing Is you. country. a do -- we most in any that that airline you XXXX

Bob Jordan

have I'll of too. you sir. But jump things. had have had I'll think Yeah, I couple -- Ryan here, in a -- yes, we

were the return January, the portion of a of that trips canceled affected that period year You period into were start to the led -- that have had, during you holiday it's then with. obviously, low

generally are travel and bookings low. so And

had we you we time a taking there many some where away. I'm as would think had just period as book of -- bookings I you typically. weren't weren't sure

that. The is good we're our -- loyal, it's thing seeing very customers and are

look in presented line leisure They plan Day. look and normal. booking really Investor we look They Our that with trends in March at strong. forward the

like get will looks business in XXXX. will current roughly and managed trends roughly with to Our restored currently XXXX be -- line it

sale a this that, than at had for codes gesture really like of typical those We million recently. redeem something rewards or faster basically even That our sale customers customers over and points, XX,XXX seeing we're an We quickly rate gave our X went well. affected goodwill.

So while Airlines, are we loyal normal be seeing beyond. disrupted Southwest our trends customers, and and kind I'm very Ryan? to we're sorry we of for March seeing customers our and that,

Ryan Green

give color just here. I'll additional Yeah. some

Bob halves. very very low demand traction. by -- quarter just operational of of first was tough first mentioned. quarter The the period, is the hangover cancellations get first the of real is time it's couple the the And the first impacted the with from then like January two In weeks to a of and quarter tale half that in event kind

loads We are and this it if at period, kind routine We you published look the of that half did Day this then the President's fares as in Bob go kind quarter and have for fares. March, think the into help there of overly when into time not period. we promotional yields want promotional regular to plan. of both beyond were on we time and But you and would out look and get second -- didn't like be mentioned,

now is March right XX% roughly booked.

enough overall, that's good expect be that month and a would what very what implies in for where on And March here if I performance read the that kind today with we're going project sit and to load March. to we of from the out in of So just pleased of and think kind the month. the give you forward us yields they take

sort for not of seeing we're So elevated cancellation rates March. any

well, performed responded sale. very As well March very Bob mentioned, to the

like And here of so March. kind we're feels it's on just -- plan in back it

those the booking see, And then encouraging. what those curve, very look look -- at if it's managed business you travel in early managed we also but can business travels,

quarter, to monitor largely, thing yeah, we momentum the the they're the us. to we'll as sticking do loyal here, we the us second forward sentiment get But hopefully So here. to we're to going in were so go the seeing but And event. I continue the right and fourth with expect customer think quarter back customers of half yeah, before the

Ravi Shanker

Thank you.

Operator

be from Research. Wolfe will from Group Scott question go ahead. next Please The

Scott Group

thanks. Hey,

differently the whatever this you rebuild sort approach of So industry? industry revenue you RASM to the -- than Would the with expect credibility, year? the this like or moving metric for have any know you for the I guidance maybe at it of call year. flattish guys sort want year. you you it, to seems overall do however But market pricing Or customer don't as is loyalty, RASM

Ryan Green

hear It was price a question the to the there, but do It expect was we think relative little to little I hard and differently. that performance hard hear. a industry any was really to to

we before in promotional far say exact is pricing comment shelf can had on we're go-to-market executed But there event. and year think to going we and that you what's beyond not the will plan on here thus and same and go-to-market kind that the plan what to I this far is that relative forward have promotional the thus the I out see. all of what

be March per of as So in we're of a And I forward. expect kind would normal normal and that just going get approaching beyond, things I plan how manage back here things it year we here. kind on of expect, we the will in terms

strong. yields -- have and been Yields loads very

yields would the environment quarter back have to year, and we yields event, the had the in post-Omicron the despite those last record been Going even event. fourth higher without

now, strong that environment expect -- to it's we're fare and I continue. a So

Bob Jordan

our Chase -- helping. here now have we're right strong agreement, and Rapid initiatives well, Rewards which one seeing strategic as And obviously is new of is the you the redemptions

Scott Group

you sounds better as maybe little think better. this cut bit reduced where period prudent don't But the capacity. hopefully, then of about you you kind understand get really a And I a up why But of capacity? cut and you ramp some talk risk, not more and to capacity through Okay. operations need be

Bob Jordan

Yeah, that Scott, I mean, like -- reason helps. would it if there think you the I that felt a was do you

event fully We feel the actually really staffing. had staffed. in opposite. December do one, were we to nothing Number the So with

having hiring hit for we our our set of in having we no including XXXX going goals operation all In hiring that trouble fact, good pilots. into that XXXX. is breadth, capacity. existing beat of hiring, and our good trouble It's XXXX lot network. adding up and A all -- no Almost for and depth going the just restoring our is operational for not into in is customers. the capacity the city It's reliability. pairs, We're

hurtful. helpful restoration of operational not reliability, reverse, terms we the which of capacity So actually the will in feel is be

your actually anything? can XXXX. terms you to would which be you ahead we reason We're hiring don't add up executing other because little do Andrew, want believe only a in the then here plans, hiring no So of for issue our you having are execute staffing plans.

Andrew Watterson

the the -- to expect one in mentioned you capacity, would can industry this number through January. numbers level that yesterday, I OTP also operating up your Monday. if sitting and two I'd in updated you performance. we're I just say if in the one show number here were you worried And through was of month got we of about, operate that for

For to going the we're number we and of of out the number with during and the disruption, three we airlines November. month five into were number even month four were Thanksgiving, disruption, three number December, the XX of

the that So we're sitting operate in with not the there. that. have it's It's out obvious able the we're above regard to -- industry average out that to capacity we fact

again, wasting to that to is don't once out necessarily of problem. kind and there helpful that But potential resources when get actions not we a take based the cause. on addressing understand given all So a as solution up, causes. as to showing could action want we people think you that show when root throw down hesitant if to we on make root will us. the There's going solutions the problem, go take adjustments be doing you root and addresses they it it lots We're causes. forward. not also to But then And of we're you're the

takes So then those little though out than even to like it happen and bottom again. people address we doesn't want problems so bit it the longer problem a would

Scott Group

Thank sense. Appreciate it. make That guys. you

Andrew Watterson

Thank you.

Operator

go will Please The Brandon Barclays. be Oglenski with question from next ahead.

Brandon Oglenski

Hey, taking And good thanks questions. my for afternoon.

guys up staffed. not the Digital mean, it the properly I if I all were network problem apart this that about to I guys wasn't being technology you GE issue. are really sounds like guidance, follow changed this call, So can the The hasn't you this listen year. talking guidance, Andrew, if issue. from CapEx Cost And maybe there. really

look than of is your the did I if And you problem I month, lot you more just this a completion keeps competitors. beat going kind The but your missed think flights be on. a cancel at your will guys So outlook competitors. trailing factor

rate. X% a about think I yesterday, cancel at look Just

So within and structural you can I that your one-off and the and thing more something really this confidence investors just your company? a guess was customers other is stakeholders here give that what not

Andrew Watterson

a to call defined Digital wouldn't that use and others is for I in sell it That Yeah. case that software, us they GE them. performs nobody well normal issue. a solver This times.

in -- So worked their software defense, the fine.

Now spot a there. to we did get bad

snow our yesterday percentages, in to regards cancellation was there Midway. was With X%,

So Midway has specific operational restrictions. very It's tight quarters.

direction, it talked when about, be have little season, of a was because wrong a winds bit a so prudent a And the more coming you de-icing more to it's time from of cancel cautious, little and and as low Ryan low we year. time

them So flights day were of the Midway before. canceled on because we out customers reaccommodate subsequent all canceled could we that those the

OTP cancel yesterday. up of made of competitors canceling handful So and fewer. hundreds time, a of We their points of thousands XX accommodated. that delayed customers ended hundreds thousands by canceled by that less, beating then but They we customers of on were our flight they had

we overall, service customer we yesterday. So a gave believe superior

including out operates in thunderstorms handle cancels XX% tower because day the had that for before of for and down Up their the to that day severe it. that in generated North, the canceled infrastructure Houston, Houston we have near that that, -- that ATC even flights there The it. tornadoes a Houston day Holiday same-store in that for handle to of We carrier Intercontinental put percent system zero while.

again, So say infrastructure different they situation, But flattering would a once Hobby. have I They're they imagine issues. compare. in than that very

a times, it's about look deceiving if a those percentages So specific of in lot particular. airport

and in you at to customers. Net-net, us you one and the edge commit pushed environment look cancel, to be to And for performance resulted safe have the your how so and on-time flat the number be that's us a to industry. caused over yesterday for you you understand have very it

NPS is a for kind quality love that's of The stuff. score customers good it. I that think So product.

to what customers see. And so want think I that's our

Bob Jordan

a the where -- of as you the prior of the most January way were issues you're several -- days I kinds there prior all well. down but to the if the it's is polluted factor talking XX think about that, by several And so XX-plus Yeah. take issue, of January here, the day the very couple of we flight. XX days most weeds were NOTAM very here, completion day, for XX data range, in in days the to XX.X% in one or canceling

it day very to have watch aggregate it throw it Obviously, if day just that Andrew that. will or the you anomaly off. like know an a described you will because have throw NOTAM day, that's you the the -- in So different,

Andrew Watterson

we the in in NOTAM as didn't the remarks, say mentioned ground before push stop. I'd day, I my

wanted we that read means validated up much got with us were cancellations later we how there. we that, to pushed the ended more significant FAA because than safe, that we a the we of before some and that competitors basically, So number tell because regulations. Therefore, start our a of being was we day, more

that again, once And next up was so and ended January But it the the we being nicely safe up for inflates numbers for overall. day. set

they to that. And at then low on outsource you doesn't lastly, departures forget, XX% the realize to behalf. wage some competitors, our don't Customer of regionals XX% look when

give inline. ma not you this they says, number sure make when the operations, you're that So a all just cancel branded many, including their

Brandon Oglenski

ensure call, of it, off the just form impacted. specific more contract? is look urgency mean need again? where for and this flights to the that the I more I do please. non-aircraft you doesn't to investors guys get we at guess in come on to sure, happen at I And pilot seats Do urgency their coming help But look CapEx? arms you it does mean, this around

Bob Jordan

across board. scheduling, I out, to right at doing we're early that There's in pointed the went as on up, warning looking nothing And procedures bottom. table. we urgency the dashboards, everything things we de-icing have Andrew these crew through is remarks, we're is think staffing -- top the now,

it on. doesn't But in again. weeks, will not mixes list whatever root and we waiting be do that patiently we on be here. to changes, for when looking Oliver there. And We're it what to at report happen cold sub-zero ensure covers and the technology months, kind on get equipment that buying to everything causes temperatures fuel will that and covers, event ground Wyman more extremely have also this We're of weather. We're need for buying to takes may do is that whether understand engine you

because got union we've partners. -- couple unions. progress. here that months had -- of gotten with contracts made proud very disconnect our I we've -- agreements very our great of X and -- negotiators, We've the our in I'm proud the last I'm we've and of very,

have We're I We really to more a progress. think, making, good couple go.

progress are We by attendance. meeting applied mediation. of of that process controls mediator. a have making the in as mediation both we're meeting The controlled but the defined is Pilot the well. those in mediator times, That the two process dates, schedule, those

those finish to up. eager We're

paid compensation. terrific. well. We're to Our we're -- have employees going are We're and pay going to to always we've going competitive market well

that. know employees our and that, know We that. know You

up, to but eager process. a am wrap those I mediation is So

Andrew Watterson

I'd say We've we that fall same happened thing last we urgency the put the make doesn't know what with place to on itself. it. call repeat as the in the And sure urgency. I was had,

with same when of software. be That's to could between starting scheduling itself, the we that for crew our and getting think thing safeguards to take the have we position but the weather root there repeat us So common kind why that not causes. time we

ground handle Lots Lots lots decisions weather. of was our of our control equipment that were to coordination operations, made, crew of between cold scheduling. used center,

that us there end. the Something where spot in in to led sequence events the of we at were

upstream protect the resolve immediately and not again to and of that to the happen there us led follow find And to string so those. situation actions that series then

And do. time we're so the taking to that's what

couple of weeks. a It's

that incremental stuff we a may report kind after since management few that that you can effort, But weeks done. I or have it's and incremental is up start shall root have maybe address, and worthwhile spending that have right certainly plans intention think we away to to we causes see. to the emergency of done take find those require and

Bob Jordan

so going we I not holidays, would we a at had well. to absolutely The this on. we're operating thing know It's got December was Day, really, XX-year We performance cetera. while the important. -- up I and proud 'XX history on is we've event really to really performance something add this then are significant last something XX, in event. et just prior And of, were of and well Labor operating good We Thanksgiving, leading that good

that forget always So a will operator. haven't terrific -- we never are we always -- be

will this need here main with we head point is attack once The of here. a work will Especially we attack on to OW it we sense on urgency. understand whatever the we report,

will need to critical. down our happen if We we but boost this sure make double if spending, will again. everything that's does technology do to, to It's we not that

Brandon Oglenski

you. Thank

Operator

with Thank the question you. Jamie And next be JPMorgan. Baker ahead. will go Please from

Jamie Baker

Good table? the afternoon. off Is interlining

Andrew Watterson

time interlining subset could then year full interlining there customers have But this airlines think don't there, changes. some I we If had as other reaccommodated. that be of were of we may well.

had this So would would we still if same the had We even discussion interlining. event. still in we have have

agreement scope pilots. Now domestic prohibited has interlining our the with

the scope some there to disruption, of we would have to that. relief should So you accommodated an get would majority have a help with we large, large and interline. the level people But of through but accommodate us put direct that interline, margin do have not made been they still

Jamie Baker

thanks your accruals. the including Tammy, second, fact for that labor updated you've And cost

for exclude bonus. seems be or industry pay to the planned true clarify, to retro assume signing I convention to also Southwest. Just any that's

Tammy Romo

include our labor Jamie, over to finish these line cost we're get here. total to best the doing agreements the

is better in well wrap contracts estimates continuously evaluating course, include contracts. to guess, So our recently, up dynamic, our of total that. say the the way is as and that, a we're But December, I environment as we shared back to ratify cost, as

Jamie Baker

the contracts. to you're Got down sure forward it. I'm looking locking

hounding stop it it. about for everybody. appreciate Thank it. you I I'll So you, me. That's

Tammy Romo

Jamie. Thanks,

Operator

ISI. And Pfennigwerth from Please go next ahead. question from Duane is our Evercore

Duane Pfennigwerth

The but is work with to for any operational I'm And Hey, your talking or for they modernized confirm technology the if run about to to that and sure this an rules. a you It on if thoughts and I points. would need like it fairly app much to recovery. that pilots seems center overwhelm There's so be gaps that. be in maybe would call been are ask Any into aligned call required numbers not like unfairly. there do could feels call verbally great. been you. would center, really written willing media there, go those thank wanted about you're with reassignment? have event example,

Bob Jordan

has and Andrew but more I is this then detail Duane, pieces. I'll it a lot Bob. than just break think start got do, I'd into I two

We do out of But to in crews. use you have that there that's absolutely our kinds terms for more work place there's yes, electronic It's that's And place. there's notification place. of in that some been things there's in for. electronic report -- in all notification

a it's change we to need work What on the electronic contractual is acknowledgment. -- and

not have to Obviously, that. know to accepting that's crew believe it's So it acknowledged electronically, to contractual going the -- and it operation, a does which require -- know that do simply delivered reroute. acknowledged, that, was That's I for was change to other you example, to Andrew happen. but in a not words, has for been that

is on. some So do. to and But this, teams And do capability. do what acknowledgment. our notification, to is work even that's a on but you are electronic have and that There But piece there's obviously, to do which contracts the to want the I is if of on of we negotiators work work add. there working two also, piece the those think, Andrew, are contractual more open,

Andrew Watterson

Yeah.

during not a the problem event, I communication think crew the problem. was

want So that. improve to we definitely

from of have the level have flight Both electronic to means, contracts, this. consistent learned crews. current our with some with We have communication some

negotiations. I think incorporate will we in that our

I next the the we of crews electronic negotiations finish because design think until before contractual will communication kind we generation respect with wait must our tool agreement. we of it the

the this that we get need and And next in I the we'll all communication. contracts, think electronic So of aligned for on the get event once go us will generation improving develop that then ironed that. out open

Duane Pfennigwerth

increase then stick what percent back out ability flying? on or thoughts out potential the And early here. know on and of too to And I'll my comment That's network Can solution? is Andrew. medicine and on a just you to if back be your helpful. any you, your with follow-up, I it's prescribe But might that

Andrew Watterson

a my can't don't I wrong. of I want number of to head. being recall for the give off top you fear

We have, our up in region the a in the test out past -- comes schedules and this back. like lot. of We've put into areas

ago. So or three I ago we years years think, four in this did Midway,

percentages, so that And that we back see increasing around anything improves and to out this the we case. the system by be put if to haven't and certain found to

to help on-time is of our into to moving how it planning found incorporate schedule actually other everyone to down the performance. your can part with though center one recoverability we put control We roof things our into seems to under because And the have and schedule, an difficult with network even nail is move opinion.

needs, very We needs predicted recoverable of can We what's for one know needs. we define But design difficult model gotten performance can overall. more a the to detail is that, does actually a how level schedule might good to contact a schedule. ground-up you good We've on-time imagine. at than maintenance incorporate crew

loop under can desire moving that. of of we together, a groups recoverability create -- into and smaller the idea they've two test continuous network smaller and design already started iterations the tighter efforts behind this to feedback built bringing one improvement the is learn organization, through the So them

on center our doing We'll control what's now the work working control see people to schedules, learn center a our in operate design network like to to cross-pollination in of help people planning who design schedules, who tour it.

out years gets think that the definitely something so how doing kind back all And that they we're schedules. is linkage improve can and us have of incrementally And really, But help thrown seen around. should improvement. tighter that a that into and we -- about cause recoverability we but haven't effect direct

Duane Pfennigwerth

Appreciate the thoughts.

Andrew Watterson

sir. Thanks,

Operator

will Savi question come go from ahead. And Syth Please the next from James. Raymond

Savi Syth

afternoon. good or morning good Hey,

more and kind issue. could given think these second of address coming Just on look you plans the of staffing concern something to the at half. not was lot having that growth just I talked year about a issues. your bit you of I that's the on lot was hiring growth more a there's curious a causes operational growth, the and hiring, Because the of you if given in little kind capacity capacity some cadence. some color if this And in provide

here? you So hiring cadence the about talk could bit a little

Bob Jordan

Savi, terms and then, where. their the if timing to it's and want yes, to especially Absolutely. you ramp. proficient, train certain to -- in the in, Bob. And there's just chime of in areas hire But Andrew, obviously timing like become

that 'XX. piece above 'XX a in why targeted of it's for of get is we actually hiring ahead our to so came And for

we front in for the loaded of prepare be capacity that will in half. a some as So bit back 'XX

right 'XX, 'XX. Our think in the hired over It's XX,XXX net now, hiring I roughly in plans net. just in X,XXX we 'XX

currently actually the So staffed not hiring XX%, because piece there's evidence the that were or 'XX that not was no roughly a setup falls for there's it that -- again, staffed. of don't holidays for again, And a 'XX. we we're we

We are well staffed.

pilots, The we one 'XX. change hire 'XX. X,XXX in hired pilots roughly plan in net X,XXX, I exception roughly, in think, terms The under net I of think, from year-over-year just the is to

is actually that increasing. So

new potential We're watch filling having every day. single classes, with pilots We're down to trouble Airlines, Southwest no hires we'll trouble classes. earlier them meeting this just terrific attracting week. no Our

some of in area. are attrition higher seeing you been pilot There's discussion attrition, our

X%. hires, last our group But year, which little think, flight more I expect it roughly got Our attrition under under a lot X% and new you there. We've elevated again, it's, normal. ops to was bit in a would be

know we're want pilots about seeing just where. more any But So not any attracting to I if Southwest detail talk to you Airlines. Andrew, don't issue

Andrew Watterson

than less that's pilots. every have we'll aggregate, work And year in for except last group true this hiring So for year.

pilots. in productivity we are constrained could. pilot right of the we mentioned we've because not pilots could all where before, the so aircraft the now We're ASMs of of And we We're the number as flying not producing of our flying. all

full in see plan no run told the which we'll me, we our you back in fleet, -- here half the of we've of there the excuse the end longer year, our year. of the this back next be will by using of pilot-constrained. when you kind And is as why we before pop-up so that And year, start that's capacity half training this

of footprint pilots kind the as they don't training as we've long have groups The pre-hired, as do.

to why is but proficient. So still therefore, on get OJT them. who are are if window see the trainings, see and in ever color look you the they and of Those who fully different proficiency out you And speak, training are a the for job, those that's airport people vests. so some

they've had you be the will, in network if want you now out later comes year, more And experience. to taking them the so in capacity some so when that repetitions, the

see numbers goes up year. in down So as the you'll why capacity coming the later that's

Savi Syth

if sounded helpful. And to you of changes, like a may, would kind from I within you do kind do it of of of Or some you super this CapEx. But I to systems ability from was on spend of of would that resource would year? That's increase have CapEx amount kind that standpoint, kind pivot? to -- increase the you to be curious some tech you standpoint, -- it of the of able if needed that kind just kind on activity the a fall in expedite

Bob Jordan

Yeah.

technology in yes, I we already have -- the increasing number was support development. three, terms a first of of provided, use third one. in think We spend that's two, the that XXXX employees that And for total ranges your and in question, always technology -- mix then we and and contractors is parties your captured from

So yeah, as flex to ability the have needed. we

Andrew Watterson

just It not equipment. IT. be may It be could

different or not at the other that de-icing or need IT. spend prejudging the we infrastructure trucks we're It the all new So could extra would some be airport. case be

just was is out other that that ourselves there the better. more there shortcomings and think kind this. non-tech also not make do But fall to be tech don't to we we some we've there of work other even that get is could equipment addressed, some come There in So I of tech. and likely -- tech changes realm. operating will technology be It's

Bob Jordan

range the And again, is think wide. I

we CapEx I think all of in range the would provided. captured that that be

Savi Syth

Helpful, guys. you Thank

Bob Jordan

Savi. Thanks,

Operator

go and last question for Melius question, our take from gentlemen, Conor Cunningham we ahead. one will from Ladies have more Please time Research. we and

Conor Cunningham

the time. Thanks for everyone. Hey,

and Curious operations could network just big When domestically, Just are on out great estimate you doing. you be what side way parse going if does think obviously to quarter. how the gave I there. that's first that the about you book your of for Southwest corporate the debate a the selling

gone on curious how that far. gone so So has just has so that or conversation far commentary

Ryan Green

Conor, Yeah, Ryan. it's

were immediately from course, event, following events, on sentiment travel there talking to good out hear to kind general corporate handle also really what were us. the and a had Of of we sure needing they to consumers following managers but make to in we the the talking days

And as and conversations We're continued. have them direct so from feedback those getting well. --

doing that updated. that doesn't travel of corporate plans standpoint, to happen customers us would and in be and our take we about outlined plans, what to again, you a they And expect, for need this keep have from open we're we as them transparent mitigation the care place making to sure regularly that ensure

the all time what those to they we're out field doing we understand to of of them is travel sign there. When reduce I majority say not of we're plans the things. their sure And the of they about positive that think which of plan Southwest do year, that corporate a for in talking doing. course, managers level to vast We're XXXX, making ask those on flying the this them all

bookings for big event. business booking The the when in you here to then the of from are given the just And side was there look they've impact sure, quarter, Those It year. an come proximity was those real couple the in at of managed was -- the first as weeks first in the January. hangover months.

So was January an a there well. in the part as of impact hangover into definitely there February and was first or some

and look and where here, what the I kind meat we're booking of we're managed into curve business -- at when travel. But for February getting of of trending towards the bookings kind we're

much better February a is it. January. got So look good than at we've

where quarter. we're that And likely fourth February we're ended be I turn of expecting It think then, business we better than the back going out is fact, In roughly better. pre-pandemic to levels to to in as get course, the will sequentially we managed is that sequentially March, February on side.

we'll resilient the our big further into certainly year, been. after we've the for plans keep as I'm So got market. that get focused a they've of by part encouraged -- That's how quarter here, on we we're it. But and

Conor Cunningham

And rolling Okay. the in system then the your and issue you're Appreciate network about a prepared weeks. just next -- that that. crew new the out on couple talked in of you remarks

looking not about collaboration for fixes? influence bit Just Thank with much allowed talking in-flight just your your the when the and Like Or an pilots at they you there. about you all? you a talk Did curious on have how talk? other culture members fix crew maybe to there can were you. maybe a them have little with overall

Ryan Green

I'm please I Well, sure redirect quite your but think I'm if not getting me. question don't I

we I call Sky something about. else the system the It had a manufacturer. So is functional what It's Solvers. talked called gap by

fix a -- it that. in putting upgrade. We call are to We

be You such past member the able hamper that in future. don't will they us to now the have the problem functionality solve crew to

having this we this would that is result of be in their problem the they in there. members would didn't something -- unions we Now crew that fixed to like our fix be happy because -- not

so think And so to the get done, like would I they perspective, they job want from that speak. -- to

We're in as the final mediation. in far negotiations culture, stages. the in As we're

on they're side, scheduling and this you And changes, certain the where of was They will. always a so a the scheduling changes for it's noisy, down that's issue. asking like if coming and lot is to would

of for to dovetailed And those give happy to And things to on upon, able and I of so input those we're be it think nicely them we can kind it. kind suggestions. improve take

going can with big have confab how in where up improve coming of to And front. we them in talk get scheduling weeks a and we the together come couple a on here actually matter they're and our subject about experts

down before, for sat even day one yesterday, the I reason. the And same of at the other unions

So professional want jointly to good we can of how welcome them their improve. relationship input. We a establish we for

maybe so lining silver And that start can we is down path. this a as

Bob Jordan

And we notification. get that we know, like of have news work unquote negotiations add work you here. for and I'm just agree, there's that work quote we going to optimistic there do on that and -- seen want you've are is in that that. on have Yes, as with unions I And them, our to things agree lot just things there. asked the that I we'll notification. years on for, And a said just

a were up parties of a we've review lot wide-ranging Second, our Wyman here and and frontline a that got in review, involved, that this the including with it's report quickly, comprehensive wrap all will understand. and it's collaborative example, of But were we're valued gather for listen partners, work union also that NOC Denver, and to including leadership because to their our leaders and as we want in feedback involved. well and the that parties, they're

more operational negotiations, said, wrapped part And you've got That's continue move to are as and -- know event up disruption. a then I But that Andrew in just be things to we moving that that don't I and attached as through of mediation. like like the compensation. scheduling through normal rules negotiation we'll that the

our them and union viewpoints partners, their value of issues. happened in our of to what in listening December But certainly terms no, we we're

Ryan Green

now them for in jointly areas report identify and with need for this, the upon, develop them. applicable areas improve will solutions We've out already said comes a we once to to we work

them the take we to committed to we're of solution the look lessons of think reported. I as be part advantage So learned

Conor Cunningham

you. thank Appreciated,

Ryan Martinez

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

Operator

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

Linda Rutherford

We the ahead get can media Chad, us. Thank if to portion. of started you, get them and Chad, for today's Q&A the call. up on you'll queued for go welcome the members and

Operator

go you. our Thank Instructions] from the [Operator Wall Street And first Gilbertson Certainly. Journal. be question will Please ahead. from Dawn

Dawn Gilbertson

I everybody. --afternoon two morning good have questions. Hi,

both, for one the or first is Bob second and is The for Andrew Ryan. or one

here. is mixed sending guys to The first you some messages seem be one

said crew state sign communication just the Andrew problem. You staffing a issue. clearly the was but not problem,

the and addressed. system? didn't airlines And so then said why that's But have exposed didn't gap other functional it large, you here issues of isn't also your this because this -- gap scope this it were mentioned

asking much this on was -- Oliver of I without what please? what bad how report Airlines? Southwest So guess I'm the of is how the waiting was problem, for much Or decision-making here the Wyman

Andrew Watterson

respectfully. now the we close-in to was like it point know up the find the and Well, we'd showed that I we this But of reason do -- because you not of the is know a of but cancels. gap problem. work when that's had know later, the kind to it, functional lot

cancels I do seeing a earlier, mentioned we're you frequently if storm come we in -- in, advance. As

cancel yes, I recently today So did, like we for just tomorrow, with Midway.

Then ourselves lots storm. the for got done had a of in. we that so And in we close cancels making we're where position

did a And the frame, we couple of that catch we didn't. crew the but Bob weather And enough day or hours use level automation, a up which and in was get the a of we the the XXth crew in as of not led lose times, know, to of mentioned, just still we when behind manually. to event, sometime cancels schedules ultimately, then They a and from the use automation. there's XXrd, transition lost for closing us the this towards event time almost to

trying bottom to sequence so question of of And point. that. so lot to then these the had events the to we're becomes, that the a close-in We've well, can were of what led address that cancels. what is That get we

And right so we don't know that now.

we we to. why led give thing, a very understand though ultimately on that's answer specific that So even you that where don't clear

Dawn Gilbertson

helpful. That's Okay.

So last-minute cancellations you why you're that Is quickly you others more that than even point? guys since lot correct? had, saying a obviously, that was much they don't know this at though more recovered

Andrew Watterson

comparative have that as at me will tell I not led of at look I'm part time, necessarily you front the at -- lot that's our we'll problem believe I've done what of versus work what a to mean have what point that can time. of that I in that is and same cancels, that in close-in be did the we I well. we a saying the for not others this ourselves, others. also

dig it and to the this with in what that, to into with with now, But was far is I point also need the again, at time right suspecting that that did both the corroborate interviewing to what once actually speak, what understand I'm so data who as But of you what as sequence. see people then can was interviews happened. to kind when,

it what time detailed to picture happened with work with fidelity I wouldn't fit but come led call a with out that up -- all it's and tedious, and and shows what it's So that line together that backed good data to. of

Dawn Gilbertson

Okay. much. Thanks very

Tammy. total Thanks curious, on figure dollar maybe dollar Ryan of as you're or the reputation, you and dollar the to did did them attach and given figures is through scale through the dollar only The can I question XX% expenses? number? or -- going attach guys to this you've figure, reasonable broaden refunds, of your Can second know somebody all for you some reimbursement, reimbursement. the but of know you I definition because also scope guys, I'm of damage much. the very on you're these And you the

Bob Jordan

event, to significantly thing the offer related knew we -- impacted alternative promised we then part for to take thing let take right holiday refunds right to and reasonable financials. then travel the the transportation. knew expenses first offer was and do I'll -- it Throughout away, Yeah, reimburse right that Tammy to we had the to plans it reasonable the do here. We to was

were And the gave the direction lean generous that in to that we teams be and customer. towards regard the

the customer the to right I so decisions do but job is lot thing understanding really reasonable in think did and are towards balancing, think the these a good a what I by of leaning of And them. order team subjective,

to largely So it thing -- subjective there. Tammy? find it's admittedly, you've I teams the the of our there, kind into element that right a but where and did got was think line the think is customer I leaned

Tammy Romo

was shared Rapid was the and impact million for fourth And points as that $XXX be Yeah. we of impact, cost the to our the customer offer expect financial the share we the we to that redeemed. And total the Reward that and -- release, on quarter. the in reimbursements lion's

that we portion our that paid So to there to pay related premium was employees. a much smaller

of Rapid customer in that the was the points. So reimbursements Reward lion's share

dollar We probably categories. was but haven't it roughly two of the XX-XX those that, between given specific amount

Bob Jordan

severely more gesture those impacted of add travel -- Rapid XX% of Southwest when just most Reward at And issued Dawn, customers ago. were for, that booked have look we that thing I'll Airlines. roughly those the future we And we already The three here. one and them issued customers points goodwill those on today, weeks

really that's and pretty -- weeks, in So good. X

already that sign understand. that So that we we and it travel of customers have a that -- that there. think They booked Southwest. take understand to that could right I up a on them is confidence make fourth of I everything did messed it as future We

Ryan Green

those points, travel. just with cash, them necessarily not some some future And them Dawn -- and with being of those of points

Bob Jordan

to complete but complicated are thing all by -- then next goal up XX% day, just to on think we're -- probably by tracking tomorrow the fact have Dawn, the be around, I -- reimbursements, think wrapped changes and which early week. next I them day it the obviously most our

moving we're So them through quickly. very

Dawn Gilbertson

Thank you, all very much.

Bob Jordan

Thank you.

Operator

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

Kyle Arnold

Hey, bit making little to Is the Thanks year? in taking in-flight improvements curious, that upgrades about my spending? billion things WiFi include you was $X.X for a like I And you're this does back-end the guys. and that question. that technology could that infrastructure? talk more

Tammy Romo

it include does of piece the the the -- $X.X and include. everything The system. technology spend, the And that The yeah, WiFi -- not that, technology, ongoing the upgrades would billion all you maintenance it referenced. includes but of again,

that be So incremental. would

Bob Jordan

investment all on infrastructure, our technology customer of support our the the investments, the including really ongoing like -- It's the and but aircraft. not WiFi of it's investments

Kyle Arnold

systems, working that plans? upgrades any maintenance part December of have the was get But probably specific systems guys you actively worked will on year this anything are like you before your event. on? place that any are there other as And It Thanks. the an upgrade in

Andrew Watterson

that ongoing at a you if have of levels We will. maturation, different couple are

recently. So it infrastructure, our paperless maintenance a up of from big ops upgrading one the That have you we middle ground so just our was just of event. in turn. with We're Investor finished may the replacement seen Day, a efforts

of And allow already we're releases, comes of to planning now us eliminate control So and and and in flight system our awarded. part Both been those paper have our within which have system. operation many -- operation our RFPs deployed upgrading center. have That's that that an turn. we of already been -- all modernizing so in and completed, some a the of have work has

cruise RFP. we you is do RFI, an in you an have then And do completed system, our what which just before

learned the of get results lessons and great we'll that from the stuff. then crew next so the And and this with event step on

of tech than workers each further operating ahead areas expect, would has the you big are And underway. So others. some as

Bob Jordan

And Kyle, invested a across well. upgraded commercial that There's systems the in enterprise. that being is billion are and $X.X as of lot

the across it's enterprise. So

Kyle Arnold

Thanks.

Operator

The Washington next from with Please is Aratani go Lori question ahead. Post.

Lori Aratani

some taking all examining yesterday that the know thank issues, and may wondered for the guys your comment the schedules regards if of have Hi, whether been more unrealistic. on little in December I time. I that your that DOT you, had into they that. they're any announced mentioned had about are to a they looking detail issues you

Andrew Watterson

And Yeah, officials. up, we as saw scrutiny include and we regulators from will that. and messed know, we said, Bob that like

fully. understand and we cooperate we'll that, So

one to the poor reliability. including with culminate been really running worried analyst in Christmas this mentioned the the then being to you'd on-time average vacation contrary, were operable, vacation, before schedule we've in I reviews, expect your above performance industry, number about As even the one And one if if Thanksgiving of well for month. you in November, -- see

a to see last whack don't that over three schedule with resources operate signs of performance ability the is out the operating So months. given strong you our of the

Bob Jordan

the talk oversight the coordination focus a of had there. and terms generally, and obviously with we're and, the customers And well, discussion. lot on how aligned, as his the aviation DOT. And of resiliency coordinating And customers doing I obviously, on and the conversations Secretary we're there's hearings several cooperating just on in personal we're focus mean We've obviously the committees. We about just of we and our with focus the welcome our with welcome our system.

of would all -- support you we'll as would expect. So we this,

Lori Aratani

Thank you.

Bob Jordan

Thank you, Lori.

Operator

with from is CNN. Isidore question next Chris ahead. go The Please

Chris Isidore

wondering is have can or the part for how for this estimate used be place? your entirely how repaired process. I'm will system before if new in repair cost And to computer So of replace if will intention is take you as think whichever crew it much or system fix it that solution fully and scheduling repaired to used, do either it or any long you the is it

Andrew Watterson

Thank you.

GE from an earlier, As we our mentioned in there's system test Digital. already upgrade

there. in the So upgrades

production not even and anything talked will don't if us weeks' or haven't upgraded a this be to but addresses in cause I few costs. time, not, it the have going it's instance. the think we shortcoming for we sure the here We in specific

Bob Jordan

we get it's in use. system, are an past that it our this this -- to performs revealed event, coming would Solver, that problems was airlines has and seen, solve ever so to there Sky GE ever as coming It just was this it a the reminder of seen, what out many should. just And requirement system. performed And and you because well, many one tool even problems that no have the need volume where industry

mean, record And now place they weeks, and working time. a in a in put have I with GE, test in fix

we during or scheduling So standard use, and it the crew again, the intended industry software did it's rescheduling and software, perform others that as event.

Chris Isidore

an to just call the you don't crew letting app clear, electronic fundamentally having system with in of form were stood know to things notification? be notify, rather than and need the where to members having So more to change problems see to a where have a they you

Bob Jordan

That's different.

Andrew Watterson

mentioned a As problem. was that earlier, I

been of situation. symptom a it wasn't the have the We for problem the a It problem, problem. was

And electronic our have these our communication some available situations, other we so calls now in contracts with require level of In situations. now. telephone right crews

to incremental improvements We will make that.

soon we Those should now in right and our will the as the few more now. to a contract agree, with with Some open to been And consistent requires have members. crew electronic the deployed for the have with comprehensive communication crew practical. changes it months. then are unions. But discussing next contract will already deployed they be new as development develop communication We're tools some

Chris Isidore

opening Have get because entire during the the issue notification itself it entire statements from contract the obviously understand they that unions and contract you to having electronic current take we agreement to not about. the for system system itself an of of new fans contract Having now one crew before months. the you new notification on possibility a as because the could from -- raised and the were the December,

Ryan Green

towards that's the contract's been want the we of if and to before They've practical final Bob approach they wise that which us have if said, in want will Well, a as now, want to they told to think that. But it, for contracts, while. hopefully, and We're certainly certainly to that just us that. based a been into -- do the not be has site on right agreement not it's do open I means and that. entire that tail of work would on. for communications, incorporated this mediation, they do current we But we're end the to push

either we've But . the no than now, happy we're way. seen So indication right current path.

Chris Isidore

you. Thank Okay.

Ryan Green

you. Thank

Operator

at And Review that ahead. time, question this question, more Las from for have be Richard and will go one time we Journal. from Velotta additional Please Vegas

Richard Velotta

good and Thank day. you,

could do curtail think of destinations airline added future not much not as issues despite that their that future? in do scheduling indicated Southwest their Vegas? you in December. You the what times capacity Has Las starting choice schedule internal And several had have have be operations capacity of to the will in terms capacity in Vegas Southwest by any Las when problems airlines flights we're occur. happened curtailed is operations and hearing in grows Harry International the problem Reed might But that

Andrew Watterson

on constraints now, work expand to at Right -- an you areas. in Reed and International. general as grows It's we've airport different normal our capacity an operation that no seen airline Harry capacity

You taxiways, the work seems Read to that plan on all execute Harry course upon and you on with systems. bag of are a These work business in good coordination airline. and have normal

So we're that. happy about

But of changes do than or so that aviation we no that, in other to successful a private new surge a note the weekends has of the in attractions. Vegas of lot that will Las environment. been see kind We I see aircraft demand. general attracting add

Richard Velotta

And is it Andrew?

Andrew Watterson

Yes, sir.

Richard Velotta

Thank you.

Andrew Watterson

Thank a Have day. good you.

Operator

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

Linda Rutherford

Thank you, Chad.

group much our us. www.swamedia.com. our by very at is media you standing communications or questions all If at other follow through have joining or, newsroom (XXX) course, up, for you XXX-XXXX all any of Thank

Operator

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

disconnect. now may You

Southwest Airlines (LUV) 26 Jan 232022 Q4 Earnings call transcript