Southwest Airlines (LUV) 27 Apr 232023 Q1 Earnings call transcript

Company Profile

Participants

Ryan Martinez	VP, IR
Bob Jordan	President and CEO
Tammy Romo	EVP and CFO
Ryan Green	EVP and Chief Commercial Officer
Andrew Watterson	COO
Linda Rutherford	Chief Administration and Communications Officer
Duane Pfennigwerth	Evercore ISI
Scott Group	Wolfe Research
Jamie Baker	JPMorgan
Matt Roberts	Raymond James
Helane Becker	TD Cowen
Conor Cunningham	Melius Research
David Vernon	Bernstein
Alexandra Skores	Dallas Morning News
Alison Sider	The Wall Street Journal
Dawn Gilbertson	The Wall Street Journal
Leslie Josephs	CNBC
Holden Wilen	Dallas Business Journal
David Slotnick	TPG

Call transcript

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Operator

Good day, and welcome to the Southwest Airlines First Quarter 2023 Conference Call. My name is Chad, and I will be moderating today’s call. This call is being recorded, and a replay will be available on southwest.com in the Investor Relations section. After today’s prepared remarks, there will be an opportunity to ask questions. [Operator Instructions]

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

Ryan Martinez

Thank you, we operator, Q&A. quarter prepared XXXX and and welcome, everyone, call. remarks just to In a jump moment, then will our conference share into our first

the Vice we our President and Commercial Ryan CEO, me and President and CFO, Chief today, Vice Green; Andrew Jordan; Chief Executive President with Watterson. Operating Tammy call and On have Bob Romo; Officer, Executive Officer,

make could forward-looking results, current we release. press will GAAP which from A are performance, are our quick we our which reminder Also, on statements, expectation that our items results and called based that in non-GAAP expectations. special reference will our differ out our future exclude to of and actual results materially reconciled

to the for Relations Investor in disclosures visit release our website and morning from please So, refer this our more information. press

you. With over it to that, I’ll Bob, turn

Bob Jordan

thank us Thank joining you, for and you, Ryan, everyone, morning. this

and that holiday trips. in impact of cancellations that with operational lower saw disruption, first revenue much million disruption. pretax return record rebound in related December March, quarter revenue a revenues of strong resulting the in We a despite driven that the was to of February, negative financial in We million our was net roughly incurred $XXX trends by expectations, impact a in loss January quarter from of line first the December $XXX

we far, strong remained demand of but thus mindful economic the Travel remain uncertain environment.

the seeing many across be You are all industries. given headlines and have we trends to

demand, leisure travel the head boost that domestic as strength here last from continues revenue a to in getting season. into We the particularly have show consideration, second year’s comparisons Taking summer tough international into closures. busy with year-over-year environment revenue we quarter

for to key they because learnings shore very moving done delivered go work executing operation in relentless year we our the based to operation through all this our times a I parts, Our due fortify the on our that of we’ve cost the making a preparedness in investments few for now, operation XXXX. is year are have on findings winter focus December. as am plan the our for I from additional higher winter few people up to proud of and preparation our this outlook won’t and

Despite lost cost the the manage on increases goal real we competitive effectively position. near-term have are our inflationary cost pressures, equally and we not focus seeing important, to maintain cost as our

ahead, solid QX. here we we As expect profits currently in look

the to We margins continue network to with goal expect year well have grow as and by year ROIC full year-over-year roughly solid full as route profits for restored year-end. our

at our capacity challenges due our new outcome to is are reducing full relative expectation The XXXX chain planning outlook, MAX CapEx needs net and news this to hiring currently X,XXX and assumption this of to a year. recent to a our recent more reduction further for year than supply we our This hire growth are XXXX relates plans Boeing the year. employees reevaluating to We lower deliveries Boeing. most

of overall our plans get moderating half as be We hiring we the will second XXXX. into

very we meantime, our in In on customer XXXX revisions making for we which Andrew aircraft, account are to are enhancements. the most detail. schedules will flight second our to on more half fewer I’m experience progress of focused cover the proud

entered investing and revenue new larger are in-seat first Wi-Fi, bins. provider, in onboard service. Viasat, new from hardware three early aircraft In power As a March, our initiatives, Wi-Fi overhead reminder, enhanced our we with

reliability. our expect to we quarter, speed third upgraded with flying all existing hardware, be offering increased By aircraft Wi-Fi Anuvu of and and

that on progress great just So front.

in-seat overhead power into are deliveries bins. Our new service X coming with larger and MAX

well. those as So, service are entering already

give to flexibility more Southwest number Kansas offer to Kansas and City very-focused during markets, XX We’re their technology our our mobile levels. fully in restored self-service other City, road to on is in customers now stronghold of map and one journey. proud Highlighting flights X more our on them in XXXX options growing ease enhancements today. also that flights the from one to airline say pre-pandemic service is our the And for I’m

community to deliver We all period a a partnership serve the appreciated a the Affairs is Chair with terminal time. February, of the It the and facility. long well and of for partner serve new to very the the opening will opportunity us it beautiful Airport and of We as airport Airport City a new great the beautiful that recently and was around, really we way celebrated Kansas Airlines in the Committee.

We work cooperation just We committees we I Meteorologists, and which with labor agreement progress. continue to to represents for agreements on reached make of that commend hard our continue and negotiating XXX, to spirit our for tentative agreement. want to TWU both the that a people led

pilots in our We representing flight and union packages the and committed with ops our remain unions employees focused market mediation remain to negotiations people. competitive ramp on representing attendants and our compensation with for

and already set eager significant we look and aside wage accrued new rate amount to forward been of have groups We those increases and contracts very get are soon. rewarding to a remaining and have

in XXXX. They And day hardest our they other for each In and are day I’m impacts just very plan deliver we customers. a we in for of closing, negative Southwest so the the proud and solid still out have QX, for believe people. despite and our Airlines,

carefully term, business and our in we of the We set in near strategy and to continue long-term the believe initiatives. are managing

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

Tammy Romo

Thank you, hello, and Bob, everyone.

how not loss start is quarter XXXX. Our to first and we hope disappointing

However, the accomplishments. without was notable not quarter

solid. year-to-date was performance March through ontime Our

weather disruption, passenger navigated difficult revenue other revenues our negative to record material performance. a despite stream And operational revenue. first record had Our the successfully impact of network operations quarter and from conditions still with impact December team through no we

We high for month the fuel strong margins prices. March quarter the with also ended of double-digit despite

operations speak our of and work performance right in will outlook, incredible and jump All by to our and will outlook. hard employees. so of I and and the possible Ryan Andrew made cost performance revenue this our was drive to

with Beginning fuels.

on per guidance jet $XX Our they high quarter $XX to within price hovered primarily reasonable dipped of about mid-March, barrel range. stayed around throughout quarter. per first oil the end was prices crude Throughout fuel was in our barrel quarter, which while per prices a range, first gallon, first $X.XX

is remained in On year. weeks, first quarter have the refining fallen crack high other relief. a market hand, over spreads, after volatile welcome last margins prices a during hitting recent XX-year particular, which Thankfully,

hedged We XXXX first price That quarter our equates still roughly includes is estimate an which price. the per estimate $X.XX to than $XX second our and price the gallon to $X.XX which lower million of $X.XX in quarter fuel estimated hedging to our in guidance $X.XX quarter gains, our be $X.XX range, hedging fuel quarter including fuel cost $X.XX are second to in $X.XX previous to be savings of XX% per second now from for range, gains. and full of year down gallon nickel our We a roughly alone.

as is are which hedged. our We began prices course, building on XXXX We April based curve this fuel portfolio a volatile, and and now and we recently and market guidance why can our about snapshot fuel be year XX% hedge. portfolio added well. oil cracks our of is to Of hedged the heating next hedge XXXX XX% forward XXth are

XXXX value total our million. for second fuel $XXX is through quarter hedge portfolio XXXX of market The

cost-effective continued expand opportunities XX% to year. hedging to goal continue get We will hedging to each to portfolio see roughly our with protection a

Moving to nonfuel costs.

Our X.X% year-over-year was our guidance first CASM-X range. increase quarter of with in line

spending including disruption labor experienced wage expected, remainder costs. increased costs, technology pressures, was market cost inflationary airport as higher The for operational accruals for we increase primarily expenses. As and higher of groups and the related by rates driven all employee well as primarily benefit rate

persist second to that X% currently and to we our increase range quarter ahead, cost X% to largely expect the inflationary driven are estimate not unique we pressures by CASM-X Southwest. Looking year-over-year, general in to

to labor rates, increases wage to higher rate market for for addition open contracts. we continue remaining In labor the accrue

our engines and further expense -XXX for And adding inflation. heavy this we maintenance to this additional due as for maintenance planning, multiyear have quarter further refine pressure cost second as come is more year maintenance our our fleet we

a guidance here continuation a full previous in due compared X% X% as change expenses decrease maintenance result Approximately year-over-year driven is For X.X% the X.X%. this second of to of fleet, estimate experiencing now Boeing to and the quarter. delays in the remainder the we capacity XXXX, our of by to of down our year-over-year are to in the lower -XXX is increase of timing year CASM-X point we with guidance X range delivery of of for what

of dollars reminder, estimated incur investments well our wage rate open labor to towards a tens market rates, higher guidance including as operational include continues CASM-X resiliency. remaining for the expect as we the millions our accruals of labor of contracts year As to full additional

We year. the quarter fleet. a received second retirements, ending of our the aircraft retirements deliveries with of which net previously aircraft, total XX up is a planned from than expected, two XXX during as to -XXX of quarter seven more shifted we a of couple as Turning first half this

the planning previous planning XXXX recent production are -X deliveries. based it’s Looking at year, our XX assumption issues of prudent full at on and in more Boeing, the compared around a deliveries -X now aircraft conservative XX have approximately to assumption we feel with

second XX% point guidance As assumptions capacity half year lowered up closely fourth XXXX result, we our capacity have to year-over-year, quarter. a X our impacts XX% full by which roughly and to

schedule. a we our summer hiring not flight the aircraft As have due our reminder, impact reduction to fleet pilot constraints. delivery of should underutilized Therefore, a and in our surplus

XX% We continue up to year-over-year. expect to our capacity be quarter second

from to Our book. differ continue planned our deliveries order contractual

contractual release. we reflect deliveries our addition delays, -X aircraft with as this around solidify XX year, are contractual In of to in further outlined press book, the very deliveries continue book, delivery our order reflected XXXX book be aircraft we order are XXXX aircraft our currently undelivered to XX soon. to recent to our in not in the planning clear, published which the intend Boeing we delivery and But schedules order

current our this $X.X aircraft compared with billion, In this previous to spend assumes of now which XX CapEx approximately year updated assumptions delivery deliveries. guidance roughly approximately reflecting year, for XX we outlook our of estimate $X regards our aircraft to billion,

Lastly, quarter. a with obligations and investments our $XX.X in of and ended short-term million debt paying We first quick $XX lease quarter sheet. after finance on cash note to retire first billion balance

debt expect million scheduled quarter. scheduled continue here a in second debt year million $XX We including modest XXXX, for full roughly in to in repayments repayments $XX

our We expect And in first in than also pre-pandemic current our the to XXXX interest million as fully restored. interest more continue we XXXX dividends is to income expectations, dividend offset paid on expense. quarter $XXX based

cash by with an and rating airline the U.S. be position, in rating We continue we agencies. a investment-grade only three to net be to continue all

Investor at back was this we Day. first closing, In not planned quarter the performance had

am the I proud with be work solid but However, and to currently line this profitability forecasting a quarter. is still perseverance. bottom people done our There sequentially immensely are fully of substantial to recover, their we to improvement

managing on laser-focused and ongoing competitive cost are maintaining inflationary regaining cost We leverage better increases, our advantage. operating

and our Airlines, We along move have many not spirit warrior success lost I’m to the path Southwest of eager goals of for to sight years come. of or our forward

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

Ryan Green

in second Thank commentary press color quarter our the Tammy. quarter a results take provide you, on more and this I’ll and first release minute morning expand on to our outlook.

reminder, call. played quarter first This storylines of of revenue And back the throughout growth out guidance trends had within that going quarter anticipated. a to quarter, and expectations quarter revenue earnings midpoint at we first right was first in as the steady with two Our competing our as year-over-year. XX.X% we January remained

an the negative behind in of the witnessed and demand, are throughout slowdown us. of holiday was January revenue these strong This terms return late over saw yields. trends February. travel result subsided was We impacts million the to March. operational of have the December. That quarter rapid for we and believe a We disruptions negative in and impact isolated overall that revenue half $XXX First, reverse up bookings now estimated our following and showed incurred redemptions and revenue cancellations in second reward

at quarter, billion revenues record impact we revenue of $X.XX. And of had beginning with record $X.X so, even operating negative quarter RASM first quarter the the the of first and

we’re restored at to recovery Managed revenues nearly also levels, it feels were XXXX revenue like improved corporate throughout very to business the XXX%. close just shy progress, and and full of significantly quarter is Southwest. March tremendous That by March

traveler corporate further recovery size to sector revenues How managed Our ahead is or industry in may business to while data. due our from demand up revenues across in consistent comes of revenue space, industry pools of improvement incremental the but accounts a on passengers. more the volumes corporate of the in accounts, driving we choppy in access expect course, still the isn’t trended managed have opens further to which the business unique of quarter. with managed to curve, be be this bit and corporate initiatives quarter new And in sequential this seem business ARC second booking first based doesn’t the out new

Regardless, business grow quarter to gained continue gains in making share from while we share we volume passenger another market in expect managed point expect very on initiatives first market we space yields. to as the our solid of

from would second pre-pandemic curve, operating improvements Leisure In continue or normalized strong in levels, less seems and of what we and heading booking it be out strong and to terms yields, that the we pre-pandemic above in saw currently sequential summer into the more quarter. fall summer, moved well expect last yields are and we’re leisure seasonally the and to to seeing has revenue further demands have levels. which

All remains domestic in in with expectations. revenue and our are the strong, overall all, environment performing line our initiatives

So in short, with we’re currently we’re pleased seeing. what

Our second contains quarter X% a XX% to guidance down range X.X-point headwind. of year-over-year RASM

XXXX. revenues to flight expiration later to and second not quarter soon credit a trends XXXX the pleased amount as well pandemic breakage headwind operating issued second credits Adjusting around approximately the change eliminate half seeing. this during dates. million additional we’re higher-than-normal flight revenue, down would the our headwind, will as be with As of RASM in second for $XXX year-over-year included were our core expire a This reminder, related that persist to quarter policy guidance we’re set X%, of

also quarter, another a record the our Rewards Rapid strong we’re to first new and We’re passenger. second saw performance of the quarter performance of first program also and quarter quarter. credit all first pleased year-over-year co-brand program, a with added Rapid ancillary had per Rewards We and products members expecting in card record ancillary of revenue in

new including Hawaii, mature. Amadeus product. portfolio I’m Revenue proud and our our also the finally, cities, management which completed to system, revenue of selection we Network the And announce that new continue is of to Management have rollout

results the is mid-XXXX revenue Our pleased our with ahead we’re the timeline implementation we of very during and pilot. from timing previous of production saw slightly Amadeus

encouraged Amadeus earnest ultimately future bookings implemented excellent an the are future the dates. managing We product very just is skillfully the in to by incremental now I’m multiple fully third to for as our revenue, manage which job management This this team is just the really as systems revenue and recovered about departure new in management opportunity proud revenue is all currently we starts quarter team. from led pandemic and of selection. and which

the want metrics disruption I and the our we scores that our mention quarter. first watched closing, improved brand since In closely have significantly throughout to have very

the consistently from to customer not hospitality, to aim have at plans communicate at continue are granted, base very to loyal we take that fortunate to us are operational reliability deliver and accustomed Southwest. about and to they we’ll remediation and our We a customer do Southwest them for service

I’ll to that, with Andrew. it over And turn

Andrew Watterson

Ryan, you, I’ll jump some everyone. provide the hello, operation into we Thank Q&A. before on and color

the December, January Following operational QX. proud am our that our event had late performance in quick rebound and the early in I strong employees we delivered in of

material no While we following recovering working operations. QX did and solid solid for regular are completion days that our as processes irregular maintained aircraft or This each event, evidence tremendous from We designed. our metrics the hangover had a weather-wise, the networks. people and In operations our factor. crew quickly was is job operational tough in

quarter, on X reflects people. our airlines we which on-time number finished XX of and the well For out performance,

resulted April operational unexpected connection in of on an XXth, double firewall while data. experienced a failure some loss to recently, that we Most

of resolve flights. stop ground quick to more the our worked hour, temporarily While than pretty little the airline. to stopped issue a caution, that It back the morning, teams technology quickly operating out ground the of fix lifted a team and an Southwest safely abundance we more we by was

day. While no our times the hours. delay with canceled within that drives time Even April within flights the on network, XX% we hour delays ran XXth. we an scheduled the material had this day, only XX% type on on XX across X departure impact of operations following of event We flight and

don’t things this those recovery an we by people, While like delays, our admiral all represents considered.

the JPMorgan detail customers plan, disruption operational microsite, our in on is Investor remediation Therefore, with and have our plan is the on track. of reiterate mid-March, presentation going and want we Relations want covered greater remediation to work a provided a findings winter Regarding Bob walk to that conference detail at also website. then, through it by I items I’m readout the that and our in in Since that on today. we the key available we again just not e-mailed solid place XXXX.

capacity. to Turning

year lower half lower aircraft this expectations in is driving delivery XXXX. Our second capacity expectations

full is be As the in our growth of to range XX% now a result, XX% year XXXX year-over-year. capacity expected to

for We’re of we summer in published flight schedules to published our as are flight flight November-December refining reevaluating our the yet schedule process plans our post be schedules.

on We current in points post X in X being December This so, or published QX being travel estimates that this capacity are but point with lower from period. trim expect have our to X us for the year, than summer and schedules now month next through a we plane the capacity puts to X QX year-over-year lower our September points roughly lower will basis. plan those original

network end adding capacity was year. into this of change year. restored roughly is this key the back And continue capacity the our lower markets material the still Southwest route growth to we in Despite to and of approach There market have nearly allocation no capacity growth, going all our by expect depth.

just voted be will represents team XXX, up by that a tentative wrap agreement negotiating who Meteorologists and the on of TWU our to our it want by employees soon. reached I commending

collective We come agreement have covered agreements. groups XX to with X of now bargaining work by

our groups, get are We’ll the begin remainder eager compensation these eager to other continue negotiations we deals and to we are representing of with the unions up, receiving our employees so them. increased work pay wrapped can

competitive accrue wage and estimated means We and market rates continue employees, already raises. to their guidance our for results reflect which financial our

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

Ryan Martinez

Thank you, Andrew.

We questions. for have up analysts queued

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

Operator

come first from ISI. Thank you. [Operator ahead. Instructions] from Evercore will And Pfennigwerth question Duane Please the go

Duane Pfennigwerth

Hey. Thanks.

I and But the to have been you of drip has pieces. Just slow run CASM your there’s on for totally a costs, moving painful business appreciate these revisions investors.

And feel so, do the my being you year? finally expectations band-aid circumstances to like this question the you are is cause off that is, today? would CASM And raise your ripped again what

Bob Jordan

Hey Duane. inflation there’s what up out are mean, But and seen revisions. I can clean there. here. Yes. Tammy you’ve start I’ll real most of

the of market is Some accruals labor to is it lot of changes. revise that. as A it continuing for

you our of best terms for marker If benefits. in pilots, rates take the delta is out and example, there

so those showed little on here we’re We’ve And you our rates. accrued contracts that that for a maintenance fully more around got XXXs. to all can assume open up inflation

just the expectation point. don’t you for I our capacity the is this expect inflation if be know pretty that pulling front. timing It’s part, we ‘XX don’t the had that obviously, example. expect for most some would mean XXXX, a that. I at change could other expect in further think of driver, we’re clean -- Some visits, around on into I to yes, ‘XX hard But for engine I

point impact the this move therefore, the on impact no, year. Tammy, a XX any XX from down to clean on would think get view will set. else And add? help for X I capacity us you -- CASM But on what our real

Tammy Romo

is inflationary Bob. benefits, think Yes, and Yes. and primary clearly the by it, I cost wages pressure pressures No, driven here. you salary, that’s covered

profile unique going at not -- loaded, always second CASM-X fully for the And we’re here, So, our an look end That pretty is the improve. going cost to us. capacity, certainly so to as to opportunities should quarter on be have always, least we said, of impact to speak. But day. the to at our

our We ongoing operations plan. modernization have

opportunities can. with network. we move the best course, that of And incorporated we as leverage as we we operating have we’ve gain So, forward,

So, understand some that But the capacity change does have we drive when changes, in question. typically CASM-X.

So, XXXX. as the here look at primary we culprit that’s

Bob Jordan

hiring other Duane, of think to XX hiring ‘XX, thing is prepare the got going hiring We to from helpful, XX additional back us our we’re year forthcoming go this this year, stacked plans XX, to Boeing from -- too, that that I XX the this aircraft at an XX. our I that’s front, especially for is help been now think plans, with that down last the then ahead through, undelivered moderate in forward. were -- at we’re lot we’ve further coming between on you point that growth. are up hiring look pretty revision A

XXX taking not next We’re year. aircraft

that out the So way go all reflow growth with we because we we Boeing, well smooth, is order have think help book in the a for deal, work that move orderly wring to the back, the I and here rest good us order hiring to book. with of as through regain the advanced and mean, efficiencies the want prepare as book it in reflow the a year. opportunity but we pre-hiring, aircraft of got is will this I growth,

Duane Pfennigwerth

of a just about it. this dynamics June think follow-up year the managing is But be half questions. too? last Appreciate what hope RASM year-over-year down quick are the XQ, do RASM in And those maybe quarter -- you the given taking then breakage. I on in we And quarter? your for Thank back will the hear the weakest thoughts. you quarter RASM you outcome the

Tammy Romo

challenging Duane. breakage Thanks, we here comparisons second had Yes, quarter year. Yes. Obviously, in the last given sure.

quarter aside with had, would we that, say, difficult yes, also headwind. I last from here. compares So, be we that that expect to do the And

a strong. just robust, in trends benefited strength domestic this As remarks, just the to general, in and challenging. environment at not we’re quarter -- Ryan the Southwest, very But very thoroughly second demand the in second benefited year, but here look in revenue making you’re point, last specific here aware, Duane, seeing from international last his was year, as comparisons quarter covered closures

Bob Jordan

Duane, thing Yes. The tough. is there, it’d be only that add I’ll

of I clearly, second to as view half on impact the year. the quarter but think But we’ve better travel, summer. and and good environment, forward air we out can beyond revenue mid-July probably got the get here far, get year. into this around to we’ve We’ll kind second into the trends second But -- into sequentially the happening the how and quarter. no to and just have we speculate and see, nothing we financial mindful beyond into quarter up timeframe and mid-August a looks that the what of a are the so idea it’s of here again, shaping be of fall, macro seen the and things tough what’s for we’ll look headlines strong strong as have second

Operator

And Scott the Group is question Research. from next from Please ahead. Wolfe go

Scott Group

more to but How there through really So, QX. Is said less because of something Is you out you -- thought does just maybe or cuts. understand growth were said the and what you there point to think points mean of point catch didn’t now this? year of continue more for next And year? going capacity this capacity, that? I misheard it. talking about Andrew, do next I out sure, then importantly, to we’re growth capacity up? then QX like X follow up want When the some on I I I a

Andrew Watterson

of in. that book to be start can the the -- September fourth originally quality from through then quarter short effectively, those and aircraft Tammy -- schedules delivery projected. the off, brunt. and of the less then kind the Bob December, the chime From impact I’ll you’ll escape will the those where it’s for bear But Well, will be means schedules than and Boeing

did publish we be So easily will actually make what will schedules be and modify something then reflect that aircraft already lower sure fairly the we revisions count. publish modest November-December. will so clean. schedules in case those September was our movable October about some those published. bets hedge to with to aircraft to And to happen, were we We

redevelop Now, we’re lower reflect going to November-December business. and go to a count back aircraft with

lower to the that’s the time plan. during capacity of original So going period drive versus what’s that

next coming And they’re aircraft order when delivered would once that the about all year, Bob year, this an for growth, next these that -- year on bunching can’t just year, because were be then not we you because said. up book for I we’re reflowing and assume last as not touched looking delivered talked they’re orderly think Bob

So, we for to then how can what that as order that we refill book, ‘XX. look that ‘XX, means --

Bob Jordan

Yes.

think just constraining about we talked is maybe to -- out is related is the I airline. thing other lot pilot the point hiring. what’s a right the And now, that

A of the to of true year. was have the are lot that aircraft effectively constraint up that the end -- roughly are out we of at going not we So, pilots. producing because just and capacity is lot today this, a of carriers dealing with

aircraft with planning -- definitely that flip to next fourth a growth quarter, the the into We’ll XX, about hiring constraint will planning constrained will just that’s we’ll take book from -- of account hiring order year. and planning summer, as for constraint lot because turns late into again, be XX It point from again issue the dropping constrained. year third again, pilot is quarter. this as we for year is deliveries And to at the think pilot Now, for an and the we next dropping, early earlier. post be then aircraft which

-- to to want XXX We Andrew as grow. don’t we will then want And we aircraft second, aircraft the said, number So We want flip constraint constrained. growth. orderly want again, one, next year.

we be as to consistent we year. be growth measured to want but opportunities, can as of that orderly lot to a have We and year and year

thinking relates hopefully, about next to capacity how year So book. with the and order that just helps that

about to work we days obviously. and XX to we’ll do We Boeing, about informed Boeing that through book pretty here, with with to -- do get keep have we or fresh and reflow news have the work you just to so that. is do The as to all think order still how

Scott Group

just it from sequential least book meaningful RASM more thoughts near-term deceleration at guide, of at a XQ. the versus million less typically question. the back in seeing then pretty add or show? And Okay. Thank in quarter to that see I maybe on back uptick we’re QX, if RASM, XXXX Any a why $XXX like I second trend RASM XQ away you. look When levels than to we implies

Andrew Watterson

Scott. Yes,

look second here performance revenue you I what think what like and ways looked if quarter. is the as think at lot guide about of this we looking a here, different the you into we’ve go and

there a got has lot in addition of quarter tailwinds or obviously, we strong lot And some to Omicron exposure as this that got for first that last industry the there also, of international -- you’ve there, disruption out our that to us, noise don’t year whether a of industry. in our have as the year. much in international peers just The is got we is while in you’ve

and what looks comparison pleased we’re up, And quarter, fourth that and quarter of in of looks it, whether quarter, second matter When so, at XXXX, is when how quarter, relatively isolate terms back we you kind us with like. fourth look to it you’re how you to and with performance what like growth go you domestic no out revenue at projecting first XXXX, second in cut it’s the And line performance. quarter that that ends to to to forward pre-pandemic, there. looking really else

Bob Jordan

there our here. I seeing the March, think just out seeing, pointed we’re remarks, just strong think the Ryan demand right made just this, XXXX were would business. of got quarter, It’s industry-leading the -- But We’ve I up. going top a the expect think are -- do business, bit with -- Investor the add now thing at I actually managed second get proud remarkable and that expect quickly. system all bookings, in I and that, choppy to other a selection levels is good the travel bookings our you’ve sequential in we in of And new That be ability as just restored all we’ve results business his GDS, a as managing is We got the we Day. thing in is other earlier but think revenue periods, quarter that and Ryan forward of which and to showing revenue improvement I’m from well. of accomplishment are about obviously business those around made we’ve at we first forward quarter investments little can here terms we talk system on Amadeus, we that. talked terms in in to than got to really to I made from system management second selection

across forward on of positives a other the will move you So, as lot year. that come here

Operator

question is Please next Jamie from from JPMorgan. ahead. The go Baker

Jamie Baker

ordinary the the if midpoint with line book adjust then we quarters, from January in much and your to guide, away for February the revenue quarter sequential demand and first So, looks of pre-COVID like second seasonality. pretty take it the second

takeaway So, the brand that is the intact? fully book ceased the has and away is

Bob Jordan

Yes.

the because outbounds about the of really strong. that very it -- sequential sequential was I to and just of way think how that’s summarize the February. canceled had margins from really in to feels most double-digit it we March, return think And feel there. ops impact was holiday weren’t the yes, book some strong terms it a March demand. the But January like We disruption, was isolated had we’re like we obviously away, was about as in travel there. think I revenue -- thinking it well, trend good

out, first pointed we rapid additions record reward quarter. Ryan in terms members in As of the had

evidence a strength. lot there’s So, of of

any don’t look this the are at strong. you we away of book evidence see point. into As second trends The quarter,

work Now, have we to do.

acknowledge brand lot And of across is work there as the to happened to year are restore at me some through continue a that, from we in The all April to here. of brand numbers tremendously when that expected -- look at December surveys. look we what do do health you just Let December. our completely improved of just following as

run But We’re customers. seeing reliable very moves up that very, quickly. need we to for a our operation

quarter-over-quarter. had and We were that two We’re that X quarter X points the performance first factors I completion on-time up think year-over-year, were up was that. doing points number in

evidence We away Trends strong, brand hospitality the hospitalities from are front. point no, there’s with that on no book wonderful product but to are is on We great we execute. a focused do have to continuing. need our the at delivering But this do -- work employees.

Andrew Watterson

that have trust Yes. The have improved visibility. and in look because point. scores point. Jamie, consideration the I’d trip. good on quarter, course that only visibility. in or of add for first really of got And About Bob we June the watching the scores -- is thing this and the significantly quarter we booked really XX% those next only is good Not XX% to first the at the confidence are this confidence said, We over that, when over -- second quarter we you their for we’ve have Southwest And like here. booked first into the at got of dramatically

so, improve look turn we in another from business in Leisure second second really continue all the quarter. on to in here, performance good is set strong looks and assuming in quarter demand and we’re like is to strong. we’re the what And quarter. we sequentially for signs the record were Managed second where revenue first. the And here forecasting, going plan

terms So like need evidence Airlines love. continue to do. Southwest execute But of work grown of have in hangover. know we bookings, Bob customers to and that to be just of the said, any no to and have sort We

Jamie Baker

that’s guess, I of question. segue, kind So, good into my a next

perspective, So new from a passenger or say, let’s passenger. a

workforce, just entering or the that’s they’ve whatever. fly, that starting level reached they’re somebody So economic just to

are -- your I flights. operations, only what’s point-to-point loyal, competitors to instances mean, days? already for point-to-point not for where these that’s proposition flying connecting Southwest be it in value Somebody get you’re the a I up, many going

in no-brainer. brand price if what isn’t buyer? a do that’s to equal competitive the first-time a that to your credit markets, or is already But your and truly does attract if passenger card ecosystem, Southwest led So,

Bob Jordan

that have strengths are brand the think for there. I XX years been for place in still --

have have on-time well. and things far we -- a all better, as have flights, we tremendous those are direct even network, improving more -- terrific service, have performance, again, we a nonstop You

experience. work on customer to the continuing We’re

We have new deliveries that are coming now with power on the aircraft.

bins. We have larger the larger overhead

improved have Wi-Fi. We

have have service. We fares. course, good low we and really And terrific our employees of everyday

strengths brand not So, changed. those have

If size. you overhead the larger sample again, bins and at look a like small something it’s --

we’ve gate it aircraft Andrew reducing a big seen but It’s in data. small for check reducing we’re the But of times mean, watching back well on cost. has over existed question, at XX%. still win that what relatively I win on to it’s is Southwest me, true point, of what we us huge It number by always check proposition customers. today. have our a bags That’s well. a so helps it’s turn We far, value -- It’s, but the as a modest this data, It’s reducing in our but again, aircraft. your as years with certainly for for Airlines amount XX for

disruption. of sit When at have Southwest And course, consideration we first the things and tells is the time, ops are, in They quickly from you numbers look look of one that strong. and set, the back a after before come we disruption for Southwest hangover ops customers consideration, but do those -- for at the customers the don’t disruption, during considering and me both they’ve constantly are really Airlines. dipped of where the we that

Andrew Watterson

Airlines customers think doesn’t. happened that. thing. made look same and at great said scores, a going that our today, No. new my understand brand that’s us in December, credit. define many I are to despite going better whole historically, forward, I have things existing The that lot say of exact you Southwest and Bob and not only us times When what mind, give in and it the customers largely And would

We’re again. than seats program. even redemption the by great are on our a seats not We of of win rewarding at and most time and close. in business-friendly the customer-friendly any frequent service far great with Airlines competitors, most flyer price airline terms More time Southwest

far when most with no even free, stable credits by with you change And customer-friendly more flexible we’re we’re of don’t at our expire. that rewarding of fly the look and So regardless fees fly fare forever policies that flight airline. the making bags you it

I think the better. value getting proposition is only

Bob Jordan

look, you Jamie, we you flyer, at the If about use entry-level talked a the is product new case, shine. where

whereas basic down is stripped or assert would I us, XX% a penalizing, economy ample you’re Others other have our pitch. legroom. XX-inch which MAXs, type XXXs are now aircraft highest-quality the economy we which a has fly product, regular of of product. got flying you So, of that’s economy a or offer

you have policies products, So and a much better better procedures. much you have physical

rather Our the people are joy opposite. than to deal with

disclose then is other I’ll disclose it, so know level fly our this would where purchase is airlines flyer forward than our We high. go, we repeat new "Oh, don’t other a And and they "Well, the purchase much higher. them So, repeat really This of come us better to So, but say, and theirs, wow, that’s again." that much airlines." is great. is

that them give and first we So, they experience, come back.

Operator

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

Matt Roberts

earlier there’s carry to to XXXX, helping I capacity these in and late the through of think just also you the more Matt offset that. are CASM-X is Savi. could to of sort Could given much fixed follow elaborate Duane’s cost question This And on costs weighted on for XXXX? cuts expected that regarding up of If I how increases. component on guidance are a variable

the Or that is there not would case? Thanks. color any why additional great. So, be

Tammy Romo

And a Sure, sharing Yes. few just Matt. thoughts.

Southwest. good our cost pressures, with all, even are to first again, inflationary not CASM-X bending competitive year still But are down the pressures position. about we and so -- our this of unique We’re feel those we

So, -- our contracts in or in are term we’ve We’ve we our our XXXX. down very targets. got the focused those on accrued. in accrued And long-term labor cost reflected got bending long again

and year. related have in $XXX next the that probably shouldn’t to Specific we repeat million onetime the here that’s this million operational some year question, to $XXX to disruptions, and your do range, costs

we -- our So, planning, certainly covered guidance And plan our is we solidifying thoroughly, we’ll our we and our what more in look there. as cost goal. our get focus ahead, driving on as now obviously, fleet for the But Bob as need is provide year. capacity down very to next further plan unit

Bob Jordan

back to the thinking get deliveries, about As fully we despite you getting and this year where still how and to too end very at -- this we growth -- back that to about aircraft of in the we’ve reduction where related is by to been network right flights year. will think upfront are the going, restored about are restoring

on come into that revenues are mature the markets. So, more

at it contribute so, faster much should a And rate.

it’s think flights is -- with on going about capacity into is as operating intent of related that push at new to leverage. our is about to Day, you have That in day. we the gaps during put talked really what Investor push As our XXXX, cost, majority where stations we

And so, are the there. costs

for where we’re costs the have paying paying We other the know into have game, we we day airport flights and of we cost. we’re for put points demand, already people, and have

will development cost for I is -- would say ‘XX. so would significantly leverage really the And that is additional lower come on a focus And Andrew, of comes I that well. operating -- profile at ‘XX those line Ryan, say growth as --

Matt Roberts

was that on question was capacity December, not initial And But the that despite Investor the dependent Day to delays. as and one guide sorry any on in of was asked provided elaborate earlier aircraft in the then deliveries like plan, terms then, at delivery it it well. seemed firm

or So now? back, to what’s feel environment there the you need something scale and on difference based Is outlook that else? is the the that current

Andrew Watterson

Andrew. is This

had growth this instructors, year, year. that our three at the back elements pilots we’ve constrain last potential They half look and of flight the we were like as aircraft. For

were of this we And that constrained aircraft pilot time, in so, Investor constrained. from would the to Day, time back and at moment pilot half knew the towards year sometime we we at spoke flip constrained at that

trajectory And so of of forecast. we’re hiring pilot our number the on and training we piles

that end it so reductions forward. year the we knew some flip with over And Boeing at the the time would now of pulls

pushed that you’ll summer of this the see to and year. period, us post-summer our is to we’ve from next aircraft constrained made now now, which what is, post year, deliveries kind reduction I pilot So the us is the the changed which for end think, schedules through of roughly why has second assumptions is adjusting reduction,

Operator

go from question from be Becker next Helane And will TD Cowen. the Please ahead.

Helane Becker

versus Just sort Net of January? how in question that’s on something follow-up focus maybe looking with Is where Score. Promoter that it -- you a now us on? was Can on that share you

Ryan Green

a Net -- you weekly Scores. if Promoter Yes. it basis. Helane, We is really on Ryan. there’s actually Net measure basis, overall more trip And longer and other on is One Airlines. Promoter on you took two trip they that not we the track Score of recommend it’s took Southwest focus is as types and daily brand a And on would the customers’ a just based then measure. on term the based a just

Bob Net upward term and continued got the brand -- gets like on Net we’ve to is measures those And And quarter momentum have it have When mentioned, on performing today, throughout really the to how course are the some Promoter a course quarter. see longer-term those place near bit Promoter on overall, quarter here. as improved terms brand in of to we’ve the focus been a first those have execute of the through the of trip Score. have trackers we well said, operating we scores over measures, we’re scores term gone first longer in we Score, those and actual to going just of continue the the of function is improved to which little how to over continue more

Net to enhancements should scores we’re addition So, well time the we to you as see product, and show Those continue in continue the improve up Promoter well. Scores. -- over operate to in that in those making

the off. also larger Promoter the Wi-Fi, investments the Promoter where on we example, bins, scores where have aircraft an enhanced are Scores Net up. on overhead those As those improved have we are the Net we aircraft The paying up. Scores aircraft on have that and are

make to scores time. to execute and come and as and continue should we we those product reliably, up -- the come as enhancements continue to operate So, up over improvements

Helane Becker

there, and helpful. really construction Bob, at up airlines terms operation didn’t just in And that. you. that experiencing earlier of talked mention the That’s as a Vegas And have other Thank you you about And one reported to I yet the recall. pretty briefly, runway follow they’re today, of that big delays. Okay. Las issues

or around issues delays of to you’re contribute seeing kind network just how wondering I’m of So any kind your those disruption.

Bob Jordan

question. yes, I we course, I Yes. a because let for network. the so out there And issues in single call I’ll -- work complex in, we Andrew have mean And and But let specifically detail. of -- Helane, much it thank weigh you I’ll day. large didn’t every

our been New So, of carriers are experiencing we’re the working one runway impacting component days with in you that of that. with things absolutely any on-time aware to to is about in have FAA certain -- the happen we’re want for performance. the discussed issues it’s at deal single that and Florida yes, with we’ve every available Andrew, give ATC no, but But obviously the very York, day, talked certain reduction issues detail? and before, capacity, Vegas you but But

Andrew Watterson

down in -- So there airfield the a program shut construction left one right. Vegas and from of north-south Las in two runways, down -- north-south. through kind is August, There’s XX longer-term they’ve and shut now

they those for down of will shut So, time. periods

flow, And south reduces so, when that we run in a north capacity. or

flow that. of rate, XX% about throughput that you on which which the our means are airlines year, the usual, those you the are usual. such to don’t time provide configuration, will schedule them So on you reduce will north two case time the we’ve runways, -- than been be if you’ll time rely XX% the or out being when the during have cancellations of of more the cover winds that one in delays up, operate -- primarily and you able north started should than roughly This that and in to scheduled. of

days, there and from a in industry spike Las in there has last has been Vegas. -- the over And and delays so from ourselves the cancellations few

passengers how in forecasted been which guard -- changing our we the was end, to we’ve have trips, is It our we made in to while plan created, use a was through that bit Las that means different We’ve sense our -- of how as continue lower. industry kind some -- to more rigidity. well. at than you’re We’ve a at broken board, when has that make I through our taken drag. the the are We’ve looking the on our catch result up changed couple adjustments sure creates our set out supposed with minimum were spares connections December it’s bid we’ve weeks, of which adjust. the Vegas of so spares. we Vegas aircraft to changed times last hard close crew Las crew to construction So, connect a it off those We’ve the it bigger is guess was sort as really did of

see So we’ve term, in a the what configuration do then crosswinds, better can can to we’re we a of of lot made regional use Washington best for are we to FAA short and collaborate changes what can so the how also to do we the the time. with that more -- we working tolerances in FA

there And airlines a and the collaboration that. so, good there’s on FAA between the

through rehabilitate a than So, it north more you expected, drag taxiways. process airports to normal August their for runways will but be have if it’s a winds to have and

Operator

from Melius ahead. The Please Conor next from question go is Cunningham Research.

Conor Cunningham

how your this is network out of of a think adjustments I lot you’re case, I’m but on And the new control, you where actually changed that making on or is general? year. coming deployment think about Thanks. you’re the full Just I still capacity just in that’s you that on curious markets, if the just it for capacity restoration. all have you Is for realize track mentioned out.

Andrew Watterson

and they COVID. restoration, network had within would you want our cities to of activity root what bucket say, the we okay, -- we the one like that’s before roughly have to the restore level restoration before. So And be flew and

we’re dates new airports at we did So, that that. XX and that’s say we the in and had the the we we when cities doing there’s restoration And operate they’ve had expansions with modified We where currently infrastructure. and margin. Hawaii expansion

more into So, we’ve added there. growth

and we third Denver, putting had bucket, and so at gates new that Phoenix, it’s above were pre-COVID. we’re additional in growth So, they’re where they what

than more they’re So, restored.

above because all these so, additional we infrastructure, aircraft. restoration And if have than be places would we that where will those of we been growing kind less they were had had

Phoenix I’m use and not it I’ll will those but Denver, be examples. saying

cities we COVID the The we restoring being have XX the COVID restore this then stuff stuff flew bucket And the before. new can what the expansions a in flex third keep second Hawaii, the big cities already in we where and So that newer being and three that’s and customer buckets. the I simultaneously our see so you’ll base, put network.

Conor Cunningham

you play think how just -- next then I’m And out Okay. out growth helpful. do trying to may how the about for like That’s you parse ‘XX year.

going these CASM-X a assumption is of And next to So set actually going have of are level directionally growth just allow And decline on context transitory more then like the how to Thank for not I’m that rate, all year? that. single-digit at lot to terms of in the Southwest is you ‘XX forward it. kind a where I’m you. high Boeing? much is how of dependent? number, you’re of in in about costs the growth trying thinking we’re asking a dependent what

Andrew Watterson

coming, the there into On be back be that carryover of that are start growth aircraft will in year the and There’s year. half stuff next will the the a growth, carryover. will with we that

the to calculate what that’s that about reflowing We be be to would depending be got growth will that orderly growth. that. But mathematically much the ingest. with year, the -- So come additional XXX aircraft. an was really want able Bob on We’ve talking too that quickly you’ll next then could

negotiating in. carryover, And so aircraft yet would involves with that’s it Boeing something addition and the but to that, determined, that’s flow to we be the -- how in

Tammy Romo

objectives Yes. day going And objectives, end that financial I financial on the us a our just of well. mean, but just is -- our as and to -- objectives work to -- we’re allows achieve plan our at the

flexibility as a orderly Boeing lot that the fleet just for work have we a So we’re up aircraft. plan and allows usual going with with to of the But reminder, inputs all come to a take do with growth.

we modernization We and fleet fleet ongoing have there’s are renew in efforts. those -- to value efforts our

delivery up with for solidify works plan Southwest we schedule a with Boeing. So, as we’ll our that come

Bob Jordan

obviously, Boeing discussion discussion And be to the the it’s the we’re talking XXXX. be Yes. early of early is -- And beginning result talking about we’re with new. impact the about because really to because early now it’s just

argument the COVID COVID, -- we up work the up. the one and bounced we I capacity things, is is think -- all dealt couple down with and a of and

advance down or deliveries the for you’ve and level year the to And -- move hiring had hiring just it’s to because it doesn’t year year next of for because That that hiring adds planned of just year. the growth we choppiness -- to so cost for much level of this originally planned, year what’s help in so lumpiness it ahead up seen it’s in initially with you’re and around our constantly the anticipation manage year. numbers and numbers to for hiring hard last coming

And predictable. of to we leverage capacity where costs. have advanced cost. can bring our add It we will where is give for places how It bring high lower to grow. grow. work So was growth time on give to moving would example opportunities. that We want to will can working will manage with be in at want in ourselves be talking I something terms time think, levels year hiring out, more of point measured the out just give We’ve one us that add want just -- capacity to Again, we here. is where year It how come to to we helpful prepare It Boeing that terms very of us much I to to got more settle time operating of it’s that We to and us about helpful predictable we Again, inefficiencies. that out. a manage into year to lot helpful. will growth. a orderly. we plan be book, and as example to much will we the gaps, It be reflow an very, order much

managed, still think but for So, measured, better be take much and growth, I just choppy Company. year-to-year-to-year. is that’s the growth much reflow is the more repeatable good less and And the plan, intent predictable to

Operator

And more we have time for question. one

take will from Please question We from Vernon ahead. go our Bernstein. David last

David Vernon

where what airlines, pressure, they’re guide? operation the we three across and resources like and there embedded little the other one were. It of about quarter little demand I sign if we especially this, rethink to back bit to bit little wouldn’t want level? that and a first little a restoration in basis of If from talking that, finished under maybe constrained kind and factors if a and we’re getting to quarter we’re ahead back a away network with Southwest of that to a isn’t in load getting the demand follow-up of plan why of And talk bit, you getting where we wouldn’t that points the mean looking load seems load in bit? kind the factors having difficulty factor. up a Andrew, there’s as can restoring XQ Bob when Ryan, just about

Bob Jordan

Yes.

the So, question. factor I’ll load take

the -- curve all had normalizing, disruption less to you or a And a I bit about -- more more role moving think obviously, booking that had is been first we here. throughout that I pre-pandemic talked trends. widely think of we’re played normalizing out earnings and quarter some here, the it’s we season here

fall. we of for worked our to was lot -- than certainly management techniques evident and that’s pre-pandemic, that way revenue there close-in more today -- kind of here that. through leisure and a of last so became adjust it and there is summer what quarter had kind first and our last to And it’s the was we adapt And less while than strength as

there’s of volume are mix you that stronger news at the the kind pre-pandemic. out, is there. XX than curve a healthy, The fares curve we good in demand than when of what fares look better getting at so, more what in the received we And that getting were and out the we’re days and further point

pressure which and Yields volume it’s that will for very loads. managing always have so, And manage you’re are there. on -- a strong, yield have may for -- downward a

managing of quarter, And But, so second both the look you’re just think yields strong. are as kind of into together. I those and things you loads

that’s so, into guide. our rolled there And out what’s

Andrew Watterson

to comp -- there’s add also I’d here. a

because what year, would in think we this last is schedules demand -- republish so you If about we time our did COVID, was we we as vacillatory. did

that you number about then done has sell, pushes you on customer and we customer to consolidate is doing to artificially experience. so poor sell, committed flights, republish which your not That fewer and kind of factor. a load what is year purchased that ago, and so have you of already a means sell And We a the that. up stop

load a that’s to make going factor more like-for-like so, difficult. And

why our good competitors practice, customer to we That we’ve if not them. Jamie’s choose that kind about means want back largely to So, people flight the question have that a but continued already us, experience. changing sold

Ryan new would a about, system. I say that they revenue put management talked in Secondly,

I assume the load things so to have would choice, managing been it’s say, performance. the been a for for the while. would not factor and necessarily RASM -- that So right

different may it regards and so, be load therefore, that to old different. compared decisions with little our element And a make factor system, may to

the And the fly and sizes delivered XXX different we’ve XXXs element XXXs sizes, not third is XXX, aircraft we two been taking have because of been yet. and

some aircraft will. many we too markets an or at have if of will, you that markets level, in so mean a big And the current

completely As seats can extra need extra extra to you but with our restored, we get connections, that connections, those network fill you restoration. do the

a short longer there’s be because not So, before. haul to that opportunity may to a as an was there not connect full today haul

network load that of as connectivity. that close gets flights on gap those help are factor shorter restored, So will some missing the that

Bob Jordan

finer the just relative I’ll revenue that point a put Yes, system. management to on

just from system trade-offs load the Our moved a legacy terms and admittedly. new system, by that we yield better a one away factor system the of load. And was in makes

will we playing here out as forward. kind be of move And so that

Ryan Martinez

it Okay. will Dave, the everybody, you’re up for I of Thanks, back wraps there. to analyst today, the call turn over assume, That portion joining. operator. I’ll and our done

Operator

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

Linda Rutherford

will you give Thank get welcome call media instructions the started Q&A and to with go if today. queue members portion like up. We ahead Chad, I’d can the you, of for them our to and

Operator

question Instructions] Please Skores from come the go News. Certainly. first the Dallas And will [Operator Morning from ahead. Alexandra

Alexandra Skores

this how could going that growth we I’m summer -- you call. looking relation affecting demand travel over wondering, talk airfares. how a talked little bit I’m you’re in lot at wondering And a to if into the about even. in that’s

Ryan Green

environment -- is strong. in them on kind basis, this of or airfares look airfares But I a and and actually an are think you at than industry to even that inflation, high adjusting the if in Yields I adjusted look are earlier for general, pre-pandemic yield airfares Yes. think, at down. going back

we volume course, the think out When in things And the further fares in And at more are of how taking in curve. second coming further those here kind and those of demand so, are at both play volume look into yield the of -- I booking where And beyond, the quarter really is about booking which here. the getting fares we out than mix nominally nominally. of lot story it’s forward. our lower entire booking curve go a in are close good we normally are curve, taking is driving higher a fares here across really of as what’s

happy The offering that customers things are driving higher other average they we’re fare a pay to too by is for. thing

board. of example has flexibility It that our are we in Away adds to transferability, without the more -- of an during fair filing Wanna things going customers they Plus fare year. kind across travel. that value, bundle buy customers flexibility additional higher a So, choose drives fares terms and for. introduced are pay that day choosing us of that that of Get is of And overall the that benefits fares higher the to That last in

Bob Jordan

is -- up a for X, direct think not peers -- again, regular are the a or memory roughly just this in materially. it’s X I’m fact, the head. lot correlation my looking in is got as number Ryan, you inflation. were quarter, And the costs in first talked We my but X%. just I I’ve about

labor it accruing and every of everywhere. a We’ve lot see for There’s a inflation. wage and our lot talked labor You about contracts. day, costs

We’re chain first pay happy inflation wage other year-over-year, is supply to but and our there real people. quarter people pay to ‘XX quarter our ‘XX. want and We to great, first

XX%. which were fuel on up capacity. up Our XX% operating revenues But was XX.X%, is awesome

the fares you your -- the just to -- are increases there real fares flip raise So manage side other the cost there. of and cost is

just to So well. point out want that I as

Operator

from Street And Sider from Wall come Alison you. the Thank question next will Journal.

Alison Sider

with has curious dealt been Boeing communication, and on Boeing to first with this have this guess, It an if latest those dealing on on with like how deliver, to know Boeing improved. time this -- kind experience of ability I things your not delivery it’s I seems guess, the if issue you’ve just their their one? issue.

Bob Jordan

of to number things. a dealt that. the been issues world is Obviously, have All and immune and with deal supply There chain companies have continues has issues. not Yes. with chain Boeing from supply

has items. We proactive. have latest. of this number Yes, been is the Boeing had a again,

schedules in advance. supply early been issues. up far suppliers, down the in So Obviously, are multiple Boeing we chain was to planning. produce its of front They’ve working with in shore tiers

most this for in, so And difficult isolate the fourth customers. able We on modifying to affecting Boeing is changes about those been work future part, this is close talked quarter. it’s schedules. our to the on with difficult, primarily, We’ve one too, the

month would something to compared that next or helpful month very after. affect the that’s So,

good. and the take Boeing been going the -- Boeing with issues. to impacts with transparent forthcoming the to work what been about our it’s So, has correct cooperation really and has

Obviously, all that continue a to don’t well. schedules, of work this they we’ll on as interruptions mean, Boeing want delivery is with I planned difficult. to We and is But -- on well. proactively aircraft. very we’ve this issues on worked is a with We but seen before -- aircraft MAX want aircraft, great as issue and our The partner. great they’ve Boeing us

Alison Sider

that given do they’re of incidents, been single of that guess denominator the I those of misses -- or future turning in couple doesn’t there you have are last a -- to of industry, cause prevent across -- and of single real the all common you to incursions near And to or try the been seem kind they the be things is clear incidents the or sort of same? state does or sort not can runway there that months that given doing these what that address all haven’t

Andrew Watterson

gotten has safety don’t repeat you so really that and good see aviation occurrences. The Yes.

systems. have FAA the safety approach the is therefore, so And develop took management to while a back everyone

and says And you policies have regulations you so that adhere procedures, to. safety that will

and you maintain being to standards. So, safety rules, by those compliant regulations

safety then is compliance. approach for our through So,

next And going day on blow the so got wing right safety week. ground we actually safety week. the above We’ve have and wing be a operations, now, we’ll

safe. SMS in we And continue the of our activities so making that are all sure outlined we our as way

be also the be forums. potential severity necessarily up does look not looks but up. to We’re The rate incursion severity to close runway the in participating -- FAA’s or

So, worthy the intention us. it and FAA attention is worthy of of from from

and safe. the how thing the we FAA’s of last best to follow And think we overall do own in off their go kind more airspace as it’s if of the do participate so direction. in want everyone We becomes lead

they’ve they just this so help announced And have blue-ribbon a panel, to lead effort.

to We make this will enthusiasm with participate our and on that do safer. part even

Operator

Journal. The next Wall question will Street from be The Gilbertson Dawn from

Dawn Gilbertson

high, that the I’d other for why well, any have are do that that there trends you that might far, signs bookings I choosing know different Airbnbs as question weakness. I are summer appreciate strong in ticket of are this are you’re destinations airlines you are see are since so anything maybe think the demand share Ryan. any bookings you. prices so And rentals high. indicate -- as at you hotel our some is on you’re But car bookings not that. travel guys looking color anything you destinations any might and people high, can saying are like, Thank there? seeing prices

Ryan Green

Don. Hey Yes.

to hot for obviously, it’s expect where smoking would terms I International go is summer. in in lesser degree destinations. I international think demand of some Hawaii our -- the expect. very really what want of -- our strong. really you is is -- franchise And really mean, competitors then typical But this we you a participate customers is Mainland, Southwest, than what to performing that would into Hawaii international summer Florida destinations well. do. the it’s that

to So It’s customers of of double-click there’s as in kind the want when data to no where per real go. normal. huge surprises you kind

Bob Jordan

And anything there’s -- weak. as sticking and the that flip you’re there of isn’t out that,

They the across So, to as as customers is when you the on ‘XX travel. back just especially strong travel” it’s it’s strong board. want side. want and saw I this demand think leisure strong, “revenge not very our come really Yes. to But the --

So, I just

Ryan Green

Wish could you a ... I give

Bob Jordan

on to, have but -- we Wish you something so. I one, yes, give don’t could to a hang

Dawn Gilbertson

Anything What that’s in packages you on there more or own appetite packages? [ph] indications? for that seeing by company, but even another about noticed a vacation I you’ve vacation your website? to is the know -- done shift are

Ryan Green

large sits Today, in vacation that with time, Yes. But are think of question day. in packages hundreds Cancun part to of of and an go digital got in travel doing over our there’s summer. those strong. vacation opportunity vacation well. that vacation merchandise on new standpoint, But the there how your terms of think I business that a millions are more strong. And lot a that to we agencies. our I of through market. network customers actually our original And vacations participate on of customers in from like relative participate are where over is Actually, very the time, the we is is to every a platforms kind that kind opportunity do we’ve back space to emerging to Hawaii places are destinations in patterns

Operator

ahead. And Leslie question from Please CNBC. the go from is next Josephs

Leslie Josephs

other or product out just in your up having moderation jobs in with to seat something the how to for And work just And year, is hiring do ruling your revenue either attendants that of know flight that broadly, you cabin, are you’re On ever groups? by strategy, the change the extra target? a like differentiated like mostly then, future? going a legroom you pilots, any many this larger or or drum

Bob Jordan

questions. different very two are Those

to and your with exactly XXXX, where is of really hiring, hiring tell impacts advance. the a in for this XX specifically, pick process So we’re are terms -- the lot of in early just and we but then the on or Boeing of planning in deliveries would I again, in you, understand they again terms understanding

highly that the our we are I to constrained can’t plans, likely delivery it, is, guess. go exactly and today we a significant they that enough to capacity call year, it’s tell schedule as best then like. want that obviously, constrained my what still well we is change for I be you we’re to will hiring through, acknowledge where now back So through pilot to were quarter understand XXXX early fourth the and the and just looks coming moderated. in going group It’s therefore, probably least until But that need to the I we the go do the to here It’s mean, other back any just press to at prudent to that. to cost. constrained. keep the near we the going look as do for at down, capacity do for and is to flip continue the thing we’re specifics needs. thing right have to I it’s hiring It’s no, headcount right efficiency. our don’t on, term aircraft that than acknowledging because

for that second go was that What do back known question? We’re efficiency, and and do quickly. we’ll and your our we’ll

Ryan Green

revenue. Premium Premium.

Bob Jordan

I forgot. My apologies. Premium.

-- to our do -- assigned seating. products, just periodically I What to on deeper example includes study customers we in studies survey that -- regularly talked like seating and as and we always It’s potential things understand that important do so -- about are We assigned and changes them. we they things think periodically we that our an what’s before. want we like

from you’ve And and enhancing told seen comes things power customers they And that historically, us us seen that’s love so and you us what always bins want. have add that and our like larger telling far, our product. now the -- us Wi-Fi, then customers the our that’s

about Now is think just there the you, point. flipping about in no that some we seating there underway assigned It doesn’t work isn’t what a to, is to to well, won’t at -- mean I’ll cabin. do work underway. premium tell think

We are like on do working -- ancillary. regularly things we work

device, product premium worked things. seating you mobile are to allow the the really But there’s continue at it’s that our cabin, customers. well. enhancements assign at few to on really, of look So looking those no boarding Those quarters to service and buy that work upgraded no, ago, and we’re now underway -- a we around kinds

grown larger to about increase place and back, Day, to We’ve things continuing all ROIC laid underway cases, bins, out committed product. added that here. being digital really service our and customers -- towards about providing already into like push out work self-service Our efficiency It’s regain hospitality. power, want on then about all people, Wi-Fi, to no we efficiency, work some the premium a enhanced quickly. bring reliable. love It’s our to, and We’ve terrific we lot and of we’ve and all very but It’s goals hard and get side. margins the work there’s Investor returns to year-over-year in at the in that the putting

Operator

The question ahead. Business go from Wilen Please next is from Dallas Holden Journal.

Holden Wilen

many guys as quarter, managed accounts factors point think for able that travel you was to to recovery how why that added more the is any specific you where to to business Investor you believe at see Day to first add wondering, travel last can during guys. like year. you’ve than corporate business continuing the more I’m you in said if I recover new accounts X,XXX Thanks. were And you it continue managed just as period? you

Ryan Green

Yes.

business think we’ve reason put because largely, the that continues the place. that recover in is I managed for of initiatives us to

for of managed kind of travel industry. it’s things it historically, I here think that if you managed kind and sits reduced kind of have sitting at to where business, the structurally there’s today play look of at travel, a relative where been couple

And I I that just behind at health And us. is from any are this well point. first of those that is scares think traveling. tailwinds of think The unrealistic

versus I necessarily, remote the in And marginal that And and different is so is structural is the largely the improvements not these of think tools. There then some at is industry today parts digital for but travel it versus consumers kind of their just kind of depressed I may but point. this of what is. patterns think office work be of the country, some -- home the other it that it has the us business way industry, for for managed component what

-- down the that restored is manifests -- travel how kind And it those unique traveling was travelers when to in where actually, of are who number itself of pre-pandemic. look of travelers. at you that frequency the is it’s or corporate What’s for who

disproportionately impacts largely national -- global so I -- and it’s or guess, And accounts. and that is

seeing. new after medium and accounts by out small backfilling back corporate opening business so we’re and travelers, what and that volume up and new to And of that’s pools going acquiring we access and mid-market are

I had March, number think of for we mid-market record active in a us. accounts

I you may have here April, record April. we at look think in if another

And to after market the gain. be so, share we’re going

point the new to quarter. up new We’re win over travelers. travel pools gained last of going in accounts, to managed out open We space a of the market access share

so And where sales team focused, where and our forward, to the off. be is efforts seem that’s paying we’ll going focused be and that’s

Bob Jordan

mean, the Well, now, it we put adding a years And time. over technology lot it’s pay of building emphasis I the GDS access. -- team off like on over will

in I in Ryan the last seen check X us nearly here, airline think the XX I I March of the reason me, think do history... think And that’s our as in Ryan but we’ve days two business managed booking said, first that. you’ve pre-pandemic our restore to ourselves best or had restore weeks

Ryan Green

the yes. in Yes, April. April, of month Since

Bob Jordan

In April. the month of

-- So And I we’re and seeing that continuing. investments strength so share. just it’s is of winning do think you’re our because

Ryan Green

to And managed managed industry in the friction trends continuing we’re the do space. some the focused do to to on space. there’s being and business in making others it -- removing And business where across easier travel harder are remove with travel

of think forward. -- all talking been our that so, like I flyer that couple you chances that our policies, going with couple we’ve program, just network, And this about industry-leading I business-friendly business-friendly frequent

Operator

from ahead. from time have last gentlemen, And ladies question. And we’ll more Please for Slotnick take and we David question TPG. our one go

David Slotnick

competitors your their They’ve flexibility look overbooking current I the about at new domestic where been have [ph] then was just talked environment, wondering, you’ve a affect. that. is what to policies the added one if of recognizable doing was to that especially airlines Southwest if well, something added. with taking they that levels especially one any of overbook I patterns seen [indiscernible] wondered could and considering that as the

Ryan Green

bit. Yes. policies regard. maybe do I the the of question caught others not kind question their there, changing were are and our that up what sure overlook overbooking aircraft. I I’m of doing But a you in was that not all We we think breaking are David,

We overbooked. haven’t

We done XXXX. have not that any since of

to happen have here does to those oversell things So, like we to overbooking. aircraft years between. occasionally not may are we’re seats going have an that more It fewer seats from and with for of or we few when an aircraft X on that. or But downgauge far X deal an rate-restricted, have We with.

not sort overbooking so, or in policy. forward, of any changing any we’re our not And the booking dealing at going materialization with by -- looking change we’re rates curve

Bob Jordan

bad -- that expires. credits I like never other the overbooking. stopped never our We’ve way. mean, It’s we adding going we’re added a expire Yes, not the customer. growth that points it. experience we’re our we’re for why We’re That’s that standing just our on things firm travel customers want.

we’re the customer to yes, So here. leading

Operator

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

Linda Rutherford

us Thanks, Chad, and we appreciate you all joining today.

you time www.swamedia.com. know today. If standing at communications you website all by or have you Thanks XXX-XXX-XXXX team much our can any follow-up media so our at visit for questions, your is

Operator

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

may now You disconnect.

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