Ben Minicucci: Well, Helane, I’m glad you asked the question because I want to set the record straight on this. And I’ll probably take a little bit of time and you’re making me put on my old operations and maintenance and engineering hat back on, which I’m glad I love putting it back on. So, I’m going to say it right from the start, the issues were completely unrelated. And I’ll explain why here if you give me some leeway. What we had was a pressure controller issue. And the pressure controller has three modes of operation. It’s got an automatic mode, it’s got an alternate mode, and it’s got a manual mode. What failed, but I liked that you’re talking about that went on was the automatic mode switching to alternate mode. And that’s perfectly in line with the pressure controller.
It has one primary and two backups. So, the pressurization was never an issue on the airplane. The reason we restricted it from going over water, and this is stuff when I was back in maintenance is we’ve taken an abundance of caution. We’re saying, look, we have other airplanes that we can send over water. This one, the light went on. It’s still working perfectly well. It’s legal to send over water. We’ll be a little more cautious. We’ll keep it over land, so we can watch it and keep it between maintenance bases. So, I just want to be totally clear. These two issues were totally unit. This was an issue with the door plug. We got a faulty door plug from Boeing, totally unrelated to the light or to the pressurization issues.
Helane Becker: Okay. Well, I appreciate that explanation because, as I said, I didn’t know, and now I do. So, thanks Ben.
Ben Minicucci: Okay. Thanks. All right. my pleasure.
Operator: And we’ll move next to Catherine O’Brien with Goldman Sachs.
Catherine O’Brien: Hey everyone. Thanks for the time. Shane, maybe one for you first. So you guys called out that you expect to lose about 7 points of capacity from the MAX grounding now to be down mid-single digits. Can you just help us think about what you were targeting Primax for CASMex, sounds like capacity is going to be up low single-digits between that math correctly. I’m guessing a lot of the fixed costs remain. Is it safe to say like there’s about a seven-point headwind to CASMex versus what you were expecting on the old growth rate, or any color there would be super helpful. Thanks.
Shane Tackett: Sure. Yes. I mean I sort of gave a previous answer, Catie. We didn’t — we haven’t managed any cost out of the system. Ryan — I know it’s a little bit of a puzzle. Ryan told you that the $150 million really is revenue because the costs wash. We’ve incurred some additional costs, certainly with passenger remuneration, re-accommodation costs, a lot of overtime premium, the costs saved are really landing fees, food and beverage and fuel. So, there’s more net cost headwind in the quarter, and we didn’t take any other cost out of the business because obviously, it happened January 5, and there was no time to react. So certainly, the — it’s almost a one-for-one impact to the quarter. But we haven’t also guided to what we thought Q1 was going to go to. We just feel like we need to get certainty around what this looks like and then we can give a full year guide if we choose to do so in the future.
Catherine O’Brien: Okay. Fair enough. And then, Andrew, maybe one for you as well. Can you help us size some of the drags to your unit revenue from tech corporate lagging, Maui, anything else you want to highlight in the fourth quarter and then how those items are trending into the first quarter. One of your competitors called out recently a boost in corporate at the start of the year and part driven by tech. So I would just love to kind of hear how maybe some of the drags in 4Q trending into 1Q. Thanks so much.
Andrew Harrison: Yes. Thanks, Catie. Just to touch on Maui real quick. We had already adjusted our capacity down, I think, like 14%, 15% in the fourth quarter, it’s down even more in the first quarter. So we feel like we’ve got our capacity somewhat aligned with demand in Maui. One of the unfortunate challenges as I shared in the Q4, we were seeing good momentum in corporate travel, of course, anything from zero to 14 days was severely impacted by the MAX 9 in January. So it’s a little bit hard for us to comment on the business side. But again, we have continued to see good momentum in average phase for business travel and I don’t see why that would not continue.
Catherine O’Brien: Great. Thanks.
Ben Minicucci: Thanks, Catie.
Operator: And our next question will come from Mike Linenberg with Deutsche Bank.
Mike Linenberg: Hey, good morning, everyone. Andrew, I appreciate all the color you gave around loyalty, ancillary, some of the premium data. I think calling out that 46% for premium and ancillary and other. I’m not sure I’ve seen that number before, and that was actually a bit higher than what I thought it would be or thought it was. From an aspirational perspective, where do you think you can get that and how also does that apsirational goal change in the event that you decide to do lie flat maybe in some of your domestic markets?
Andrew Harrison: Thanks, Mike. So a couple of things. We are continuing to see good demand for our premium product with the team, both on the revenue side and how we manage it. And also, we still have a lot of marketing opportunity and upsell to go. So I still expect good strength there. We added a role on our 175 additional premium class. We’re also — we’ll be adding additional premium class in our 8s and 9s with our — some of our reconfiguration. Of course, the challenge always is making sure that we don’t completely squeeze out our top-tier leads from the front cabin, and we feel like we’ve received a full good balance there. But and overall, we continue to look at our cabins, and we continue to look at our network and we continue to look at what are the right seats and densification of our premium cabins given the environment and especially, if we continue to see this remain strong.
Ben Minicucci: And Mike, I just want to shine a little more of a light on your question. Again, we had a 7.5% pre-tax margin close to United and Delta, again, without the international tailwinds with the fuel headwinds and yet our margin was as high as it was, simply because of your question, because of our premium offering. Our business model competes with the network carriers. We are differentiated domestically with our competitors. Our airplanes are 100% fully configured in premium, again, with our loyalty program, with the way the business miles stood up with lounges. So it is a reason why we see success even when there’s shift between domestic and international. And again, we’ll have more success with the Hawaiian acquisition. So I just wanted to shine a bit more of a light on that.
Mike Linenberg: Great. Thanks. And just sort of a follow-up and maybe it just leads to this next question, which Andrew, are you making that comment about part of the industry really starting to acknowledge what you refer to as these post-COVID demand realities. And I’m curious, at least from the low end, in any of your markets, what you’re seeing on competitive capacity, maybe any notable markets that you want to call out where you’ve seen some meaningful shift that should be to your benefit? Any color there would be great. Thanks.
