Greg Anderson: Hey, Drew, and this is Greg. I might add, Dan. Just some other puts the items to think about last year, we talked about IROP already in our opening remarks, then $100 million full year, right? But a big chunk of that is lost revenue. So that’s going to be a helpful comp year-over-year on these unit revenue numbers. The growth, although it’s limited that Drew is looking at, it’s measured, it’s de-risked. It’s in markets that already exist today. So we’re not going out and trying to add new markets. There’s already a maturation there. And then the other thing, maybe just to your point about potential recession is our utilization per aircraft going into this year is low, 6.2 hours, right? In 2019, by way of comparison, it was eight hours. And so we already have the lower utilization and our model is built to flex in those peak periods to capture that demand. So I think we’re just very well positioned in the event we do see a slowdown.
Drew Wells: Yes. I think as we look at the next couple of quarters, the only 20% to 25% of our capacity likely be on off-peak day a week kind of going up what Greg was mentioning. So we’re very well aligned with where the leisure customer wants to travel already, well positioned for that. And we know that the leisure customer is incredibly resilient. We’ll see what that means for far kind of broadly across the industry in the event that, that happens. But — so the leisure customer is still able to be stimulated to travel just finding that right price point to get there.
John Redmond: And on the inflation front, I mean, we have great visibility on the first half of the year, for sure, the first quarter. So, to the extent there is any modest inflationary pressures, we just don’t feel or see it, but it’s going to be back ended in the year to the extent there is anything.
Daniel McKenzie: Wow, that’s a great perspective. I can get a second question in here. I guess, BJ, I’m already getting inbound on negative free cash flow this year. It’s a solid outlook to be sure, but I’m just wondering if you can speak to that. And if the plan is to use cash on the balance sheet, potentially equity or additional debt if we could potentially just take that worry off the table?
Robert Neal: Yes. Thanks, Dan. Most of the CapEx this year is debt financed. Greg, I don’t know if you want to talk to specific numbers here. We can — if you think about where the CapEx is and just use sort of like rough historical LTVs, we can bring in north of $450 million in new debt that’s at our discretion as we navigate throughout the year. But then there’s between $150 and $200 million in principal payments. The thing I’d mention is we have a line of sight to really fantastic terms on attractive financing where all of the CapEx coming in. As you know, Sunseeker is already financed at an interest rate that’s in the money now, something that we’re really pleased with. And then on the aircraft, the appraisal values are up, I think, $3 million, $3.5 million since we placed our order at the end of 2021, which just gives us a great ability to go out and raise financing and draw a lot of interest for supporting the airlines.
Greg Anderson: This is Greg. I was just going to add two things, just to BJ’s point, maybe just to crystallize here. That’s while we are going to add leverage, if you just take the midpoint of our guide for ’23 that gives you about $500 million in EBITDA. If you take the net leverage, so I think BJ said, we’ll end the year with $1 billion in cash and you kind of take the waterfall of debt that gets you $2.5 billion in debt; net debt, $1.5 billion. So three turns net leverage still comfortable. But these are — this is a time when we’re investing back in the Company. We’re investing in assets that are yet to be revenue producing. We’re doing it with a strong credit. And so — but when we get on the other side of this ’24 and beyond, you’re going to see that that de-lever pretty quickly as our expectation.
Operator: And our next question comes from Helane Becker from Cowen Securities. Your line is now open.
Helane Becker: Two questions. One is, as you think about your ASM growth being so low single digits this year, how are you thinking about where to prioritize the growth? Or you — in other words, is it new markets? Is it increased service in existing markets? How should we think about that?
Drew Wells: Sure. Thanks, Helane. It’s not a lot of new markets. For the first half of the year, only about 4% of our ASMs will come from markets in their first 12 months. And within that, it’s been — we have a few new markets starting here in the first quarter, and that’s about it. It’s pretty minimal. I focus more on the restoration of a little bit of that frequency that’s where we can get it. But when we’re talking 1% in the first quarter and a small step up, there’s not a ton beyond that.
Helane Becker: Okay. That’s helpful, actually. And then my follow-up question is — as you’re thinking about the resort, Sunseeker, Punta Gorda, the region and so on, climate has been an increasing issue for a lot of companies. And obviously, it was a big issue last year for you guys. How are you thinking about hurricane seasons going forward in the hurricane season this year? Maybe it’s how do you protect the resort from hits like this in the future?
John Redmond: Helane, this is John. I’m stating the obvious when I say hurricanes have been around in Florida forever. And the state has reacted to those over time by changing building codes by doing a lot of things with technology that allowed buildings to be built differently in operations to be run differently. So when you take the resort, we thought about that when we were designing it, frankly. A lot of you probably didn’t understand when we were first chatting about it, but we built the resort 16 feet above the mean height pipeline. So we wouldn’t have had any damage, but we’re falling cranes. If you look at the worst hurricane, a lot of people referring to, that’s happened to the state of Florida. So put another way, if the resort was done and if the type of storm surge that hit Port Myers hit where the resort is, it would have gone underneath the building and out the other end.
So we wouldn’t have had any damage. So we’re the only resort in the entire state of Florida that don’t like that to be able to withstand it and also we’re built to Category five standards. So I think that’s how we reacted to what we’ve seen in the state of Florida, and I’m sure that’s how others have reacted and whether they’re building office buildings or anything else, they’re building them differently. And I’m sure homeowners will build differently going forward as well after seeing what happened down in Fort Myers. So we like — we obviously love what we did. We’re positioned fantastic going forward to weather any kind of the storm in Florida. And I guess this was a test to that. Again, but for these hurricanes falling down in the building, we wouldn’t have an issue.
And it’s also worth pointing out, the last major hurricane that hit Southwest Florida like that was Charley in ’04. So it’s not like these are annual events. They might be annual to a certain extent, somewhere in the state, but not always in the exact same region. So you went from ’04 to ’22 before it had the next major one. And that one, which was the worst, would not have hurt us at all that we were completed.
Operator: And our next question comes from Brandon Oglenski from Barclays. Your line is now open.
