Duane Pfennigwerth: I don’t know if the one question was just meant for me, but I’ll respect it. On the 4Q revenue outcome, you touched on the breakage, I guess if you could go into a little bit more detail on what were the drivers of the upside and on base fares in particular. Any particular markets and I think the pattern we’ve seen in the last couple of quarters is that there was kind of an inability or constraints to flex up in these peak demand periods, and that was kind of holding you back. Is there something that has changed or something you’re doing differently that is helping you kind of flex back up in the peaks again unlike the last two or three quarters?
Drew Wells: Duane, I don’t know that that’s necessarily true. I mean some of our best performance before the holidays was in the summer and what we were able to do on a yield basis, it certainly wasn’t to this extent. I think there’s a little bit of a difference in — there always has been in terms of the holidays and spring break versus summer, where we have this very tight window in which travel occurs, right? I think giving is very heavily concentrated around the holiday, same with Christmas and New Year versus a much kind of longer and drawn out summer that’s good, but it’s kind of the spread drawn out good. So we were really able to capitalize well on that very concentrated window of demand, probably in a way that you’re — at least I thought we were not able to be at the same level in summer.
The opting stuff still looks good. October was healthy as well. So there’s not necessarily any individual piece to call out. It all looked good with maybe some slight outperformance in the holidays, like I mentioned, tight windows.
Duane Pfennigwerth: I guess — sorry, I’m going to contradict myself. On the guidance, is that just airline EPS? Or is that consolidated EPS guidance?
John Redmond: Yes, Airline EPS.
Operator: And our next question comes from Michael Linenberg from Deutsche Bank. Your line is now open.
Michael Linenberg: Congrats to the team on the promotions. Just one here. I guess Scott DeAngelo, you called out, you talked about the loyalty of your customer base and you provided some qualifiers around it. I thought it was interesting that you called out Southwest and other airlines of where you were getting passengers or picking up new customers. Is the Southwest mention? Is it because of the overlap that you have with them? Or more recently, are you actually seeing meaningful traction in the markets where you may compete head-to-head or just in their backyard?
Scott DeAngelo: Thanks, Michael, for the question. It is more of the former. We’ve tended to overlap with them the most. So when you ask our customers, who did you last or most recently fly with about 1/3 of the time that answer is going to be Southwest West. And then the other carriers, even though it’s convenient, I know for the market to classify us alongside other ULCCs, the reality is we don’t have much overlap there. And so the next three airlines that are answered when asked who did you last or most recently fly with are always Delta, American and United in that order with, obviously, many of our customers actually flying the regional arms, but identifying with right, the overall brand of those airlines. And so — it was meant simply to show that in this environment, even if there was some type of recession, I would just ask the market to — in as much as there was any contraction at any point in leisure travel, also look at the slice of pie that is ULCC because our data would indicate that even if the overall pie were to shrink, our slice of that pie would continue to grow as customers of — whether it’s Southwest or other network carriers are increasingly buying down and/or coming into the ULCC category, given our brand of non-stop travel.
So hopefully, that’s helpful in providing some color there.
Michael Linenberg: Well, Scott, on the survey, when they give you the airline, what is the number one reason? Is it because of fares? Or is it because they had a lousy experience? I’m just curious.
Scott DeAngelo: Oh, yes. No, great, it’s usually non-stop flight and fares. And those can go one to two, but those are far and away the top two. Schedule is the third one, but it’s usually way down and then preferred airport everything else ties for fourth and beyond. But we don’t — we haven’t seen that there’s just a swell given just one bad experience, but we undoubtedly know that right overall disruptions, especially when it involves connecting flights we’ll draw someone now to look for non-stop flights. And as you all know, all of our flights are non-stop. So that’s really the key driver, I think, in times of disruption, whether it’s weather, whether it’s just irregular operations over the summer, over the winter, it happens to every airline.
But if there’s one thing we know, it’s one thing to potentially get canceled delay in your origin or your destination, there is nothing worse than getting stuck in the middle. And that’s what we’re seeing a lot of customers react to and be drawn in by an airline that only flies non-stop.
Operator: And our next question comes from Andrew Didora from Bank of America Merrill Lynch. Your line is now open.
Andrew Didora: Just a question on the CapEx, right? I think last call you said a floor of like $500 million on CapEx. I guess at the time I never thought it could be north of the $700 million you just guided to. I guess, one, what are the big buckets of CapEx kind of that are coming in this year ahead of plan, particularly on the non-aircraft side? And then when you think about the CapEx, and I know you can finance a lot of this. How do you think about minimum liquidity going forward? Because I would think with the MAX is pushed out to 2024 deliveries, CapEx will be pretty high next year as well.
Greg Anderson: Andrew, it’s Greg. I’m going to kick it off real quick and BJ will walk through a little bit more detail just because I think I’m the one that threw out that floor of $500 million of CapEx next year. And really, it was — we just — there was a lot of uncertainty around the timing of the Boeing aircraft being delivered in ’24 and PDPs. And so — we wanted to throw that out of the floor that will be no less than. And so we’ve had more time to work through that and understand the timing, which is now why we’re updating you with those numbers. But with that, BJ?
Robert Neal: Yes. Andrew, just on that same point, I mean, if you think about a large portion of the aircraft are paid for in the calendar year prior to delivery, so with so many aircraft moving into 2024, you’ve got a lot of CapEx going out for PD this year. I think that’s actually our largest CapEx commitment this year is pre-delivery deposits. And then you have the two aircraft delivering from Boeing in the fourth quarter of this year. And then remember, we also slid for placeholder aircraft from 2022 into 2023. So a lot of this CapEx was sliding from ’22 to ’23 and then paying PDPs for ’24 and ’23.
Greg Anderson: And then liquidity, I think BJ mentioned it in his opening comments, 2x, roughly 2x ATL, which gets you right now, ATLs run at about $400 million. I think total liquidity would be around $1 billion is what we’re targeting for the year at the end. Is that fair?
Drew Wells: Yes. And then maybe just mention that our revolver facilities are undrawn today, which are $225 million and then the better part of our $200 million PDP financing facility is undrawn as well. So, using those as necessary throughout the year.
Andrew Didora: Understood. And just what are the big buckets of the non-aircraft CapEx?
Greg Anderson: It’s — I think it’s about $135 million in total non-aircraft million, $60 million $70 million, that’s going to be that IT investment that we were talking about. You have some sims and simulators that we’re going to be acquiring to take card delivery to the Boeing aircraft or fleet. And then the remaining would be just your normal kind of standard CapEx, maintenance CapEx, such as parts, tools, things like that.
Operator: And our next question comes from Savi Syth from Raymond James. Your line is now open.
Savi Syth: Just on the kind of the pilot and flight and an also on the pilot side. What have you seen in terms of attrition levels are kind of being able to staff that well? I’m just kind of curious with if you’re only getting a deal by midyear that means as you head into the summer. You will be kind of having a headwind versus a lot of other airlines that have increased pay deals. So just curious on what you’re expecting there and what you’re seeing there?
