Allegiant Travel Company (NASDAQ:ALGT) Q4 2023 Earnings Call Transcript

Allegiant Travel Company (NASDAQ:ALGT) Q4 2023 Earnings Call Transcript February 5, 2024

Allegiant Travel Company isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Hello and welcome to the Allegiant Travel Company Fourth Quarter and Full Year 2023 Earnings Call. [Operator Instructions] After the speakers remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the conference over Sherry Wilson, Managing Director of Investor Relations. Please go ahead.

Sherry Wilson: Thank you, Sarah. Good afternoon, everyone and welcome to the Allegiant Travel Company’s fourth quarter and full year 2023 earnings call. On the call with me today are Maury Gallagher, the Company’s Executive Chairman and CEO; Greg Anderson, President; Scott DeAngelo, our EVP and Chief Marketing Officer; Drew Wells, our SVP and Chief Revenue Officer; Robert Neal, SVP and Chief Financial Officer and a handful of others to help answer questions. We will start the call with commentary and then open it up to questions. We ask that you please limit yourself to one question and one follow-up. The company’s comments today will contain forward-looking statements concerning our future performance and strategic plan. Various risk factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or implied by our forward-looking statements.

These risk factors and others are more fully disclosed in our filings with the SEC. Any forward-looking statements are based on information available to us today. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise. The company cautions investors not to place due reliance on forward-looking statements which may be based on assumptions and events that do not materialize. To view this earnings release as well as the rebroadcast of the call, feel free to visit the company’s Investor Relations site at ir.allegiantair.com. And with that, I’ll turn it to Maury.

Maurice Gallagher: Good afternoon, ladies and gentlemen. Thank you for your time today and welcome from Super Bowl headquarters here in Las Vegas. As you saw in our release, we continued to move ahead in our efforts to return pre-pandemic performances. I’m happy to report on a number of areas that we’re moving forward on all fronts. Sunseeker opened on December 15. It’s a terrific nation of [indiscernible]. Micah Richins, who’s on the call with us today and his partner in crime, Jason Shkorupa and their team have done [indiscernible] work completing and operating this magnificent and destination resort. Stay tuned for more updates in the coming months. Our operational performance for this year — the past year, our completion factor and on time, [indiscernible] our 2019 industry-leading stats and we were among the top 3 in operating margin for the year.

Aircraft deliveries, while Boeing deliveries will be delayed based on recent news and comments, we are excited about our introduction of the MAX 8200 aircraft. It’s one of the most reliable airplanes in the world. Its performance profile as well will provide us enhanced economic benefits in the coming years. On the labor front, we’ve been plagued for the past 3 years by a number of labor issues, particularly with our pilots. However, I’m cautiously optimistic with our recent progress. Our updated labor agreements will allow us to continue to do what we do best, to grow Allegiant in our non-competitive markets in the coming months and years. As I mentioned, at Super Bowl week here in Las Vegas. The town is on fire and amazing stuff that’s going on.

This week will be a large payback for our investment in the naming rights for the Las Vegas Radar [ph] Stadium. The exposure to the impressions we have already received and will continue to receive in this next week have been and will be exceptional. Allegiant stadium has a nice ring to it. We made this investment in 2019, a big step for us. But it was part and parcel of our efforts to separate ourselves from the crowd and promote our Allegiant brand. As I mentioned, our operations this past year were industry-leading. This level of performance in today’s social media world is critical. Consumer products are continuously on stage. There is nowhere to hide. It seems simple. We want a reliable, on-time airline with friendly people. Easy to say but tough to do.

But our focus on this approach for the past many years is paying dividends. Our Net Promoter Scores are industry-leading. In recent surveys of our own customers, they assigned us what we believe to be the top of the field on NPS of 51. It’s coming in ahead of all of the domestic carriers as far as we know. Our results compare extremely well when compared to other low players, some of whose scores are meaningfully negative. In the past 12 to 24 months, as you all are aware, our competition has become much more intense for a number of the low-fare carriers. The majors have come down market and have a low-priced competing product and a better reputation against — again, the NPS scores tell the tale Being the carrier of last choice in today’s world is a decline.

Over the past 20 years, there’s been a generic low-fare labeling or ULCC moniker assigned to a number of us carriers. Practically, this label is for the start-up since the 2000, specifically us, Frontier, Spirit and more recently, carriers such as Sun Country [indiscernible]. Well, we all have this time line in common. What we don’t have in common is the same model and how the companies have been managed. Unlike the other carriers in this grouping, our model has allowed us to build a robust moat around our business. Over the years, we are focused on building that non-competitive nonstop network. Today, 75% of our routes do not have any direct competition. This approach is paying substantial dividends in today’s more confrontational environment.

With most of our routes operating just 2 to 3 — 2 times per week, we can support a much larger network of cities and routes. 124 cities today with 555 routes, 450 of which are non-competitive. In contrast, Spirit and the Frontier have on average just 300 routes each rather but only 30 are non-competitive or a 10% factor. One might analogize the ULCC crowd by comparing them and us to the famous bank robber Willie Sutton. When asked why Rob Banks his answer was because that’s where the money is. Well, in today’s airline space, the banks are the big cities and the major air carrier hubs and networks. Virtually all of the ULCC labeled airlines are focused on these big banks. Historically, they’ve been easy money but not anymore. The banks have developed ferocious tools to fight off their historic robbers.

Allegiant has stayed away from those big banks. Allegiant is focused on earning its money in the old-fashioned way by creating our own customers, those that heretofore have gone unnoticed. Said another way, we’ve created our own private swimlane [ph] and are proud to be in it. In the coming months and years, we will continue to grow our model. It is strong. It works and it has a great deal of room to run. Lastly, I want to thank our team members. This has been a difficult 3 to 4 years, as we all know. You have been supporting our passengers [indiscernible] reliable and friendly service and you have run the best airline this year, an industry-leading 99.8% controllable completion factor. Well done. In today’s era, poor service and cancel flights, you will put us back where we belong at the top of the pack.

Thank you. Greg?

Greg Anderson: Thank you, Maury. Entering 2023, one of our primary objectives was to step up our operational gain and drive down our op costs. Team Allegiant delivered a [indiscernible], closing out the year with an industry-leading 99.8% controllable completion and a reduction in IROC costs of nearly $100 million. These results didn’t go unnoticed at the Wall Street Journal ranked Allegiant of the best-performing airlines of 2023, trailing only Delta in Alaska. This turnaround performance isn’t possible without a dedicated and highly talented team. I know I’m biased but I think they’re the best in the business. Throughout 2023, I had the great privilege of traveling our system to visit most of our ’24 basis. The passion of Team Allegiant truly a site to be seen.

Our base structure, coupled with our out-and-back model, allows us to provide our frontline team members with the rare industry part. Their work shifts begin and end in their home cities. This unique feature plays a key role in helping us retain and grow our flight crew rings. As evidenced by the increase of more than 100 net new pilots during the back half of 2023. While being home every night is a value benefit, we are overdue in getting our inflight and fly group’s [ph] updated labor contracts. This remains a top priority and is in the best interest of all parties. Once in place, these agreements should help unlock meaningful value. And as mentioned last quarter, an area of value to keep an eye on is our restoring of utilization during peak leisure demand periods.

We have been strengthening our foundation to begin ratcheting up our peak day flying which should provide us a decent tailwind in 2024. We expect this tailwind to gain momentum into 2025 with the potential of increasing peak utilization by as much as 20% compared to 2023. As you know, one of Allegiant’s key differentiators is our adherence to peak season and peak day week flying patterns, something that will continue even with the new Boeing MAX aircraft. We are confident the recent issues facing the MAX will be solved by Boeing and the FAA. The continued uncertainty around the timing of our MAX deliveries means we are being extra flexible with our 2024 capacity plans. Each MAX delivery will come equipped with Allegiant Extra and we are concurrently configuring our A320 aircraft to carry this premium product.

This improved cabin layouts should continue to be a big hit among our customers through our expansive domestic network of roughly 124 communities and 555 crowds. Interestingly, we are the only nonstop option on roughly 450 of the routes we currently serve. Surprisingly, Allegiant serves more unique nonstop domestic routes than JetBlue, Alaska, Spirit, Frontier, Hawaiian, Sun Country, Freeze and Novello combined. And we are positioned to meaningfully grow our number of unique one-stop flights via the 1,400 incremental routes we have identified including the many unique nonstop routes we expect to serve into Mexico’s premier beach destinations alongside our JV partner, Viva Airbus [ph]. While the timing of governmental approval of our ATI application is uncertain, we remain confident its approval is a matter of when, not if.

In addition, we have upgraded our systems by transitioning to Navitaire [ph] which will help support our long-term growth plans, including international expansion. We migrated our legacy passenger service system in Navitaire in the back half of 2023 and a dedicated team working to further seize on its capabilities by improving our dynamic pricing formulary products and unlocking further efficiencies. We expect these enhancements in place by the first half of 2024. Our Sunseeker Resort opened in mid-December. It is elegantly designed and features popular amenities as well as a spectacular service-oriented staff. Guests are having a wonderful experience. The resort is still in its infancy as it has only been open for roughly 45 days. Encouragingly, each week, we see meaningful improvements to booking trends as we continue to build further awareness of the Sunseeker brand.

While we are still very early, we expect the resort could contribute as much as $15 million in EBITDA in 2024. In closing, we are extremely proud of the Team Allegiant taking back our rightful spot at the top of the industry, both operationally and financially in addition to the great progress made in strengthening our foundation. We have positioned ourselves to enhance utilization during peak leisure demand periods. Our brand has never been stronger. The number of unique routes to further expand our network has never been greater. Aspirational products such as Allegiant Extra and our always loyalty program remain in high demand. Sunseeker is open and contributing. Many more opportunities remain on the horizon, including our international expansion with Viva Aerobus.

We will continue to build off this momentum to strengthen our competitive advantages and further reshape the leisure travel space. With that, I’ll turn it over to Scott.

Scott DeAngelo: Thanks, Greg. Fourth quarter completed the year that saw post-pandemic normalization of domestic leisure travel demand. But with Allegiant nonetheless, driving booking and passenger levels that slightly surpassed the historic highs of 2022 despite minimal capacity growth. This was achieved thanks to our continued distinctive ability to match capacity with demand and in particular, to generate and fulfill demand for peak travel periods. Demand has never been greater for our Allegiant brand which differentiates itself on the 2 factors that matter most to leisure travelers, low fares and nonstop flights. As Maury referenced, this week, a good portion of those nonstop flights will be Super Bowl bound here in Las Vegas where the Allegiant brand stands to gain an unprecedented boost in awareness from the more than 100 million U.S. viewers expected to tune into Super Bowl 58 at Allegiant Stadium on Sunday and we stand ready to capitalize on this brand awareness boost during one of our busiest booking periods as leisure travelers book in earnest for the spring break and even early summer peak travel season.

For full year 2023, we retained nearly 1/3 of customers who flew us the prior year and those customers accounted for nearly half of our total revenue for the year. This year-to-year customer retention rate was 16% higher than it was in 2022. Our loyalty programs always rewards and the always Rewards Visa card continue to engage a greater portion of customers and motivate those engaged customers to travel and spend more with Allegiant year after year. 2023 was the fifth consecutive year that the Allegiant co-brand credit card was named Best Airline Credit Card in USA TODAY’s Readers’ Choice Awards. We ended the year with 484,000 cardholders, up 16% versus 2022. And total co-brand credit card compensation was nearly $120 million for the year, up 18% versus 2022.

We expect similar growth rates to continue for both new cardholders and program compensation in 2024. In addition to the direct compensation we received from the program, our cardholders continued to exhibit strong travel frequency and spend. During 2023, card holders flew and spent more than 2x that of non-cardholders. We also continue to see strong impact from our Always Rewards noncredit card program. 2.8 million always rewards members had activity during 2023, 25% more than prior year and these members flew 24% more and spent 69% more than non-members. Our ever increasingly loyal customer base is enabling us to further differentiate by showing interest in premium economy products such as Allegiant Extra and buy on board products as well as our third-party hotel and rental car products and now Sun Seeker Resort, Charlotte Harbor which as was noted, opened this past December.

Nearly 3/4 of our customers say they are aware of the resort and nearly half of those in cities with Allegiant service in the Southwest Florida, so they would consider staying there. To date, nearly 2/3 of Sunseeker bookings have come from allegiant customers, 40% always rewards members and 20% are Allegiant co-brand credit cardholders. Sunseeker is a welcome addition to the Allegiant Travel Company family and enables us to give our customers more leisure travel products and rewards and then enabling them to, as we like to say, live their best nonstop life with Allegiant. And with that, I’ll turn it over to Drew.

Drew Wells: Thank you, Scott and thanks to everyone for joining us today. A strong fourth quarter capped off our first full year revenue figure over $2.5 billion. While our 4Q TRASM of $0.1316 was down 6.2% versus the prior year. It was still more than 4% better than any fourth quarter before that. Further, the full year TRASM of $0.338 was nearly 6% better than any prior year, punctuated by record ancillary performance more than $5 better year-over-year. The fourth quarter featured some modest ASM growth at plus 5.7% and ended on a high note with incredible close-in demand for the holiday periods. These weeks were — these were weeks with already high expectations and they exceeded those lofty goals. And as expected, the resilience in the peak weeks was met with normalizing peak to off-peak variants as in a typical leisure environment.

Lastly, for 2023, on the heels of a monthly record in September, fixed fee strength continued to ramp in both the fourth quarter and full year set revenue records. Really a great all-around effort to achieve $611 million in total revenue for the quarter and a sincere thank you to all our Allegiant team members for making that happen. As we shift attention to the first quarter, growth will be back to muted at roughly 1%. Across the industry, weather took a toll on mid-January and the impact to Allegiant was approximately 0.5 point ASM headwind for the quarter and about $2.5 million of revenue impact. Hats off to our operations teams for their excellent performance in keeping the airline on track amid the cast of the storms. I expect many of the same attributes discussed last quarter to persist.

The peak weeks will remain incredibly strong, likely in line to higher than prior year in fact. Easter shifts into March, while it should be a TRASM good guide to the final week of the month, the shift is generally negative overall. A meaningful portion of spring break travel is compressing to one week and we have only so much capacity to deploy. Good for unitized figures in that week at the expense of some total potential and the contribution of the other weeks, including weeks earlier in March future spring breaks moving to a line with Easter this year. Continuing the overarching theme of normalcy in my remarks recently, I expect the first quarter sequential increase in TRASM to look normal relative to the 4Q ’23 TRASM. As with most first quarters, the revenue will hinge on the peak weeks at the end and with more than 50% of the revenue left to book, there is still a long way to go.

Another result of the Easter shift will be a decent pull down of April capacity around 10% year-over-year. However, we’re excited to bring much more capacity into our summer plan than originally anticipated. Our June through August capacity should see each month’s ASM up mid- to high single digits versus the same month in 2023, utilization increase of hour per aircraft per day. We still have a hill to climb to get all the way back to our peak utilization levels but accomplishing these gains while still having the Boeing Max transition training headwind is incredibly exciting. And for some additional context, our plan starting around June is largely in line with our 2018 utilization levels. One for a reminder of how large our ’18 to ’19 utilization jump was and two, in line with Greg’s comments on our 2025 potential.

We also anticipate that we’ll begin retrofitting existing 186-seat A320s with our popular Allegiant extra seating configuration in the second quarter as well as introduce a new to us travel insurance product through our partners at — goals both should help bolster our already strong but still improving ancillary program. For the full year, we are guiding an ASM range of positive 2% to 6% year-over-year. This will include a more conservative approach to planning capacity in the back half of the year to provide downside risk mitigation at Boeing MAX deliveries are delayed and upside if one time. There’s a lot of unknown and we wanted to be prudent in our process. I’ll turn it over to Robert Neal to provide a bit more color on this and so much more.

Robert Neal: Thanks, Drew and good afternoon, everyone. Today, we reported our full year 2023 financial results which included an adjusted consolidated net income of $2.4 million and an adjusted earnings per share of $0.11 for the fourth quarter. This number includes approximately $12.8 million in preopening expenses for Sunseeker Resort. The airline recorded $15.9 million in adjusted net income for the quarter, yielding an adjusted airline-only EPS of $0.86. Adjusted consolidated net income for the full year 2023 was roughly $137 million, yielding an adjusted earnings per share of $7.31, including approximately $33 million in expense related to Sunseeker. EBITDA for the full year was $472 million, excluding special charges which is a 45% increase over 2022.

The airline recorded an adjusted net income of $165 million for the year, yielding an adjusted airline full year EPS of $8.82 which was slightly ahead of our initial expectations and the airline generated over $500 million in EBITDA, excluding special items during the year. [Indiscernible] came in at $3.09 per gallon for the full year, approximately 17% below the 2022 level. Our adjusted nonfuel airline unit costs ended 10.8% higher at $0.0812 for the full year which was driven primarily by wage increases for frontline labor groups. This accounted for about 8.5 points of the increase. That’s inclusive of our pilot retention bonus accrual which was in effect May through December. The other main driver of unit cost increase was depreciation expense on lower asset utilization which drove 1.5 points and the rest of the increase came from a handful of other items.

On the balance sheet, we ended the year with just over $1.1 billion in total liquidity comprised of $870 million in cash and investments and $275 million in undrawn revolvers. Net debt at year-end was just under $1.4 billion. During the year, we prepaid approximately $210 million in 2024 debt maturities, including a $150 million payoff of senior secured notes in the fourth quarter. Fourth quarter inline capital expenditures were $143 million, comprised of $120 million for payments related to aircrafts and engine and $23 million in other airline CapEx. Deferred heavy maintenance spend was $17 million during the quarter. Total airline CapEx for the full year was $568 million and CapEx for Sunseeker Resort construction came in at $321 million, including $53 million in the fourth quarter.

Turning to fleet; we retired 1 A319 aircraft during the fourth quarter and we took delivery of 1 A320 which began revenue service during January 24. We expect to take delivery of one additional A320 aircraft during the first quarter which should enter service in the second quarter of ’24. As of now, we are planning to retire 8 of our oldest A320 aircraft during the year, down from 11 previously planned. As you might expect, we are actively discussing with Boeing changes to our 737 MAX delivery schedule for 2024. At the time of our last investor update, we were expecting to take delivery of our first MAX aircraft in the first week of 2024. As of now, we are estimating that deliveries will begin in late March or early April. Our current estimates differ from contractual commitments as we are conservatively planning to take delivery of 12 and place into service 10 737 Max 200 aircraft by the end of this year.

While the timing of these deliveries is uncertain, we are estimating capital expenditures by year-end to be approximately $790 million for the airline and $10 million for final payments related to Sunseeker construction. Airline CapEx is inclusive of $85 million for heavy maintenance spend and $160 million in non-aircraft CapEx, with the remaining $540 million attributable to aircraft and engine related payments. With respect to 2024 financial results, given the uncertainty around timing of the estimated 12 aircraft deliveries, we are only prepared to speak to the first quarter of 2024 at this time. We expect to record an airline operating margin between 8% and 10% on ASM growth of just over 1% in the March quarter. This guidance assumes an average fuel cost of $2.85 per gallon.

We do expect year-over-year nonfuel unit cost pressure in the first quarter related to our pilot retention bonus accrual which was not in place during the first quarter of 2023. In closing, I want to hand my thanks to all of our Allegiant team members for all they’ve accomplished in 2023. Our people worked tirelessly throughout the year, in particularly managing various major systems implementations. Delivering a 99.8% controllable completion is a key driver in improving financial performance and a stabilized operation provides us the strong foundation necessary for us to improve peak period fleet utilization and better leverage our investments. Thank you. And with that, Sarah, we can begin taking analyst questions.

Operator: [Operator Instructions] Your first question comes from the line of Savi Syth with Raymond James.

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Q&A Session

Savanthi Syth: If I might, I can appreciate the lack of clarity on the full year with capacity. But I was wondering if you can provide a little bit more color on what’s a historical Q-over-Q unit revenue is? And also just on the unit cost, like what you’re expecting for the first quarter on a year-over-year basis.

Drew Wells: Sherry, I’ll take the first part of that. If you go back probably 2011 through 2019, [indiscernible] has been right about 2.5%, give or take, on TRASM.

Robert Neal: And then, Savi, on the cost side, as I mentioned, the first quarter should be elevated on a year-over-year basis, that should be the high point for a year-over-year comp. And that’s nearly all driven by increases in wages for frontline labor groups. You will see some elevated costs in costs throughout the year. But I would expect that on a full year basis, we would have a unit cost level that’s below what we turned in the first quarter.

Savanthi Syth: That’s helpful. And if I might just follow up in terms of what you’re seeing on the demand side, is there any improvement on the pricing? I know in the fourth quarter, you called out off-peak pricing really weak. It sounds like peak pricing is still holding on. Just curious if you’re seeing any change in the offpeak pricing? Or is the fact that you’re pointing to normal historical Q-over-Q then maybe not much of a change there?

Drew Wells: Yes. I would look back to just normal leisure seasonality right now. The spread we see between where peaks are and off-peaks are, while obviously, everything is meaningfully above prepandemic still, that spread looks about like it did pre-pandemic. So whatever you deem as the normal variance there? Is kind of what we’re seeing.

Operator: Your next question comes from the line of Brandon Oglenski with Barclays.

Brandon Oglenski: Maybe following up on Savi’s line questioning there. I know you guys are only providing the airline only guidance for the first quarter but how do we think about margin seasonality going into 2Q, maybe any initial indications on bookings especially, I think, Greg, you said that your peak capacity is going to be up pretty significantly versus where you were in ’23. Is that right?

Greg Anderson: Brandon, it’s Greg. I hit it at a high level and then Drew could add any color kind of on the peak capacity. My point on that, though, is that we’ve level set operations to build back and fly more in the peak periods. I don’t think — in March, it will be a little bit more difficult for us to start ramping that up, particularly given the timing of the uncertainty around the Boeing deliveries. However, we have a clear line of sight to be able to start taking that up in the summer, this summer but really hitting that or at least a path to hit the 20% increase by 2025. And as I think about the full year, just kind of back to the uncertainty of the delivery of the MAX aircraft, as you know, for us, months matter in a year, right?

80% of our earnings come in March, this summer and holidays. So we need to make sure that as we’re planning, we’re trying to get up and peak in those periods, as Drew will hit on it a little bit. But I would say the [indiscernible] in the second quarter, I would expect op margin that should be the best quarter for us. So I’d expect second quarter sequentially to be higher than the first quarter. And full year, I expect us to be at or near industry-leading margins at our base case. I mean, maybe there’s some upside in there. But we still think we put out a strong ’24 but we just — there’s some uncertainty with some of the timing and moving parts. Drew, do you want to hit anything on that?

Drew Wells: I’ll add maybe just a little bit, just be mindful that Easter comes out of April which will be a meaningful revenue headwind as well as ASM, like I mentioned, about 10% coming out of April there. That will be a headwind — the lift we see in terms of that summer capacity will start really at the end of May into early June. And kind of based on timing of when we had confidence around the number of crew hours and pilot heads we have to be able to fly that. We’re a little bit close in to be able to realize that in March. So we’ll see that. I think it will be — the good news will be kind of back-half weighted for the second quarter but other than that agree with Greg’s comments.

Brandon Oglenski: Okay. Appreciate it, guys. And then a quick one for Robert. How are you guys looking at financing that capital spending this year. What are alternatives that you’re looking at now?

Robert Neal: Sure. Yes. I’m glad you asked. We actually put out an RFP just in the first week of the year and I’ve been really pleased with the results that came in to finance the MAX aircraft. You’ll probably recall our first 4 aircraft are already committed to a financing agreement that we signed up last year which is kind of a blend between finance lease and like a EETC structure, so it has 2 tranches and they’re financing at 100% of their appraised value. And then after that, I suspect we’ll tap into the bank market a little bit and look at finance leases. We’re pretty focused right now on products that give us a lot of flexibility. And then late in the year, depending on the number of deliveries we have and what happens with the MAX [ph] certification, I think we could go and look at the EETC product as well. But I think what all of those things have in common is those are financing products that lead the assets on the balance sheet.

Operator: Your next question comes from the line of Conor Cunningham with Melius Research.

Conor Cunningham: You mentioned that your pilots and flight attendants are currently up and there’s been a fair bit of movement with Southwest and so on. Can you just level set on where discussions are today? And then have your accruals changed at all given where the market is?

Greg Anderson: I’ll [indiscernible] it up and then B.J. may want to comment on the accruals. But in terms of where our labor agreements are at today, Conor — one, I mean we’re very eager to get both agreements in place with our flight attendants. You may recall that went out to vote late last year, that was turned down, I think, by 60%, 40% voted against. So we’ve come back to the table with the TWD leadership and really working to address some of the areas of which that we think fly was voted down and get that back out to vote soon. So we’re happy with the progress there. And in terms of pilots, we’re actually in federal mediation. And so we started that at the early part of last year. I’m encouraged by some of the progress that was made late in ’23.

We actually — in the past few months, we’ve [indiscernible] a couple of sections. We’re about to TA one or 2 more, we think. There’s been changes to the union, the negotiating team on their side which we’re cautiously optimistic with that. As the company has and will continue to do, we’re ready and prepared and we want to get a deal done that for both our flight attendants and pilots that they deserve it. [Indiscernible], do you have anything on the approvals or the timing?

Unidentified Company Representative: Not really just — I’ll just share the accrual for the pilot retention bonus was at the end of the year. So that will continue to build up until we have an agreement with our pilots. And then we haven’t made any changes to that or started accruing for anything on the flight attendants — coming in place to pay out any type of bonus like that.