And with that, I’ll turn it back to the operator to open up the line for analyst questions.
Operator: [Operator Instructions] Our first question comes from the line of David Vernon of Bernstein.
David Vernon: So maybe to you or Robert, when you look at the 2Q RASM guide, it’s a little bit better, I think, than people were expecting but it’s not quite sort of flat and level with peers. There’s also a pretty big sequential ramp from sort of 1Q into 2Q when you look at the TRASM number. Can you guys kind of help us understand kind of what’s embedded underneath that? What’s driving the big sequential acceleration on top of capacity growth? And maybe why that unit revenue metric is not performing at the same rate as peers?
Vasu Raja: Absolutely. Absolutely. It’s an excellent question, one I suspect it’s on many people’s minds. Look, and actually, the tail of our year, the quarterly progression of TRASM really starts in the first quarter. And as we saw in the first quarter, there are 3 things that impacted us in the first quarter, which changed materially as the year progresses. The first is in first quarter, competitive capacity grew the most in our markets and strength in the domestic and short-haul network.
Two, in our first quarter, we flew too much. When you look at what we did, about 60% of our growth ASMs were in off-peak times a day or days of week, which is about 10 to 15 points higher than our next competitor. And the third thing, and related to Robert’s marks at the top of this is Q1 marks the end of really a year of transition of our distribution strategies in which we were really focused on actually creating the right long-term customer proposition, reducing a lot of the unnecessary expenses that went along with it.
All 3 of those conditions start to change as we go forward, which is not just us guessing, you actually start to see it. On Q1, refer to my first point, we see industry capacity starting to change as we go into the summer and certainly into the fall. That reduction is coming most heavily in the narrow-body system, which uniquely favors us. Two, as we go in the third quarter, you’ve already seen this in our published schedules, and you’ll see more of it in the days ahead.
We are also taking a much more careful look at our off-peak or off-time channel flying, so we’ll produce less flying in the trough too, which also pretty benefit to TRASM. And now having gone through a year of transition with our distribution strategy, we get to do optimization. And we see a lot of ways to be able to do that, which is great for our customers.
Frankly, can really bring in a lot of our travel agency and corporate partners. But very critically, can drive revenue and profit for the airline. And so you see that in our sequential build as we go quarter-to-quarter through the year.
David Vernon: And then maybe just as a follow-up, when you think about sort of the exit rate of 1Q and what we’re seeing kind of in April, is that kind of consistent with that ramp building from a sequential perspective in TRASM? I mean, I’m sure you guys have carefully gone through the guidance and stuff like that. It just looks like a really big sort of 1Q to 2Q pop.
Vasu Raja: Yes. And look, it’s probably best to give a sense for our 2Q by entity. As we go look into 2Q, what we see is in the Transpacific network, we anticipate RASM to be flat to slightly up and Transatlantic mid-single digits up, in Latin America double digits down. And domestic, we expect to be flat to slightly down but very importantly, as we were — in our peaks in 1Q, we were actually inflecting positive in domestic. April has a lot of industry capacity comes back, we turn a little negative.
But as we end the Q1 period, we expect to see and are already starting to see more favorable revenue outlook in domestic. So when you look at it in that way, in our 2Q, we anticipate that the long-haul system at large will be positive on a RASM basis the domestic and short-haul system down with a steadily improving trend, both in domestic and short-haul international every single month in the second quarter.
Operator: Our next question comes from the line of Conor Cunningham of Melius Research.
Conor Cunningham: Maybe we can talk a little bit about the regional build back. I’m just trying to understand maybe to David’s earlier point, just the mix dynamic that you’re seeing as you bring back regional aircraft, I would think it’s positive for unit revenue, but potentially negative for unit cost. But I don’t know if it’s playing out like that. If you could just kind of talk about the regional build back and how that’s contributing to your margin trajectory.
Devon May: Conor, it’s Devon. Yes, regional is doing both of those things, and it is what gives us confidence in unit revenue inflecting positive in the third and fourth quarter. But just to give you some numbers around it, in the first quarter we operated the equivalent of around 465 fully utilized regional jets. We expect that number to grow by 20 to 25 regional jets each quarter as we move throughout the year. So by the time we get to the fourth quarter, we expect to have around 535 fully utilized regional jets and it’s going to do the things that you just talked about.
It is going to be helpful to unit revenue. These are higher unit revenue-producing assets. It does drive a bit of a headwind on unit costs but we do still expect our unit cost to stay within our guidance for the year. But we are seeing really nice trends there, and we’re excited to see that supportability improve.
Robert Isom: Yes. And Devon, I’ll just add that as we see these aircraft come back and have a chance to put them in the schedule and actually plan for them fully. It has — it will show benefit. So Vasu, do you want to talk a little bit about how we intend to deploy those aircraft?
