Conor Cunningham: Okay, appreciate that. And then, Dan, just back to the maintenance costs and operational investments, just trying to understand, I know you touched on it in Jamie’s question, but just trying to understand how it plays out. Are you basically assuming that maintenance and operational investments will be elevated in the first half? And then, how does that roll off? And then, when do the productivity gains that you’ve talked about in the past kind of kick in? I’m just trying to understand how the moving parts are changing a little bit right now. Thank you.
Dan Janki: Yeah, certainly we talked about it. We’re in the middle of — Conor, thank you. We’re in the middle of the ’24 planning process. When you think about maintenance, as Ed talked about, it is a foundational item as it relates to our operational reliability and the investments that we’re making here related to fleet health and the work that we’re doing on our engines, we’re going to stay after here. And that will be with us at least into the first half of next year, and we want to drive that operational reliability. The second part of that is, as you get that operational reliability, that is really what creates the foundation to be able to start to optimize and unlock the cost, investment and inefficiencies that we talked back about at Investor Day, that $1 billion-plus.
And as you see that operational reliability continue to improve, our teams will be able to lean more and more into getting those investment buffers out, those inefficiencies that are in every part of our operation. And our teams are working through that as they’re building out their operating plan and financial plan for 2024.
Conor Cunningham: Thank you.
Operator: Thank you. Your next question is coming from Duane Pfennigwerth from Evercore ISI. Your line is live.
Duane Pfennigwerth: Hey, good morning. Just on the maintenance investment, I’ll follow up to maybe Jamie’s question there, is this at all a reflection of your thoughts on future aircraft delivery constraints? In other words, were you always thinking about using those 75s next year? And then just generally, how do you think about and measure returns on capital for investing in something like a 757 versus going out and buying new?
Dan Janki: Yeah, Glen can chime in here too. I think the 757 has been a fleet as we’ve gone through our restoration that we’ve characterized as a flexible fleet. And it’s one that — it’s certainly a workhorse. The returns are very good related to how we deploy it and fly it within our network. So, we have leaned on it. When you think back of where we might have been 18, 24 months ago, the number that we’re flying, we have reactivated more as we continue to see new delivery slide, and we get recalibrated year to year. So, it is one that we’ve leaned into. And it’s one that we will be flexible on as we work through the next three, four, five years in regards to how we deploy it. The wave of overhauls that we started last year and we’re doing this year and we’ll have the same next year, but that gets us through a heavy wave, that then allows us really very viable engines that the Delta team has always been very good at managing the end of life of an asset.
We did it on the 90s, 88s in regards to how you manage those assets and deploy them, but also get the most out of them, whether it’s in whole or in the parts and how they’re redeployed back in the stream. And we are always working closely then with fleet and maintenance with Glen’s team on how to deploy them and get the best returns for them. But those are good returning. It’s a great workhorse for our fleet with good returns.
Glen Hauenstein: Nothing to add other than, yeah, we took a lot of late deliveries. I think our last 75 was produced — we had the last one ever built. So, some of these planes are not that old and we have them in our fleet and we have — but as you said, as we get to the end of life of these, towards the end of this decade, we’ll be able to really start harvesting the engines, which will really improve the maintenance profile of the fleet.
Ed Bastian: And Duane, this is Ed, if I could add my perspective. Your point is right. It is related to the OEMs fundamentally. Their inability to produce engines on time, which they’re having their own challenges within the supply chain, as well as parts on time. And the one thing that has been a core part of Delta’s strength over at TechOps is our ability to go into the used/repair market and acquire assets and repurpose them towards our own needs. That market has largely dried up given all the large rebound in flight activity, which was running at the same time the OEMs have been having and struggling to produce new. So, I think this is something you’re going to see across the industry. This isn’t just at Delta. And it’s one of the constraints we talked about at Investor Day.
It’s going to keep us all pretty limited in the amount of capacity that we can produce. But I’d put my money on the Delta TechOps team, because they’re the best in the business and we’ll figure this out. And we know this is a — while it may hit the expense line, we know this is a long-term asset that’s going to pay dividends for years to come.
Duane Pfennigwerth: Appreciate those thoughts. And maybe just for my follow-up on Pacific, and Glen, can you just remind us where we are in China reopen? I think there’s another round of expansion here in November. And then just broadly in Pacific, what are the markets away from China that you’re excited about?
Glen Hauenstein: Well, I think what we’re very excited about is the success of our Incheon hub with Korean. And that has really even exceeded our expectations. We think it’s the best place to connect to get to Southeast Asia from any one of our hubs or as a double connect. So, really trying to leverage that, and we’ll have some announcements on continuing to work to increase our capacity next year. But that’s really been a lynchpin. South Pacific has been a really great surprise for us, the demand there, really in tune with that same high demand for leisure destinations. So that’s been doing very well, as well as Japan. As you know, Japan was closed for a couple years and our Japanese franchise is doing quite well. So, you put the Pacific together, and if you recall, for years, we were telling our investors to hold on.
We’ve got this restructuring coming. We had the wrong airplanes. We were at the wrong airports. And it took us many years to get to where we wanted to be, but we’re finally there and we’re producing great returns in the Pacific and we’re excited about our opportunities moving forward.
Duane Pfennigwerth: I appreciate the detailed thoughts.
Glen Hauenstein: Oh, China. I didn’t say — China, of course. We went from essentially double daily in Detroit — double weekly, I’m sorry, in Detroit and Seattle to 10x a week, with Seattle moving to daily and Detroit moving to 3x. So — and we’ll see if there’s another wave of this. I think the first thing we have to see is, is there a demand for the capacity that’s going into market right now, and we’ll keep you abreast of that as we move forward on China reopening.
Duane Pfennigwerth: Thank you.
Operator: Thank you. Your next question is coming from Andrew Didora from Bank of America. Your line is live.
