John Dietrich: Sure, Scott. Thank you. Yes. Looking at Ground, we’re really excited about the results we’re seeing at Ground, and through DRIVE and all our other initiatives, we are focused on maintaining those margins. I think we have tremendous flexibility to continue to leverage the surface modes, including rail, and Raj touched on some of those other things. In talking with the team, we also have some additional opportunities to leverage our LTL network as well. So, we certainly are looking favorably on the ground at margins going forward. With respect to Q3, and while I’m not going to give quarterly guidance, historically, it has been our lowest profitable quarter and we expect seasonal trends to continue, but a lighter third quarter and more moderate margin improvement in Q3.
Operator: The next question will come from Brandon Oglenski with Barclays. Please go ahead.
Brandon Oglenski: Hey, good afternoon, everyone, and thanks for taking my question. So, Raj or John, maybe can you guys comment on your non-fuel expenses at Express? Because I’ve seen them at about $8.9 billion now for the last three quarters and I think what has gotten investors really excited around DRIVE is the idea that structural cost reductions are coming. So, can you talk about that $1.8 billion that you wanted to achieve this year, how much you’ve already seen at Express? And is there more to come sequentially on that cost structure? And for that Tricolor fleet initiative that you’ve talked about, Raj, is that a signal that you’re just reallocating capacity or should we be thinking that’s a structural reduction in air capacity going forward?
Raj Subramaniam: Let me start on the latter question and I’ll have John hit the former. We’ll size the overall capacity to what the demand looks like and we’re very — we are very prudent in that. In fact, we’ve taken out a lot of flight hours in the last 12 months accordingly. So, the one part of it is sizing the capacity to demand. But within that capacity, now there is a fundamental restructuring that allows us to really improve our service on our core IP business, improve density across all our networks, and then essentially bring to a lower cost point and access some of our Ground networks that are really unparalleled. So, that’s the idea with Tricolor. And so, let me turn it over to John for the other part.
John Dietrich: Sure. Thanks, Raj. So, the majority of our adjusted operating expense decline in the first half was the result of lower volume-related expenses as we’ve continued to align our costs across the enterprise with reduced volumes. In addition, as you pointed out, we’re making strong progress on our DRIVE and we are on track to achieve the $1.8 billion in structural savings in fiscal year 2024 that we talked about. It’s fairly evenly spread throughout the year, with slightly more heavily weighted in the second half as some of these initiatives take hold. In Q2, Raj touched on some of the points in his presentation, of structural cost reductions, included approximately $115 million in the Air and International permanent savings category, $200 million in Surface savings and over $100 million in G&A. So, we’re on track for that $1.8 billion as well.
Operator: The next question will come from Jack Atkins with Stephens. Please go ahead.
Jack Atkins: Okay. Great. Thank you for taking my question. I just wanted to go back to the Air Network redesign commentary for a moment. Just to be clear, was that contemplated within your initial DRIVE program? And then I guess, were there costs associated with that in the second quarter? And if so, could you break that out? And then finally, as you sort of think about when you’re going to start seeing a benefit from this network redesign, is that something we could see show up in the second half of this fiscal year or is that more of an FY 2025 event? Thank you.
John Dietrich: Thanks, Jack. It’s John. So, yes, Tricolor was factored into our outlook. It’s something we’ve been looking at for quite a while. It’s very well-developed. We’re looking forward to implementation. And it is factored into our full year outlook. From a cost standpoint, we’re leveraging, as Raj said, the assets that we have. There may be some incidental facilities costs that we incur, but nothing that I would describe in the material category.
Operator: The next question will come from Tom Wadewitz with UBS. Please go ahead.
Tom Wadewitz: Yes. Good afternoon. I wanted to see if you could offer some — a little bit of help on the — what the yields look like ex-fuel, so perhaps Ground and domestic Express. What did those revenue per piece numbers look like, ex-fuel? And then some thoughts on what the pricing environment is doing. I mean I think there’s certainly been some kind of evidence out there that UPS is competing to get business back and you are competing as well. And so, I’m just wondering if you are seeing some of that and that’s a point of pressure as well just in terms of getting a bit less price than you had expected?
Brie Carere: Hi, Tom. Thank you for your question. Its Brie. I think the most important thing is that the market is quite rational. Yes, the yields have reset since the height of the pandemic, but I think everybody in this room fully anticipated that. As we mentioned, we continue to get a higher yield per package per segment in the US domestic market than our primary competitor, and we’re very proud of that. We’ve been able to maintain that yield leadership and take market share. So, yes, it’s a competitive market, but it’s overall very rational and we feel really good about the team’s performance. From an overall demand or performance in the quarter, we’re actually quite pleased where yield was in totality. As Raj talked about, we do have some pressures from a mix perspective but that was more of an Express story.
We feel really good about Ground and actually when you double-click and we look at the market share we gained, we actually took more share in the B2B segment. So, from a mix perspective, that’s helping.
Operator: The next question will come from David Vernon with Bernstein. Please go ahead.
David Vernon: Hey, good afternoon. So, Raj, I want to kind of come back to the struggles at the Express segment here, obviously, popping around between the sort of 2% and 4% on the margin side. If you think about this in a three-year view, obviously, we have a lot of plans that are in place to pull cost out and we’ve got a lot of initiatives to work on this. At what point do you say, like, we haven’t gotten to where we want to go and we need to think about something else deeper or more structural around the business? I’m just trying to like address some investor concerns that I’ve certainly been hearing about. Is the margin profile here fixable? And if it’s not, then what — what’s going to happen next?
