Operator: Thank you. And our next question is going to come from the line of Brandon Oglenski with Barclays. Your line is open, please go ahead.
Brandon Oglenski: Yes, good morning, and thanks for taking the question. Barry, I guess if you can step back, what do you tell investors that have been with you since the IPO? Because it’s been a pretty tough run here. And if we look at your order book, over 200 aircraft on order yet 130 today, that’s a lot of growth the next 10 years. And I know you’re pulling it back in the first quarter, but some of it seems like uneven demand off peak weakness fuel pressure APTC delays. They seem to be continuing. So, what structurally changes in the next year or two that gets you back to that pre-tax double digit margin range?
Barry Biffle: I think it’s pretty simple. One, I think you’re going to see, as I mentioned, I think you’re going to see the rebalancing of the capacity in the US. You’re not going to have these wild swings, about 20% in one city versus down 15% and others. I think that’s going to rebalance and that’s going to be significantly beneficial to Frontier in absolute and on a relative basis. I think you’re also going to see a shift in normalization and demand. I mean, international is in vogue, but that isn’t going to last. And so that’s going to rebalance as well. History shows you that. So, that’s worth three to four points each. And then we ourselves are going to take our own self help, and we’re going to grow away from the from the from the saturations worth several more points.
And as we we’ve laid out, we’re going to actually reduce our costs significantly, which is going to drive a couple more points of margin. And that’s also going to drive greater reliability, which also increases your revenue. When you’re cancelling 2%, 3% of your plights, the costs stay the same, but the revenue goes down. And then obviously, we’ve got, as Jimmy mentioned, our get it off for less, promise that we rolled out this week, which we think is going to pay massive dividends with the loyalty approach, which happens to be with Barclaycard. So, but we’re going to control the things we can control. And, that’s going to deliver, profitability. And we believe that that low cost will win.
Brandon Oglenski: I appreciate that, Barry. I mean, are you going through a wholesale change on the network next year? Is that what we should think, like, getting out of markets like Vegas and Florida incrementally?
Barry Biffle: No. We’re not getting it. So, let me be clear. We are not getting out and we’re not leaving anywhere. But we will concentrate the growth that we plan. So in the mid-teens, it will be away from places that are saturated. It’s going to be in places that are underserved.
Brandon Oglenski: Okay. And sorry, I should have rephrased, like, not getting out, but incrementally moving away from those markets with relative new capacity. Is that right?
Barry Biffle: No. No. We are the lowest cost provider in Las Vegas. We’re not going anywhere. We do believe that that the industry will probably slow its growth and probably contract there, but we will not be contracting. We will just the growth that we add to the company will be an underserved will not add more capacity to markets that we believe are oversaturated
Brandon Oglenski: Okay. Appreciate it. Thank you.
Operator: Thank you. And our next question is going to come from the line of Michael Linenberg with Deutsche Bank. Your line is open. Please go ahead.
Michael Linenberg: Hey, good morning everyone. Hey Barry, just back to your view on next year, talked about mid-single growth in the March quarter. And then aiming for mid-teens for full year. So you would obviously have to ramp up as we move through the year. Are there any sort of whether it’s margin targets or return metrics that you’ll have to achieve in order to then sort of green light that type of growth know, maybe it’s by the June quarter where you start to ramp up, because I’m sure there’s metrics you probably want to hit before you want to accelerate that? Your thinking around that. Thank you.
Barry Biffle: Yes. Thanks, Mike. We’re not guiding for 2024 margins at this point.
Michael Linenberg: Okay. Okay, too early. And then, just a question to, Mark, and congratulations on your promotion. I want to go back just on the guidance. You had mentioned that, the pretax margin guide for the fourth quarter versus the third, you said a lot of that had to do with a higher fuel price assumption. Are you assuming sort of similar demand that what we saw in September quarter continues into December. Is that is that is that a fair a fair assumption?
Mark Mitchell: Yes. I mean, I think, as was highlighted in the initial remarks book trends, here to have stabilized. And so what you see in that guide range is primarily the impact of the higher fuel costs.
Michael Linenberg: Okay, great. Thank you.
Operator: Thank you. And our next question is going to come from the line of Stephen Trent with Citi. Your line is open. Please go ahead.
Stephen Trent: Yes. Good morning everybody. Can you hear me okay?
Barry Biffle: Yes. We can.
Stephen Trent: Okay. Sorry about that. I have a little trouble with my phone. And congrats. I share, Mike’s comments, congrats to Jimmy and Mark on those new moves. That’s great stuff. Just one or two for me here. Could you tell me with your 2024 plan what are your basic assumptions about the Air Traffic Control situation and sort of infrastructure investment in US airport? Any change there or you’re assuming everything states as it is now?
Barry Biffle: Yes, thanks, David. Actually, we’re assuming it gets worse. And that is why, we had always planned by 2025, 2026 to get to above 80% to 90%, kind of out and back simplified network. But we have to accelerate that. We have we’ve studied this extensively for now six to eight months. We have studied what how they manage this in Europe very similar situations. And so we believe that, their traffic control gets if you look at the staffing levels relative to the departures, it’s going to be more constrained than it is now. And so we are planning around that by ensuring that we no longer have the kind of dependencies and the risk of running multi-day trips that are vulnerable with three to four to five hour GDP programs.
Stephen Trent: All right. Really appreciate that, Barry. And just one other quick question. Could you refresh my memory regarding what percentage of your fuel exposure is West Coast refined?
Jimmy Dempsey: Steve, it’s Jimmy here. I mean, it’s less than 20% of our exposure covers the West Coast, and we also have an exposure of about 10% or 15% in Denver as well, which is incorporated into that kind of more higher kind of crack spread and higher jet fuel cost. But over half of our exposure to fuel is around the U.S. Gulf Coast.
