Stephen Trent: Okay, perfect. Thanks very much, Jimmy. Let me leave it there.
Operator: Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Helane Becker with TD Cowen. Your line is open. Please go ahead.
Helane Becker: Thanks very much, operator. Hi, everybody, and thanks for the time here. Is there a way for you to quantify what the Barclays card spend is and whether it’s up, down, or the same as it was six months or a year ago?
Barry Biffle: We don’t actually disclose that, but I can tell you we’re very pleased with the performance of credit card partnerships with Barclays. And we are investing significantly in the loyalty, as we announced earlier this week, our Get It All for Less promise includes changes to how people earn on the program, our elite status levels, but also the fact that you can actually earn gold status by just spending $3,000 on the credit card, which unlocks free bags, free seats, no change fees, no cancels, so just a lot of value. And so what we believe is that there is no one in the space that if you travel a few times a year and spend at least $10,000 on a credit card that you earn as much as you will on us in terms of free travel.
And when you couple that with what we are doing on the modularity and where we are going to be concentrating our bases, we also believe that we’re going to see much more market maturity as we continue to be much more relevant for customers in our bases.
Helane Becker: Okay. That’s hugely helpful, actually. The relevance is very helpful. But the question I have about the comment you made on underserved markets and kind of thinking about growing in those markets. I understand why you would want to do that and it makes perfect sense, but do you need to have smaller aircraft to do that because those markets may not be as robust or as demand driven as some of the other markets that you are serving already? I feel like Americans only go to places, right?
Barry Biffle: Well, it’s a good question, Helene, but no. look, when you’ve got the 321neo in our configuration, it provides the lowest seat cost in the industry and it enables you to fly more places, whether it’s just a couple times a week for small markets or several times a day. We have an amazing amount of stimulating, amazing ability to stimulate demand. But I think what you should look at is just take the cities in the U.S., take all the airports, and just go in and look at the fourth quarter capacity by city, look how many seats in each city, and compare that to the same quarter in 2019. And you’ll see a dramatic, dramatic difference. You’re talking probably 30 to 40 points swing between the top and the bottom. So if demand is similar, and you have a 30% swing in capacity, that can be a 20 to 30 point jump in RASM or it can be a 20 to 30 point drag on a relative basis.
So, that’s what we’re talking about when we say uneven capacity deployment in the U.S. And I think you’ll find something very interesting if you do that analysis. You’ll find that there’s a large correlation between the airlines that are doing well and the ones that are doing well and the ones that are struggling margin-wise when you compare where their concentrations are. And that’s why we say, and history shows that these things will normalize over the next 6 to 12 months.
Helane Becker: Right. That makes sense. Yes. Okay. That’s really helpful, Barry. Thanks for all of that.
Barry Biffle: Thanks, Helane.
Operator: Thank you. And one moment for our next question. Our next question comes from the line of Jamie Baker with JMP — JPMorgan Securities. Your line is open. Please go ahead.
Jamie Baker: Hey, good morning everybody and congrats to Jimmy and Matt, Rajat and I’m sorry, Jimmy and Mark, Rajat and Matt as well. It’s already been a long morning. Can you update us on CapEx for the next couple of years? Obviously, everybody hoping for a better year next year, but just in the event that 2024 ends up resembling 2023, particularly after you reach a pilot deal, that 2024 ends up resembling 2023, particularly after you reach a pilot deal. I just want to make sure I understand your ability to raise incremental capital. I know you cited the credit card program and IP, so I’m just guessing that liquidity is on your mind as well.
Jimmy Dempsey: Yes, Jamie, it’s Jimmy here. Look, it’s not a secret that we’ve spent a lot of time over the years fostering relationships across the leasing community to fund the growth in the business. And, we have about 22, 23 aircraft delivering next year. We have a really good pipeline on selling leasebacks on those aircraft all the way through to the end of next year, but most of our aircraft committed really in the first seven or eight months of next year. So we feel really good about the material capital spend on aircraft assets. The other capital spend that we have in the business is clearly engine shop visits and then just funding the growth in the business, they tend to be much lesser in terms of CapEx spend than the aircraft themselves, albeit the LEAP aircraft is coming in the next few years into its window where you’ll see some more engine shop visits develop for those aircraft.
And the other thing that we’re watching quite closely, although, we’re unclear right now is that the impact it will have on Frontier is really what’s happening with the GTF. Frontier delivered its first GTF engine in September 2022. We’re outside of the initial window where inspections on those engines are occurring at the moment, but we do anticipate we’ll have to do some inspections towards the back end of 2024 and into 2025 and beyond. And so, albeit, we think it’s going to be a minimal impact on Frontier in relation to how we understand it at the moment, it’s obviously a fluid situation. We’re watching it quite closely. And so that will determine our spares ratio and various different things, engine capacity in the airline.
Jamie Baker: Okay. So no definitive CapEx guide, but we should be thinking about sale-leaseback activity as we model for that. That’s the summary?
Jimmy Dempsey: Yes, I mean, that market has been really good to frontier and it continues to be so. So, I mean, obviously, interest rates are higher and higher for everybody and we operate within that world, but the pipeline of operating leases that we have coming are pretty good. So we’re quite comfortable with it.
Jamie Baker: Okay, good. And then second, Barry, you talk about lower ex-fuel CASM next year. What’s your confidence on getting there if you mark your pilots to market, and let’s just assume you did that on January 1st for illustrative purposes? I’m not asking you to negotiate in public. I’m just asking you to speak to your confidence in achieving lower X fuel chasm after a pilot hit of what’s sort of best case scenario, I’m guessing $50 million of annual incremental expense. I’m not guessing, I’m analyzing, but probably a figure potentially north of that.
