Stephen Trent: Okay. Appreciate it, Barry. Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from Conor Cunningham of Melius Research.
Conor Cunningham: Hi, everyone. Thank you. Just back to the underserved markets and all the changes that you’re making there, it seems like you’re indicating that a lot of the stuff is unit revenue accretive, which I think is a bit surprising to some of us. Is the brand and the fares just being that well received? But historically, you would think of a spooling period being like over a year or two years. So just any thoughts around on what’s being — on why the success so far?
Barry Biffle: I think if you — in normal course, I think those assumptions are correct. But having been a part of processes like this over the last 30-years, I think you have to consider that where we’re pulling this capacity from is a negative opportunity cost. So when you’re not doing well financially on those, the redeployment in many cases, is almost immediately accretive when you move to better market opportunities. I mean I’ll give you an example. If you’re flying something 4 times a day, and the fourth frequency didn’t add any more revenue, but you had all these costs. Moving that frequency somewhere else, that gain to the network is 100% incremental.
Conor Cunningham: Okay. That’s helpful. Makes sense. And then on all these new products that you’re talking about Biz fare premium economy and all the loyalty changes, I was just wondering if you could probably — if you could give some context to just the contribution? You’re talking about a 7-point improvement in pretax margin. So what portion of these new products is what’s occurring in 2025? Thank you.
Barry Biffle: Yes. I appreciate the question, but we haven’t actually broken that out in detail. But I can tell you the majority of the benefit both this year and next year is going to come from the network and the shift to the VFR flying and away from the oversupplied leisure markets. And then each one of the others are smaller contribution. We haven’t expected huge things from the Biz fare, for example. We think that takes a while to mature. Obviously, the frequent flier things take time to mature. But early signs are fantastic, right? I mean, as Jim mentioned earlier, you think the credit card spend alone. I mean, within a month of launching it, the spins up over 10% year-over-year, so which is just huge. So — but sorry, we’re not giving a breakdown of each one of those components.
Conor Cunningham: It’s all good. Thank you.
Operator: Thank you. [Operator Instructions] And our next question comes from Andrew Didora of Bank of America.
Andrew Didora: Hi, good morning everyone. Barry, look, I know your back half margins are going to look drastically better than what your — what’s coming through in 1Q. But maybe going back to Scott’s question, can you just provide a little bit more color on sort of the bridge on how you get from back half margins to your 2025 goal? And I guess, what kind of headwinds are you assuming from labor? How are we thinking about kind of incremental revenues? Any color you can provide on kind of bridging back half ’24 to ’25 margins, I think, would be very helpful for folks.
Barry Biffle: Sure. Look, as I said a while ago, we’ve given the first quarter and we begin the year, so you can do the simple algebra and solve for X to figure out what that has to be obviously, as we’ve discussed, the diversification of the revenue has multiple components that actually unfold through the year. And so obviously, that will have better — greater benefit in six months from now than it will two months from now. And so I think when you play that out, that actually — and then you annualize that in the back end into 2025, you can easily cover what we expect to be somewhere in around $0.25 the headwind of our labor deals. But we believe that we can solely get back to the 10% to 14% range for 2025 as a result.
Andrew Didora: Okay. Got it. And Mark, just the $36 million benefit you had in 4Q from the lease extensions, does this just go away, how long were these leases extended for? Does that $36 million kind of come back in ’25 at all? How should we think about that?
Mark Mitchell: Yes. So these are eight-year leases that we extended out 12-years. And so that $36 million is out far into the future. So that’s not a ’25 item.
Andrew Didora: Okay, got it. Thank you.
Mark Mitchell: Yes.
Operator: Thank you. [Operator Instructions] And our next question comes from James Kirby of JPMorgan Securities.
James Kirby: Hey, good morning, guys. Just following up with Savi’s question earlier with the pilot pipeline. There are mere reports earlier last month on just slowing down the training and pushing some out. Is that a function of less flying? Or is that just a function of less turnover? And any color you can share there?
Barry Biffle: Yes. We’ve seen — thanks for the question. We’ve actually seen against what our earlier expectations were kind of a slowdown in attrition. And so we’ve seen that coupled with other kind of canaries in the coal mine around the industry. So you’ve just seen a big change in that. And so to give you an idea, we’ve needed in round numbers around 30 pilots a month, right? And to get those with attrition for the last several years, we generally hire 60, right? And so what happens is that if your attrition dries up, you could — because of the timing, it takes, call it, six to eight months to get to the full kind of training of a new first officer, then you have a training of a captain and kind of to create a crew. So if you see a material change in the attrition, you could actually very quickly be 200, 300 pilots way too many.
