Peter Ingram: Yes. Thanks for that, Mike. We are operating one aircraft currently, and our team did a really stellar job, albeit with a very small operation. But with only a single airplane to execute it, we’ve had really outstanding operational performance. And I think the Amazon team is pleased with how that airplane is integrating into their fleet. The plan as it stands right now is for us to ramp up to about six airplanes in operation over the course of this year, which is a little bit slower than what had initially been contemplated. And that is not a product of our desire or customers’ desire but more a product of the pace at which those airplanes are available from the conversion line. And given that, as Shannon, I think alluded to, we see the benefits of that investment ramping up over the course of the year. Where it should be a positive contributor will be at the tail end of this year or into next year is where we would anticipate that at this point.
Mike Linenberg: Okay, great. That’s helpful. And then my second question just to Brent on interisland, we have seen a pretty meaningful increase in average fares, and you talked about that. With that increase, did we see any sort of meaningful falloff in demand, or was the market just mispriced a year ago, and I guess the consumer got an unsustainably good benefit?
Brent Overbeek: I would say load factors have held up really well, and if we’re seeing any kind of impact on load factor, it’s minimal. And certainly, these changes have been kind of revenue positive, particularly if you look at kind of the elasticity closer into departure. These have not been accretive to unit revenue.
Mike Linenberg: Great. Thank you.
Peter Ingram: Thanks, Mike.
Operator: Our next question comes from the line of Helane Becker with TD Cowen. Please proceed with your question.
Helane Becker: Thanks very much operator. Hi, team. So I have a question about the GTF issue. I’m hearing that that 250 to 300 a day on the ground to get the engines repaired is starting to extend to over 400 days. And I’m wondering if you’ve heard something similar or if you are in a better position to get the aircraft out sooner, especially given your answer to Conor’s question about second half seeing improvement?
Peter Ingram: Yes. Helane, I’m not aware of an expansion at this point in the overall span of shop visits. But I would point out that whenever you hear those numbers, you have to put it in the context of it’s a range. And it really is a function when the engine comes off wing and goes into the overhaul shop of the scope of work that is required in there. I think in terms of the volume of engines that have to go through, there probably is a greater waiting time before they actually get onto the shop floor and get operated on. And I think that’s factored into the expectations. From our specific situation, if you recall, even before the powder metal issue became the subject of the day last July, we had had a number of removals for other reasons.
And so, we’ve had a number of engines that have already been in the overhaul process, and part of what is helping our outlook on a relative basis in the next little while is that some of those engines start to come out of the overhaul shop that have been in there since the early part of last year, before we even got into having removals for the powder metal inspection. So it’s a moving picture, and there’s still uncertainty in a number of things. One of the things we have to factor into our forecast is unexpected engine removals, and they’re always hard to forecast by the nature of being unexpected. But we feel relatively better about where we are right now. We’re working closely with Pratt & Whitney to keep our finger on the pulse of that and make sure that whatever expectations we have can be built into our schedule.
So we’re giving a reliable aircraft availability forecast to Brent before his team goes and lays out the network plan going forward.
Helane Becker: Got it. That’s really helpful. Thank you. And then I have two other questions. They’re really short. One is, can you say, as you’re talking about financing the 787s, what your cost of capital is? And the other question is, can you talk a little bit about how you’re thinking of or if you’ve seen in the forward schedules any sign that Southwest is pulling some of the interisland capacity out and kind of rerouting those aircraft to redeyes back to the U.S.?
Shannon Okinaka: Yes, Helane, I think at this point yet, we’re not completely done with the financing. It’ll be concurrent with the delivery. So I can probably provide you more information when we’re — when it’s all final on the exact cost of capital.
Helane Becker: Okay. That’s fair.
Peter Ingram: In terms of competitive schedules, we haven’t seen any recent activity in terms of neighbor island or conversion from daytime flying to redeye flying.
Helane Becker: Okay. All right. Well, we’ll look for it. All right. Thanks, team. Thanks for your help.
Brent Overbeek: Thank you.
Peter Ingram: Thanks, Helane.
Helane Becker: Of course.
Operator: Our next question comes from the line of Dan McKenzie with Seaport Global. Please proceed with your question.
Dan McKenzie: Hey, thanks. Peter, going back to the script about the commentary around the number of pilots undergoing training and the GTF issues, what efficiency metrics are you focused on? And I guess where are you at today? Where do you want those metrics to be in 2025? And I guess, what I’m really trying to get at here is the embedded inefficiency that’s in the cost structure today that eventually goes away next year, so 2024 going to the — I think the messaging that this is really a transition year that should give way to a much better 2025?
Peter Ingram: Yes. In terms of efficiency metrics, there’s obviously a wide variety of things that we look at, in terms of aircraft utilization in terms of for crews, in particular. You mentioned pilots. We really focus on the number of productive block hours relative to the hours we pay for. And of course, training is a big part of that, because, well, it is essential, and we certainly have to do it. Every time we bring a new pilot on or we shift someone to a new fleet or seat, it’s not producing block hours that generate ASMs that generate revenue. So we’re in a position this year — over the last couple of years, we’ve had an incredible amount of training, and I think this has been a theme throughout the industry as airlines have dealt with some turnover in the ranks and a lot of hiring.
And of course, with us bringing on a couple of new fleet types over a several month time frame. As Shannon said in her commentary, that training level remains elevated, but it’s actually not higher year-over-year. We’re into a slower pace of hiring now and a slower pace of movement, and so it does become more manageable, and we see more productivity improvements as we go through the back part of the year.
Shannon Okinaka: So I’ll add a little bit more there, Dan. Last quarter, we talked about that percent of efficiency compared to 2019. And we believed our exit point this year was going to be — I think it was around 10% to 11% greater than 2019 as far as excess pilots per shell. Of course, with the delivery delays this year, we’re not expecting — we had to change our expectation for the exit rate. It improves over this year, but we don’t expect to get to that level maybe until the middle of 2025 when we have about that equivalent of flying after all the delivery delays. We don’t believe that that’s the steady state. We believe we can get more improvement even off of that, but we’ve got — we’re looking at about a six-month delay to get to that point that we talked about last quarter.
