So this is a long-term dig ourselves out of this hole. This is not going to take one-year or two-year, it’s going a couple of years. When we say we’re optimistic about the captain supply model, I can say that we’re producing captains as of today, but not as many as we want. And throughout 2024, we’re going to evaluate additional programs to make sure that we’re vertically integrated with our partners to try to expand that cabin production even further. So, I don’t know if that kind of helps put some framework around your question or not, Duane.
Operator: Your next question comes from the line of Mike Linenberg with Deutsche Bank.
Mike Linenberg: Wade, I want to go back to, you talked about I guess, 165, 76 seat type opportunities among — I guess amongst your partners. And I guess I want some clarity clarification of that. Is that 165 available spots for 76 seaters, 70 seaters, 66 seaters? Is it just the three or I should say actually four carriers that you do business with, does that include other major carriers that may be looking at bringing on a regional, maybe if you can just provide a little bit of color around that statement?
Wade Steel: So first of all, just to clarify what I said in my script, it was a lot of numbers that I was saying, but it was 165 to 76 seat aircraft, so it’s 100 airplanes in that scope category right, so there’s 100 airplanes that are available to be awarded between 65 and 76 seats between all of our major partners. And so just to add a little color, we’ve obviously got our existing fleet that we have. We have some assets that are still not under contract that fall into that category. There’s obviously new airplanes out there and there’s obviously other carriers that have 76 seat or 70 seat aircraft that are not flying right, and so there’s three very good buckets out there of potential to potentially get some of those 100 aircraft.
Mike Linenberg: And then I just, I want to go back to Contour. Is that first off, I guess, on Rob, is that going to be accounted for under the equity method, that 25% stake?
Rob Simmons: For now, yes.
Mike Linenberg: Will that be a contributor to your P&L in 2024 or a detractor or maybe just breakeven?
Rob Simmons: Yes. What we said is that it was not a contributor in the fourth quarter of 2023, but that we would expected, sorry, I’m speaking now that our SWC operation.
Mike Linenberg: Yes, I’m talking Contour.
Rob Simmons: Sorry. SWC will be a contributor contour. We’ve got a 25% ownership and that will wait and see and give more color down the road.
Mike Linenberg: And then how big is Contour? How many pilots does Contour have today?
Wade Steel: They have about 30 aircraft and somewhere around 200 pilots, somewhere in that range.
Mike Linenberg: And then does Contour today like other Part 135 carriers like Silver and Cape Air, do they have interline agreements with various carriers or they don’t have any affiliation with anyone?
Wade Steel: So currently as of the closing of the transaction, they have an interline agreement with American Airlines.
Mike Linenberg: And then just one last one if I can squeeze in on this topic because it is an interesting one. As I recall, you did have an investment in Southern Airways Express, but I now know that that’s been kind of rolled into the Surf Air. I’m not even sure if you have a residual stake there. What does this get you that maybe that couldn’t get you or maybe the structure with Surf Air and Southern Airways Express wasn’t a clean one and this is a lot easier to start kind of with a de novo type investment. Any color on that and thanks for answering my questions.
Wade Steel: Yes. So, Mike, I’ll take the first part of that and then Chip will tackle the last part of it. So as far as our investment in Southern, as part of their transaction with Surf, we divested of our ownership stake in that. So, we’re, we no longer have ownership.
Chip Childs: And Michael, on the second half of that, there’s some big differences between Southern and Contour. Obviously, to become a Contour is almost exactly like SWC and we would like to accomplish with SWC. I mean, it’s the same type of aircraft, same type of flying. And Southern was just a smaller aircraft, single engine turboprop that type of stuff. So the fleet and asset connection is the number one difference. And there’s a lot of alignment strategically with what both of the carriers could do and from that perspective it seemed to work very, very well.
Operator: Your next question comes from the line of Helane Becker with TD Cowen.
Helane Becker: How are you weighing debt repayment versus buybacks for capital allocation? How should we think about that, like priorities?
Rob Simmons: Yes. Thanks, Helane. And I would say that I don’t see them, as being mutually exclusive. Obviously, we’re very focused on deploying capital in an optimal way, and I think we’ve done a pretty good job in that. But we definitely want to leave plenty of dry powder for flying opportunities that may be out there, like Wade and Chip have been talking about the 100 scope airplanes that are out there. We would love to obviously continue to grow that way, but we’ll continue that we have an open share repurchase program as well, but we’ll probably slow the cadence of that at the levels we’re at now, but I think that we’ll take things sort of a quarter at a time and look to potentially continue to do both.
Helane Becker: And then my follow-up question, how are you thinking about the timeline back to pre-COVID margins? And I know how you’re thinking about getting back to, just size with the roughly 2,000 pilots that you would like to have, but how are you thinking about margins? Or how should we think about margins?
Rob Simmons: Yes. Thanks, Helane. So, look, I think we’re not back to 2019 margins yet, and obviously, we’re making good progress in that direction. But because of how we’ve deployed capital and the shares that we bought back, we are there from an EPS standpoint. So even though margins are not back to 2019 levels, potentially in 2024 EPS will be.
