David Slotnick: I was wondering if you could just expand a little bit on the lower-than-expected close-in bookings. Do you think this is a lengthening of the booking curve again, sort of a return to the pre-pandemic booking trends, or is this a one-off that maybe has something to do with the present environment?
Andrew Watterson: I would just characterize it as we are moving back towards more pre-pandemic norms. Of course, managed business travel remains down relative to pre-pandemic levels. It’s — the baseline in managed business is kind of slow and steady recovery, and we’re picking up market share with our initiatives in the managed business space. And so, we feel good about that. But when you turn to the leisure piece of this, there is still more close-in leisure today than there was pre-pandemic, but it is not at the level of what we saw earlier this year at the end of last year. So, I think it’s more of a reversing of trends here back to norms as kind of return to office trends and things like that also begin to change here a bit.
I called it out in my prepared remarks, but specifically, in the third quarter, there’s other things that would have impacted close-in leisure. The school calendar changes are pretty significant in August specifically. And a third — in our markets, a third of schools were back in session the second week of August. That’s double what it was pre-pandemic. And anybody that has kids, you usually don’t travel the week before your kids go back to school. So that kind of wipes almost all of August out there for a third of travel in our market. So there’s some things moving around in the macro environment that’s impacting it. But I think just generally characterizing, we’re kind of reverting back to norms.
Ryan Green: And at the risk of being redundant, which I probably am. All of these things are about tweaking the network and the business for new demand trends and behaviors that are caused by things like business being just below and not fully recovered or new trends coming out of the pandemic. There — it’s not about there is a demand problem. So again, Southwest, we’re seeing, again, record operating revenues, record passengers, record Rapid Rewards participation on revenues, record retail spend on our card, record new members, on and on and on, and we’re expecting record operating revenues and passengers again in the fourth quarter. So it’s not as if we’re not generating demand. Southwest is generating a strong demand.
It’s about getting that aligned more precisely with the new travel patterns and also just absorbing the rapid growth that we saw because we restored our network here in the back half of the year. And that just drove sequentially more seats, more capacity than normal. And now it’s time to mature that, absorb that, which is really why we’re stepping down and slowing our growth rate in ‘24 so that we can take the time to do that. But I just want to point out, to me, a lot this is — while there’s work to do, a lot of this is tweaking and adjusting to the new trends. It’s not about we have a demand problem.
David Slotnick: And then just following up, you excluded the holidays specifically when you mentioned this during your prepared remarks. What’s the booking curve looking like for that? Where do you think we are in the curve sort of right now?
Ryan Green: Yes. Holiday bookings are strong. I made the comment earlier that if you look at where we sit today versus last year at this point in the curve for the December holiday period, specifically, were booked ahead, which I think is a vote of confidence that customers are beyond our operational disruption, and we’re not suffering any sort of demand weakness for the December holiday period. And I would just characterize the Thanksgiving period as strong as well. We’ve got a lot of capacity here over the — in the fourth quarter that we’ll have to absorb. But I’m pleased with how the holidays are booking.
Operator: And our next question comes from — is a follow-up from Mary Schlangenstein from Bloomberg News.
Mary Schlangenstein: I appreciate the extra question. I wanted to ask, in the order book, the new order book that you laid out today, you’re taking an additional aircraft — over 200 additional aircraft over that time frame. And I wanted to see if you would comment on why you decided to do that now because it hasn’t been that long since you placed an order for MAXes?
Bob Jordan: Yes. Mary, I’ll start and then Tammy can add on. But I think it’s really about a couple of things. Again, we — the delivery — Boeing is a great partner. We’ve all suffered supply chain and other issues. So the delivery challenges have just pushed a lot of aircraft forward, and we just want to make sure we got back through, let’s clean all that up, and let’s get back to where we — the order book reflects orderly and appropriate growth. So, that’s why you see a pretty normal sort of 80, 85, 90 number year to year to year to year. That was number one. Let’s just clean all this up. Number two, the aircraft the new aircraft market is tight. And we want to ensure that we have access to aircraft into the future.
And we’ve done that through 2031. We want to make sure that we locked in very attractive pricing, which we have with Boeing, again, as a great partner, and we’ve accomplished that. And then last, again, sort of — there’s been more variability in — our industry that I think I’ve ever seen. And so because of that, you just need to make sure you’ve got plenty of flexibility, and that’s flex up and that’s flex down. If you look at the level of options and other things, we have plenty of opportunity to move those annual numbers up and down as demand dictates. So it was really — it was as much about sort of taking the uncertainty out of the future, but also walking up access to those aircraft that attracted pricing. Tammy?
Tammy Romo: Yes. You hit it all, Bob. Yes. We’re very thrilled to have wrapped up our discussions with Boeing. It’s everything Bob covered. And certainly, one of our key initiatives, just to add on is our fleet modernization efforts. So again, we believe this order book supports our quarterly growth plan and our fleet modernization initiative provides significant flexibility for us and also gives us a great path to retire our -700 fleet over the coming years. So, we are just thrilled to have a cost-effective order book that meets our needs going forward.
Operator: And ladies and gentlemen, this will conclude our question-and-answer session. I’d like to turn the floor back over to Ms. Rutherford for any closing remarks.
Linda Rutherford: Thank you all for being with us. Members of the media, if you have any follow-up questions, you can obviously reach out to our communications team at 214-792-4847, or on our media website at swamedia.com. Thanks so much for joining us.
Operator: Ladies and gentlemen, the conference has now concluded. We thank you for attending today’s presentation. You may now disconnect your lines.
