Operator: Pardon me. This is a conference operator. We seem to have lost connection with the speakers’ location. Please stand by what we try to rejoin. [Technical Difficulty] Pardon me, this is the conference operator. We regained the audio from the speaker location. Please continue
Bob Jordan: Jamie, my apologies there. I don’t know where we left off. But my point is we are focused on Southwest. We’re focused in 24 years on expanding margins covering our cost of capital that sets us up for a lot of momentum to then even make even more progress in 2025. And thinking about capacity for Southwest Airlines, our capacity, our CapEx, as we plan forward, will obviously take into consideration the progress we are making against those financial goals. I just want you to know that. The backdrop of the industry, I think, is going to play out here across 2024, and we’ll just have to see.
Jamie Baker: Okay. Helpful. And then second, you’ve disclosed in the past that you have seriously considered a second fleet type, but decided not to go down that path. I don’t have to tell you that industry animosity towards your sole provider is obviously crescendoing, would it be unreasonable to assume your single — your single fleet conviction might finally begin to wait from here, or is that putting words in your mouth?
Bob Jordan: Yes. Well, let me just back up a second. Obviously, there’s a lot going on with Boeing. I mean, the MAX 8 is a great aircraft. We’re very satisfied with it. And like Boeing, we support the work of the FAA and the oversight to improve quality, address any issues because at the end of the day, better Boeing is good for Southwest Airlines. The — we periodically look at aircraft manufacturers and aircraft types. That’s something we take up routinely here at Southwest Airlines. We’ve done that in the past. And our focus right now is on our own fleet plan, our fleet plan with Boeing. Obviously, working with Boeing to get the MAX 7 certified. But we do take that up periodically. You also have to understand every — I know you know this, but there isn’t — as such, there’s no such thing as being able to derisk all of this.
Even if you have multiple aircraft providers, say we were 50-50, you’d have 400 aircraft to one type and 400 of another type, and so an issue still creates great risk for the company. So the best thing that we can do is work with Boeing to make them an even better company, which is exactly what’s happening. We’ve got great confidence again in the MAX 8, and we’re eager to get to MAX-7, we’re not in charge of that certification date. But no, we have confidence that Boeing will get all this figured out with the FAA will come out a better company.
Jamie Baker: Appreciate the color. Take care everyone.
Bob Jordan: Jamie, thank you.
Operator: The next question is from Catherine O’Brien with Goldman Sachs. Please go ahead.
Catherine O’Brien: Hey, good morning, everyone. Thanks so much for the time. Maybe just a couple of quick ones. On unit revenue going forward, underlying your double-digit top line forecast for the year. Can you just help us think about where we go from the 1Q unit revenue forecast? I’m assuming based on the full year capacity outlook growth is going to slow from the first quarter into the remaining quarters of the year. So, that would be a sequential tailwind. You’ll be lapping some of that easy comp from the book away as we move through the year. How does that impact where you think unit revenue trends quarter-to-quarter. Anything else lumpy we should be considering?
Tammy Romo: Yes. I’ll start off and then Ryan, if you want to jump in with any thoughts you have, really, there — as you pointed out, there’s a bit of noise year-over-year. So, probably the best way to kind of help you think through that is sequentially. As you’re aware, the first quarter is seasonally a tougher quarter just in general for the airline industry. And we will have our network changes materially in place in March. So, — and then following on into the summer, we expect to have that fully completed with our summer schedules. And then just as we continue to go through the year, we would expect our development markets to continue to mature, you’re aware 10% of our system is development market. And by the end of the year, we expect that to be more in line with our historical percentage of about, call it, 5%.
And then on top of that, as Ryan covered, we are — we believe we’ll continue to grow our managed business revenue. We’ve been with our GDS initiative, and we would expect those benefits to steadily improve as we go through the year. So, we would expect — we’ve got a lot of momentum coming into this year. We would expect that to continue and [Technical Difficulty]
Operator: Pardon me. This is a conference operator. We’ve again lost audio from the speaker location. Please standby as we try to regain it. Thank you. This is the conference operator. We’ve regained audio from the speaker’s location. Please continue. Thank you.
Bob Jordan: And everybody, sorry about it. We’re having some form of conference call issue here, my apologies. But I would just pile on just simply, maybe talk — cover what Tammy did, which is you have decelerating capacity across the year. 10% Q1, 8% to 10% in the second quarter, 3% to 5% in the third quarter. And then the back half of the year, really is all just [indiscernible]. Trips are down, seats are down. On top of that, the initiatives and particularly the network related revenue initiatives and the development market related initiatives accelerate because they really started in March, accelerated on the summer. So you have decreasing capacity across the year, and you have an accelerated contribution from the network initiatives across the year. That’s an indirect answer to your question, but that’s how I’m thinking about it.
Ryan Green: Yeah. And I wouldn’t add anything else, other than to say that the revenue initiatives, that component of the plan, those are — there’s very little lumpiness in those as well. Those are pretty evenly spread throughout the year. So it’s really about the decelerating capacity in the back half of the year and the network maturation and optimization efforts coming on.
Catherine O’Brien: Makes a lot of sense. And then maybe just for my second question. Would just like to talk about the unit cost side for this year, and I know very early, but maybe first 2025. Can you talk to us just about like some of the incremental headwinds you’re expecting for 2024 versus what you were thinking back earlier in 2023 when you’re targeting unit costs to be down year-over-year, of course, at least a couple of points that lower capacity. The pilot contract came in higher. It would be great if you could just walk us from that, down year-over-year to up $6 million to $7 million. And then, again, early, but into 2025, if we lap the big step up in wages or back to something more inflationary plus, I’m guessing you’re going to get more efficiency back as you go into year two of the network recovery in your optimization phase, like is that when we get the down year-over-year? Any color there would be great. Thanks so much for the time.
