Bob Jordan: Thank you, and I’ll start, and then I’m sure Tammy you will pile in. I mean the — we were accrued for our labor contract increases here. We’ve got nine done, two to go it’s really, for the most part, it’s rate increases here in 2024. So if you take the pilots, for example, they’ve got a 4% rate increase. We’ve got some benefit increases. That’s the majority of the $6 million to $7 million. On top of that, you have maintenance pressure that was known. It’s really the 800 engines coming off holiday and that’s a couple of points. Those are going to be things, wage rate pressure, maintenance pressure that most of the industry shares. Now on the efficiency side, as we go across the year, we’ve peaked our hiring, and we will — our target is to end the year in 2024 with fewer heads than we ended the year 2023, which will, of course, naturally make us more efficient for the 7% growth.
It’s too early to talk about 2025. But as you maybe think about a forecast there, yeah, you would naturally decelerate from the unit cost pressure this year. And our goal, we’re not ready to give you a number, of course, for 2025, but our goal will be to dramatically control that headcount growth again in 2025. And we’ll be sharing a lot more about that at our Investor Day later in the year. Tammy, if you want to add anything?
Tammy Romo: Yeah, you really covered it all. But yeah, the story is actually quite simple is labor cost, labor rate cost, obviously, the inflation there is more than we would have anticipated initially. So we’ve — with the pilot contract, behind us. We’ve adjusted our accruals. So most of 2024 is associated with the step — with the step up in scale increases, wage rate increases and enhanced benefits and Bob covered the maintenance, and we’ll share more at Investor Day, but obviously, we’re focused on bringing out those efficiencies as we move through 2024 and to a greater degree in 2025.
Catherine O’Brien: Thanks so much.
Tammy Romo: Thank you.
Operator: The next question is from Duane Pfennigwerth with Evercore ISI. Please go ahead.
Duane Pfennigwerth: Hey, thanks. Appreciate the time. So, maybe just one more shot at this. Can you give us your best guess as to the contributors to the sequential improvement here? How much of that five points would you attribute to these network realignment initiatives? And how much would you attribute to just better underlying demand? It’s been challenging with airlines to really make a read about the macro based on what airlines are doing in any given quarter. Just like in the third quarter of last year, I didn’t think that was a particularly good read on the macro. But if you just look at this revenue outlook here, what is your business telling you about the macro? And are you seeing acceleration and if so, where?
Ryan Green: Yeah, Duane, it’s Ryan. I think the macro environment for demand overall is very strong. I mean the way that we closed the fourth quarter, we saw a close-in performance kind of accelerate in the holiday time period which had us — we came in above our expectations at that point. So I think that, that was a good sign as we got into the year. And as you sit here in the first quarter, the beginning of the first quarter, we’ve got about 60% of bookings on hand. That’s plenty for us to get a good read on how the macro trends are performing. I think demand looks very strong in January and February, which are typically trough periods here. We’re performing just fine. As you look into the stronger periods into March, I think spring break travel and the Easter travel period, that’s looking very well.
And then probably also, as it relates to the overall macro environment, if you just look at managed business trends. I think I mentioned this earlier, fourth quarter was better than third quarter and first quarter is expected to be better than the fourth. We’ve got very strong bookings in place on the managed business side here for February as we begin to get into that part of the curve. So I think the overall macro environment sets up well for us having a really good year.
Duane Pfennigwerth: Just a follow-up there. Any focus cities or parts of the country that are kind of waking back up for you?
Ryan Green: Well, I would say destination-based markets are doing very well. International is doing very well. Hawaii, we beat our expectations in the fourth quarter. Phoenix, Orlando, Vegas, those markets are doing very well for us. I think when you look, California was slower to come back, it’s doing — it’s improving for sure. So it’s definitely pockets across the network. But again, I think overall, things continue to improve.
Duane Pfennigwerth: Okay. Thank you.
Operator: The next question is from Brandon Oglenski with Barclays. Please go ahead.
Brandon Oglenski: Hey, good afternoon, and thanks for taking my question. So can I come back, I think, to the first Q&A here, which was about the premiumization of the industry. Because I think what we did observe through 2023 was some growing yield differential between yourself and maybe some low-cost competitors relative to the network airlines. And I guess I just want to ask the question maybe more bluntly or directly. Does products matter in does it matter as you go further in distance and longer in flight length? And I guess I’d specifically ask about your experience in Hawaii as well. And I guess how do these initiatives that you guys are talking about on the commercial side start to try to address that? Thank you.
Ryan Green : Well, first of all, I would say, absolutely product matters. And I think that certainly from a coach product, Southwest Airlines has the best coach product in the industry. I would just echo what I said on the premium component of this is highly cyclical. And I think that we want — before we would take up that question, you would want to — or we would want to study that very closely as we think about that. Your question on how do we do relative in a long-haul market like Hawaii, as I mentioned, we beat expectations. We beat our own expectations for Hawaii in the fourth quarter. I think our yields continue to improve, and the Mainland to Hawaii component of that franchise. And we’ll continue to develop those yields further.
