But no, I think that our product fares very well even in long-haul markets. But yes, on the whole, I think product matters. And I think when you look at the industry together, I think that there’s at least some evidence out there today that demand for fares on the bottom end and lower products on the lower end of the segment, there may not be as much demand for those types of products today as what their once was.
Bob Jordan : And Brandon, this is Bob. The only thing I would add is — and this is no prediction don’t read more into this than is there. You’ve got to meet your customers’ demand and their expectations. So as those change over time, you want to understand that. You want to be — you want to carefully understand that. And we have a history of demonstrating that. So you go back 10 years, we wouldn’t have been talking about Wi-Fi. We would not have been talking about power on the aircraft. And you can go on and on and on. There was a time when we didn’t even have a loyalty program here at Southwest Airlines. So as consumer demands and expectations change and you’ve got different generations of flyers coming into the system as well.
We will constantly look at that, understand what our customers want. And then if that warrants change, we will look at that, and we will make the right decision. Again, we have a history of doing that with our product here and our customer experience. That’s no predictor regarding premium in the cabin. I’m just trying to make sure that you know that we aren’t stubborn in this area that as you see demands change, we’ll understand that and we will react if needed.
Brandon Oglenski: Bob and Ryan, I appreciate that. And then maybe if I can just get a quick follow-up for Tammy. Any ability to tell us where you view your weighted cost of capital today?
Tammy Romo : Yes, sure. It’s sitting probably — it’s the high 8s, close between 8% and 9%. So we view it as about 8.6%, 8.7%.
Brandon Oglenski: Okay. Appreciate that Tammy.
Tammy Romo: But one thing, Brandon, just to add on, over our longer term, it’s been closer to 9%. We certainly take a view, a longer-term view when we’re planning in terms of our returns on invested capital.
Brandon Oglenski: Thank you.
Operator: The next question is from Helane Becker with TD Cowen. Please go ahead.
Helane Becker: Thanks very much, operator. Hi everybody. Thank you for the time. As I look at your numbers for the fourth quarter, your revenues were up at 12.5% or something and your costs were up 10.5% and yet you weren’t able to see significant margin improvement because of the things you already talked about where you have inflationary pressure. But as we look forward to the next one year, how should we think about the seasonality of your business now? Because it seems like you said everything was great for the fourth quarter, and yet you didn’t perform significantly better than you did last year, and I would have thought that last year, given all the issues, you would have performed a lot better. So maybe you can help me bridge beyond just the obvious labor cost inflation and other inflationary pressures, how you get back to those margins you used to report?
And then do you expect — and then my other question is, do you expect any book away from the flight attendant asking for a strike vote.
Bob Jordan: Yes. Maybe Helane, thank you. Maybe I can start and…
Helane Becker: That was a lot of question.
Bob Jordan: Yes, I’ll try to remember everything. I think just generally, I think the biggest impact, sort of tearing everything aside in the fourth quarter is we did choose to restore capacity quickly. So basically, that was a choice to number one, get our aircraft back to normal utilization, fly all our aircraft, our pilots, all that. And so our capacity, our ramp-up was greater than normal, and therefore, we did have — you could see it, we had a drop in load factor. I think that’s the biggest contributor in terms of the performance rate there that’s different than normal. And our ’24 plan, obviously, is to get back to normal in that area as we normalize capacity. So to me, that’s the biggest thing. And I don’t attribute any of that.
I’ll get to your flight attendant question. We don’t — I don’t attribute any of that to book away in the holidays, for example, related to Elliot or something like that. I think it really was the rate of capacity restoration. As we look at our consumer — our customer behaviors, we look at our customer metrics, demand for Southwest Airlines, there’s no indicator or indication that we saw any hangover or book away. In fact, the holiday periods were the strongest periods of the quarter. Your question about the flight attendant, and I’m really proud of our labor folks. We ratified nine agreements in just over a year. We have two to go, one of those with TW 556 are flight attendants. We were at federal mediation. And in federal mediation, you follow the mediator, and the mediator determines your dates and when you meet and we’re eager to get a contract done.
And just like our pilots who are in mediation, I’m confident we can do that. The SAV or the strike vote does not mean you are headed to a strike. There are many, many, many things that have to occur before we get to that point. So, I’m not worried about a strike despite the strike authorization vote. When we saw our pilots, I take an SAV or strike authorization vote. We did not see any very little customer even indicator that the customers were focused on it or aware. So I don’t expect any kind of hangover from that here in terms of customer demand with — because of the flight attendant vote. Ryan, do you want to add anything there?
Ryan Green: No, there’s no evidence in anything that we track from a customer sentiment perspective that would make us concerned about that.
Bob Jordan: That sentiment is fully recovered to at this point. And our NPS scores, our customer satisfaction have recently have been records and certainly back to pre-pandemic levels.
Helane Becker: Okay. That’s really helpful. Thank you.
