Bob Jordan: Thank you.
Operator: We have time for one more question. We’ll take that last question from Dan McKenzie with Seaport Global. Please go ahead.
Dan McKenzie: Hey, thanks for squeezing me in. I guess on efficiency and further improvement to come in 2025, for investors that want — or that would like line of sight on where FTEs per aircraft could ultimately go, what prior year could serve as a good benchmark. I guess that’s first. And then secondly, is that reasonable to assume Southwest could get there fully in 2025.
Bob Jordan: Yes, I’ll answer directly and add Andrew, if you want to chime in. I think we’re not ready to talk about that in maybe as much detail as you want until we get to our Investor Day here later this year. But absolutely, it’s just like the goal of covering our cost of capital this year, and getting back to our historic returns and ROIC well above WACC, restoring efficiency is right alongside in terms of the key goal or a key goal. We ramped up our hiring quickly to be able to restore the network and get all of our aircraft flying. That hiring peaked in October to November, and we have been decelerating that rapidly here in the last 60 days. The plan is to, again, to grow six-or-so percent this year and then to end this year with the same or fewer heads than we began the year, which will obviously help our efficiency quite a bit.
Not ready to discuss 2025, but we would have certainly a directionally similar goal in 2025. We also have a significant number to hate to tease here. We have a significant number of efficiency initiatives that we are planning around both efficiency of the aircraft, efficiency of our people and processes as we think about things like the turn, and we’ll be sharing a lot more about that again in our Investor Day later this year.
Andrew Watterson: I’d say, Bob, one element to that on that is the same kind of cross-functional groups we use to kind of rapidly accelerate our hiring that same team is now responsible for driving up these efficiencies. So that is something that is literally every week kind of needing to get to achieve what you just said about where the headcount split at the end of the year. And I’d also say that while we’re conscious of the FTE per aircraft, we’re actually managing a lever or squib CASM because if you think about aircraft, I could fly that different ways. We could say you’d have two flights a day and my ground obviously needs a different fluids six times a day. And then the block hours for the aircraft would change pilot pay, if it was a longer block hours per aircraft or less further less.
So the ultimate CASM you get out of your aircraft depends on how you’re flying it and how you’re deploying staff against it. So the FTE per aircraft is a useful measure can have, but it’s A, hard to compare across the airlines because of the outsourcing, but B, dependent on how you fit the aircraft it and give some — a little bit of false signal, but you can really look at what we’re going to try to do for the labor CASM and get that to a good order.
Dan McKenzie: Very good. And if I could just squeeze 1 last 1 in here. It’s a question on the shift to the cloud. How much of Southwest has shifted to the cloud at this point? And once you complete that endeavor, what could the savings ultimately look like once that transition is completed? Is it tens of millions, hundreds of millions? And is that an opportunity?
Bob Jordan: I’d tell you what, you’re stretching my technical abilities here, but I believe like a lot of companies, we have a path to shift to the cloud. But again, it’s to shift the appropriate things to the cloud. It’s not as simple as it might sound. I think we have shifted something on the order of just below 50% is what I’ve got in my head, and we have a goal to shift a lot more. Some of that is cost savings, absolutely. And — but I think that is more modest. A lot of what you gain is reliability. And the ability to fail over systems and obviously support operations, support our systems, which is critical here in an airline. You have systems that can’t be down 30 minutes cause you an operational problem. So, a lot of the shift to the cloud is as much a resiliency effort and a modernization of the code base and all that effort as it is a cost savings.
Certainly, you’ll see cost savings. And — but I just don’t — not my guess is it’s more in the tens of millions than it is hundreds of millions
Andrew Watterson: I think, Bob, we — I mean, fraction side it used to be very good progress. But when we talk about it internally, we’re not talking so much of the cost you can take a hosted bigger system, breakup in micro services that are in the cloud and allows you to then get productivity and how you refresh and improve that application over time. So, it’s really the speed to market for these new products and support the products is really what drives the benefit. So, it’s elsewhere in the business, you get the benefit not so much any kind of hosted costs, if you will.
Bob Jordan: The other lease of that, too, and then we’ll — I’ll stop is the — there is a — it’s not a tech cost, but there is a very high cost, both revenue and expense and being down and having an issue. And you saw issues earlier this year or last year, like the NOTAM outage that really hurt the industry. And so to the extent that you can reduce issues, reduce the number of the issues, the length of time of an issue or reduce them completely. My guess is that is more powerful in terms of cost reduction than even the technology reduction because reducing IROPs is very powerful.
Dan McKenzie: Very good. Thanks so much for the time guys.
Bob Jordan: Dan, thank you.
Julia Landrum: Okay. That completes the analyst portion of our call. A quick reminder that the transcript and a replay of the call will be available on our Investor Relations’ website. I appreciate everyone joining, and have a great day.
Operator: Ladies and gentlemen, we will now begin with our media portion of today’s call. I’d like to first introduce Ms. Whitney Eichinger, Chief Communications Officer.
Whitney Eichinger: Thanks, Gary. I’d like to welcome members of the media to our call today. Before we begin taking questions, Gary, could you please give instructions on how everyone should queue up for a question?
Operator: [Operator Instructions] Our first question comes from Alison Sider with The Wall Street Journal.
