Jude Bricker: Yes. I mean as I mentioned in my comments, that spring break of last year was spectacular and probably not repeatable. And so we’ve seen a bit of a settling consistent with comments that you’ve heard other carriers make in the Mexican Caribbean markets. But this year, we’ll produce substantial TRASM premiums to pre-COVID levels as consistent with my comments in the last several quarters. The domestic market is doing really well. I think we’re seeing a rebound in Florida, which is important to us. As we lap the — in challenges that West Florida was facing last year, sort of broadly, I think things are really good, consistent with other folks’ comments. [indiscernible] here with me, anything.
Dave Davis: No. That’s absolutely the case. And the airline is digesting well, 20% capacity growth in March. So it just speaks to how the brand has been built in Minneapolis, we definitely continue to be and worked very hard to be the leading leisure airline in that marketplace that I think our results speak to that point, and we’re going to compete aggressively for that title going forward.
Catherine O’Brien: Great. Thanks for the time.
Operator: Thank you. One moment for our next question, please. Next question comes from the line of Ravi Shanker with Morgan Stanley. Your line is now open.
Unidentified Analyst: Good morning everyone. This is Catherine on for Ravi. Thank you for taking my question. I was just curious about — you kind of mentioned this on your last question, but as the floor of CASM across the industry is expected to potentially push RASM up. I was curious if that helps you guys take price or share in that scenario.
Jude Bricker: Yes. I mean generally, yes, but the things that make us less subject to capacity effects also reduce the impact of sort of unexpected grounding of the GTF fleet, for example. We’re just not — for good and for bad, we’re just not as exposed to the industry machinations. But capacity out of the system is a net positive. I think — but we’d be like the secondary, tertiary effect of like reallocation of capacity to backfill will pull on the margin some capacity of our network maybe from ROAs, but it’s not material.
Unidentified Analyst: Got it. And just as a quick follow-up. So, I know close-in bookings across the industry were really strong in last year and even probably 2021 and then kind of dropped off in 2023. What is that looking like now? And I’m curious if you guys — what normal behavior might look like for close-in bookings at some country?
Jude Bricker: It remains really strong. I mean we — the shape of the booking curve, which is sort of like aggregate bookings made at any given time is very similar to pre-COVID levels, but at a higher fare. So, I think the future looks a lot like the past and passenger behavior, I think things are really positive. Got, anything else?
Dave Davis: No.
Jude Bricker: Good.
Unidentified Analyst: Thank you
Operator: Thank you. And our next question comes from the line of Mike Linenberg with Deutsche Bank. One moment please for your question.
Jude Bricker: Hey Mike.
Mike Linenberg: Can you guys hear me?
Jude Bricker: I got you now. Now we can.
Mike Linenberg: Sorry. Just a follow-up. I actually have two questions here, but one follow-up on Duane’s question where you’ve talked about really being able to take advantage of, call it, the marginal opportunity here. I think in the past, you’ve characterized that being able to now take advantage of the fact that you can have the fixed cost base, you’re able to sort of capitalize on that. I think you’ve characterized it as like a 40% operating margin — incremental operating margin as you better utilize your asset base. You did sort of backtrack and say, well, we’re still going to be off about two hours from where we could have been or where we were back in 2019. Is that that magnitude on, call it, the incremental opportunity here. Does that still come at — is my math right, somewhere in the 40% range or so? Is that how we should think about it?
Dave Davis: Yes. I mean — so what we’re talking about there is not an operating margin, but rather a contribution margin. So, profits in excess of variable cost, revenue in excess of variable costs. And yes, I mean our March VAC, variable contribution, is in excess of 40%. So is it in July. So is it in the back of December. So, as we grow those markets, grow those periods of time in the calendar, we would expect that level of contribution for those incremental flights, absolutely.
Jude Bricker: Yeah, Mike. I think one of the things on the utilization comment 2019, there were some unique things, particularly around military flying was really strong and other things that we were able to pick up. We’re not saying that there’s not two hours of opportunity. We’re just — there’s opportunity. We’re just not maybe going to get back to the nine plus hours that we did in 2019 because there were some unusual things. But there’s plenty of opportunity on the utilization front to drive high variable contribution flying. Yeah. downward pressure on utilization is going to come from the check cycle that Dave mentioned earlier. We have a higher spending ratio than we’ve had in the past. Just — we’re going to make sure we execute real well in operations, and that requires a little bit of conservatism on utilization.
Mike Linenberg: Great. And then just my second question. As we go back to fleet and procurement and the like, and I appreciate your point about that you’re not dealing with the issues that a lot of other carriers are, whether it’s the GTF or the grounding of the MAX 9. But now it does seem like that going forward, one of the large OEMs basically will really only have one airplane that people care about. As you know, there’s not a lot of interest in the MAX 9. It’s going to be all about the MAX 8, and it seems like that, that’s probably going to be the primary airplane of choice over the next couple of years, which will probably put a lot of upward pressure in the used market for 800s and even use 900 ERs or maybe even 700s. What are you seeing in the market?
And it was obviously encouraging to see that you picked up two more 800s from fly to buy, so that plus the five from Oman. So you have seven shelves of growth. Have you identified additional shelves out there that are maybe that you’re working on right now? And then what are you seeing on the pricing for these used airplanes. It would seem like that the bid for those types of airplanes have actually moved up given the constraints of the OEMs. Any color on that would be great? Thanks.
Jude Bricker: So Mike, I think you covered that operating that sort — and every quarter, they say how strong the market it is for residual value. This is one time that they’re right. We’re going to — I mean, so all the challenges that the OEMs are having is kind of trickling into the used aircraft market and availability and pricing are both moving in the favor of owners of aircraft. And we are comfortable then not having to do any deals for a few years and just cash flow and we remain in the market. We’re very active. If an airplane is out there trading hands, we’re at the table, but our — the bid ask for us has really widened over the last several months. And we only originated one aircraft over the last 12 months, and we may continue on in that trend for the foreseeable future, say, two years. The point I was making, though, is that we could grow this airline 40% without any incremental originating aircraft deals.
