Mike Linenberg: That’s great. That’s great color. Thanks. Thanks everyone.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Brandon Oglenski with Barclays. Your line is now open.
Brandon Oglenski: Hey, good morning, guys, and thanks for taking the questions.
Jude Bricker: Hey, Brandon.
Brandon Oglenski: I guess, Dave, can you talk to us looking into April in the second quarter because you guys do have — just based on the model and your peak schedules out of Minneapolis in the first quarter, 2Q can be a little bit softer. So how do you see at least the first half of the year playing out from a profitability perspective?
Jude Bricker: So just a little bit of expectation setting. I mean, Easter is a lot earlier this year than it was last year. And so that will have a negative effect on April on a year-over-year comp basis, which is expected. We had a really spectacular April of last year, as I mentioned, the winter of last year was really special and that won’t repeat itself. But the trends that we’ve seen as we lap the COVID recovery have broadly maintained themselves. I mean we’re looking at 25%, 30% TRASM broadly over 2019, you got to adjust for these calendar shifts. But generally, fares have reset themselves at a stable but a much higher level. 2Q for us, is not nearly as good as 1Q, and that will obviously be the same this year, but we’re certainly really bullish about where we’re booking right now.
Dave Davis: Yeah. And I would also say that you’ve seen a continued ability of us to add capacity where we know we’re going to be profitable throughout the process, and we work really closely with the operating team. So I would say there’s a lot of work going on to understand where we can add some incremental capacity in the second quarter. So, those keeping score with BO and those sorts of things, it’s not all in there yet. And I would echo Jude’s sentiment, we understand what the world’s going to look like in the second quarter, and we have a plan for it.
Jude Bricker: That’s a really good point. I mean, it’s our scheduling philosophy is one where we hold back some capacity and allocate it as bookings matriculate. And I think that’s the right way to run our business. Many airlines schedule above, so that competitors notice and then they kind of cancel down as bookings happen, we have the opposite. So we’ll have this a little bit a couple of percentage points of capacity to allocate as we get in closer, which will help as well.
Brandon Oglenski: I appreciate that, too. And then, Dave, maybe on expectations in the office, I know you mentioned maybe lower premium pay this year, but what else do you have going on, on the cost side that you could speak to?
Dave Davis: Well, I mean, I think cost control across the company has been very solid. On the – so there’s a lot of operating leverage here as we grow, like we talked about a minute ago here, on the aircraft side, we basically got the shelves we need to fly in the 2024 level. So that’s — operating leverage kicks in and we get a CASM benefit from that. We’ve also got a number of IT projects that we’ve been working now that I think are going to contribute to a lower CASM as well. With the exception of this maintenance issue, which is a decision that we’ve made, costs are well in control. I can’t point to any one initiative. I just think across all of the areas of our company right now, costs are well in hand.
Brandon Oglenski: Thank you.
Dave Davis: Thanks Brandon.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Christopher Stathoulopoulos with Susquehanna. Your line is now open.
Christopher Stathoulopoulos: Good morning. Thanks for taking my question. What percent of your charter is currently under contract? And how much is up for renewal this year?
Jude Bricker: We have about 85% of our charter revenue right now is under long-term contract. As these pilots and other staffing issues sort of resolve themselves, we want to drive a little more ad hoc revenue. But right now, like I said, 85%-ish or so is long term. I think we have any significant contracts up.
Dave Davis: No, and we’re working closely with any of that. So we feel really good about the portfolio, and they like what we’re doing and we like to be connected with them.
Christopher Stathoulopoulos: Okay. Okay. And the second question, the sequential decline in block hours and cargo. Is that just reflective of a weak peak or perhaps regional shift in Amazon’s network between carriers. It’s just a little…
Dave Davis: That’s a result entirely of the C-Check cycle and some weather disruptions that we had. It has nothing to do with — I mean — I can’t comment on anything about what Amazon’s plans are.
Christopher Stathoulopoulos: Okay. Okay. Great. Thank you.
Operator: Thank you. One moment for our next question, please. Next question comes from the line of Catherine O’Brien with Goldman Sachs. Your line is now open.
Catherine O’Brien: Hi again. Thanks so much for follow-up. Maybe just one quick one on the share repurchase program. You guys were pretty active the last two years. I think you got like $11 million, $11.5 million left and CapEx is stepping down materially. I guess any comments on, are there any changes to how you’re thinking about capital allocation? Or should we just stay tuned on the shareholder return front? Thanks so much.
Jude Bricker: Yes. First of all, your comment on the free cash flow generation is spot on. I mean CapEx at the company will drop by more than half between ’23 and ’24. If we deliver the kind of results that we think we’re going to deliver, we’re going to generate a lot of free cash and then we’ll have to decide what we’re going to do with that cash. There is more share buyback in that we would definitely look at. We don’t have a lot of debt that’s economical to pay down. We don’t have a lot of debt period. We don’t have a lot of debt that’s economical to really pay down early with sort of one exception. So what I think is, as we go forward here, there will be decisions around do we do share buybacks? Do we pay down this one piece of debt that we can.
We’re going to fully fund and we have been fully funding cost reduction and revenue-generative initiatives, particularly on the IT side, we’ll continue to do that, but that should be reflected in the $100 million I talked about for ’24 CapEx. So, we’re in a good position to have a lot of flexibility on what we — how we deploy our cash in ’24 and ’25.
Catherine O’Brien: That’s great. Thanks so much.
Operator: Thank you. I’m currently showing no further questions at this time. I’d like to turn the call back to Mr. Bricker, Chief Executive Officer, for closing remarks.
Jude Bricker: Well, thanks, everybody, for joining us today. Have a great day, and we’ll talk to you in 90 days. Thanks.
