Southwest Airways (LUV) This fall 2024 Earnings Name Transcript

Southwest Airways (LUV -1.23%)
This fall 2024 Earnings Name
Jan 30, 2025, 12:30 p.m. ET

Contents:

• Ready Remarks
• Questions and Solutions
• Name Contributors

Ready Remarks:

Operator

Hey, everybody, and welcome to the Southwest Airways fourth quarter 2024 convention name. I am Gary, and I will be moderating at present’s name, which is being recorded. A replay might be obtainable on southwest.com within the Investor Relations part. [Operator instructions] Now, Julia Landrum, vp of investor relations, will start the dialogue.

Please go forward, Julia.

Julia Landrum — Vice President, Investor Relations

Thanks. Hey, everybody, and welcome to Southwest Airways fourth quarter 2024 earnings name. I am joined at present by our president and CEO and vice chairman of the board, Bob Jordan; Chief Working Officer Andrew Watterson; Govt Vice President and Chief Transformation Officer Ryan Inexperienced; and Govt Vice President and CFO Tammy Romo. Bob will begin off by offering a high-level replace on the fourth quarter and full-year 2024 efficiency, in addition to a strategic replace on our Southwest Even Higher plan.

He’ll then flip it over to Andrew to debate our income momentum and our industry-leading operational efficiency. Ryan will present a progress replace on our portfolio of strategic initiatives, highlighting key milestones achieved. Tammy will comply with to stroll by value efficiency and outlook to additionally talk about our fleet technique and canopy steadiness sheet and capital allocation. Bob will wrap this up with a couple of feedback, after which, we’ll transfer to Q&A.

As a reminder, we’ll make forward-looking statements, that are primarily based on present expectations of future efficiency. Our precise outcomes might differ materially from expectations. Additionally, we’ll reference non-GAAP outcomes, which exclude particular gadgets and are known as out and reconciled to GAAP ends in our earnings press launch. Our press launch with fourth quarter 2024 outcomes and a supplemental presentation that features our up to date initiative scorecard have been each issued this morning and can be found on our Investor Relations web site.

And now I am happy to show the decision over to you, Bob.

Bob Jordan — President and Chief Govt Officer

Thanks, Julia. And earlier than we bounce into our outcomes, I wish to take a second upfront to acknowledge the tragic accident close to Reagan DCA airport final evening. Our hearts exit to all these family members who’re among the many passengers and the crew. And we additionally lengthen our sympathies to our pals at American Airways and their subsidiary, PSA Airways, as they course of this occasion themselves.

Lastly, I wish to thank the primary responders who labored tirelessly all through the evening. And whereas we’re all rivals, we’re one airline neighborhood, and we’ll do all the pieces that we will to help our pals in American and at PSA. Now turning to the enterprise. 2024 was a foundational 12 months for us.

We additional invested within the operation. We finalized our open labor contracts, and we laid out a complete plan our Southwest even higher plan. The plan, which is probably the most transformational within the historical past of the corporate, consists of initiatives to spice up our effectivity and decrease prices, together with the power to fly red-eye and to show our plane quicker. It additionally considerably improves our buyer expertise and expands what we provide clients by introducing issues like partnerships and an all-new holidays product, all of which improve the speedy awards within the co-brand ecosystem.

In the end, the plan gives a path to monetary prosperity, which we consider will open thrilling progress alternatives forward. We’re already seeing the advantages of the work we did final 12 months, and the plan is nicely underway. I’m more than happy with the momentum we’re carrying into 2025 because of that effort. Beginning with the operation.

We noticed enhancements in practically each key metric, demonstrating success from our multiyear investments. Actually, we completed the 12 months with an industry-leading completion issue. And simply final week, we have been acknowledged by the Wall Avenue Journal as one of many high two U.S. carriers who’ve “separated themselves from the pack.” We completed with a mere 1-point hole to first place, a niche that we’ll work very arduous to beat in 2025.

We additionally completed the 12 months with sturdy year-over-year unit income enchancment. Unit revenues for the fourth quarter got here in 8% greater than fourth quarter 2023, nicely above the improved expectations we offered in early December. Nominally, fourth quarter RASM was additionally 7% greater sequentially relative to 3rd quarter RASM, and that’s 5 factors forward of the historic third quarter to fourth quarter development. The very arduous work of our groups helped drive this acceleration as they executed tactical enhancements.

Along with enchancment from tactical actions, we skilled advantages from a constructive {industry} backdrop, pushed by continued demand energy and capability moderation. We’re making nice progress with our strategic initiative portfolio, our fleet monetization technique, and our capital allocation plan. The group will stroll by the main points to offer you execution proof factors and share how we’re hitting key milestones. Whereas I see enchancment in our tempo of execution, the deal with driving pace and agility will proceed.

And whereas we’re targeted on execution, we’ll preserve a pulse on developments and be open-minded as we take into account methods to repeatedly enhance the enterprise. Shifting to our value efficiency. We’re experiencing above-normal unit value inflation, most notably in market-driven wage charges, airport prices, and healthcare. We outlined a multiyear $500 million value plan again at investor day to assist mitigate value inflation and grow to be extra environment friendly, and we might be relentless in pursuing value takeout.

Whereas we’ve not but shared the cadence of how the $500 million comes on-line, the main focus might be on reaching that price as shortly as attainable. We’re dedicated to the effectivity work, together with company overhead. The actual fact is company overhead has grown at a quicker price than the remainder of the airline as we staffed up for initiatives. We should be the chief when it comes to effectivity, and you will see us being aggressive as you’re employed to grow to be a leaner and extra agile group.

Our crucial in 2025 is to ship improved monetary outcomes and construct additional momentum to hit the milestones required to ship on our 2026 and 2027 investor day targets. And we’re dedicated to transparency and routine updates. We debuted a scorecard final quarter, and we up to date it once more this morning detailing our progress and it is obtainable on our Investor Relations web site. For the core enterprise initiatives, we proceed to ship — to count on to ship or exceed the $1 billion 2025 EBIT contribution goal, which excludes any profit from fleet transactions.

Now transferring to the fleet. There’s lots occurring at Boeing. I used to be simply there final week visiting with the management group and strolling the manufacturing facility ground. They’ve clearly been arduous at work, and I used to be happy with the progress that I noticed.

Everybody was engaged and targeted. And whereas they nonetheless have a lot work to do, they look like on path and we’re feeling extra optimistic. Regardless, we expect it is prudent to hedge our bets. We are actually planning with a conservative 38 supply assumption for 2025 to derisk the operation.

We conservatively adjusted our plans again in March of 2024 and we have not needed to republish the schedule since. So we’re doing the identical factor this 12 months. That is very totally different from our contractual quantity, which for 2025 is now 136. We aren’t going to get 136 plane, however we consider Boeing is on tempo to exceed 38 this 12 months, and over the subsequent couple of years that there might be a possibility to do loads of transactions as Boeing ramps up their manufacturing.

Tammy goes to enter much more element, however my level is that the chance is massive. And regardless of the query of fleet timing, we nonetheless intention to ship the $1.5 billion of focused whole 2025 incremental EBIT from our investor day initiative portfolio. We’re seeing our tactical actions yield advantages quicker than deliberate and count on to hit all key milestones for our strategic initiatives. As I wrap up, we’re in an ideal place to capitalize on our momentum and proceed making progress towards our objectives.

We’ve a complete plan, an in depth set of initiatives, and constructive {industry} backdrop, and we’re executing with urgency and objective. We won’t let up for even a second as we transfer ahead and ship the Southwest even higher plan. I wish to thank our staff for his or her dedication and dedication. And for the superb operation, they have been operating regardless of a approach of winter climate.

It is simply actually distinctive. And I’ll now flip it over to Andrew to cowl the operations and tactical initiative efficiency in additional element. Andrew?

Andrew Watterson — Chief Working Officer

Thanks, Bob. I wish to begin by thanking our frontline staff for all their arduous work and for serving to Southwest have an impressive 12 months operationally. As Bob talked about, final week, we have been acknowledged within the Wall Avenue Journal’s 2024 annual airline rankings, transferring as much as a really shut second place this 12 months, taking into account seven key metrics. Among the many 9 main U.S.

airways, we have been the chief and completion issue with lower than 1% of flights canceled in the course of the 12 months. We additionally had the bottom price of Tarmac delays and the fewest DOT buyer submissions. And we did not are available beneath fourth in any class, which is a testomony to each our folks and investments within the operation. Turning to our income efficiency.

We’re happy with how we completed 2024. Our fourth quarter RASM was up 8% 12 months over 12 months, which exceeded our prior steering vary of up 5.5% to 7%. Actually, we noticed a pleasant development in year-over-year RASM progress as we closed out 2024 as we realized tailwinds, each from our inner initiatives and capability changes, in addition to the advantages of a wholesome {industry} backdrop. Whereas there was noteworthy strain from provide demand imbalance within the first half of 2024, we noticed a pivot to capability moderation throughout the {industry} with continued wholesome demand within the latter a part of the 12 months.

And as you recognize, we took deliberate steps to recalibrate and higher optimize our income administration techniques and processes. The advantage of that work is materializing quicker than anticipated. As we shared at investor day, the income administration initiative is complete and is supported by a spread of capabilities and development actions. For instance, we reorganized the income administration group to handle demand for buyer itineraries reasonably than managing demand for particular person flights.

This variation aligns our groups extra carefully to our system. On the instrument facet, we invested in bettering our skill to foretell demand patterns, each by reserving window and by flight. We have additionally launched new proprietary dashboard to assist our group to higher optimize the income efficiency of our highest-demand seats. We’re seeing yield advantages from our arm development efforts throughout the board.

These flights with better than 90% load issue are seeing the strongest shut efficiency because of higher administration of the reserving curve. And our flights with lower than 90% load issue are additionally seeing sequential enhancements as we higher optimize fares additional out within the reserving curve. As we glance into 2025, we’ll preserve the identical depth and deal with delivering worth from our tactical initiatives whereas additionally remaining dedicated to carefully managing capability. We have made a number of progress bettering yield within the fourth quarter, and our focus now could be on sustaining yield efficiency as we work to shut the load issue hole.

We count on present demand energy to proceed in 2025, and our first quarter RASM is projected to be up within the vary of 5% to 7% 12 months over 12 months. Because the 12 months progresses, we count on constructive year-over-year RASM progress, pushed by tactical initiatives. Within the second quarter, we count on to see advantages from the subsequent part of our community realignment. This consists of reductions to Atlanta and Oakland or beforehand mentioned, with that capability being redeployed to level of energy like Nashville and Sacramento.

We additionally count on to see document contributions from partnerships, getaways, and loyalty initiatives, most notably within the fourth quarter. So whereas we’re happy with our progress, we’re removed from glad. We’ve a plan and might be pressing and deliberate in our execution. As I shut, I wish to thank our folks for operating an ideal operation and delivering unparalleled Southwest hospitality.

And with that, I’ll flip it over to Ryan to go over the progress of our strategic initiatives.

Ryan Inexperienced — Govt Vice President, Chief Business Officer

Thanks, Andrew. As Bob talked about, I’ll offer you updates on our strategic initiatives as we proceed to execute towards our Southwest even higher plan. Earlier this month, we signed our first industrial settlement with Iceland Air, making them our first accomplice service. And beginning February 13, we’ll start connecting clients and baggage crossing the Atlantic on Iceland Air into the Southwest community at our Baltimore station.

This is a vital milestone in our plan to broaden how and the place our clients can journey. We’ll proceed to evolve this partnership and plan to additionally join Iceland Air into our community in Denver and Nashville later this 12 months, which gives much more connection alternatives by shared gateways. Additionally, earlier this month, we obtained our IOS certification for efficiently finishing the IATA Operational Security audit. This serves because the {industry} benchmark in security auditing, and we’re happy with this achievement that reaffirms our dedication to the best security requirements.

It is also an vital milestone in our transformation journey because it units the stage for future progress by extra airline partnerships. We proceed to pursue partnership agreements with different world carriers and nonetheless plan to announce not less than one extra accomplice service later this 12 months. Our Getaways by Southwest product can be anticipated to launch later this 12 months, and we’re excited to announce at present that we’ll add MGM Resorts Worldwide to our listing of companions in Las Vegas. This represents a big milestone from one among our targeted markets for getaways by Southwest.

And together with our present companions there, it will give us entry to a considerable portion of the lodge stock in Las Vegas with extra companions to return. We proceed to make progress and transfer ahead on our assigned and premium seating product and proceed to count on to fulfill the monetary targets and timelines we communicated at investor day to start promoting seat assignments within the second half of this 12 months and function flights was signed in premium seating within the first half of subsequent 12 months. As we finalize our cabin structure and work towards FAA certification, we plan to start retrofitting plane midyear, beginning with our bigger -800 plane with the smaller 700s to comply with later within the 12 months. By starting retrofits midyear, it permits us to fulfill our deliberate function date.

It minimizes the period of time we’ve a combined fleet, and it retains the 700 plane flying with their present seat depend for extra of this 12 months. We consider our tech ops services, staff and distributors are nicely geared up to replace our complete fleet inside our timeline. Know-how improvement can be going nicely. Our know-how staff and distributors are arduous at work, coding the required technological modifications, and can quickly start a rigorous testing part earlier than we start promoting assigned seats.

One other key milestone reached simply this month is our amended co-brand settlement with Chase. As we have mentioned earlier than, we wanted to replace our settlement to offer our card members with new advantages associated to our assigned and premium seating merchandise. We’ll have extra data to share on the main points of these advantages quickly, however we’re excited to get these new card merchandise into the market as we’re assured clients will worth these advantages, and they’re going to drive co-brand card acquisitions sooner or later. This settlement helps the multiyear monetary targets we introduced at investor day.

Inside the operation, we proceed to deal with effectivity and modernization by lowering the time it takes to show an plane and growing our plane productiveness. We have made significant progress towards our purpose of eradicating paper-based processes from the day-to-day operation and have digitized crew paperwork. Our November 2024 schedule was the primary that applied a five-minute discount in flip instances in 12 of our stations. And I am comfortable to report that it is working as deliberate with no operational impression.

Later this quarter, we plan to introduce a digital communication instrument that may permit pilots, flight attendants, and operations brokers to speak stay with one another whereas they’re working the flip — whereas they’re working to show the plane between flights additional enhancing our effectivity. We proceed to count on our flip time initiative to create the equal of roughly 16 free plane by the tip of November this 12 months. Whereas we’re already a pacesetter in flip time, we’re assured it will additional our aggressive benefit within the day-to-day operation. Along with lowering flip time, we can even launch red-eye flying in 5 key markets subsequent month with the primary flights arriving on Valentine’s Day.

It will ramp as much as a complete of 33 red-eye markets within the June 2025-based schedule, together with Hawaii routes. And we’re happy with how red-eye flights are reserving up to now with practically 75% of passengers on a connecting itinerary both earlier than or after the red-eye flight. Redeye flights capitalize on peak seasonality and maximize community connectivity whereas producing incremental load issue. And do not forget that our Flip and red-eye initiatives support our modest capability progress plans for this 12 months of up 1% to 2% 12 months over 12 months.

And eventually, I’m happy to share that our service modernization efforts to drive operational efficiencies and improved expertise for workers and clients are additionally paying off. Because of the digital capabilities we offered our clients to allow them to self-serve, we have seen name volumes lower even additional than what was assumed in our plans. These digital enhancements have enabled a major improve in effectivity inside our name heart. As you possibly can see, we’re working arduous and making continued progress on our transformational plan.

We’re dedicated to continued execution and delivering on our Southwest even higher plan. And I wish to thank the arduous work of our unbelievable people who find themselves making this occur. And with that, I am going to flip it over to Tammy.

Tammy Romo — Govt Vice President, Chief Monetary Officer

Thanks, Ryan, and good day, everybody. I’m happy by the extent of execution Ryan simply lined and the conclusion of early advantages from our Southwest. Even Higher plan. As we laid out, our plan gives a highway map to rework Southwest and importantly, to revive our monetary prosperity and drive sustainable shareholder worth.

Whereas we’ve extra our work forward, to hit our multiyear monetary targets, our fourth quarter efficiency exceeded expectations, and we ended the 12 months with improved year-over-year margins within the fourth quarter. A lot of this enchancment has already been lined, so I am going to decide up with coloration on our value efficiency, and we’ll shut with a couple of feedback on the steadiness sheet and an replace on capital allocation, together with extra insights on our fleet monetization technique. Our fourth quarter 2024 CASM-X elevated 11.1% 12 months over 12 months and full-year 2024 CASM-X elevated 7.8% 12 months over 12 months, each inclusive of a $92 million acquire from a sale-leaseback transaction in fourth quarter 2024. The year-over-year improve was primarily the results of elevated working bills related to inflationary pressures, together with contractual market-driven wage price will increase.

And fourth quarter particularly, the decline in capability progress resulted in extra unit value strain. We’re urgently working towards implementing the $500 million value initiative introduced at investor day in September with an intense deal with exceeding that quantity and accelerating as a lot of the profit into this 12 months as attainable. Our efforts are targeted on mitigating value inflation by minimizing hiring, optimizing scheduling effectivity, capitalizing on provide chain alternatives, and aggressively bettering company overhead. Trying ahead, we presently count on this quarter’s CASM-X to extend within the vary of seven% to 9% 12 months over 12 months, pushed primarily by the continuation of common inflationary pressures from wage and work rule headwinds from labor contracts ratified final 12 months and in addition from continued capability moderation efforts.

As 2025 progresses, our year-over-year unit value inflation is anticipated to ease as we lap labor contract anniversaries, deploy initiative-driven capability progress, and aggressively pursue advantages from our value initiatives. Our cabin retrofit efforts related to our premium seating initiatives are anticipated to lead to roughly $150 million in incremental prices, primarily within the second half of the 12 months. However these might be one time and won’t carry ahead into 2026. Taking all these variables into consideration, excluding potential features from any future sale fleet gross sales, sale-leaseback transactions, we count on to exit 2025 with fourth quarter year-over-year CASM-X progress within the low single digits.

Shifting to fleet. As we highlighted in third quarter earnings, we noticed the prudent planning of our conservative fleet supply expectations repay. As a reminder, we entered 2024 anticipating to obtain 79 Boeing plane deliveries. In March, Boeing knowledgeable us, we’d obtain 46.

After going by an in depth course of, we conservatively adjusted our plan to twenty deliveries to cut back the danger of additional operational impression. We closed out 2024 with a complete of twenty-two deliveries primarily according to our inner estimation. Now when it comes to how we’re enthusiastic about managing our fleet this 12 months, we’ve a modest capability plan of 1% to 2% year-over-year progress, and that progress is totally funded by our effectivity initiatives. This units us as much as scale back our whole plane depend by year-end.

Nonetheless, we nonetheless need as many deliveries as attainable to modernize our fleet and attain our purpose of an all -700, -800 fleet in 2031. To that finish, we’re planning to retire 51 plane this 12 months. And as well as, we’re considering the sale of an extra 10 -800NGs. To help this, we’d like 38 deliveries from Boeing.

Nonetheless, as Bob shared, all incremental deliveries past 38 provide a possibility to speed up the execution of our fleet monetization technique. I’ll remind you that we view our fleet monetization technique as incremental to the bottom enterprise enchancment. The technique is extremely idiosyncratic alternative to monetize our fleet by our portfolio of gross sales and sale leasebacks to fund fleet modernization and help shareholder return. The fleet alternative is uniquely obtainable to Southwest because of the next elements: one, the present {industry} plane provide constraints, that are pushed by OEM challenges creating sturdy demand within the secondary market; two, the embedded worth in our -8 from Boeing compensation and favorable pricing, which creates a significant worth hole relative to the sturdy secondary market; and three, entry to plane offered by our contractual order ebook, which is past the wants of our modest capability plan.

As a reminder, the 1% to 2% progress over the subsequent three years doesn’t require extra plane as it’s funded by effectivity initiatives. Now, in fact, the -800 and -8 plane play totally different roles in our fleet technique initiative. I am going to begin with the -800. These are mid-life plane that presently have extremely favorable market valuation.

The present market setup and our order ebook economics mixed to create a possibility to interchange these midlife -800s with new -8. This creates worth for Southwest as we plan to understand the decrease upkeep and gasoline prices, improve buyer expertise, and higher reliability related to -8 plane, all with decreased capital spending. With the -8 plane, the chance to understand worth comes from the power to promote extra plane in our order ebook and pull ahead the numerous embedded worth that comes from favorable pricing and the present market worth. Nonetheless, to have the ability to totally execute the technique, we should obtain ample deliveries from Boeing.

Whereas we’re feeling excellent about the place Boeing is headed, we’ll wish to acquire confidence of their manufacturing capabilities earlier than we transfer ahead with gross sales. So you possibly can perceive that our sturdy choice is to execute gross sales, the -800 gross sales facilitate capital-efficient fleet modernization, and for the chance is to reap the numerous embedded worth. We’ll, nevertheless, be opportunistic with sale-leasebacks and pursue them as a mechanism for an orderly exit of the -800s from our fleet. Now that we’ve accomplished our first transaction, you may have a greater thought of the economics of the -800 sale leaseback.

A lock within the certainty of at present’s sturdy secondary pricing, whereas concurrently bridging our operations till we’re assured that we’ll obtain our contractual substitute -7s and -8 from Boeing. Basically, these sale leasebacks are functioning as ahead gross sales. And once more, we’ll pursue them opportunistically solely the place it makes monetary sense whereas additionally making an allowance for general fleet modernization objectives, financing wants, and capital allocation issues. Shifting to capex.

Full 12 months 2024 gross capital expenditures have been $2.1 billion, according to earlier steering, together with proceeds of $871 million from the sale leaseback transaction in fourth quarter 2024, full-year 2024 web capital expenditures have been $1.2 billion. We presently count on 2025 gross capital spending to be within the vary of $2.5 billion to $3 billion. This consists of roughly $1.2 billion in plane capital spending and $1.6 billion in non-aircraft capital spending. And once more, there is a chance to decrease web capital spending from our fleet monetization technique.

As we glance to the longer term, we stay dedicated to sustaining a robust steadiness sheet and are proud to have an investment-grade ranking by all three ranking businesses. We additionally stay dedicated to offering important returns to our shareholders by dividends and share repurchases. In 2024, we returned $680 million, consisting of $430 million in dividends and $250 million of share repurchases to our shareholders. The $250 million ASR was the primary repurchase program of the $2.5 billion share repurchase authorization introduced at our September investor day.

The corporate continues to plan for the launch of an extra $750 million ASR program later this quarter. Assuming efficiency developments proceed as anticipated, we plan to finish repurchases of the remaining $1.5 billion obtainable below our share repurchase authorization in 2025. Earlier than I hand it again to Bob, I wish to ship out LUV like to my Southwest household and to all of you within the funding neighborhood on your help in comradery over the previous 33-plus years. With that, I’ll flip it again to Bob.

Bob Jordan — President and Chief Govt Officer

Thanks, Tammy. As we wrap up, I wish to emphasize a couple of factors. First, the group is extremely targeted on assembly and exceeding our focused efficiency enchancment trajectory. Second, our core enterprise initiatives are performing forward of expectations outlined solely 4 months in the past, and we count on to ship or exceed the $1 billion 2025 EBIT contribution goal.

This excludes the profit from any fleet transactions. Nonetheless, our purpose stays to ship $1.5 billion of focused whole 2025 incremental EBIT. Third, we’re taking a tough have a look at our value construction. Our value efficiency together with within the first quarter shouldn’t be the place we would like it to be.

We’re taking quick actions to speed up as a lot of the $500 million of focused value financial savings into 2025 as attainable and we’ll report on our progress as we go. Lastly, we’ve super confidence within the plan and are enthusiastic about the way forward for Southwest. We plan to repurchase $2.25 billion of inventory this 12 months or roughly 12% and of our market cap at present costs. We count on this to be very accretive for our traders as we work to ship our Southwest even higher plan, together with our North Star Gold, to realize after-tax ROIC of not less than 50% in 2027.

The tempo of these share repurchases don’t rely upon the progress of our fleet monetization technique. Now earlier than I flip it to Q&A, I wish to say a couple of phrases about Tammy. As you all know, Tammy might be retiring as our CFO on the finish of this quarter after 33 years with the corporate. She has served in lots of roles and has the excellence of serving as our first head of investor relations.

She’s been our chief monetary officer since 2012. Over time, she’s led us by instances of nice prosperity that offered for profitable shareholder returns. She’s an revolutionary chief, who’s instrumental within the success of numerous endeavors. She leaves Southwest with a fortress steadiness sheet, investment-grade rated by all three credit score businesses and Tammy is a humble beneficiant, and inspirational chief.

She’s a tireless mentor and as such, leaves a robust legacy and you will not discover a nicer, kinder, and more durable particular person wherever. So I would wish to thank Tammy for her deep dedication to our staff, the funding neighborhood and our shareholders. And Tammy, congrats on all you may have completed thanks on your management and extra importantly, your friendship. You can be missed.

And on that word, I’ll move it again to Julia to begin our Q&A.

Julia Landrum — Vice President, Investor Relations

Thanks, Bob, and congratulations Tammy. We LUV you, too. This completes our ready remarks. We’ll now open the road for analyst questions.

[Operator instructions] We’ll now take the primary query.

Questions & Solutions:

Operator

Thanks, Julia. [Operator instructions] The primary query comes from Savi Syth with Raymond James. Please go forward.

Savi Syth — Analyst

Hey, good morning. And if I’ll, Tammy, congratulations on the pending retirement. And one among your rivals as soon as informed me or counterpart, one among your competitor companies as soon as informed me that Southwest steadiness sheet as being one thing on one other planet when it comes to relative place. And I do know that does not occur by chance.

So congrats. If I’d, for my first query and possibly to Tammy, unit value right here within the first quarter is moderating by about 3 factors or possibly nearer to five, in case you take into account that you do not have the sale-leaseback acquire within the quarter. And in your opening remarks, you talked about like a 1.5-point headwind within the second half from the cabin retrofits. So given all of the transferring elements, I hoped you could possibly speak a bit bit in regards to the cadence of unit value progress for the remainder of the 12 months.

And simply to make clear that low single-digit exit price, what kind of capability progress that exit price is on?

Tammy Romo — Govt Vice President, Chief Monetary Officer

Sure. No, thanks. Initially, thanks on your form phrases, Savi, and it is actually been a pleasure, and you might be fantastic. So thanks.

I — simply to provide you a bit little bit of coloration on simply the bridge for the 5 to 7 factors from our midpoint of our steering within the first quarter to the low single-digit exit price within the fourth quarter. It is actually coming from a few totally different buckets. We’ve, name it, 3 to 4 factors from Flip and red-eye initiatives. So a giant chunk of that’s coming from simply capability from the capability.

So hopefully, that helps reply your query there. It is in all probability 3 factors if I needed to peg that. And one other level simply from absorbing the overstaffing that we have mentioned. In earlier calls.

After which there’s one other 2 to three factors that’s cut up pretty evenly between the lapping impacts from labor contracts that have been ratified final 12 months and the simply general advantages from the associated fee plan initiative kicking in. In order Bob and I each talked about in our remarks, we’re very targeted on our cost-reduction efforts, and people will, in fact, ramp up as we undergo the 12 months. So we’re feeling good as we sit right here at present in regards to the exit price. And whereas a few of that’s coming from capability, it is also coming from simply an unbelievable quantity of labor from the group.

Savi Syth — Analyst

That is useful, Tammy. And possibly simply following up on that. So from a timing perspective, these type of experience initiatives, I am guessing they type of kicked in, in there within the second and third quarter. is it type of pretty constant than the remainder of the quarters as a result of it is the second half, you do have that type of step up in cabin retrofit.

Tammy Romo — Govt Vice President, Chief Monetary Officer

Sure. So it ramps up with the most important impression hitting within the fourth quarter.

Savi Syth — Analyst

Understood. Thanks.

Operator

The following query is from Duane Pfennigwerth with Evercore ISI. Please go forward.

Duane Pfennigwerth — Analyst

Hey, thanks. Tammy, congrats. Good luck with the subsequent part of your profession. I do know you are going to miss all this enjoyable.

Tammy Romo — Govt Vice President, Chief Monetary Officer

I’ll miss you, Duane.

Duane Pfennigwerth — Analyst

So look, I needed to ask you possibly a longer-term query. There’s a number of symmetry proper now between the {industry} backdrop and the renaissance that kicked off in 2012. And Southwest was actually a giant a part of that renaissance. And as we return and have a look at that interval, you actually had a multiyear interval of margin enlargement, RASM progress over CASM progress, not 1 / 4 or two or timing shifts right here and there, however a multiyear interval of margin enlargement.

Now a few of that was macro progress and benign gasoline costs, however actually CASM progress for Southwest was modest even though capability progress was additionally modest and pretty tight over a multiyear interval. So my query is, sorry for the long-winded lead-in, from a unit value perspective, do you see the potential to enter the same multiyear interval the place you get modest unit value progress on modest capability progress or does higher CASM actually depend on getting again to a interval of upper progress?

Bob Jordan — President and Chief Govt Officer

Sure, Duane. It is Bob. I am going to take a shot after which Tammy can chime in. I feel the — we’re not able to information ’26, ’27 CASM-X, however the exit price for ’25, not less than provide you with some indication of what we’re striving for, possibly a attain, however we’re striving for over the course of the remainder of the plan, ’26, ’27.

So not unreasonable that we will have CASM in that low single-digit vary. And Clearly, we’ve labor price surety with the contracts closed down. We actually haven’t any openers of magnitude to ’27. So sure, I feel that is completely — it’s completely doable.

Duane Pfennigwerth — Analyst

After which possibly only for my follow-up, the certification course of on your new seating configuration. Are you able to give us an replace there? What have you ever realized since final quarter or since investor day? And when does this actually begin in earnest?

Bob Jordan — President and Chief Govt Officer

Sure. Hey, Duane. We finalized actually our cabin layouts, which permits us to complete up weight and steadiness certification with the FAA and get our STC certification. We’ll get to attend and steadiness certification.

We’re planning for that. In fact, it is depending on FAA timelines, however we’re fairly assured we’ll get that right here within the first quarter after which the certification within the second, after which that may — we will start retrofits following at that time. That goes together with Tammy’s word on the retrofit value being within the second half of the 12 months. We’ll get the retrofit began right here midyear, after which that may ramp by the rest of the 12 months.

And we’re assured that we have got the distributors in place, our staff are in place to get the fleet retrofit earlier than we get to our working date.

Duane Pfennigwerth — Analyst

Thanks.

Operator

The following query is from Mike Linenberg with Deutsche Financial institution. Please go forward.

Michael Linenberg — Analyst

Sure. Hey, good morning, everybody, and I echo the feedback of what everyone has stated about Tammy. Tammy, it has been a number of enjoyable. And I feel I have been there for almost all of these 33 years.

So run. Anyway, simply on questions, and actually, I do have one for you, Tammy. Once I take into consideration sale-leaseback transaction that you simply guys took within the fourth quarter, and in order that was 35 airplanes, name it, $90 million. I do know that previously, you had indicated that we might see a margin increase upwards of, name it, possibly 2 factors from this technique.

And so once I take into consideration your income base for 2025, 2026, and I type of have a look at this transaction, and I understand not each transaction goes to be type of sized this manner. But it surely does seem to be that we might be taking a look at possibly upwards of 100 airplanes on a sale-leaseback foundation. I imply, is that quantity too excessive? How ought to I give it some thought? And what kind of as a follow-up, what are you type of focusing on for 2025 with respect to sale leasebacks? And I do know that there was an RFP for 30 outright divestitures. The place does that sit? So type of a multi-pronged airplane query.

Tammy Romo — Govt Vice President, Chief Monetary Officer

Sure. No, thanks, Mike, and I feel you are a number of enjoyable, too. So on the — in your query, I feel the overarching theme right here is we’ve a number of levers we will pull to hit our focused EBIT contribution from our fleet technique. So — and the sale leasebacks are going to be depending on our 800 exit technique right here.

In order that’s simply actually a method to assist us handle that. And clearly, to the extent the proceeds, the proceeds will go to our fleet modernization efforts, clearly, in the end with the substitute of the MAX 8 as a result of we get EBIT advantages from that as nicely. So — however the bulk — and once more, we will — simply to be clear, these — it’ll rely upon the economics of these transactions and with the purpose, clearly, to be NPV constructive. So the majority of the profit actually comes from gross sales of the surplus plane that we don’t have to hit our moderated capability plan.

In order that, in fact, depends on Boeing deliveries and simply market circumstances. However the principle constraint there may be Boeing deliveries and Bob reported on Boeing in his remarks. So they’re ramping up. And we did, I feel, have a fairly conservative estimate of what our deliveries are for this 12 months at 38.

So see the place Boeing finally ends up. So that is what makes your query a bit bit difficult when it comes to timing, however we might have doubtlessly as much as 50 to 55 deliveries. And once more, these would go towards our fleet modernization efforts. So I feel the — the takeaway right here is that we’ve a number of levers.

We’ll handle this very fastidiously. And once more, the purpose with the -800 is we’re exiting we’re exiting the NGs and the sale leaseback is simply an efficient instrument to assist us handle that, however the bulk of this system would come from gross sales

Bob Jordan — President and Chief Govt Officer

Sure. I used to be simply going to say, simply sale leaseback is only a pull-forward sale, proper? So our sturdy choice is gross sales, 800s to interchange, and decrease working prices. and NASH to maximise the embedded worth towards the market that is within the fleet order ebook. And I might simply to say it once more, and it is — so the extra Boeing can ship, the extra we will execute the technique in 2025 I used to be at Seattle final week and actually inspired by what I noticed on the road, the processes, the procedures, slack time popping out, type of all of the stuff you wish to see.

They’ve a protracted methods to go. However pending one thing that we do not learn about, I am optimistic — strongly optimistic they’ll exceed the 38, and we in all probability have upside to 50, 55. In order that would definitely assist in executing the fleet technique on the gross sales facet. So lots to be seen right here.

I feel we’ll know lots as soon as we all know whether or not Boeing breaks price 38 in March, early April. I count on that they’ll. We’ll should see — after which I feel that places us in a great place to actually replace you on what we now count on when it comes to deliveries and what we now assume we will execute when it comes to the fleet monetization plan.

Tammy Romo — Govt Vice President, Chief Monetary Officer

Sure. And Mike, I simply needed to make another. I simply wish to be actually clear on this. We’re working to get to our 2027 goal, which is with out fleet.

On the finish of the day, we — our core base enterprise, the place we’re aiming to get to our 15% return on invested capital of not less than 15% and op margins of excluding particular gadgets of better than 10%. In order that’s actually — we’re speaking lots about fleet, however I simply don’t desire that to get misplaced within the dialog.

Michael Linenberg — Analyst

Nice, nice. Thanks, everybody.

Operator

The following query is from Catherine O’Brien with Goldman Sachs. Please go forward.

Catie OBrien — Goldman Sachs — Analyst

Hey. Good afternoon, everybody. And possibly I have not been right here for the entire 33 years like Mike has. However Tammy, it is actually been a pleasure to work with you.

So congratulations on the profession on fairly a profession and comfortable retirement. So I’ve one fast income one after which one fast fleet one for you, Tammy, however possibly I am going to begin on income. The 4Q RASM end result you talked about that the beat was pushed, partly, by stronger vacation peak after which additionally the ramp of income administration. Are you able to simply assist us take into consideration broad strokes, how a lot every of these buckets contributed? And the way will we take into consideration the pacing of that $1 billion in tactical revenue-driven initiatives in 2025? How a lot of your 1Q information does that drive versus common {industry} atmosphere? And the way does that construct for the 12 months?

Andrew Watterson — Chief Working Officer

It is at all times arduous to utterly tear aside precisely the — I might say that in case you bought to have a look at type of sequentially how our RASM went from Q3 to This fall, and the way that compares to our norms, how the opposite airways — how they sequentially progress and the way it compares to their norms, you see a stage of outperformance with Southwest Airways. — do the identical factor in This fall to Q1, you see that very same quantity. You see the identical impact, if you’ll, of an outperformance on a sequential foundation. This provides you an concept that it is some — there’s some company-specific issues which can be taking place there.

and that provides us confidence in hopefully our traders confidence that we’re seeing that type of RASM reversion that we’d like again to our historic ranges to hit our plan. Now inside that, type of tearing them aside every of those by design components of our tactical initiatives are self-reinforcing. The community modifications the income administration modifications, the advertising and marketing modifications, all these work collectively. So actually, the order of operations of quantifying it, no matter you go together with first, it will get an even bigger profit, so to talk.

Now income administration did have a stronger impression in This fall and into Q1 than the opposite two. In order that’s why we known as it out in our ready remarks, however they’re all type of contributing. So I feel for that idiosyncratic southwest half is these three mixed, and we see that progressing all year long. I’ll say those that we highlighted in investor day the place they type of are getting again to our regular type of yield low cost, if you’ll, versus our rivals.

— and getting again our load issue to norm. So the two type of massive levers we highlighted that might be alerts of us progressing that we did — we had extra progress than, frankly, I anticipated on the yield facet after which a bit most parks on load issue. In order we go all year long, I count on to maintain and develop that yield profit after which load issue can be the one which comes second all year long. So I feel in case you look carefully at these every quarter, you will get an thought of how we’re progressing the tactical initiatives.

Catie OBrien — Goldman Sachs — Analyst

That is nice. Thanks. After which I assume one final query for Tammy. On the fleet technique, you have known as out you count on that to contribute about $500 million in EBIT on common per 12 months.

I perceive that is very fluid. Tammy, in your reply to Mike, I feel you made it clear that the majority of that may come from straight gross sales, not sale-leasebacks. Ought to we consider sale leasebacks as offsetting that constructive sale impression? Simply with the primary leaseback the elevated hire over three years offset the acquire on the lower in D&A? Or will we have to be including like different gadgets like decrease upkeep dispatch reliability? I assume what I am actually getting at is, do you count on the online of acquire plane entrance and DNA for these sale leasebacks to even be constructive? Or how will we take into consideration that?

Tammy Romo — Govt Vice President, Chief Monetary Officer

Sure. No, nice query, Catie. Sure. After we have a look at our sale-leaseback alternatives, we — our purpose and our intention is to do all of this and NPV be constructive approach.

So whereas sure, you are recognizing a acquire once you promote the plane, and there may be elevated rents that might exceed the depreciation expense. Once more, these are short-term sale leasebacks, once more, to assist handle the exit of in fleet. However after we have a look at that in whole, it will — it is NPV constructive, and that is the way in which we’re establishing our fleet technique right here. So however we’re making an allowance for the entire issues that you simply simply talked about.

— upkeep, and so forth. And we have got, once more, a number of levers we will pull to do that in an NPV constructive approach. And hopefully, that helps.

Catie OBrien — Goldman Sachs — Analyst

Thanks, and congrats, Tammy.

Tammy Romo — Govt Vice President, Chief Monetary Officer

Thanks, Catie.

Operator

The following query is from Dan McKenzie with Seaport World. Please go forward.

Daniel McKenzie — Analyst

Hey, thanks. Good morning. Tammy, I’ve to leap on the bandwagon right here and say big congrats on such an prolonged run as a CFO and at Southwest, in fact. A few questions right here.

Following up on my query. And when all is claimed and achieved, how a lot money might doubtlessly be unlocked from the steadiness sheet from these gross sales? And so I assume my query is what number of plane fall into that engaging mid-age bucket — and over what number of years might these gross sales doubtlessly happen in case you needed to drag the set off?

Tammy Romo — Govt Vice President, Chief Monetary Officer

Sure. Nicely, to start with, thanks, Dan, and it has been a pleasure working with you through the years. So we’re not going to provide particular steering on the entire proceeds. We have got in case you have a look at our — if we have a look at our order ebook, and I shared this at investor day, we simply have airplanes in extra of the plane that we will want right here over the subsequent 3-year interval to hit our 1% to 2% capability progress goal.

So that provides us the proceeds from that might clearly be important. And once more, what we’re targeted on is hitting the working margin targets that we offered you at investor day, in addition to the return on invested capital. So not ready to provide you that at present as a result of, once more, this relies in the marketplace. And we will do transactions that make monetary sense and which can be prudent to the underside line.

And once more, we’re managing our invested capital base with these proceeds and targeted on exiting our NG fleet by 2031, which can set us up very well for the subsequent technology when it comes to capex necessities to fund future progress. So I am not attempting to provide you a nonanswer. I am actually not simply not ready to stroll you thru specifics as a result of it actually does rely upon Boeing right here and the market.

Bob Jordan — President and Chief Govt Officer

And Dan, simply chiming in, I feel simply to shortly add, I’ve stated this many, many instances, we’re dedicated to extracting each dime out of that worth — embedded worth within the order ebook. So I feel we’ve 672 proper now. So what — the dedication is regardless of the actual technique when it comes to how each transaction lays out, the intent is to drag each little bit of worth out for ourselves and our shareholders. And in case you run this out, sure, you get to a mean fleet age, I feel, a 5 all-MAX fleet.

That is terrific. It’s extremely low. So there’s additionally work to do, I feel, to have a look at the intersection of optimizing a nonetheless actually good — actually good industry-leading fleet age and the variety of plane that might be extra at present capability charges. So there’s work to do to possibly sort out precisely what is perfect when it comes to your query.

After which final — you did not ask this, however there have been some dialogue of this fleet technique associated possibly to what some others are doing. And the distinction is, to me, we’ve extra plane with sturdy embedded values due to the credit and our personal worth pricing, particularly on the MAX 8s, and we’re utilizing the money proceeds to purchase again inventory and ship worth to our shareholders and to modernize the fleet and decrease working prices. In order that’s — that extra money goes to work for the precise issues. So once more, the precise optimum intersection of the fleet age and the variety of transactions type of TBD, however we’re definitely going to run it out to a really engaging fleet age.

Daniel McKenzie — Analyst

Sure. That is good. Thanks. Second query here’s a steadiness sheet query.

I consider the plan is to pay down the debt coming due this 12 months. I feel it is $2.9 billion within the first half, if I am not mistaken, however please appropriate me on that. However the place would that depart the steadiness sheet metrics? And secondly, would that open the door for the board to think about an acceleration of capital returns when you hit these metrics?

Tammy Romo — Govt Vice President, Chief Monetary Officer

Sure. So we’re — sure, we’d — the plan is to proceed to cut back our leverage right here as we go, as we shared at investor day, and can clearly handle that query right here as we go together with the board.

Bob Jordan — President and Chief Govt Officer

Sure. Clearly, we’re dedicated to take care of what everyone seems to be praising Tammy for right here, a robust steadiness sheet and sustaining the suitable stage of leverage. Clearly, there is a vary to all the pieces right here, and we’ll be taking that up with the board.

Tammy Romo — Govt Vice President, Chief Monetary Officer

Sure. And you recognize our goal there may be the mid-30% vary. So clearly, the paydown of debt this 12 months will put us nearer to that purpose.

Daniel McKenzie — Analyst

Thanks a lot you, guys.

Operator

There’s time for another query. It can come from Ravi Shanker with Morgan Stanley. Please go forward.

Katherine Kallergis — Morgan Stanley — Analyst

Hello. Good afternoon. That is Katherine on for Ravi. We additionally needed to thanks, Tammy, for all of your assist over the previous few years, and we congratulate you as nicely.

I used to be simply questioning in case you had ideas on general {industry} capability in possibly 2Q by 3Q and whether or not you are assured which will come down from what we’re seeing possibly in schedules or if there’s any areas of pockets overcapacity that you simply’re seeing particularly?

Andrew Watterson — Chief Working Officer

Sure, definitely. I might say that schedules are actually agency for Q1. And our schedules are comparatively fairly far out as a result of we do not wish to republish some stage of changes mandatory given the Boeing supply scenario we simply mentioned right here for the final hour. However a number of the airways take an strategy of modifying considerably capability nearer in.

So consequently, summer season and past, we do not view as full but. And so we’ll wait till these agency up earlier than we make an evaluation of what the again half of the 12 months goes to appear to be. Some airways having printed past type of mid-Could. So it is nonetheless in flux, however what we do see is printed and agency is, I feel, a constructive backdrop.

Bob Jordan — President and Chief Govt Officer

Sure. And Katherine, one of many questions we get lots, clearly, is how lengthy does the constructive backdrop persists. And regardless of the optimism that we fill with Boeing, there’s nonetheless a number of work to do to get again to the numerous charges and utterly get provide chain wholesome. Clearly, on the Airbus facet, you have bought the gear turbofan and lengthy, lengthy span instances on engines.

And so I am of the view that regardless of the enhancements we’re seeing within the constructive backdrop, pushed by — particularly manufacturing constraints nonetheless exists for years. forward. So this isn’t one thing that is going to return off anytime quickly. So I feel it will stay constructive for fairly some time.

Katherine Kallergis — Morgan Stanley — Analyst

And simply as a fast follow-up. I do know you guys have type of talked about your plans for retrofitting plane for the premium cabin. However I used to be simply curious in case you might give us a fast replace on the progress you have made for the reason that investor day, possibly one thing that you have been enthusiastic about or that you have achieved since then. And thanks for taking my questions.

Bob Jordan — President and Chief Govt Officer

Sure, Katherine. We lined the retrofits, the progress there, which is nice. earlier within the name, I feel the — getting the modification achieved with Chase is one other key step in are the trail towards promoting and working in an assigned and premium atmosphere, we wanted to change type of our boarding advantages over to boarding and seating advantages, which I feel our clients might be out with the main points quickly and with our clients. However I feel what we have constructed there in partnership with Chase goes to be actually thrilling for patrons.

I feel it will drive co-brand card acquisitions sooner or later. So positively enthusiastic about that. And simply typically, I am happy with our progress general. Know-how improvement goes nicely.

the group broadly throughout Southwest has actually rallied round this as a key precedence for the corporate. All people understands the worth to our clients, worth to shareholders, and worth to our staff. And I simply assume that the tempo of execution has been actually good, and the main focus is there. So I am inspired by our progress and what’s left to return right here over the steadiness of the 12 months.

Andrew Watterson — Chief Working Officer

I might additionally add, Ryan, we began — we intend to dynamically value the seats and the brand new product. And we went stay with dynamic pricing for our upgraded boarding product this quarter, simply truly only recently, and that is going to type of give us type of coaching the fashions and giving us practices and the processes and applied sciences for nearly a full 12 months right here earlier than we go stay. So I feel that is a type of early win. It can assist us this 12 months, but in addition as a proof level of our know-how acumen prematurely of the brand new product.

Bob Jordan — President and Chief Govt Officer

100% agree.

Operator

Women and gents, we now transition to our media portion of at present’s name. Ms. Whitney Eichinger, chief communications officer, leads us off. Please go forward, Whitney.

Whitney Eichinger — Chief Communications Officer

Thanks, Gary. Welcome to the media on our name at present. Earlier than we start to listen to your questions, might you please remind everybody tips on how to share — tips on how to queue up for questions?

Operator

[Operator instructions] The primary query comes from Mary Schlangenstein with Bloomberg Information. Please go forward.

Mary Schlangenstein — Bloomberg — Airline Reporter

Hello. Thanks. I simply had a fast query on the amended bank card deal. Together with your forecast that it will actually drive acquisitions of the cardboard up — are you providing any type of a forecast when it comes to how your remuneration from Chase could broaden and a few thought of what that might be on an annual foundation going ahead?

Bob Jordan — President and Chief Govt Officer

Hey, Mary. I am going to begin, and I am certain Ryan will add. I simply needed to say first, due to our group and to our Chase companions. It is a massive modification, and we transfer by it with pace and tempo, and so I am simply — I am very grateful.

However now we’re actually for the brand new deal, it does embrace important extra compensation. I feel you could possibly consider it as aggressive with latest offers out there that I am certain you are accustomed to. It was contemplated in our investor day plan. However no, we’re not going to — we simply — we’re not capable of present actual particulars on the financials.

However Ryan, if you wish to add something?

Ryan Inexperienced — Govt Vice President, Chief Business Officer

No. It is — we’re happy to get it achieved. It is a proof level in plan. And such as you stated, it is completely very aggressive with what’s on the market with legacy carriers out there.

Mary Schlangenstein — Bloomberg — Airline Reporter

Thanks.

Operator

The following query is from Robert Silk with Journey Weekly. Please go forward.

Robert Silk — Journey Weekly — Air Journey Reporter

Thanks for taking my name. Two fast questions. One, — has there been a shift in Southwest strategy to DEI? There’s been some consideration paid to the change in title out of your vp of DEI, altering the company citizenship; and chief inclusion officer. That is query one.

Query two, very totally different query is Getaways by Southwest any updates on that when it comes to how you’re employed with the journey commerce journey advisors?

Andrew Watterson — Chief Working Officer

I am going to begin with the second first. With that one, we’ve no modifications to announce usually, have been as we beforehand mentioned, have been a direct-to-consumer enterprise. And so nice majority of the enterprise case relies on promoting to our present clients, who wish to purchase packages, however who’re unfulfilled by Southwest Airways. So we’ll be capable of provide them what they wish to purchase in or shopping for at present.

And so we expect that might be a profit. Whether or not we work with a commerce or not, how a lot — we do on the margin in some conditions, and there is nothing to philosophy towards that, however principally the enterprise case relies on direct gross sales. However as we get nearer to go stay, we’ll agency up our commerce insurance policies.

Bob Jordan — President and Chief Govt Officer

And Robert, on the DEI query, whether or not it is at present, 5 years in the past, 10 years in the past, or 20 years in the past, I have been right here 37 years. We have at all times labored arduous to rent people who find themselves simply good. They match the tradition. — and to create an atmosphere that’s inclusive and we use the phrase belonging, Folks simply be ok with being right here.

They like coming to work. They like their group, they usually really feel like they belong at Southwest. After which because it pertains to hiring and promotions, they’ve at all times been merit-based and no totally different throughout our historical past. So no, no modifications when it comes to how we take into consideration how we deal with folks and the way we reward folks.

Now clearly, there’s a number of questions in regards to the flurry of govt orders as wanted, we’ll be evaluating these and understanding what we could have to do. And so I feel simply type of keep tuned there.

Robert Silk — Journey Weekly — Air Journey Reporter

OK. Thanks very a lot.

Operator

This concludes our question-and-answer session for media. So again over to Whitney now for some closing ideas.

Whitney Eichinger — Chief Communications Officer

If anybody has any additional questions, our communications group is standing by. Their contact data, together with at present’s information launch, are all obtainable at swamedia.com.

Operator

[Operator signoff]

Period: 0 minutes

Name individuals:

Julia Landrum — Vice President, Investor Relations

Bob Jordan — President and Chief Govt Officer

Andrew Watterson — Chief Working Officer

Ryan Inexperienced — Govt Vice President, Chief Business Officer

Tammy Romo — Govt Vice President, Chief Monetary Officer

Savi Syth — Analyst

Duane Pfennigwerth — Analyst

Michael Linenberg — Analyst

Mike Linenberg — Analyst

Catie OBrien — Goldman Sachs — Analyst

Daniel McKenzie — Analyst

Dan McKenzie — Analyst

Katherine Kallergis — Morgan Stanley — Analyst

Whitney Eichinger — Chief Communications Officer

Mary Schlangenstein — Bloomberg — Airline Reporter

Robert Silk — Journey Weekly — Air Journey Reporter

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