Good day, and thank you for standing by. Welcome to the Q3 2022 Allegiant Travel Company Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a Q&A session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today. Sherry Wilson, please go ahead. Thank you, Chris. Welcome to the Allegiant Travel Company third quarter 2022 earnings call. On the call with me today are John Redmond, the company's Chief Executive Officer, Greg Anderson, President and Chief Financial Officer, Scott Sheldon, President and Chief Operating Officer, Scott DeAngelo, our EVP and Chief Marketing Officer, Drew Wells, our SVP of Revenue and Planning, and a handful of others to help answer questions. We will start the call with commentary and then open it up to questions. We ask that you please limit yourself to one question and one follow-up. The company's comments today will contain forward-looking statements concerning our future performance and strategic plans. Various risk factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or implied by our forward-looking statements. These risk factors and others are more fully disclosed in our filings with the SEC. Any forward-looking statements are based on information available to us today. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise. The company cautions investors not to place undue reliance on forward-looking statements which may be based on assumptions and events that do not materialize. To view this earnings release as well as the rebroadcast of the call, feel free to visit the company's investor relations site at ir.allegiantair.com. With that, I'll turn it over to John. Thank you very much, Sherry, and good afternoon, everyone. The quarter saw our airline operations getting back to more acceptable performance levels, more in line with where we were in 2019 before the pandemic. The respective teams have done a lot of hard work getting to these levels, and the effort and results have continued into Q4. The revenue picture was also solid with total average fare just shy of $126 and up 15.5% over Q3 of 2019. Q4 should exceed Q4 of 2019 by a similar percentage, assuming no severe weather issues in the balance of the quarter. In this rising fare environment, we are uniquely positioned to not only capture customers trading down, but to continue to grow total average fare, given the significant domestic average base fare gap between us and other carriers. With the exception of the other ULCCs, all other carriers' average base fare is somewhere between two and almost four times higher than us. After adjusting for one-off items such as the Sunseeker Resort special charge of $35 million, the employee recognition bonus of $9.3 million, and the $5 million loss on extinguishment of debt, the quarter was strong and encouraging going into Q4 and 2023 as well. Turning to our balance sheet, one important point to make regarding our outstanding debt, given the interest rate outlook, is the fact that we are 83% fixed and only 17% floating. Our floating rate debt is all secured by aircraft in primarily shorter duration or less than five-year maturities. All this debt is very flexible, prepayable, and refinancable. Equally important, our current maturities are only 8% of our outstanding debt. In regards to Hurricane Ian, which struck on 9/28, we are currently operational at all Florida airports. Punta Gorda was the only airport shut down post-Ian, but flying resumed October 6. Our teams did a fantastic job relocating aircraft pre and post-Ian, allowing us to become operational faster than expected. Even better, our traffic volumes returned to normal within 14 days of reopening. Southwest Florida is incredible, and the resilience never ceases to amaze and is further validation of the Sunseeker story. Sunseeker Resort Charlotte Harbor survived Hurricane Ian, which some have referred to as the worst storm to hit the state, without any damage, except from falling cranes or unfinished parts of the building, which allowed water intrusion. We believe all storm damage to the resort is fully insured, including business interruption. The initial estimate of damage determined by the insurance carriers was $35 million, but this amount is subject to change after further assessment and understanding of impacted supply chains. We have estimated the opening of the resort to be delayed roughly 90 days. As a result, we've pushed the beginning reservation acceptance date or opening date from May 26, 2023 to September 1, 2023. Given all the IT system upgrades happening throughout the company and touching everything we do, we knew 2022 and 2023 would be foundational years for our company and transformational at the same time. The effort put in by our team members has been nothing short of exceptional. This complete change-out would take decades for some to achieve and never contemplated by others, but our team members will accomplish the impossible in two years. Certain upgrades will allow us to take full advantage of and more seamlessly integrate our Viva Aerobus partnership. While not a certainty, we believe all necessary approvals will be in place, including Category one status in Mexico in the first half of 2023. Our Viva partners recently reported an outstanding Q3, extending their compelling growth story. Because of the upgrades, we will be able to take full advantage of the partnership and the opportunities it offers in conjunction with the necessary approvals. In the Q2 earnings call, I made reference to ongoing negotiations with our pilots. Maury is personally involved in those negotiations and progress is being made on a weekly basis. It's an arduous process that, frankly, takes longer than it should. We will get a deal done that works for both parties, that recognizes the value and contributions of our pilots and the importance of maintaining our business model. We expect significant progress towards that end over the next couple of months. Thank you to our incredible team members for their passion and stamina you have shown not only in the quarter but throughout the year. With that, I'll turn it over to Scott Sheldon. Thank you, John, and good afternoon, everyone. Before I touch on third quarter results, I first wanna say thank you from this management team and to all of our team members and partners throughout the network. Your efforts throughout the third quarter, and particularly through the devastating hurricane that impacted Southwest Florida in late September, were tremendous. Our ground maintenance and flight crew volunteers enabled the movement of nearly 25% of our fleet, countless passengers, and well in excess of 100 team and family members out of our Florida bases. My hat's off to you for an outstanding effort. A few quick comments on the operational environment before I touch on labor. We continue to see improvements in our operational performance on all fronts during the third quarter. It was a relatively clean quarter in that it wasn't solely dominated by labor instability. As discussed on prior calls, our network is more complex and dispersed than it was in the third quarter of 2019. Over three years scheduled departures were up 8.4% and our crew base growth and aircraft growth of 21% and 31% respectively. This month, we plan on opening our 24th crew base in Provo, Utah, up from 19 bases in 2019. The breadth of our operational footprint requires individual bases to operate as standalone franchises and to drive high completion factors and on-time performance, we need to see some significant improvements in dispatch reliability and unplanned absence trends. We remain cautiously optimistic, but we are seeing nice traction on both fronts. We ended the quarter with nearly 99.5% controllable completion and A14 production of just over 70% through the end of October. Uncontrollable factors such as air traffic control staffing and flow control programs into Florida will continue to be on-time performance headwinds, but we hope to see substantial reductions in ops costs as we move into 2023. Moving on to pilots, we're happy to report we entered into our first exclusive pilot pathway program with Spartan College of Aeronautics in Denver, Colorado. This exclusive program, to be branded Altitude, will be a closed loop partnership customized for prospective Allegiant pilots and is expected to produce upwards of 250 pilots annually as the program matures. Details in a formal joint announcement are still to come, but we are excited to secure a direct pipeline for our future growth needs. The last thing I'd like to touch on is our efforts to ratify a new contract with our pilots. A ratified agreement is and continues to be our number one focus and is critical to the long-term success of the airline. As JR mentioned, our team, headed up by the old man himself, Maury Gallagher, continues to meet in person with the IBT, and good progress has been made over the last three months. The rate environment continues to be incredibly volatile, and since January, we've passed seven comprehensive proposals for IBT consideration. Our proposals touch on everything from rates, rate guarantees, retirement, scheduling, work rules, and quality of life enhancements, all of which directionally reflect other domestic air carrier CBAs that have been ratified since the beginning of the year. A newly ratified contract coupled with the rollout of our Altitude Pilot Pathway program sets us up nicely for the introduction of our new Boeing fleet in the back half of the year and into 2024. Hope to have something to report in the not-too-distant future. With that, I'll turn it over to Scott DeAngelo. Thanks, Scott. Q3 saw sustained strong leisure travel demand for Allegiant across both web traffic to allegiant.com and passenger segments both. Just as we saw during the pandemic and as we're seeing again in the face of negative economic factors threatening to impact consumer discretionary spending, our direct-to-consumer distribution approach gives us an advantage by enabling us to stay close to our customers and engage with them in ongoing two-way communication to ensure that the Allegiant brand is top of mind at addressing the two most important buying factors for leisure travelers, low fares and nonstop flights. During the current economic climate, we're seeing our brand proposition, what we positioned as living the nonstop life through affordable, accessible leisure travel, resonate more than ever to attract new customers and retain existing ones. Year to date, total visitation to our website remains up by nearly 30% versus 2019, and new first-time visitors are up by nearly 50% versus 2019. In addition, the number of new customers booking their first Allegiant flight is up by nearly 25% versus 2019 levels. We also continue to see the strong positive impact of leisure travel from the unprecedented number of baby boomers who retired the past two years and now have the discretionary time to travel more. Year to date, the number of new Allegiant customers ages 60 or older is up by more than 60% versus 2019 levels. As I referenced last quarter, our addressable customer audience continues to grow as more new customers consider Allegiant for their leisure travel needs. They're seeking relief from sky-high fares, as well as avoiding the risk, inconvenience, and time associated with connecting flights through crowded airport hubs. This past week, in a survey of customers who flew with Allegiant this year, we asked them whether economic considerations, such as inflation, gas prices, and recession fears would make them more or less likely to consider flying with Allegiant again in the next 12 months. Among those customers who have traditionally flown most often with Southwest, Delta, American, or United, more than 40% said they are more likely to consider flying with Allegiant in light of these economic concerns. In particular, for those customers who said they have traditionally flown most often with American or United, nearly 50% said they were more likely to consider flying with Allegiant this upcoming year. Also noteworthy coming out of this survey was getting a deeper understanding into the reasons for travel among Allegiant customers in 2022 to date. About 15% are flying for combined work and leisure, representing the first time we've seen a material segment of our customer base in this growing bleisure category. Also, nearly 60% of leisure-only Allegiant customers are flying to visit family and friends. And as we've noted in the past, 15%-20%, depending on the season, are flying to a second or vacation home. Each of these customer travel occasion types represent what we believe to be the most resilient forms of leisure travel during economic downturns. To that point, looking forward, web searches for flights during virtually all upcoming weeks of travel through March of next year remain between 10%-40% above last year's flight search levels at the same time. Beyond the growth of new customers to Allegiant, we're also retaining customers and growing customer value at our greatest levels ever thanks to our award-winning loyalty programs. USA Today Reader's Choice awarded Best Airline Credit Card to the Allways Allegiant World Mastercard for the fourth consecutive year. In its inaugural year, Allways Rewards also claimed the top spot as Best Frequent Flyer Program in the nation. The Allways Allegiant World Mastercard continues to post record-setting months in terms of new card sign-ups, average spend on card, and total compensation to Allegiant. Most notably, however, may be that above and beyond the program's third-party revenue and profit stream, our cardholder base of nearly 400,000 currently drives about 15% of our total air and air ancillary revenue, and the level of spend by this group on air and air ancillary has grown by more than 350% since 2019. Similarly, our Allways Rewards program has about three million active members who account for about 2/3 of our total air and air ancillary revenue. One year into its existence, we're already seeing these members spending 34% more on average per itinerary booked and booking 28% more frequently on average compared to non-members. Having the vast majority of our revenue linked to customers in our loyalty program is not only positive in terms of retaining these customers and this revenue, but also helps motivate these customers to attach air ancillary and third-party products, such as hotel and rental car, at a greater rate. In closing, we believe Allegiant's unique brand of low fares and nonstop flights remains a compelling, distinctive value proposition, especially in these uncertain economic times, that is attracting new and returning customers alike in record numbers who are engaging with our popular loyalty programs and making Allegiant their airline of choice. With that, I'll turn it over to Drew. Thank you, Scott, and thanks to everyone for joining us this afternoon. Third quarter revenue was tracking nicely to come in a bit above the original guidance of +29% versus the third quarter of 2019. However, due to Hurricane Ian, we lost approximately $3.5 million in revenue to finish with total revenue up +28.4%. Similarly, we lost one point of scheduled service capacity to finish at +17%. The resulting 12.60 TRASM in the quarter is the best third quarter since 2008. Perhaps most importantly, through an immense amount of communication and collaboration, the planning and operational groups have done an incredible job balancing the needs across the enterprise to set the operation up for success, and we're excited about the improvements we've seen on that front. There are generally three distinct pre-hurricane periods to the third quarter. The peak summer weeks were marked with lower growth and strong demand that was strong unitized metrics. The ensuing four weeks saw roughly 45% ASM growth and high rates of cash positive flying. While unit revenues were relatively challenged due to the growth, they were still positive. The rest of the quarter until the hurricane was likely the star of the quarter based on relative outperformance. While ASM growth was elevated between 25%-30%, TRASM growth still performed in the double digits, and September load factors were the highest since 2011. We've long theorized the changing dynamics of leisure and hybrid travel should lift the floor on September and other off-peak periods, and we're pleased with how that has manifested through the first try. Scott touched on the emerging significance of hybrid travel to our business, and everyone around this table believes in the structural shift of both how travel is valued as a life experience, but also how our business model meshes so well with that shift. Despite the relative September strength, the growth cadence in the quarter was still a unit revenue headwind. If weekly ASM growth through the quarter was the same as the average peak summer growth rate, we'd have expected to perform about 5.5 points better on a year-over-year basis. With the unbundled approach to itineraries that we employ, we tried to balance the approach to maximizing total revenue per flight, generally ensuring that we are capturing the ancillary piece where inventory allows and pushing yields where demand is the greatest. As a part of this balance, we accomplished monthly record total revenue per passenger in both September and October on top of load factors we hadn't seen since the early part of last decade. The step-up in ancillary per passenger during the third quarter was essentially in line with the second quarter at +17.9%. Again, driven by success with our bundled ancillary products and the Allways Allegiant World Mastercard program. The fourth quarter should end at approximately $70 per passenger. While we won't see much incremental upside in this quarter, we will begin to induct new-to-us Airbus aircraft in the 180-seat Allegiant Extra layout this month, gaining three tails by quarter's end and two more shortly after the new year. Throughout 2022, Allegiant Extra returns on the four initial aircraft currently in service, continuing to widen the gap on both the required hurdle rate for positive contribution and the performance versus previous years. We are ecstatic to make this available to more customers in the coming quarters. Zooming out a little bit, we expect total revenue for the fourth quarter to be up between 26.5% and 28.5% year-over-year, with scheduled service capacity up 15%, implying mild sequential TRASM acceleration at the midpoint. While ASM growth is a bit flatter throughout the fourth quarter versus the third, two primary headwinds remain. 3% due to Hurricane Ian and roughly one point due to incremental off-peak days and holiday timing. However, despite these headwinds, the fourth quarter will vie for the highest TRASM of any quarter in Allegiant history. With that, I'd like to turn it over to Greg. Drew, thank you, and we appreciate everyone joining us today. Of course, a special thanks to Team Allegiant. We are extremely proud of the amazing work you continue to accomplish. Operational stability has been one of our top priorities, and third quarter results did not disappoint. Controllable completion for the quarter of 99.4% was 2.1 higher than the first half of 2022 and very much trending in the right direction. However, as we were closing out the quarter, we experienced an uncontrollable disruption as Hurricane Ian ripped through Florida. First and foremost, our heartfelt thoughts are with those impacted by the storm. As announced earlier this week, we deepened our partnership with the Red Cross to support the recovery and rebuilding of this area. When Ian made landfall in Southwest Florida, it devastated the surrounding areas, including the Port Charlotte and Punta Gorda area. This hit home for us in many ways as Punta Gorda is one of our largest aircraft bases, and Port Charlotte is home to our Sunseeker Resort. Over 550 Allegiant and Sunseeker team members live in and around these surrounding areas. We are grateful to report that all of our team members were safe and accounted for, although the recovery for many of them continues. We estimate the hurricane headwind to our operating margin to be 1% and 3% in the third and fourth quarters, respectively. Regarding the damage to the resort, we still have limited information, but preliminary estimates suggest approximately $35 million of physical damage primarily caused by subcontractor cranes hitting the buildings. We believe we have ample insurance to cover these estimated damages, and from an accounting perspective, GAAP required us to report a preliminary loss estimate of the $35 million, which will be offset in subsequent quarters as insurance proceeds are collected. If we exclude the $35 million, our adjusted operating income for the third quarter was $13.5 million at 2.4% op margin. Prior to the Hurricane Ian, as Drew explained, revenue for the quarter was on pace to exceed our initial expectations. Absolute costs were down 8% from prior quarter, aided by a reduction in fuel costs, and our third quarter fuel cost per gallon was $3.85, was generally in line with our initial guide. Our unitized cost, excluding fuel, CARES grant and that $35 million Hurricane Ian special charge, it came in at $0.0761, 13.9% versus same period in 2019 on 14.5% ASM growth. Increase was largely driven by four points of labor productivity, three points of inflation, and four points of aircraft utilization. Aircraft utilization, as measured by block hours per day, was 6.4 hours per day during the third quarter, and you compare that to 7.4 hours during the same period in 2019. We estimate a one-hour increase in utilization for aircraft per day would have reduced our unit cost by a half cent. Turning towards the fourth quarter, our guidance issued today suggests an adjusted operating margin of 8%, and that's for the fourth quarter, a meaningful improvement sequentially, and this assumes an average of $3.75 per gallon of fuel. Based on system ASM growth, 13.5%, we expect CASM-ex for the quarter to be up 14% year-over-year. This increase is summarized as follows. One, inflationary pressures at our airports and with service providers is roughly four points. Two, lower aircraft utilization should drive roughly four points, and three, lower labor productivity should result in another two points of this increase. As we look towards 2023, uncertainty remains around fuel price levels, supply chain and OEM delays, and pilot constraints. As such, we are not prepared to share specifics on our 2023 budget plans, but we'll provide some high-level thoughts. Overall, our 2023 priority is to continue improving margins, which we have line of sight on. A couple important steps in helping us get there is, first, operational stability, which is not only paramount for our team members and our guests, but will also improve financial results. This is underscored by our year-to-date spend in total IROPS, which is $60 million more than all of 2019. In addition, we are seeing improved reliability has naturally helped with crew stability by reducing the number of unplanned absences and sick calls. Second, securing labor contracts. We are in active contract negotiations with our pilot and flight attendant groups. We have terrific crew members, improving communication, upgrading systems, and getting a new contract they deserve is our top priority. While these new deals should have a headwind to absolute cost, we expect them to increase the momentum in achieving staffing levels and restoring our ability to optimize aircraft productivity. Speaking of aircraft, our internal teams continue to pace nicely with our plans of being ready to take delivery of our 737 MAX aircraft order. We are excited to bring on the MAX aircraft, particularly as we believe they will bring a 30% earnings advantage compared to our A320ceos. However, the delivery timing from Boeing is pushed to the right a few months. We actually only expect three of the aircraft next year, with the first one now not expected until October of 2023. With that backdrop, we want to reaffirm our current plan of 2023 ASM growth to be around 10%. This in no way suggests demand is weak. In fact, we continue to see very strong demand. We will, however, continue to keep a close eye on the consumer as the Fed is still far off from achieving its target goal of 2% inflation and is raising interest rates at unprecedented speed, which leads into some recent debt transactions that have greatly de-risked our capital stack. During the third quarter, we carefully timed the markets by extending our $533 million term loan maturity from one year out to five years. This was with the $550 million secured bond offering. That offering was 6x oversubscribed and priced at a fixed rate of 7.25%. Interest to be paid on the new bond is expected to be less than the preexisting loan given the high rising rate environment. In addition, and as part of this transaction, we secured a $75 million revolving credit facility with Barclays. As such, we expect to end the year with $1.2 billion in total liquidity, inclusive of cash on hand and undrawn revolvers. This is more than two times our liquidity on hand prior to the pandemic. Total debt, inclusive of finance leases, is expected to end 2022 at roughly $2 billion, which applies $1 billion of net debt. Last month, we drew our final tranche from our $350 million loan with Castlelake to fund Sunseeker, and that's at a fixed interest rate of 5.75%. Also, during the quarter, we secured $200 million in financing for our upcoming PDP commitments with Boeing. We were really pleased to find standalone PDP financing, which didn't require long-term financing commitments for any aircraft. This will provide us with tremendous flexibility in managing the balance sheet as we take delivery of those aircraft in 2023 and 2024, while also navigating the interest rate environment. We are fortunate to have a fleet plan with tremendous flexibility, and in the event of extended delays in delivery of our 737 MAX order book, we could adjust timing of our A320 retirements and/or take additional aircraft from the used market to meet our network requirements. In addition, we have valuable options for up to 50 additional 737 MAX aircraft for delivery between 2025 and 2028. As mentioned last quarter, we decided to hold three aircraft in storage this year and place them into service in the first half of 2023. This change means we will end 2022 with 123 aircraft in service. With that, we'll take your questions. Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. In addition, we ask that you limit your questions to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Savanthi Syth at Raymond James. Your line is open. Hey, thanks. Good afternoon, everyone. I'm just kinda curious if you could provide just a little color on, are you seeing your crew levels and attrition levels improving? As you kind of think about 2023, if you're expecting an improvement into 2023, how much of that will be kinda offset by having to kinda hire and train ahead of the MAX kinda coming into the fleet? Hey, Savanthi. This is Sheldon. Appreciate the question. Yeah, there's certain months definitely throughout 2022, where we saw first officer attrition specifically reach 30% on an annual basis. If you look at the complement of pilots throughout the system, it's running about 15%. We've put in more than 350 folks through the schoolhouse this year. If you look at the net seniority list increase, we're up about 135 folks. You know, that's a lot of sort of thrash in order to sort of obviously get ready for the introduction of the Boeing fleet. You know, that being said, with the launch of a pilot program, and more importantly, we gotta get a deal done. At the end of the day, our rates are so far underwater. I think directionally we know where the contract needs to be, and we're just plowing through it as quickly as we can. I think aspirationally we wanna have classes of 25 each month, which should more than offset any sort of attrition. But that's sort of how we're looking at modeling this into 2023. Savanthi, it's Greg, on your question around the cost headwinds from incorporating the MAX aircraft, you know, where we're looking at today, 2023, we'd expect that to be roughly $0.05 CASM-ex headwind. 2024, I think where it would hit the top there would be about $0.10 CASM-ex. That's super helpful. Thanks for all that color. If I might just on the fuel efficiency side, it seems like the fuel efficiency of the Airbus fleet hasn't really been showing up. Just wondering if you could just provide a little bit more color and what the trend there might be? Hey, sure, Savanthi, it's Greg. Let me take that. You know, I think overall, what we target the fuel efficiency on the A320 fleet to be roughly like 86 ASMs per gallon. It also is impacted seasonally, like by season, so by quarter. The third quarter is generally the hottest and, so that'll be the lowest or less efficient, least efficient quarter in terms of ASMs per gallon. So, where I think we're gonna end the year is probably 84 ASMs per gallon. I would expect it a little bit of step up next year in 2023. Then once we take that to Boeing aircraft, I think you'll. Those are roughly mixed in the fleet. Those are mixed between the two types, the seven and the 8200s. I think you're about 110 ASMs per gallon, so I'd like to see in 2024 get closer to 90 ASMs per gallon, and then in 2025 when we have more on, you know, going above the 90 ASMs per gallon. That's the follow-up. Thank you. Thank you. Our next question comes from the line of Duane Pfennigwerth at Evercore ISI. Your line is open. Hey, thank you for the time. Your guidance implies some sequential improvement in margins from 3Q- 4Q. Honestly, we haven't had a lot of time to dissect, you know, the special bonuses, the debt charge, the hurricane charge. It looks like ex all of that, you still a loss of money, which is historically unusual for Allegiant. What would you point to as the biggest drivers of your loss in 3Q? What are the fundamental reasons you see margins getting better? Is this really about, like, we're gonna be chugging along here at similar levels until you guys have more confidence in your ability to flex up in the peaks? I'd love your comments on if you think, you know, that confidence is increasing yet? Hey, Duane. Thanks for the question. It's Greg. Why don't I kick it off, here, and then, others will, I'm sure, wanna jump in. You know, I think in terms of the sequential improvement in margins, one, the fourth quarter is just stronger than the third quarter seasonally, so we should see strength, and that should help drive revenue. You know, some of the tailwinds that we should see as well is operational reliability. Third quarter, we did a nice job there, but it's even stronger, trending much better into the fourth quarter. You know, some of the headwinds, I think Drew pointed this out in the fourth quarter, was, will still be the lingering of Hurricane Ian. We have some of the Sunseeker operating costs that have been trending up over the quarters as we get closer to opening as well. You know, I think what I'd say, though, is we think about, like, optimizing aircraft utilization and how we get there. You know, Scott mentioned, you know, a focus on labor, but also with the operational reliability improvement, I think we've seen a reduction in unplanned crew absences and sick time, which if you think about that and you take that crew stability, that can give you more of an opportunity to increase utilization in those peak periods. Early this year, we've capped our peak periods, and that's where. I know, Duane, you've followed us for so many years. You know that's where we make most of our money. I think in March and the summer, we make 60% of all of our earnings in those peak periods. Having that capped, I mean, has been more difficult for us to produce those type of results, but we see line of sight in getting back there. As we mentioned with operational stability, that's the first step, and then we'll continue to layer on and kind of remove and torque up utilization where we can and where it makes sense at the right time, right and appropriate time. I'll pause there. Drew, is there anything? Anybody else? Did that help, Duane? Did we miss anything? Is there anything? Yeah. Yeah. I appreciate those thoughts. Just on CapEx, I think we can back into the remaining spend on Sunseeker next year from the disclosure that you have. Can you just remind us total aircraft CapEx and maintenance-related CapEx you'd expect next year? Hey, Duane. It's Greg. It's a great question. What I'll caveat it with is it's just fluid at this point, given the uncertainty of timing around MAX deliveries, not only in 2023, but as you know, a big part of our CapEx is gonna be PDP payments and trying to understand all that for the entire order. What I'll say is where we sit today, I think CapEx next year as a floor should be at least $500 million. I wanna say we'll end this year at $350 million for the airline. For next year, the airline will be at least $500 million. What I'd wanna say, maybe put BJ on the spot here, but ask BJ to add some color because of that CapEx. I think he's done a really nice job of making sure we have the appropriate financing to support it. BJ, anything you wanna add? Maybe just, Duane, you know, the moving parts are, of course, the actual delivery of the Boeing airplanes. Like Greg mentioned, the 2024 schedule will impact PDP CapEx in 2023. Then there's a couple of other things in there, you know, whether or not those first deliveries or those early deliveries in 2024 end up being MAX 7s or MAX 8s. And then finally, just movement in the used A320 acquisitions that we may need to bridge that gap. Okay. Thank you very much. Thanks, Duane. Thank you. Our next question comes from the line of Michael Linenberg from Deutsche Bank. Your line is now open. Oh, great. Hey, good afternoon, everyone. Hey, Greg, I wanna go back to, you know, the 8% adjusted operating margin that you sort of threw out earlier on the call. Is that incorporating, like, the three points from Ian? So we should be thinking more like a five-point margin, 5% margin ex Ian, or are you rolling that through? And then also just the employee recognition piece. I know you call it out as a special for the last two quarters. Is that gonna feature as a cost item in the fourth quarter? Because I know you don't include it in CASM, so we're just trying to get to that 8%. Any color? Thanks. Sure. Yeah. For the fourth quarter, I'd say the adjusted op margin of 8% will exclude that recognition or the bulk of that recognition bonus, and I'll tell you here why in one second, Michael, but it would include the impact from Hurricane Ian. You know, save the Hurricane Ian, it would be 11%, if that makes sense. Okay. The reason we excluded this year the recognition bonus is, you know, we've had a policy for many, many years to, you'd have to achieve a 5% operating margin before we started accruing. Mm-hmm A bonus profit sharing for our team members. Given this unique environment from labor across all of our team members, and they're just going above and beyond, we wanted to make sure that we did the right thing and we accrued and paid and had bonuses ready for them, irrespective of where our profit came in or lack thereof. What I would say is next year we're gonna pull that out. Next year, when we expect to be back to earning again and providing profits, we're not gonna peg it to a recognition grant. It's gonna be based on profitability, and we would not exclude that in CASM-ex. Okay. That helps. Just a quick one to Drew on capacity fourth quarter. You mentioned 15%. I think the schedules are still indicating a bit higher than that, so I guess we should assume that we're gonna see some additional cuts through additional filing schedules over the next month or so. Is that accurate? I think essentially we just need to file the changes that have been made. Things that happened around Ian will never be reflected in Diio or other public sources because they were so close in. Okay. We took an impact there. I think we're scheduled. I thought we were gonna do it this last weekend. I think a new filing is coming soon. The deal will remain. Our public forums will remain slightly elevated just due to those close-in cancels associated with Hurricane Ian. Fair enough. Okay. Thanks. Thanks, everyone for answering my questions. Thank you. Our next question comes from the line of Scott Group at Wolfe Research. Your line is now open. Hey, thanks. Good afternoon. Wanted to see if you have any thoughts on CASM next year. If ASMs are up about 10%, sounds like maybe you'll be expensing the employee recognition, maybe you get a new pilot deal. How are you thinking about CASM next year? Do you think it can be down on a year-over-year basis? Any directional color? Hey. Hey, Scott, it's Greg. Yeah, maybe just directionally in that we're still in the process of budgeting for 2023, so wanna be careful and not get too specific here on where we expect CASM-ex to be. You know, you mentioned that 10% ASM number that we've of course mentioned as well. I would say that growth is generally, you should expect that to be back half of 2023 loaded. So the first half is gonna be, limited ASM growth, or generally flat. You know, what I'd say some of the tailwinds or at least a big tailwind in 2023 versus 2022 to the unit cost will be, the IROPS being down, right? I think, that should be super helpful. Some of the headwinds are, Savvy asked early on Boeing incorporating the Boeing aircraft. So that's about 0.05 cent CASM-ex headwind. You have FTEs are up with the exception of pilots to kind of support this infrastructure to be larger. I mean, candidly, a year ago, at this time, we thought in 2023 we'd be 20% larger than we're gonna be. But we have that infrastructure in place. And as we kind of loosen up and get set the pipeline, as Scott Sheldon mentioned with the pilots coming in and the ability to kinda yank up utilization and growth. The good thing is we're spring-coiled and ready to go. We have that foundation in place. At some point, I think you could see nice growth, but I wouldn't expect that to even begin happening until the back half of 2023. Again, that's gonna be contingent on a labor deal being done, or likely being done. You know, and then just everything I talked about here directionally, that doesn't assume a pilot deal in the cost, but I would say for internal forecasts, that's what we're expecting. We're building that in for our forecast. I don't wanna give numbers and negotiate, you know, publicly if you will. Yeah. I mean, I know you're guiding to margin improvement next year and just planning on... It feels like double-digit margin is tough to get to, but let me know if you think differently. You know, how... I guess, what is the path to getting back to double-digit margin, operating margin, which you guys, you know, consistently used to have? How do we get there? Yeah, it's a great question. Let me kick it off here again. As I say, and I keep saying it, ops stability. Getting rid of IROP. That's gotta come out of the business. $60 million incremental in total IROP costs this year versus 2019, so that's one. That stable ops, as we mentioned, stabilizing ops, that gives us crew stability, so we could peak up more or we could fly more in those peak periods, which is the most profitable time for us to fly, so that's two. Labor deals getting done, which helps with utilization, with growth, that's three. Aircraft, the aircraft we're bringing in. If you think about 2019, you talked EBITDA for aircraft was $6 million per share, shell. The 321 86-seat or even the 320 that's gonna be Allegiant Extra, that has an earnings potential of $7 million of EBITDA per copy. You know, we think bringing those in along with the 30%, economic advantage of the Boeing aircraft is gonna be key there as well. Cost discipline. You know, like, as I mentioned, we're going through the budget, and austerity is a big theme here at Allegiant this year to make sure that we're cutting out any unnecessary costs, but that we can support the opportunities that we have ahead. Maybe I'll pause and I don't know if Drew or Scott wanna hit on some of the commercial initiatives such as systems like Navitaire or Viva. I mean, we think these can really drive earnings potential or drive margins higher, not to mention loyalty and everything that's happening on that side of the house as well. Anybody else wanna add? I think you covered quite a bit. Great. Yeah. Okay. Go ahead. If you have more to add, go ahead, please. No, I think I probably took too much time and answered for everybody, so I apologize. Yeah, I think that covered kind of where we wanted to hit. Thank you, guys. Appreciate the time. Thank you. Our next question comes from the line of Andrew Didora from Bank of America. Your line is now open. Hey, good afternoon, everyone. John or Greg, you know, I know in the release you highlighted the removal of the suspension on the existing buyback. Obviously, all the government restrictions were lifted at the end of September. Just curious, how do you think about capital allocation today now that these restrictions have been lifted? Would you consider buying back stock before, say, you know, getting a new pilot deal? Just curious your thoughts there. You know, we're not gonna try to predict timing in that regard. I think, you know, our board wanted to make sure that the capital allocation strategies we had in the past we open those back up as soon as we are able to do that, which is why they lifted the restriction that we put in place due to the CARES Act. Now we no longer have that restriction, if you will. We do have the flexibility to do what we historically have done in the past going forward. Trying to predict timing, you know, we're not gonna try to do that here. It is nice to have those restrictions gone. Understood. Maybe for Scott DeAngelo or Drew, I think a lot of your, you know, ULCC peers have some pretty aggressive goals for their non-ticket revenues over the next few years. Just curious, what do you think your opportunity is for non-ticket? You know, how do you think about the trade-off between, you know, ticket and non-ticket? Thanks. I'll kick it off here, Drew here. You know, I think at the last call we talked about an incremental $10 being, you know, quite plausible over the next five or so years. I continue to believe that that's a very firm target. There's a number of initiatives Greg hinted at, Navitaire, and that'll unlock some capabilities for us on the ancillary side that we have not had internally, really in the history of Allegiant. That'll provide a lot more flexibility in terms of how we approach the ancillary program. I think we've been dynamic. We're capable, particularly around seats, but in other areas like bags, we've been, you know, fairly handcuffed by our own doing and can really unlock a lot there. Pretty bullish on that. Allegiant Extra was also mentioned, which will drive a lot to the seats line. Greg mentioned can take the A320s up to seven million EBITDA per copy, if we can return to some of the 2019 bandwidth. Beyond that, we have a lot of. I'll kick it over to Scott. He's got here a lot of the co-branded stuff and some third-party elements that he can develop. Yeah, that's exactly what I would add to that. Thanks for the question. You know, the next point, as Maury would put it if he was in the room, is selling outside the aircraft. Even, you know, if there are capacity challenges, part of the IT transformation that John spoke about includes really being able to add hotel inventory beyond just Las Vegas, where traditionally we've been strong, but also to streamline the buying and the adding of hotels and rental cars to be at parity with leading OTAs, which is something we don't currently have but will have, you know, in the near future. That additional hotel and rental car sales, in addition to what Drew says, I think, you know, helps us outpace from a revenue perspective. I think maybe just in closing and, you know, the idea is not to just, focus on ancillary as the opportunity, but base fare as well. You know, everyone can deploy a different strategy, if you will, on getting to a larger total average fare. You know, as we get there, it's not strictly a focus on ancillary, but a focus on base fare as well. All right. Thanks, everyone. Thanks, Andrew. Thank you. Our next question comes from the line of Daniel McKenzie of Seaport Global. Your line is now open. Hey. Thanks, guys. A couple questions here. You know, just following up on an earlier question on CASM ex for next year, should we be including the upfront Sunseeker costs in that cost outlook? The reason I ask is just 'cause there's no real offsetting revenue, you know, until that opens, I guess, now September first. Or, you know, I guess maybe if you can provide some perspective on, you know, at least how you're initially thinking to report that. And then more broadly, you know, just going, you know, on this point of expanding margins for next year, I'm just wondering if you can elaborate a little bit more on that. You know, what kind of economic scenario does that contemplate? You know, I think Bloomberg has said there's a 100% probability of a recession. I think the market's assuming 60%. If you can just elaborate a little bit more on those topics, that would be great. Hey, hey, Dan. Thanks. Greg, why don't I kick it off? I'll try to hit them both. On your Sunseeker comment, next year we're going to segment reports, so we'll break all that out so you'll see it separately. We're planning to begin that next year in 2023. In terms of just as we're thinking about next year, I think in the face of a recession, to get to your point, one, we focus on leisure customers, which generally is a stickier or we've got historically been a stickier kind of customer base. Scott DeAngelo, I think, mentioned it in his opening comment, 80% VFR and second home, which if you peel that onion back a little bit on the leisure customer, I think that's probably even more sticky, right? If you think about it from that perspective. To measure growth, we're going up to 10% next year. I think Drew and team are planning on that to be in existing markets, so it's de-risking that type of growth. We have our flexible model, the network, the direct distribution. Overall, I mean, with the capacity somewhat constrained and where GDP's outpacing 2019 more so than even the industry, I mean, we think even if a recession were to come and that there's some headwinds to the consumer, that we can continue to stimulate demand, and we're gonna be just fine. I think we're better, if not as well, if not better positioned than most other carriers where we sit today, given all our unique facts and circumstances. Dan, maybe just elaborate a little bit on the Sunseeker piece that you asked about. You know, the expense you'll see we're incurring now and you'll see next year is primarily all pre-opening, right? Next year, we'll blow out all the remaining part of that leading up to the opening of the resort, and most of that will skew in Q3 of 2023. We'll have it, of course, in the first two quarters, but most will skew into 2023. We'll share with you what that number is in Q4, when we finish the quarter. We'll break it out and let you know what that number is and then give you some thoughts as to what the order of magnitude is for all of 2023. The other thing, of course, that'll impact that is just the delayed opening. Pre-opening is larger just due to the delay. Having said that, we would expect to recover some of that through insurance as well. A lot more guidance, if you will, on that, we'll share with you after Q4. Yeah, that'd be terrific. Okay. Thank you guys. You know, second question here for, I guess, Scott DeAngelo. Total visitation, pardon me, to the website, you know, was up 30% versus 2019. To what extent is this data feeding into your, you know, revenue management systems or at least informing how the revenue management system should work? Yeah. Yeah. Oh, go ahead. I'm sorry. I was gonna just follow up with one more. No, no. You go ahead and finish. My apologies. Well, I was just gonna ask, you know, the reference to the up 30% versus 2019, and kind of the second part of this question, you know, is that our best indicator of pent-up demand as we think about the 2023 revenue picture? Or, you know, does it really more reflect the bleisure reference earlier in the script, so a structural change in demand? Kind of a two-part question. You bet. We'll take the second part first, and it's the latter. We think it's structural demand. I commented versus 2019 just to keep it consistent, but I'm happy to share our total web users were up by 34% versus last year. You actually see it gaining steam. That suggests structural as Drew had mentioned. Then on the first question, marketing and the revenue management and network planning team do work extremely close, especially as you think about, you know, off-peak being able to grab some of what we might not be able to grab during the peaks, as it were. When we drive those users, and where we're driving them from market-wise, is something we do in lockstep with network planning and revenue to make sure those users are coming at the right time and wanting to fly from and to the right places. Yeah. Maybe just, this is Drew here, just to expand slightly on the actual RM model. It's probably more art than science. It is integrated into the model, but not in a way that's driving significant automated changes or recommendations at this point. It still falls on the analysts to interpret and react accordingly. Yeah. Understood. Okay. Thanks for the time, you guys. Thanks, Dan. Thank you. Our next question comes from the line of Conor Cunningham from Melius Research. Your line is now open. Hey, everyone. Thank you. Just on the 10% capacity growth, it seems like you're sizing that to your resources that you have right now. There's still a lot of issues in terms of aviation infrastructure, you know, ATC being the major problem. Just curious on how you plan on navigating a lot of those issues outside of your own control next year. Sure. As we look at next year and really, you know, using 2022 as the baseline, ATC has certainly caused some A14 issues. I wouldn't call it anything major after, you know, probably the first quarter or so of the year. We struggled a little bit through March. Didn't really feel material impact through the summer outside of, like I mentioned, some A14. Not a lot of cancels being driven by that. So at this point, we're not restructuring our network plans or our schedule around that. I think similar story on TSA and other infrastructure issues. There's probably one-offs that you know we could point to, but you know at this juncture I would not plan on material changes to our plan in 2023 based on infrastructure that you're referring to. Okay. Just the changing dynamics from like the flexibility. You talked about a bit, a whole of it in the press release from a monthly standpoint, but you know, some of the other airlines have talked about like day of weeks changing a fair bit. When I think about you guys, like, you barely fly on Tuesdays and Saturdays. You know, I'm just curious on how that trend may be changing or how you're looking at that trend now, going forward and seeing if you'll be making any adjustments to your model as a result of it. Thank you. Yeah, no, I think you hit the nail on the head, that we don't have a ton of exposure to, you know, markets that are beyond two and three times per week. Where we are running six or more times a week, we certainly have seen some of that same shift to where primarily Wednesdays come up a bit more toward the week average. Tuesdays lag a little bit behind that. I don't think it necessarily changes our philosophy at all. You know, we've had to compress schedules even on larger markets a little bit given the constraints we have in place, and we'd love to be able to restore that and take better advantage. We would be doing that with or without the results that we've been seeing, I believe so. You know, seeing what you're indicating, but it's not something that needs to change our approach in my opinion. I think the other part worth mentioning, this came up just the other day. As you think about load factors exceeding your 90% books, that kind of implies you have more than just your peak patterns that are booking, right? So instead of just a heavy Friday to Monday or Thursday to Sunday weekend pattern, coming into the destination, you're also experiencing those going out of the destination as well as covering kind of the midweek type of travel. So that's more of how we'll see the dynamic shift, and kind of the dynamic that you need to adjust in order to facilitate book load factors at those levels. Okay, thank you. Thanks, Connor. Thank you. Our next question comes from Christopher Stathoulopoulos from Susquehanna International Group. Thank you. Good afternoon, everyone. John, on the 10% ASM growth for next year, what is your risk-adjusted view on the order book? Meaning you're contracted to receive X aircraft, but you're expecting a minimum of, let's say, Y. Then on the 10%, could you give us some color on the moving pieces there, how much you're expecting to come from departures, gauge, and stage? Thank you. Well, I'll let Greg or BJ talk about some of those kind of details. You know, at the end of the day, we have an agreement, you know, in place with Boeing. You know, we're not gonna renegotiate a deal over the phone. As we come into more information through conversation with Boeing, we'll react in a way that makes sense for Allegiant. You know, we're just gonna stay tuned and see what happens. Right now there's nothing really to add beyond what Greg and BJ mentioned about the 23 deliveries that we expect. Go ahead on the other detail that he's talking about. Sure, Chris. I think, you know, on the 10% growth, and Drew might fact check me here, but the departures are gonna lag the ASM growth because of gauge, slightly, maybe a point or two. We'll get back on that. We'll see where that comes out with next year. To John's point, you know, but like I say, on the Boeing deliveries, they were always gonna be back half of next year. That's what we were expecting. We're eager to get these aircraft in. We're planning on it. We have a whole team set up and working towards that. As I mentioned, there's 30% earnings advantage with that, with those aircraft. We have bonus depreciation, which it's 100% in 2023. It steps down to 80% in 2024 and then 60% in 2025. You know, that's very helpful for us in terms of offsetting cash taxes. It's part of our decision making, candidly. We wanna get these aircraft in. They're game changers, particularly in a high fuel environment for us. We're planning or preparing and being flexible depending on when that time comes. I don't know, BJ if I missed anything or if there's anything else you wanna add. Yeah, just to your question on contractual deliveries and expected deliveries, you know, to the. We were contracted to take originally 10 aircraft during 2023. We had mutually agreed to reduce that to eight aircraft shortly after signing the agreement. That was for some operational reasons to help us with onboarding the airplane type. We've now received notice from Boeing that it will only be three aircraft delivered in 2023, and we're still working with them to determine when the five airplanes that fell out of 2023 will deliver. To Greg's point, you know, we wanna be made whole on that. There were a lot of things we were counting on with those, but we're not sure they're gonna fit into 2024, so we'll have to update that maybe on the next call. Okay. Greg, on the CASM-ex breakout for 4Q, how much of the 10 points that you outlined do you see carrying over into 2023? I believe you suggested in response to Scott's CASM-ex question that you were anticipating some CASM-ex relief in the second half, which sounds like just a function of where your capacity is expected to be, plus these three aircraft. Is that the case? B, is that including a labor deal in that scenario? Thank you. You know, that is not including a labor deal, but what I would say is, getting a labor deal done gives us, you know, a path to take up utilization or optimize utilization per aircraft, which I think is really meaningful. In my prepared remarks, Chris, I think I mentioned every hour of increase in utilization per aircraft per day is worth like 0.5% of CASM-ex. So that could be a meaningful tailwind for us there. I think to your question about kind of what's rolling over for Q4 costs versus next year, into early next year. One of the things that I think maybe Linenberg was getting at, but it. There is gonna be the headwind in unit costs in it when it comes to bonus accrual. As mentioned, we're excluding it this year, but we'd add that back in next year, so that'll be a headwind. You know, it also, some of our costs, unit costs are seasonal, depending on just ASMs. First quarter, we're gonna generally have more ASMs than we would in the fourth quarter. That is, we'd have to take that into account as well. Yeah, I mean, I think like a, I mean, I. I'm just gonna pause or stop there because I wanna be careful for not getting into too much detail and guiding before we're ready to, because again, we're just still working through the budget and I wanna be fair to that process. Okay. Just the integration from Boeing, did you say that was $0.5 or $0.05? Thank you. $0.05 cents of CASM-ex. Thank you. That's added in by 24. That'll mature at $0.10 cents of CASM-ex. Okay, thank you. Thank you. I would now like to turn it back to John Redmond, CEO, for closing remarks. Well, we appreciate the questions. Hopefully you got all the information you needed. We're happy with the quarter. It was a good quarter. Obviously, we always expect, you know, more and I think you'll see that as we move forward and resolve. Thank you very much and everyone have a great rest of your week. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.