Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to the Spirit Airlines Fourth Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw your question, just press star one again. Thank you. I would now like to turn the call over to DeAnne Gabel, Senior Director, Investor Relations. DeAnne, please go ahead. Thank you, Greg, and welcome everyone to Spirit Airlines' Fourth Quarter 2023 Earnings Conference Call. This call is being recorded and simultaneously webcast. As soon as it is available, we will archive a replay of this call on our website for a minimum of 60 days. Presenting on today's call are Ted Christie, Spirit's Chief Executive Officer, Matt Klein, our Chief Commercial Officer, and Scott Haralson, our Chief Financial Officer. Also joining us are other members of our senior leadership team. Following our prepared remarks, there will be a question-and-answer session for analysts. Today's discussion contains forward-looking statements that are based on the company's current expectations and are not a guarantee of future performance. There could be significant risks and uncertainties that cause actual results to differ materially from those contained in our forward-looking statements, including, but not limited to, various risks and uncertainties related to the acquisition of Spirit by JetBlue and other risk factors discussed in our reports on file with the SEC. We undertake no duty to update any forward-looking statements, and investors should not place undue reliance on these forward-looking statements. In comparing results today, we will be adjusting all periods to exclude special items unless otherwise noted. For an explanation and reconciliation of these non-GAAP measures to GAAP, please refer to the reconciliation tables provided in our fourth quarter 2023 earnings release, a copy of which is available on our website under the Investor Relations section at ir.spirit.com. And now, I will turn the call over to Ted Christie. Thanks, DeAnne, and thanks to everyone for joining us on the call today. As we look back on 2023, while our financial results for the full year were unsatisfactory, I am proud of what our team accomplished, and we are well on our way to make the necessary strategic shifts that will enable Spirit to compete effectively in the current demand environment. First of all, I thank all our Spirit team members for their dedication and commitment in caring for our guests and each other while overcoming the operational and financial challenges we faced in 2023. A special thank you to all who carried the extra burden of preparing for the court case and working on merger integration planning while attending to their regular full-time duties. The professionalism and enthusiasm of the Spirit team is unmatched, and I am honored to work alongside such remarkable people as we deploy our plan to return to sustained profitability. Regarding the merger, when JetBlue first made the offer to us in 2022, and we subsequently signed a merger agreement, which had overwhelming support from our stockholders, our board of directors anticipated it would be a long, litigious road to obtaining regulatory approval. To compensate for that, we negotiated meaningful protections for the company and our constituents against an adverse regulatory outcome. Nonetheless, we believed, and we continue to believe, a merger between JetBlue and Spirit is a compelling combination, not only for our business, but also for the American consumers. As such, we strongly disagree with the court's ruling to grant an injunction against the merger. Together with JetBlue, we filed a notice of appeal, and our request for an expedited review has been granted. We will not be commenting further or entertaining questions about the merger on today's call. Moving on to a recap of 2023. At the beginning of the year, we made the decision to allocate resources and go full throttle on hiring the necessary number of pilots and building the infrastructure to support getting back to full fleet utilization by year-end 2023. We also recognized that we needed to de-risk the business and give ourselves the means to digest the high growth rate we had coming out of the pandemic. However, due to contractual obligations, the first practical opportunity to slow our pace of forward deliveries was in 2024. Therefore, in the summer of 2023, we negotiated a deferral of 11 aircraft, originally slated for delivery in 2024, and smoothed out the remaining deliveries between 2025 and 2029 to slow the pace of our growth over the next few years. At the time, together with achieving full fleet utilization, we believed this would be enough to set us up for a return to profitability in 2024. Things, of course, changed as the year progressed. We did not foresee the number of parked neo-aircraft in 2024 and beyond due to GTF neo-engine availability, further complicating and delaying our ability to achieve full fleet utilization. In addition, shifts in the balance of supply and demand for domestic air travel in leisure markets during last summer and fall had a very profound negative impact on revenue trends for the second half of 2023. In October, we stated we were prepared to make the necessary strategic shifts to enable Spirit to compete effectively, and we began to do just that and are executing on a plan that we believe will provide us a platform for margin health. We are making changes to network construction, peak versus off-peak flying, and geographic and market concentration, and we'll assess the success of various components and make some inevitable adjustments. We are not prepared to share all the details of our plan with you today as we await some clarity on our appeal. However, Matt and Scott will share some of the actions in progress that are already having the desired impact. Before I hand it over to them to provide details on our fourth quarter financial performance and first quarter 2024 outlook.... I want to comment on the recent speculation about Spirit's ability to make it as a standalone carrier, should the merger not close. This misguided narrative has been advanced by an assortment of pundits. However, back in the real world, we are focused on facts. Liquidity is always king, and we have enhanced our levels to give us the necessary flexibility to successfully close with JetBlue or to pursue our standalone plans. Above all else, margin repair is the key, and we have been making network adjustments and cost decisions to recover our margin production. First, Matt, over to you. Thanks, Ted. I want to start by commending our team for delivering excellent operating results throughout the fourth quarter. During the busy peak holiday period, we achieved a near-perfect completion factor. Running a great operation is a key focus at all times. However, high load factors like we had over the peak holiday period and winter weather disruptions add extra complexities in running a reliable operation, and our team did a fantastic job managing both. Moving on to our fourth quarter revenue performance, total revenue for the fourth quarter was $1.32 billion, a decrease of 5% year-over-year, which was better than the high end of our initial guide. Total RASM was $0.0894, a decrease of 17.3% on a capacity increase of about 15%. Load factor was 80.1%, down around 1% year-over-year. On a per segment basis, passenger revenue per segment decreased 25% year-over-year to $48.24. Our non-ticket results weren't quite as strong as they were in the fourth quarter last year, declining 6.6% year-over-year to $66.60. But I would call the non-ticket trend from an exit rate perspective strong as we head into Q1. I'll add some more color on this non-ticket topic further down in my prepared remarks. It is not apparent by looking only at the quarterly averages, but leisure demand in the peak holiday periods was very strong. However, with the return of corporate business traffic still lagging that of leisure, it feels like there is still a bit too much capacity chasing leisure demand to gain yield traction and drive historical load factors during the off-peak periods. In the immediate term, primarily January through the first half of February, we felt the best way to address this continuing issue was to reduce flights on off-peak days to a greater degree than we typically do. We also made other network changes, including suspending a few of our recently launched markets and slowing our overall pace of introducing new markets to our network. We are also continuing to make other adjustments to the network to better align our capacity towards markets where the supply-demand trends are more in balance. We started to get more aggressive in this process in Q4, and we will continue to refine the network throughout the balance of the first half of the year. For the first quarter, we estimate our capacity will be up approximately 1.5% year-over-year, which is about 5.5 percentage points lower than we projected back in October. About half of this variance is related to the reduction of scheduled flights on off-peak days that I just spoke about. The other half is a combination of having to pull neo aircraft from service to position them for engine removals due to the powdered metal disc inspections, and some impact still remains related to ongoing ATC issues. ATC issues are improving, they just have not improved to the degree we thought they would. Therefore, to help support operational reliability, we have not yet been able to reduce scheduled block times as much as we had originally anticipated. We'll get there, but it's taking longer than any of us would like. For the remainder of the year, based on our current assumptions regarding engine removals, we anticipate year-over-year capacity for Q2 to be up low single digits, Q3 up high single digits, Q4 expected to be about flat, which leads to full year 2024 capacity ranging between flat to up mid-single digits versus full year 2023. The timing of engine removals and aircraft being pulled from service is fluid, so this is just our baseline estimate for now. Please note that our published schedules for the second quarter and beyond do not yet reflect the estimates I just provided. I'll now turn to how we are thinking about the demand environment and what we think the trajectory will be headed into the summer. There is a material amount of industry capacity coming online in some of the markets we serve. However, we have also seen some cuts in projected industry capacity growth rates for 2024, which should be constructive for yield production as we move through the year. Domestic demand over the peak holiday period and early trends we are seeing for spring break give us confidence that we will see more normalized demand trends for domestic travel this summer. In regard to non-ticket trends, throughout Q4, we saw core ancillary products improve in each month, in each month on a year-over-year basis. This trend is continuing into Q1 as well. Some network shifts, as well as some adjustments to our revenue management strategies, has non-ticket back on track. Additionally, some new merchandising techniques are going into production this month, which we anticipate will continue to push non-ticket higher as we exit the off-peak and head into spring break in Q2. As a reminder, we are lapping what was a very strong first quarter last year. So on a year-over-year basis, we are estimating first quarter 2024 TRASM will be down compared to the first quarter last year. However, our network and schedule changes, together with non-ticket revenue trends, should provide a nice tailwind to our sequential unit revenue performance from Q4 into Q1, and that sets us up well to continue this positive trend into Q2. We estimate the first quarter of 2024 total revenue will range between $1.25 billion and $1.28 billion. With that, I will now turn it over to Scott. Thanks, Matt. 2023 was a year of many distractions and unpredicted events. Our team did a great job preparing for and reacting to all the issues we faced with professionalism and a positive attitude. For that, I want to give thanks to everyone on the Spirit team. Turning to our fourth quarter results, our fourth quarter operating costs were $1.49 billion, an increase of 11.3% compared to the fourth quarter of 2022, on a capacity increase of 14.8%. Non-fuel operating expenses were $998 million, much better than our initial expectations, driven largely by lower airport rents, lower costs resulting from reliable operational performance, and various cost savings initiatives. Also, better fuel efficiency drove lower than expected fuel expense, despite fuel price per gallon coming in higher. Together with the better-than-expected revenue results- Mr. Stathopoulos with Susquehanna Operating margin for the fourth quarter of 2023 was -12.4%, about 2.5 points better than the high end of our initial guide. While I applaud our team for beating expectations, these are clearly unsustainable results overall, and we remain determined to return to profitability and have been adjusting our strategy accordingly. There is considerable economic power in the Spirit business model, but we do understand some of the limitations and issues with it as well. We believe we have some things in the works that will address these issues while maintaining the power of the model. We look forward to discussing these enhancements as the year unfolds. Total non-operating expense came in about $5 million higher than our initial guide, in part due to lower interest income, higher interest expense, and mark-to-market valuation of the derivative liability associated with the 2026 convertible notes. We ended 2023 with $1.3 billion of liquidity, which includes unrestricted cash and cash equivalents, short-term investments, and the $300 million of available capacity under our revolving credit facility. During the fourth quarter of 2023, we modified our credit facility, extending the final maturity to September 30th of 2025. We recently completed sale-leaseback transactions for aircraft we previously owned and operated. We completed 20 of these transactions in December and five more in early January. In total, these transactions resulted in net cash proceeds of approximately $420 million. We retired one A319 aircraft and took delivery of two new A320neos and two new A321neos during the fourth quarter, ending the year with 205 aircraft in our fleet. Before I move on to the first quarter outlook and plans for 2024, just a quick update on our GTF engine availability issues. In January, we averaged 13 grounded neo aircraft and continue to estimate this number will climb steadily to an average of about 40 in December, averaging about 25 AOGs for the full year 2024. The situation remains very fluid, so we'll keep you updated as things develop. While we are working closely with Pratt & Whitney to predictively manage the engine removals and finalize a compensation arrangement that will partially cover the cost of the AOGs, we won't be able to achieve what we would consider an optimized cost structure until we get past the engine availability issues. Net of expected reimbursements, we expect this current AOG issue to cost us a few margin points in 2024. Looking ahead to the first quarter and full year of 2024, we continue to face cost pressures from carrying costs related to the NEO engine availability issues, inflationary pressures on wages, and we will also see increases in aircraft rent due to the higher mix of leased versus debt-financed aircraft. On the positive side, we continue to improve fuel efficiency, driven by the increase in the number of neo aircraft in our fleet, particularly the 8 A321neos added in 2023. In 2024, we are scheduled to take 20 more A321neos, which will drive further fuel efficiency. We are also making progress in improving utilization of our non-AOG aircraft, which we define as total fleet, minus any aircraft on the ground due to engine availability issues, and this is a better comparable metric to historical fleet utilization numbers. We expect the benefits from better fuel efficiency, improved utilization of our non-AOG fleet, and the right sizing of our labor costs to be the platform for our ongoing unit cost repair. Regarding liquidity, we believe our $1.3 billion of total liquidity at the end of 2023 should be more than adequate to sustain us until the business is back to generating cash. This is a milestone we think we will cross as we enter March of this year, and then begin building cash in the second quarter and beyond. While we have confidence in our ability to return a positive cash generation, we will continue to look at other opportunities to further shore up liquidity as we progress through the year. Also, while Spirit remains focused on consummating the merger with JetBlue and is looking forward to prosecuting the expedited appeal of the U.S. District Court's order, the company is aware of its 2025 and 2026 debt maturities and is assessing options to address those maturities when the time is appropriate. We anticipate capital expenditures, including net pre-delivery deposits, for the full year of 2024 to be about $235 million. For the first quarter of 2024, we estimate our operating margin will range between -15% to -12%, with a fuel cost per gallon averaging $2.90. So now I'll turn it back to Ted for closing remarks. Thanks, Scott. As we enter 2024, we are beginning to see the benefits from the tactical and strategic changes we implemented in 2023, including day-of-week schedule adjustments, eliminating a number of underperforming cities, refocusing our network on areas of obvious strength, like Fort Lauderdale, and directing more discretionary airplanes to markets with better supply-demand characteristics. In addition, current booking trends support our view that the domestic environment is beginning to rebound. Together with the changes we have made, we estimate this will result in an unprecedented sequential improvement in TRASM from fourth quarter 2023 to first quarter 2024, which supports our view of a domestic recovery in 2024. After 20+ years of working for lower-cost carriers, it has become ever more clear to me that we exist in an uneven playing field. To quote Judge William Young in his decision to enjoin the merger between Spirit and JetBlue, quote, "The airline industry is an oligopoly that has become more concentrated due to a series of mergers in the first decades of the twenty-first century, with a small group of firms in control of the vast majority of the market." End quote. No truer words were stated in the entire opinion. Despite that explicit acknowledgment, the government continues to do nothing to address the anti-competitive structure of our industry. Instead, they have just engaged in an expensive and long litigation process to block the merger of the sixth and seventh largest airlines, that when combined, would still be half the size of the fourth. This case should never have been brought. It's beyond absurd for the government to claim a victory for the American consumer. In fact, it's ridiculous. As kind as I can be on the matter, would be to confirm that the law of unintended consequences is in full effect. Either through direct government intervention or lack thereof, the end result has been to perpetuate a small group of haves that control the market at the expense of the have-nots and the American consumer. Nonetheless, you can rest assured that the Spirit team is 100% clear and focused on the adjustments we are currently deploying and will continue to make throughout 2024 to drive us back to cash flow generation and profitability. Now back to DeAnne. Thank you, Ted, Scott, and Matt. I also want to apologize for the background noise you may have heard. I'm not sure where it was coming from, but it does seem to have resolved itself. With that, Greg, we are now ready to take questions from the analysts. We do ask that you limit yourself to one question and one related follow-up. Great, thanks so much. And at this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Once again, star and the number one on your touch-tone phone. And we will pause just a moment to compile the Q&A roster. All right, it looks like our first question is from the line of Christopher Stathopoulos with Susquehanna. Christopher, please go ahead. Good morning. Thanks for taking my question. So Ted, you know, with regards to the network optimization, could you talk a little bit in perhaps some more detail around the changes with your, you know, crew scheduling placement, and then also how you're thinking about your seat distribution by market? Sounds like perhaps something similar to what we heard from Frontier this week, but any additional color here as we think about the composition or distribution of your capacity, as well as some of the tactical changes you made around scheduling and the crew, as we look at 2024. Thank you. Sure. Well, let me make a couple of comments specifically on how we've designed how the airplane network interfaces with the crew, and then I'll let Matt also opine on how he feels like, you know, seats and capacity are being deployed into markets. So, over the last, you know, two and a half years, we've made a number of structural improvements to the core network and how it enhances our reliability. And one of the biggest changes we made, you know, at the early part of the later part of 2021 and into early 2022, was restructuring how many crews originate and come back to their base, and what percentage of the flying originates and comes back to its base, and how long those crews are away from their base. Those changes were made back then, and if you follow our reliability since then, while on-time performance ebbs and flows, depending on how our utilization is doing throughout the year, and of course, depending on air traffic control and weather, completion factor has been excellent. And that's really what's key to us is to see that signal first, then we can start tweaking further in ways that we think can drive even better on-time performance. And if you look at the peak part of the holiday periods at the end of last year, we were in the top three, and for the month of January, we are in the top three and in the top two in completion factor. So I think as far as structural enhancements go, we're getting wiser and wiser about how we can enhance further reliability. If we think about how the network is being deployed from a seat perspective, maybe, Matt, you want to give some perspective on that too? Yeah, sure. So Chris, we, when you look at first quarter this year versus sort of the last 12 months rolling into the quarter, we have added on a year-over-year basis, 55 new routes, and we suspended or exited 37 routes. And part of those suspensions includes nine city exits or suspensions where we think we'll be back into those cities. So you know, those are some material moves for us. And I think Ted mentioned his prepared remarks, the shift in the ASMs. Some of it has gone to Fort Lauderdale, where we continue to see very good strength. And we've also seen a good bit of growth for Spirit in the New York metro area as well. Again, a great, great source of strength for us, and what we're seeing is some shift away from some other leisure destinations. Orlando is a little smaller for us. Las Vegas is also smaller for us. So, really just surveying the landscape, which we do all the time, and just those are the actions that we've been taking. And, I think for now, we're really happy with what we're seeing, as early returns on that, and we'll just continue to accentuate our strengths and look for opportunities where we think the supply-demand balance favors us a little bit more. Okay, thank you. And as my follow-up, Matt or Scott, maybe if you could walk us through the cadence of, you know, how we should think about the GTF aircraft down grounding. You did give your capacity guide by quarter here for 2024, so thank you. But as we start to rework, if you will, our bottoms-up models for next year, any detail you could give as far as the cadence of GTF groundings through 2024 and how we should think about 2025? Thank you. Yeah. Hey, Chris, this is Scott. I'll start. For 2024, I think I mentioned a little bit in the prepared remarks, we will, you know, have an AOG number in the first quarter in the high teens, and that will steadily climb through the year, and probably end up in the fourth quarter, averaging about 40 AOGs. And that would translate to an annual number for 2024 at about 25 AOGs for the year. For 2025, it's going to be difficult to estimate today. I mean, in actuality, really looking out into the third and fourth quarter has some, you know, bit of volatility. So looking into 2025 is going to be tough to estimate. There's a lot of things that we're doing and Pratt is doing to, to help manage the number. So we really only have a good bit of visibility into 2024 at this point. And I would just, this is Matt. I would just add, to that, like, to Scott's point, there is still some volatility in the number, and we'll just continue to adjust the fleet, and the network will move around some of that. We feel pretty good that we have a better number now than we had, even a few months ago, so that's good, but we'll just continue to move, as necessary. Okay. Thank you. Great. Thanks, Christopher. Our next question comes from the line of Mike Linenberg with Deutsche Bank. Mike, please go ahead. Yeah. Hey, good morning. I apologize if I missed this, Scott, but when we think about the airplanes coming in for the year, I think, what is it? 26 or 27 new Airbuses. Are- how are those being financed? And as each airplane comes in, should we think of that as a, as a c- cash accretive transaction, as you bring in each airplane with all the puts and takes? Yeah. Hey, Mike, thanks for the question. Yeah, the number of deliveries for 2024 will be 27 aircraft, and they are all fully financed with either the ones coming from Airbus are sale-leaseback transactions, and we also have deliveries that are coming from lessors as direct operating leases. So those are all fully financed. And in fact, we're fully financed through the second quarter of 2025, minus one second quarter of 2025 airplanes. So that, that's the delivery stream. And in regards to the financing, we typically will finance the cost of the airplane. So we're usually plus or minus the cost of the airplane. We don't typically overfinance. And also, maybe it's a good time to point out maybe some clarification, too, on how that stuff works. You know, because we've had some questions from analysts around what do we do with gains and losses? So, you know, they've asked whether or not we include the gains or losses in our operating expense. And to be clear, you know, we do not. We actually calculate the gains or loss and account for them as a non-operating expense, and they are excluded from our non-GAAP metrics. So we know some airlines do account for gains and losses as credits to operating expense, but we don't do that. Yeah, I would say actually, most airlines that, with respect to sale-leaseback gains, actually follow what you do. Southwest excludes them as well when they take them. So no, I think that- Yeah ... that, that's sort of what it's been historically. My second question is just related to cash. You mentioned that, you know, you anticipate getting into positive operating cash in March and then beyond, you know, June quarter and beyond, clearly there is a seasonal tailwind that will start kicking in, probably if it's not now, it's within the next week or two. And so we know that that carries you through part of the year. But as we think through the full year, are you implicitly telling us that, you know, the operating performance, or I should say, the financial performance of the airline is expected to get a lot better in the back half of the year? Or will that be supplemented by, you know, other things like whether it's, you know, deferred maintenance, or, you know, other levers that you can pull to generate, you know, additional cash on the operating side? Thanks for taking my question. Yeah. Hey, Mike, I'll start, and I'm sure Ted and Matt want to jump in here too. I'll just start at the high level, sort of, you know, sort of financial forecast for the business. And yeah, we'll likely, you know, burn some operating cash in the beginnings of the first quarter, which we talked about January and February. But things will make a turn, you know, as we head into spring break. Mm-hmm. And, you know, the second, third, and fourth quarters, we do expect you know to generate you know some operating cash for the business in those quarters. We expect margin to be, you know, positive for those periods. And it's really, you know, premised on, you know, the domestic return, our ability to manage some of the costs in the business, which we are already seeing returns on. So that's really what the premise of the cash generation is, but I'll let Matt and Ted sort of talk about some of the market stuff. Mm-hmm. Yeah, I mean, I think I'd only add, Mike, that, you know, when we hit-- and I, I think I made a comment, when we hit the late summer of last year, you know, there was, there was some notable shift in domestic demand, and we're obviously heavily skewed domestic, today. Mm-hmm. And that coupled with, you know, Pratt & Whitney not moving in our direction by any means and getting considerably worse- Mm-hmm ...burdened the business with both kind of like a bad setup on the top line and a lot of burden in the cost structure. That was not a good start, but we're starting to make the adjustments we need to make, you know, moving as rapidly as we can. Looks like the market should stabilize, just based on what we saw on the peak of the fourth quarter and what we're already seeing for spring break. And we'll make some, as Scott alluded to, some adjustments, you know, to right-sizing the business as well, and all of that combined, while not fully done, and we still have a lot of work to do to get back to where we want to be, it's progress in the right direction that gives us some confidence that we can start moving the cash needle in the right way. Very good. Thanks. All right. Thank you, Mike. Our next question comes from Duane Pfennigwerth with Evercore ISI. Duane, please go ahead. Hey, good morning. This is Jake on for Duane. Mm-hmm. In your prepared remarks, you mentioned right-sizing the labor cost. If that's coming from headcount, can you quantify how overstaffed you are and what particular groups? Then just relating to commentary on the last call, are you seeing the same as the rest of the industry regarding improving pilot staffing? Thanks for the question. This is Ted. I'll start. Maybe, Scott, you want to jump in. So as I stated, we moved full bore into hiring to hit what we thought was going to be a full utilization airline on a much bigger fleet, as we were moving through the second half of 2023. And we, that did not materialize. We're going to be, as Scott said, down on average 25 airplanes from where we thought we would be. By the time we hit the end of the year, it's 40. And so, you know, that's a lot of staffing, and that's across the board. It's everything from our frontline people, our pilots, our flight attendants, the folks at the airports, quite frankly, even the general administrative workforce has some more direct related expense associated with it when you get bigger. So, you know, we're working with all those various constituents to come up with solutions. We already have some progress on that. I hesitate to give you a number right now, but, you know, last year we alluded to the fact that we're pursuing $100 million in structural cost enhancements, and it's sort of tied to that. So at least gives you some guidance on the bucket. And then, as to your question on pilot staffing, you know, we saw the worm start to turn a little bit in the middle part of last year, and attrition really started to go down for us. And I've heard similar comments from other airlines as well. So it sounds like all the work that the industry is doing collectively to create more opportunities for pilots to get training, to move through the process, is bearing some fruit. And we're starting to see, you know, once again, the principles of supply and demand working the way it's supposed to. Wages have gone up for pilots. There's more opportunity for prospective pilots to find options to get trained and to become a professional pilot, and that's beginning to bear fruit. So I think we are starting to get closer and closer in balance. You want to add anything more? No, I think you hit on it, Ted. I think that that's the point is, you know, when we think about hiring crew, you know, it's well in advance of taking deliveries of airplanes. And so when the, you know, when the AOG issues started to materialize in the back half of last year, we had to react, and the number of resources that we had internally was already embedded into the business. So, this is really all about right-sizing, you know, our costs, and a lot of that is labor, you know, as Ted mentioned, to the size of the business. And that will, you know, be muted in 2024 and 2025, and maybe even beyond that. Part of what we're going to do is figure out the right staffing levels in all components of the business to make sure they're a fit for where we are. ... Okay, thanks. And then just to follow up, you talked about the timing of AOG, but do you have any insight, or can you provide any detail for the timeline of GTF engine compensation? Yeah, I mean, from a timing perspective, let me just give you a little history. You know, we've been in discussions with Pratt & Whitney for the better part of a few months, figuring out how to best negotiate a structure to compensate us for the AOG aircraft. And while I think we are in the later innings, we don't have an agreement yet, so it's difficult to say where we think that will hit and when. But we do have some amount of compensation embedded in our guidance. Just to be clear, I just can't give you details on what that is. That is a commercial agreement with Pratt that we will not be able to disclose the details, but I will tell you that it's in the guidance. Okay, thank you. All right. Thank you for your question. And our next question comes from the line of Conor Cunningham with Melius Research. Coor, please go ahead. Hi, everyone. Thank you. You know, just as we talk about this margin recovery opportunity, some of the other domestic airlines have talked about that as well. But as you sit here today, do the plans that you're currently laying out get you back to break even by year-end? It just seems very unit revenue-driven right now. I'm just trying to understand the building blocks of how we get there overall. Thanks, Connor. It's Ted. Yeah, so look, it has to be at least, if not a portion, a significant portion driven around the recovery that we're seeing. You know, and I think that speaks a little bit to how bad it was in the latter part of summer and the fall of last year. That didn't feel right to anybody, and feels like it was a little bit of a demand shift and maybe some macro concern about where the economy was heading. And I think those two things are starting to stabilize. So, if we weren't seeing, you know, some confidence in that in the way people were booking in both the peaks and off-peaks right now, we would, you know, we would tell you. But they are. It does appear to be moving in the right direction. So yes, it does imply that we start to continue to see that momentum, coupled with the efforts that we're making on the cost structure and the utilization that were not right in the second half of last year either. So, you know, it's definitely both items, but it does require the demand environment to behave the way we're starting to see it behave. Yeah. Hey, Conor, I'll make one other comment, and Matt will probably want to chime in, too. But just mathematically, as we think about the year-over-year move, you know, we talked about our growth rate being, you know, in the low single digits, you know, kind of flat to mid-single digits range. That alone will provide a tailwind to unit revenue, sort of this no-growth scenario versus our historical double-digit growth rate. So we think that the move in unit revenue for us, and really the domestic landscape, doesn't have to be fantastic for us to get to the unit revenue number that we're expecting for the year. I don't think we're being aggressive, because we do have some puts and takes on, you know, the network changes and the sort of no-growth benefits to unit revenues. So I think the assumption around the domestic recovery I think is not aggressive for us at this point. Yeah, and Conor, this is Matt. I can add a little bit of color in terms of the trends that we've been seeing, especially as we moved out of the fourth quarter and into January. We're definitely starting to see... If you think about the sort of the year-over-year unit revenue production, it was very, you know, obviously not up to where we wanted it to be in Q4. What we're seeing now, as we head into January, it's still January, but the year-over-year unit revenue change from what we saw in Q4 as we head into January and into the first quarter, we're seeing significant unit revenue improvement on a year-over-year basis. Still down in Q1, but significantly less down, if that makes sense, from what we expect in Q1 relative to what we saw in Q4. Domestic is leading that charge back, which is what we were expecting to see, and it's good to see it, you know, starting to come through that way. One other piece I think it's worth noting, geographically, and everybody has some amount of geographic diversity, it just so happens right now, we talked in the past, I think it was like last summer into the fall, how Cancun really took a turn in the wrong way as we headed into the summer and exited this summer. We're still seeing some issues there. So, Cancun and some of our Caribbean leisure routes, think of that as like Montego Bay, Punta Cana, we're still seeing material unit revenue declines there. So, some of our numbers here are including, of course, including that part of the network, which might be worth at least a couple of margin points right there, just from some geographic issues that we're having. We expect that to come back, but the timing is taking longer than what we would have liked. So that's still out there affecting our numbers, and domestic is definitely starting to lead this charge back for us. Okay. That's very helpful. And then, you know, I know you talked about you feel comfortable with the liquidity situation, but can you just talk about where the unencumbered asset base sits today? I feel like you got a lot of equity in your order book. Just anything that you have on your current fleet. And then maybe if you could just talk about your current discussions with refinancing of the loyalty bond in 2025. Thank you. ... Yeah, I'll mention the uncovered assets, and really the financeable base, I guess, is sort of what you're getting to. So today- Yeah Unencumbered assets, you know, excluding the 319s, which are already contracted for sale, you know, hard assets sit in the sort of $350 million range. We also have $425 million of PDPs with Airbus, and a roughly, you know, $500 million of equity sitting in airplanes. And so that's sort of $1.2 billion of financeable assets, you know, sort of what we start with. You know, LTVs are, you know, unknown at this point, but... And it also doesn't assess the value of the order book, which is a different concept, but just sort of the financeable base is over $1 billion. And then, the other discussions around the loyalty bonds, you know, aren't at a point at which we can discuss today. We're in the early innings of thinking about how we address those, but we are aware, and that's about all I can say about those today. Okay. Thank you. Great. Thank you, Conor. Our next question comes from the line of Scott Group with Wolfe Research. Scott, please go ahead. Hey, thanks. Good morning. So just before I get to questions, just one thing I want to clarify. You made a comment that the GTF recovery is reflected in your guidance. What do you mean when you say that? Yeah, the comment was around the compensation agreement with Pratt & Whitney for the AOGs. While we don't have an agreement in place today, we do have an estimate for that compensation that will show up as a credit to non-operating expenses. That is in our guidance, an assumption for that. So, you're saying in the Q1 guide reflects some assumption for the recovery? That is what I'm saying, yes. Okay. And then just, are you assuming that's spread over the course of a year, or are you taking, like, the full recovery assumption in Q1? Just to understand, like, what the real starting point for Q1 costs are. Sure, fair enough. Yeah, the way the estimate will work in our guide is that we assume that we get compensated on a per AOG amount over the year. So the number of AOGs that happen in the first quarter will have a corresponding amount as a credit to that expense in the period. So that will- it'll be spread over the year, in other words. Okay. Okay, that's helpful. And then just maybe along those lines, just how are you thinking about the trajectory of CASM over the course of the year? Well, I think a lot of it will be in part to, you know, what Matt mentioned around capacity. But we're not going to give guidance for CASM for the year. There's a number of moving pieces around that at this point. But we do expect to be, you know, sort of year over year, we've talked about it being up, you know, probably mid-single digits, you know, year over year. And that's primarily due to capacity constraints and some of the lingering, you know, sort of right-sizing components that we'll address through the year. Okay. And then just lastly, is there a—I know you said $230 million or so of CapEx. Is there a cash CapEx number to think about? And then have you guys publicly talked about any sort of minimum liquidity targets? Thank you. The $235 million of CapEx is cash. So that's the cash number for CapEx. And we've been asked around, you know, minimum liquidity, and I'll say a couple of things. One is that there is no, you know, specific operating minimum for us, but we do have some contractual minimums. We've talked about the $400 million minimum in our loyalty bond. Our revolver has a similar number. And, you know, people often ask about holdback, of which we can't give details on, but just as a marker, you know, our ATL balance is, you know, just under $400 million for the end of 2023. So, you know, the holdback is usually some factor of that, at which we can't give specifics, but those are sort of markers. But, you know, other than that, I can't give you a specific number. Very helpful. Thank you, guys. Thank you, Scott. Our next question comes from the line of Andrew Didora with Bank of America. Andrew, please go ahead. Hey, good morning, everyone. A lot of my questions have already been addressed, but, hey, Scott, just with regards to the answer to the last question here, the $235 million of cash CapEx in 2024, that is before any financing, correct? That, that is correct. That, that is not, you know, sort of the gross fleet CapEx number. You know, that, that really includes, our, our sort of aircraft-related CapEx, you know, call it, you know, net of PDPs and engines and those things, plus other, you know, CapEx. Like, we have some remaining spend left on the headquarters, some other, you know, rotatable spend, parts spend, and, and other IT projects. So to your normal, you know, run rate CapEx. Yep, got it. Okay, and then just, you know, going back to the GTF issues, by the time you reach the end of 2024, how much of your fleet will already be kind of through the process and done? Just trying to get a sense for what's to come in 2025. Thank you. Well, this is a tough one. We're sort of looking at each other as the best way to answer it. It's an excellent question, but unfortunately, we don't have clarity on that. The number that would trigger the right answer there would be some stability in what we call the wing-to-wing turn time of the engine. So after it comes off, how long does it take- ... for it to come back once it's through the shop. Historically, and I'm really reaching back into my early days, in, in the business, we used to see the engine manufacturers get wing-to-wing turn times somewhere in the 90-120-day range. Unfortunately, we're seeing Pratt numbers that are in the 300+ range. And we're not sure whether or not that is stable, whether or not it will continue to increase or decrease. So until we get a feel for that, it's hard to say how many, quote-unquote, engines will be through the process. The reason that they will be removed over the course of the year is because they will have reached their threshold to be removed. So, this is obviously the way that the process would work. We'll just have to see how quickly they can either start to move that turn time up, and get us back engines and/or produce more spares available for the worldwide fleet to start offsetting some of the pressure. I think Scott said earlier that it's hard to guess on what's going to happen in 2025 right now, and that's one of the primary reasons, is we don't yet have clarity from them on how they're going to how quickly they'll be able to move through this process. Got it. Understood. Thanks, Ted. All right. Thank you, Andrew. And our next question comes from the line of Jamie Baker with JP Morgan. Jamie, please go ahead. Hey, good morning, guys. This is, James on for Jamie. Just a couple quick follows on liquidity. For the pre-delivery payments, my understanding is that the OEM has to be in breach for those to be returned. Is that correct, or is there some negotiation that Spirit can have to reclaim them? Well, we're not in discussions around the return of PDP payments at this point. I think if you're commenting on my previous, you know, words, it was around the PDP financing, not a return of PDPs, but... Okay. Gotcha. And then just a quick one. The new HQ, is that unencumbered? And if it is, or can you give a value there? It is unencumbered. We, we've built that, you know, with cash at this point, and then we'll probably look to use it as a collateral for some sort of financing in the future. Of the $350 million hard asset number I said for unencumbered, you know, it's a significant portion of that in the $250-$300 million range. Okay, thanks for the questions. All right. Thank you, James. And our next question comes from the line of Dan McKenzie with Seaport Global. Dan, please go ahead. Hey, good morning. Thanks, guys. Matt, putting a finer point, I guess, on the network questions, big picture, what% of the network needs to get reconfigured to get back to profitability? And I guess, how far along are you today? I mean, are we, are we halfway there, three-quarters of the way there, and, you know, just sort of the time frame for completion. I'm just trying to get a sense of how easy or how hard it is from where you sit. Yeah, Dan, thanks. That's a great question. I would tell you that the moves we're making now and the moves that we have planned to make throughout the rest of the first half of this year is what we need to do to get us back on track to head towards profitability. I quoted some numbers for you there earlier in terms of city exits and new routes and suspensions. All of that is us moving methodically towards getting the network to a place where we can take advantage of our strengths and look for where the supply-demand balance is more appropriate. So I don't have an exact percentage that I'm going to give to you for that question. It's a great question, but the moves that we're making throughout the first half of this year should set us up for that. And of course, once we then hit after summer and into the fall and winter, we may have some additional moves that are just seasonal in nature, but the vast majority of what we should be doing should be in place by the first half, by the end of the first half of this year. Hmm. Yeah. Okay, very good. And then, Scott, you know, in response to an earlier question, you mentioned generating operating cash and margins being positive, and I think that was for the second and third quarter. Does that positive margin reference reflect the compensation from Pratt? And, you know, does the current outlook contemplate profitability in any of the quarters this year? Hey, yeah, it does. I mean, as I mentioned earlier, the guidance that we issued does include compensation from Pratt. Now, I mentioned in my prepared remarks as well, that the compensation doesn't fully cover what the impact of the AOGs, you know, are for the business as well. It partially offsets in both the direct costs and in opportunity costs. I mean, our unit costs would be lower, but for the AOGs, our margins would be higher, but for the AOGs. So, just to be clear, that is the case. But notwithstanding, we do still think that we will be in a situation to have positive margins for the second, third, and probably the fourth quarter as well. You know, it's all part of the discussions we had earlier around, you know, market recovery and our own unit cost management. Hmm. Thanks for the time, you guys. Okay. Thank you, Dan. Our next question comes from the line of Savi Syth with Raymond James. Savi, please go ahead. Hi, this is Zara, on for Savi Syth. Our question today is that there seems to be investor concern around credit card holdback, which seems premature. What type of discussions are you having with your administrator on this topic, and what are the thresholds they are looking at? Yeah, as I mentioned earlier, we can't disclose the credit card holdback number, and that is a competitive, you know, commercial arrangement. But I mentioned that the ATL balance today is, you know, just under $400 million, and credit card holdback, you know, is usually some factor of that number. And we had a, you know, an agreement renegotiated with them a couple of years ago that lowered the actual holdback that we were required to have. Or that I should say lowered the minimum cash balance that we were required to have. So, we feel like we're in a pretty good spot there. Hey, Greg- Okay, gotcha. And then- Oh, sorry, go ahead. Go ahead, Zara. Oh. Oh, no worries. And then one more, although you guys touched on this earlier, if you could talk about any additional costs, headwinds, and tailwinds in 2024, that would be great. Thank you. Yeah, sure. I mean, I think it's a similar story. You know, as we've talked about, the big movers are our labor costs, aircraft rent, you know, due to more leased aircraft than owned. You know, and, you know, as we look through the year, it's gonna be those things that we'll have to address. You know, airport costs are also part of that. And, the good guys, though, I mean, we saw in the fourth quarter was running a good operation. You know, that was critical for us. We saw that throughout the P&L, including fuel burn. As I mentioned, you know, running a good operation has, you know, obvious direct expenses with labor and interrupted trip expense, but we benefit in fuel burn and not having to fly so fast and really thinking about, you know, as the network team allocates NEOs to market appropriate places, you know, we'll see real benefit in fuel burn, you know, in 2024. All right. Thank you, Sara. Hey, Greg, we have time for one more question. Let's move on to the next one, please. Okay, no problem at all. Our final question comes from Helane Becker with TD Cowen. Helane, please go ahead. Thanks very much, operator. Matt, can you say what percentage of the forecast revenue for 2024's first quarter is already booked? Yeah. So, we usually don't comment specifically on that, Helane. I would tell you, though, that for the spring break period, we like the setup very well. We think our revenue management plans there are gonna bear fruit for us, and we're looking forward to getting closer and closer to March because we do believe that the setup's really good for spring break, and we're looking forward to getting there. Okay, thanks. That was my only question. Great. Well, thanks everyone for joining us today, and we will catch you next quarter. All right, ladies and gentlemen, that does conclude today's call. Again, thank you all for joining, and you may now disconnect. Have a great day, everyone.