In any event, Bob Jordan is gonna take over the cockpit here, Andrew Watterson, and reintroducing Tom Doxey. A lot of people here, you know, probably have met you in the background, and I don't know if we have to start out with some safe harbor statistics, but I'll leave that to you. Thanks, bud. It's good to see you. Thank you. Thank you. Thank you. Thank y'all for being here. What I took out of that introduction, Jamie, was that you were only happy to see Tom. Before we start, Lauren, you've got some disclosures at all. Yes, thank you, Tom. Hello, everyone. Just a quick reminder that we will make forward-looking statements which are based on our current expectation of future performance, and our actual results could differ materially from expectations. Please refer to our presentation for further disclosures. Back to you, Bob. Lauren, thank you. Good morning, everybody. Yeah, we do have a lot to talk about this morning. It's good to be here. We got a lot to cover, but I do, I did want to welcome Andrew Watterson, our EVP, our CFO, I mean, our COO at Southwest Airlines, and our new EVP, CFO Tom Doxey. Tom joined Southwest two days ago, literally became our CFO yesterday, and brings a wealth of industry experience from last as president of Breeze. Just super thankful to have both Andrew and Tom here today. Today I'll provide an update on current guidance, some context around our recent performance, update you on some progress against previously announced initiatives, but I'm going to focus the majority of the time on new initiatives that we are announcing today. As evidenced by recent actions and what I'll be covering today, Southwest is evolving very rapidly to meet our current and future customer needs, boost revenues, drive efficiency, reduce cost, and accelerate the return targets that we laid out last September. We have tremendous opportunity at Southwest Airlines. While we'll build on what has made us strong, our people and our terrific service that they deliver for our customers, we must become more innovative, more agile, and efficient in everything that we do. I'd like to start this morning by providing an update on our first quarter guidance. We are lowering our RASM guide today by three points to an increase in the 2%-4% range year over year. Roughly a point of that three-point reduction is due to higher-than-expected completion factor and other one-time impacts, including a reduction in government travel. The remaining two points are primarily due to softness in bookings and demand, in large part due to the macro environment. The good news is market fuel prices have fallen in tandem with the revenue environment, which has driven a roughly $0.15 per gallon reduction in our first quarter fuel outlook. Our non-fuel cost trends are also very favorable. We now expect our first quarter CASM-ex to increase roughly 6% year over year, significantly below our previous guide of up 7-9% year over year. The change in our guide is primarily due to higher-than-expected completion factor and lower-than-expected salaries, wages, and benefits, maintenance, and other expenses, part of which are a shift to later in the year. Of course, we remain very focused on driving efficiencies and offsetting inflationary cost pressures and achieving our cost initiative that I'll spend a lot of time on this morning. First, I wanna provide some context on the recent performance of Southwest Airlines. Our margin contraction over recent years is in part due to our own cost pressures. As you know, in the last two years, we ratified all 12 of our labor contracts, which included increased rates and work rule changes. We've experienced inflationary pressure, pressure in corporate overhead, which has grown faster than the rest of the airline. We've also continued to make investments in technology and operational reliability. Lastly, aircraft delivery delays created inefficiencies, especially in staffing and training conducted in anticipation of aircraft deliveries that ultimately did not take place as they were expected. These items were all large contributors to significant cost pressures that we have faced over the last several years. On the revenue front, over many years, we also fell behind in revenue generation as our peers introduced a host of things that we did not pursue at Southwest, like bag fees, basic economy, assigned and premium seating monetization, dynamic pricing of redemptions, and much more. The cost increases, combined with not pursuing these key revenue opportunities, resulted in margin contraction at Southwest compared with our better-performing peers. We laid out an initial element of our plan to address this margin contraction at our investor day last September and built on those initiatives during our fourth quarter call in January. We have made excellent progress on all of the things that have been previously announced. The implementation of assigned seating and premium extra legroom is on track, both the technology and the fleet modifications. We refined our planned sale date for those products to third quarter of this year, and the operation is now planned to begin in the first quarter of 2026. We recently reached an amended co-brand agreement with Chase that provides enhanced card member benefits and supports our multi-year financial targets. We launched an interline agreement with Icelandair on February 13, and we expect to announce additional partners in the near future. The turn time reduction initiative is now in place in 14 airports, including Chicago Midway and Houston Hobby, which were implemented just last week. We launched 24-hour operations with our first red-eye flights last month, and red-eye flights are expected to ramp to a total of 33 markets this summer. Looking ahead, bookings are as expected. As a reminder, the combination of the turn time changes and the red-eye flying increases aircraft utilization and is expected to fund the equivalent of 34 incremental aircraft by the end of this year without incremental capital spending, and essentially funds all of the growth of the airline between now and 2027. We completed a short-term sale-leaseback for 36 737-800 aircraft, taking advantage of a strong market for new and used aircraft, and we have repurchased $1 billion against our $2.5 billion share buyback allocation. All that is great, and we are on track, but today I'll be outlining significant additional cost and revenue initiatives that build on that progress, the progress that our team has already made. You know, I mentioned in January that we were focused on achieving our cost initiative as quickly as possible. Today, we are announcing a significant expansion of our cost-saving initiatives that brings our anticipated 2027 cost savings to more than $1 billion, and that is more than double the $500 million target that was announced at investor day. Notably, we expect to achieve $370 million of these cost reductions this year in 2025. On February 17, we announced an approximate 15% reduction in corporate overhead positions, representing $300 million in run rate cost savings. As a part of that, leadership, including senior leadership, was reduced significantly. While the cost savings are important, the headcount reduction eliminates unneeded work, it removes layers, and it eliminates low spans, all of which is key to becoming the airline that we want to be: faster, leaner, and more agile. Additional cost reduction and efficiency efforts include ground operations optimization, rationalization of airport space and rent, and optimization of technology cost, work against sourcing and procurement, and the discontinuation of our fuel hedging program, which eliminates additional fuel hedge premiums in the future. We'll be opportunistic in unwinding our existing positions, based on market conditions. The focus today is on new revenue initiatives that are now underway. I would like to announce those initiatives right now. First, we will be introducing bag fees for most fare products beginning May the 28th. The first bag will be free for our tier customers as well as Chase Rapid Rewards Visa holders. Our higher tier and Business Select customers will continue to have two free bags. In addition to bag fee revenue, we believe that this move will drive new enrollments in our co-brand credit card program. Additionally, we carry nearly two times the bags as compared to the competition, which is costly on many fronts. I expect operational benefits there as well. Second, we are optimizing our industry-leading Rapid Rewards program to both better align earn rates to the fare paid and dynamically optimize redemption rates on both low and high-demand flights. The earn rate change was implemented last week, and the redemption rate change will be rolled out later this month. Third, starting May the 28th, new flight credits issued will now expire in one year or less from the time of ticketing, depending on the flight, on the fare type purchased. Fourth, we are introducing a new Basic Economy fare in advance of new fare products being added this summer. Over time, the competition has optimized revenue production in the cabin through more segmented fare products. As we continue to evaluate consumer preference and refine our product offerings, the need to create differentiation and optionality for our customers became very apparent. Fifth, we implemented another new distribution channel with the online travel site Expedia on February 26. Like our entry into metas earch sites last year, this new channel will serve to better capture demand and attract customers that are new to Southwest and to our loyalty program. While the specific terms are confidential, we were able to negotiate a very cost-effective transaction rate, and we'll continue to add other online travel agencies, but only if cost-effective. One obvious question is the switch in our position on bag fees, relative to what was presented at investor day last fall, and I want to hit that head-on. In contrast to our previous analysis, actual customer booking behavior through our new booking channel, such as metas earch, did not show that we are getting the same benefit from our bundled offering with free bags, which has led us to update the assumptions. We've also benefited from the additional experience of leaders that have direct experience implementing bag fees at multiple airlines, and that's also helped further validate the new assumptions. It's also important to note that while all of these initiatives are new to Southwest, they are not new to the industry. That adds additional confidence in the ability to execute as planned and in achieving the financial targets that are laid out. All these changes are targeted at creating value in 2025. We expect the initiatives announced today to add an incremental $800 million in EBIT contribution in 2025 and an incremental $1.7 billion in EBIT in 2026. This brings the total estimated EBIT contribution for our portfolio of initiatives to $1.8 billion in 2025 and $4.3 billion in 2026. Importantly, the initiatives discussed today are targeted at making fundamental improvements to the performance of our core and base business. Therefore, the incremental values that you see that are shown here exclude any potential impact from future fleet transactions. We remain optimistic with our fleet strategy, and we'll pursue transactions that are accretive to our business, but we want to be transparent about the performance of the core business. Starting today, we are also introducing a guide for nominal EBIT for both 2025 and 2026, excluding fleet transactions, again, to focus on the expected improvement to our core business performance. We provided a lot of metrics at investor day, and our EBIT forecast is intended to provide clarity on not only the expected performance of our initiatives, but also the overall performance of the business. EBIT for 2025 is expected to be approximately $1.7 billion, and for 2026, approximately $3.8 billion. Again, we gave you a lot of metrics at investor day with and without fleet revenue. This new guide is intended to cut all through that and be very clear about the performance of the base business. Most notably, our plan now supports achieving after-tax ROIC in excess of our cost of capital this year in 2025. We now expect to achieve our North Star goal of after-tax ROIC greater than or equal to 15% in 2026, rather than 2027, as outlined at investor day. Speaking to our 2025 forecast specifically, while booking trends for the summer currently appear stable, we have assumed a moderate level of softness in revenue trends, and that continues throughout the remainder of the year. We've also assumed $2.33 per gallon for fuel for both 2025 and 2026. Now, turning to the share buyback, as we shared at Q4 earnings, we launched a $750 million ASR this quarter, which completed $1 billion of the $2.5 billion share repurchase authorization. Today, we are announcing that we intend to accelerate the remaining $1.5 billion to complete by the end of July 2025. This acceleration demonstrates our confidence in executing our plan and in delivering on significantly improved financial results. That is a lot. To wrap up, I just wanna say we're, you know, at Southwest, we are pivoting and we are evolving very quickly, as you can tell. We are implementing more initiatives than I have seen, across our whole 53-year history. Changes like enhanced customer segmentation, the addition of a new Basic Economy product, the addition of assigned seating and premium extra legroom, adding bag fees, continued optimization of the Rapid Rewards program, and selling on new distribution channels are expected to both improve our commercial offering and improve the bottom line rapidly. We will also continue a relentless focus on efficiency and on cost reduction. As always, we are committed to execution and delivering against our plans, and we will report regularly on the progress against the new initiatives and revised targets, including, soon in our first quarter earnings announcement. It is a really exciting time at Southwest Airlines, and the initiatives announced today are just a start as we continue to grow our relevance to our current and new customers, attract new customer segments that we cannot compete for today, and return to the levels of profitability that our shareholders expect and that I expect. Jamie, with that, I will take questions, or we will take questions. I can't imagine there are any questions. First question is, and I'll try to ask this delicately. It's related to the first quarter guide. Yeah, you mentioned, obviously, the pressure points in the quarter, but you have a lot of overlap with American Airlines, obviously. They went dark after 5342, much as you did after 1380. I don't quibble with that decision. I think that's the right thing to do. Was there any pickup in your business associated with one of your largest competitors going dark for a three-week period? Yeah, and Andrew can add a lot more color. I, no, I don't think that we saw any material. You know, there were things that happened in the quarter, obviously like the L. A. fires that were impactful. What we're seeing now is kind of a broad softness in the macro economy that it's hard to attribute to any one thing. I just want to point out that we have run that trend through most of the second quarter and then a modest softening through the rest of the year. The numbers that you see reflect that. We've not run something significantly worse, you know, worse through our plan. Andrew, I think Robert Isom and David Seymour did a wonderful job, responding to that tragic event. Very, very, very well done. I will say that, though, that tragedy did cause, I think us and perhaps the industry to have suppressed bookings for a short period of time afterwards, which is understandable. It was not a positive. It was a short negative. All right. Appreciate that. Today's announcement, I mean, I guess I was of the view that bag fees might come at some point in my lifetime. I was actually more interested by the basic offering. What's the calculus behind that? Is it defensive in nature, given that, you know, you have significant overlap with other low-cost carriers? Admittedly, you know, in Spirit's case, they pulled down a lot of capacity. Is it more a defensive acknowledgement? Is it more about selling more credit cards and getting people, you know, younger, more frugal travelers into the ecosystem early and then keeping them there? Just what were the underlying assumptions as to why you needed basic now? Yeah. Maybe a little, you know, more on just the bag and basic both. You have been after us to add a bag fee for at least, is it 12 years? We were thinking about putting your, we're thinking about putting your face on every bag tag from here forward. All kidding. All kidding. All kidding aside, you know, we did a lot of consumer research in the fall that I feel like was well-founded. As we got into real data with the, particularly in the metas earch and now Expedia engines and where you can tell our customers giving you value for what you offer in a fare, we just saw no share shift to Southwest Airlines for the fact that we had better policies. What we did see, and this ties into your basic economy, is that customers are incredibly in those channels sensitive to price and will shift, you know, on very small movements in price. As you think about our offering and others, they're offering a basic economy fare at that price, very stripped down, few amenities. We're matching up with our Wanna Get Away, which is very rich, two bags fly free, flight credits that don't expire. We're giving you an awful lot for that same fare, and it's just not affordable in a way. We need to reward our most loyal customers and then match what you receive to the fare that's paid. That's a piece of it. To your last point, yeah, we're gonna see buy up from the basic economy fare to the next fare. The fact that the co-brand will come with, you know, a free bag is absolutely gonna drive a card acquisition. Yeah. I'd add, I guess first that it's more about buy up, almost exclusively about buy up. If you're an engaged Southwest Airlines customer, meaning you're a tier member, A-List, A-List Preferred, you have the credit card, you will largely keep the benefits you have today. That won't change. For the consumer who did not have this as a choice driver and for whom we were over, over kind of delivering, we'll have this kind of bare bones, but then we'll also have opportunities to buy up. To buy up for, we'll be able to segment those who really just cared about the price from those who cared about the amenities we previously offered to everybody. For a modest buy up, they can move from the Basic Economy to the next level up, for, you know, good value for money. For us, it's all about the buy up here, when we go to Basic Economy. Yeah, just to cut the chain, it's far less about a defensive move than it is. We're offering customers, a segment of customers, something that they want to buy. Got it. it. Bob, I've covered Southwest on the sell side for 26 years. And if anyone asked me to name a company that has a definable culture and views culture as a competitive advantage, I would have cited Southwest. And that culture right now is undergoing the most upheaval it's ever undergone. You wear your heart on your lapel and so forth. How are you managing that shock and awe with the employee base? And can culture continue to be a competitive advantage for Southwest given all the changes going on right now? Yeah. Yeah. I wear, you know, the heart on my lapel, but it's deeply embedded in who I am at the time that I've been at Southwest for 37 years. We love our people. We love each other. We're a family. We are more than a policy. We are more than, than even, you know, the way we paint our aircraft or something like that. Southwest is all about very tangible things like the best domestic network, the most point to point, sitting here, you know, today, the best mainline operational reliability. We are also about the intangibles, the best people in the business, the best hospitality in the business. None of that is gonna change. A lot of the policy changes that we're making, it's very clear that our employees want them. Our employees wanted to move to assigned seating because it clears up the job at the gate of policing boarding and policing pre-boards and those kinds of things. Our employees want to move, many of them want to move to a bag fee because they're dealing with the 2X bag volume as an example. Many of the policies that we're implementing are exactly what our employees are looking for the company to do. You take something that's difficult like the layoff, obviously very difficult, or just the pace of change at Southwest Airlines. Tom can opine, he's in day 11 here, and can opine on what he's finding at Southwest. While there's change, what I see is a lot of excitement for where we're headed, excitement about the future, and then painting that next. I mean, this isn't it. We've got a set of things we announced in the fall, a set of things that we are announcing today. There is a, where is Southwest Airlines going next? I see very much excitement for our future, but the core of who we are and what we stand for is not changing. Yeah. I think I can offer a bit of a unique perspective too, right? Having been at other places and having admired the Southwest culture and having an idea for what the culture is, it might be like on the inside. For the last few weeks, having the opportunity to actually be inside the building and see it. What I'm seeing is, and I wondered that too, I thought, okay, with a lot of these changes, will it have changed? A lot of the things that I would say I admired before I joined are there and they are alive and well. Our people wanna win, right? They wanna have a successful business that they can be proud of. A lot of the things that we're announcing today are gonna help us to get back to where everybody wants to be as a company. You know, I'm seeing a senior leadership team led by Bob that is aligned, that wants to win and is moving forward, with alignment from a board that is also aligned, and a combined culture that is still very much alive in the Southwest that I was seeing from a distance before I joined. Tom, I wanted to ask you my second question, which is especially as new guy on the block here. You have a toolkit that you've never had before in terms of the Southwest balance sheet, right? $15 billion north on income, maybe more, the unencumbered program, et cetera. When you think about sort of balancing the balance sheet strategy and shareholder returns, you obviously have a very large shareholder who's pushing for more buybacks and so forth. You are, you know, levering up relative to prior targets. How do you think about, you know, that interplay and managing that, you know, as the airline undergoes this transition? Yeah, it's a great question. You know, Bob talked a little bit about fleet, and maybe I'll start off by answering it by saying it was very important to us that what we were showing here today was this is what's there for the core business, right? Nothing around fleet transactions or other things. These are the changes that are being made to the core business. We feel like what we're doing here is really making underlying changes to that core business in a really, really meaningful way. It'll produce cash, right? As we have these changes that roll through, it'll produce cash. We've talked about what our growth targets are. Bob talked about fleet as well on the flexibility that we have on the new aircraft side and on the used aircraft side as well. All of that stuff will play into the inputs, that'll get toward how we look at the balance sheet. Specifically to answer your question on the balance sheet, that is something we're gonna look at. Where should we be, right? How do we balance that as far as whether it's shareholder returns, what cash levels we wanna hold, what does debt look like? All of those things, as I'm coming in, all of those things together with our team are things that we're gonna be looking at to determine what do we think the optimal point will be. You know, nothing to share other than what we have today here around the acceleration of the share buyback. Absolutely that's part of the conversation that we're having internally. Can we just put some guardrails around that last comment? I mean, at the investor day previously, the comment was made solidly investment grade. Is that still the guidepost for what you're looking at, or are you looking broader? Yeah. What I would say is, I'll go back to what I said before, which is that we are talking about it internally. We're looking at what we think the optimal point is, and we'll come back to you, I think, with more detail on what that looks like going forward. Yeah. I think the way to look at it would be we're not going to become something we are not. We're not going to abandon our guardrails, but there certainly is, you know, there's flexibility within guardrails even. What the work that's going on now is to understand what is optimal. We have things that we can do with the fleet. We have obviously target leverage. We, we have unencumbered assets. And so you will not see Southwest doing radical things. The point is to work our way to a point rather than sort of rigid constraints, what is the optimal intersection of all those things? We are not ready to talk about a next set of share buybacks, but obviously returns to shareholders in whatever form they take, and driving the business to the absolute right levels of profitability, there is no higher priority. Okay. Okay. Back to me. One thing that I am not able to do after, well, lots of things I am not able to do, but one of them in particular that I cannot answer for clients having looked at today's slides is how conservative or aggressive some of the revenue assumptions might be. Can you help me understand that? Because obviously conservative is better. Yeah. For example, do you think you do spill some demand charging for bags? Do you think turn times are affected because you, you know, some number of your passengers are now gonna bring oversized, you know, they're gonna, they're gonna try to monopolize the overhead bins and that slows down. I mean, just what are, what are some of the puts and takes that go into this? I probably the best place to start is what percentage of your flown passengers do you think will be subjected to bag fees, incremental bag fees as opposed to bundled or credit card, you know, actually paying up at the ticket counter? Yeah. Maybe let me just start with the conserv, you know, what's the, how conservative are the numbers? Yeah, these are baseline numbers. We're not going to be aggressive. You know, they are, you know, any initiative, you have got an analysis and you decide then how do I want to think about the number that's outputted in terms of conservatism? Does it overlap with some other initiatives? No, these are baseline numbers. I would describe them as we have a lot of comfort in their execution and we have a lot of comfort in the delivery of the numbers that we're showing you. Two, these are things that almost everybody in the airline industry has already done. That gives you comfort and data around what can be provided, both the ability to execute and again, the financials. The numbers that you saw were net. It's bag fees and, you know, the credit card and the expiration date on flight credits, but net, some assumption around things like share shift. They are net numbers. Last, the majority of the things that we are certainly adding today are much more certain in my mind, even certain relative to the slowdown. If you look at a bag fee, we have strong data from other airlines around bag fee revenue. While bookings may, there may be softness in bookings, I think that's disaggregated from the bag fee. If you look at the change in flight credits, with flight credits that do not expire, there's a very long tail, which means you have more usage and you have basically lower breakage. It's very knowable what happens when you change that to one year. That's not dependent on softness in the, you know, in the economy and in bookings. It's very knowable. If you look at the changes to Rapid Rewards, we've already worked through that benefit with Chase. We've changed the earn rate. It's very knowable what happens there. Two things, I, we have been conservative in terms of the numbers used. They are nets, nets of things like some assumption of share shift, and they are revenue streams that to my mind are not nearly as subject to an impact from softness as a straight up booking. If you all want to add the, or the, the percentage of bags, I don't think we'll give that number right now. All right. Gotcha. And then just quickly, because Mark has another question. You mentioned unwinding fuel hedges. Did, do you actually mean unwind or was that shorthand for, you'll just let them burn off? I wasn't clear. Yeah. Just talking about fuel hedging. I mean, we're known for fuel hedging, right? For decades now. If you look at fuel hedging and you go back over 10- 15 years, with the exception of a couple of positive years, it's not been beneficial to the company. On top of that, you have obviously hedge premiums. With volatility in the market, hedge premiums have become much more expensive. Our hedge costs were about $150 million last year. You just basically do an analysis of the program and it just doesn't make sense looking backwards over a long period of time to continue the program. What we spend on fuel hedges, because it's settled with the hedge itself, will come on over time as we, as we don't spend new monies on hedge premium. And then, yeah, we, again, we have a hedge portfolio today. And, if the market presents itself, we'll look to be opportunistic to unwind those at current prices. It is not, but it, you know, in case that it presents itself, then we will be. Last topic. If we go over a minute, it's okay 'cause the room's empty after this. I wanna talk just about Boeing and fleet. Yeah. Number one, I wanna ask what you're hearing from Seattle and what you expect this year from Boeing, what the latest is. Number two, the commitment to a smaller gauge. Yep. I'm sorry. The commitment to, yeah. Okay. The commitment to a smaller gauge aircraft, the 700, the seven, whatever we wanna call it, is that something that is also being considered whether or not you need to stick with having that smaller gauge aircraft? Third, is another thing that might be being considered whether or not you need to diversify where you're sourcing your aircraft from? Yeah. I can't speak for Boeing. I think I said it every time we were there, about a month ago, just to see for ourselves, walk the floor, talk to folks building our aircraft. I am optimistic about the progress that Boeing is making. I see them attacking the right problems, approaching those problems conservatively in terms of how they think about deliveries. They are, you know, it looks like they're on track to hit their rate 38 here in April. We're planning against reasonable numbers and waiting to see, you know, the output at Boeing. Just generally what I'm seeing at Boeing is encouraging. We have a really strong order book at very attractive pricing. We need Boeing to get back to delivering the number of aircraft that we need over time. I'm confident that they'll do that. It's just gonna take them a while, but I see progress at Boeing. I see them looking at the right questions on the MAX 7. That's a certification question, you know, with the FAA. I really can't opine on the timing. Andrew can talk about this, but we certainly need the MAX 7 in certain markets, short airfield places like Chicago Midway, maybe interline Hawaii. There is a need for that gauge aircraft. If you were thinking about, is there a chance that we don't need the MAX 7, I see a need for that smaller aircraft. It may be a small number. Last, on diversification, as we think about the future of Southwest, I'm just not ready to talk about this in detail. I'm just, you know, it's just more, you know, pontificating a bit. As we look to serve everything that our customers want in places that we really dominate, the Nashvilles and the Austins and Kansas City, et cetera, we need to be able to serve more and more of what a customer wants. That can mean more out of the network, more destinations. That could be more about the product. Those destinations could require a different aircraft in some cases. Not anywhere close to ready to talk about that, but just know that beyond what you saw today, this is a build to the next thing that we will be talking to you about in the future. Andrew, on the seven. Yeah. The MAX 7, as you mentioned, does have very high performance on certain long, thin routes where we'd like it. Part of the original desire was to have an aircraft suitable for high frequency business markets, which is less a market now than it was pre-pandemic. The percentage of our fleet that would be MAX 7 is less today than it would have been when we first ordered it, but it's not zero. We look forward to hearing more about the future when you're ready to talk about it. Thanks Bob and team. We appreciate it. Thank y'all.