Good day, thank you for standing by. Welcome to the Frontier Group Holdings Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Erdman, Senior Director, Investor Relations. Please go ahead. Thank you, and good afternoon, everyone. Welcome to our 4th quarter 2022 earnings call. Today's speakers will be Barry Biffle, President and CEO, Jimmy Dempsey, EVP and CFO, and Daniel Shurz, Senior Vice President, Commercial. Each will deliver brief prepared remarks and then we'll get to your questions. First, though, let me cover the safe harbor provisions. During this call, we will be making forward-looking statements which are subject to risks and uncertainties. Actual results may differ materially from those predicted in these forward-looking statements. Additional information concerning risk factors which could cause such differences are outlined in the announcement we published earlier, along with reports we file with the SEC. We will also be discussing non-GAAP financial measures which are reconciled to the nearest comparable GAAP measure in the appendix of the earnings announcement. With that, I'm going to give the floor to Barry to begin his comments. Barry? Thank you, David, and good afternoon, everyone. Frontier posted strong fourth-quarter results, achieving an adjusted pre-tax margin of 5.7%, our third straight quarterly profit. Results were underpinned by record ancillary revenue performance along with meaningful improvements in our unit cost utilization. The strong results were tempered by major disruptions caused by Winter Storm Elliott during the busy holiday travel period. However, we were able to minimize the impact through the recoverability of our modular network and the dedication of Team Frontier, who worked tirelessly to ensure our passengers arrived safely at their destination. I'd like to extend my gratitude and recognize the team's efforts as they overcame treacherous weather conditions, worked extended shifts, and managed customer disruptions to get them to their destinations safely. At our Investor Day last November, we highlighted how leisure travel demand has undergone a fundamental shift and how we're uniquely positioned to exploit it. Customers have more flexibility and more propensity to travel than they did pre-pandemic, and its compelling evidence points to the resiliency in the leisure travel segment. We expect the benefits from the resilient demand to be amplified by industry capacity constraints caused predominantly by pilot shortages and supply chain bottlenecks. This creates a significant opportunity for Frontier. Although we're not immune to these issues, our workbook, dominated by the A321neo, together with our robust pilot recruiting and training platforms, uniquely provides us the foundation to harness the growth opportunity before us. Last year, we launched our cadet and rotary programs, and both are driving strong demand with candidates who want to fly for Frontier. Over 100 pilots have already been accepted into the cadet program. We have nearly 5,000 applications last year through all of our hiring channels. In fact, the first cadets from the program will be joining us as first officers in just a few weeks. Although aircraft manufacturers are dealing with supply chain issues, the delays we're experiencing from Airbus are between one-five months. While we're disappointed in these delays, they effectively represent a manageable one-quarter shift on average across our workbook. Our strategy has been to focus on areas that we can control. We're focused on hitting our near-term target of $85 in ancillary revenue per passenger. We achieved $82 for the fourth quarter, enhancing our confidence that hitting the $85 in the fourth quarter will happen. Moreover, we've lowered our total adjusted CASM, including interest, by 8% from the prior quarter and widened our total cost advantage with the industry to an equivalent of over $70 per passenger. Our costs are our competitive edge, and we expect to maintain this advantage for years to come. Put simply, our strong ancillary performance and industry-leading unit costs are the variables that make it possible for us to capitalize on the strong leisure market and stimulate profitable growth for the rest of the decade. All of us at Team Frontier are unified in this pursuit, and it gives me confidence to reaffirm our target of returning the airline to pre-pandemic profit per plane by the second half of 2023 on a run rate basis. With that, I'll hand the call over to Daniel for a commercial update. Thank you, Barry. Good afternoon, everyone. Fourth quarter revenue was $906 million, a 38% increase from the 2019 quarter, marking the fourth consecutive quarter in which revenue has grown by double digits over the respective 2019 quarter. RASM reached 10.45 cents, reflecting 21% increase over the 2019 quarter on a 15% higher level of capacity. Total revenue per passenger was $133, supported by impressive performance on the ancillary front, which, as Barry mentioned, reached a record $82 per passenger. Our ancillary performance demonstrates our customers' preference for unbundled products, enabling them to personalize their travel experience while providing us with a more stable, predictable source of revenue. With this impression of improving ancillary performance that we saw throughout 2022, we're confident in achieving our target of $85 per passenger in Q4 2023, as well as our long-term target of $100 per passenger by 2026. Average daily aircraft utilization improved by approximately 25 minutes per day over the prior quarter to 11.5 hours, while average stage length increased 6% to 1,032 miles. With the continued progression in our utilization of stage length throughout 2022 towards pre-pandemic levels, we're on track to achieve average daily utilization of over 12 hours on an average stage of 1,050 hours during 2023 as set forth at our Investor Day. In the fourth quarter, we opened our presence in Phoenix, a key Frontier growth market, where 140 pilots. With the six new routes we launched in the fourth quarter and the six additional we launched in January, we now serve 23 destinations from Phoenix. Additionally, during the fourth quarter, we announced a new crew base in Dallas Fort Worth to open in May 2023, where we expect to fly up to 120 pilots and 220 flight attendants by the end of the first year of operation. We've been the fastest-growing carrier at DFW since 2019. Once we launch six new routes this spring, we'll be the third-largest carrier at the airport based on destinations served. Last week, we announced expanded service to Puerto Rico with additional non-stop routes to San Juan and Mayagüez and new service to Ponza, giving customers access to all three key destinations on the island. Once the routes launch in May, we will serve more destinations in the Caribbean island than any other airline. Since it was launched in November, travel on GoWild!, where you can fly pass have been strong. This unique product provides travelers the opportunity for unlimited flights to all of our domestic and international destinations for one low annual price. Just last week, we introduced the second version of the product to travel during the summer months, which has been in strong demand since it went on sale. We're pleased with volume of passes sold, but I'm equally encouraged by the increased engagement this product creates with our brand, both for existing and new customers. That concludes my remarks, and so I will yield the call to Jim. Thank you, Daniel. We generated a pre-tax margin of 5.5% on the GAAP basis and 5.7% on an adjusted basis during the fourth quarter. Above the midpoints of our guidance range, despite the impact of the holiday winter storm. Our adjusted pre-tax margin includes $2 million in employee retention credit associated with the terminated combination with Spirit, the recognition of which is expected to include in the March 2023 quarter. The sequential margin improvement, tempered by storm impacts, was largely driven by record ancillary revenue and lower fuel cost per gallon. Adjusted CASM ex-fuel declined sequentially to $0.064, which was 7% lower than the prior quarter, the lowest it's been since exiting the pandemic. The decline was driven by higher utilization, along with the timing of aircraft deliveries and aircraft returns, partially offset by higher other non-fuel expenses, particularly lease return costs. We ended the year in a strong financial position with $761 million of unrestricted cash and cash equivalents and $332 million of net of total debt. As previously highlighted, we have the ability, if needed, to access substantial liquidity through our loyalty program and brand-related assets. We had 120 aircraft in our fleet at year-end after taking delivery of two A320neo and three A321neo aircraft during the quarter. We expect to take delivery of another six A321neos in the first quarter of 2023, of which three are direct leases. As noted in our earnings release, Airbus is delaying aircraft deliveries by one-five months for delivery scheduled in 2023. Accordingly, nine A321neo aircraft deliveries previously expected this year will shift into 2024, resulting in about 5% less capacity in 2023 than we expected in November. We therefore expect to encounter slight upward pressure on adjusted CASM ex in the near term, given the unit cost efficiencies unlocked by the A321neo aircraft. Accordingly, we anticipate being below $0.06 during the second half of 2023 and modestly above for the full year, a level which we believe is materially below the industry average. Recapping guidance, first quarter capacity is anticipated to grow 17%-19% over the 2022 quarter, while full year 2023 is expected to grow 23%-28% over the prior year. Fuel costs are expected between $3.50 and $3.55 per gallon in the first quarter and between $3.05 and $3.15 per gallon for the full year 2023, as of the blended fuel curve on January 30. Adjusted non-fuel operating expenses in the first quarter are expected to be between $570 million and $595 million and $2.425 billion to $2.525 billion for the full year. Our effective tax rate is expected to be 24% for the entire year. First quarter adjusted pre-tax margin is expected to be in the range of -2% to -6%, largely reflecting elevated fuel prices and seasonal softness. With that, I'll turn the call back to Barry for closing remarks. Thanks, Jimmy. Our objectives for 2023 are clear. All 13,000 members of Team Frontier are focused on completing the post-pandemic turnaround. I'm confident we can sustain the momentum from the last three quarters as we execute on widening our relative total cost advantage as we deliver on revenue enhancements, particularly on the ancillary front. Together, these two factors will enable us to return the airline to pre-pandemic profit levels. Thanks again everyone for joining the call today. We're now happy to take your questions. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question will come from the line of Stephen Trent from Citi. Your line is open. Hey, good afternoon, gentlemen, and thanks very much for taking my question. Definitely appreciate the color and everything you mentioned about the cadet program and what have you, and that's great to hear. I was wondering if you wouldn't mind giving us some color on what you're seeing in terms of mechanics and sort of availability of mechanics, and if you're seeing sort of any hiccups in terms of engine maintenance throughput issues of any kind. Thanks again. Yeah, thanks, Stephen. Look, we've been talking about the mechanic shortage for years, and everyone's focused on the pilots, but actually the mechanic shortages is just as problematic. We have seen some of our business partners, as a reminder, the majority of our maintenance on the line is actually provided by business partners, and we have seen some challenges there. In particular, we've seen issues, especially in places where we have what was called on-call maintenance, where we don't do maintenance every day. Sometimes the availability, lots of times how quickly they respond, has deteriorated a lot, you know, as a result of their staffing levels. We are working with them. We've had a lot of talks with them recently. The other thing that's been impacting us, you mentioned the engines that, which hasn't been a major issue for us. However, there has been significant challenges with parts overall. We have seen in many cases over the last several months, we've had multiple instances with aircraft out five-seven days waiting on parts. We've kind of seen the supply chain issue that a lot of people have had. We are working with all our providers and spending a lot of time on that. The supply chain issue this year across other industries, including our own, they are real. Okay, that's super helpful. Really appreciate it, Barry. Thank you. Thank you. One moment for our next question. Our next question comes the line of Jamie Baker from JP Morgan. Your line is open. Hey, good afternoon, everybody. This first question I wasn't planning to ask until last night. Of your total ancillary take, what percentage comes from seat assignment, fees on reservations with more than one traveler in the PNR? since, Jamie, seats are a really important part of our ancillary, we don't disclose a breakdown. Certainly I don't have a breakdown of exactly what the mix is of how many passengers on the PNR and what's going on. Okay. We're obviously conscious that this thing's being talked about. Yeah. Yeah. Which is why I'm asking. Well, Jamie, I know why you're asking the question. First of all, we have four years, and it's a standard practice across the industry. We have shown every option available to a customer before they complete their booking, so everyone knows prices well in advance. If a flight is canceled or if it is significantly delayed, we provide prompt refunds on request. Also, as it comes to families and seating families, we actually do that today, for free, and we have high success in actually getting families, seated together. There are operational challenges a lot of the time, if a flight's full and there's plenty of other seats, and the last two seats were sold to, you know, a family, it's a little harder, but, we do a really good job with that. I think there's a lot of confusion with that. Well, and I appreciate that, Barry. Let me just ask, and I apologize because I'm gonna give away the fact that I don't fly Frontier very often. If I go to book a flight right now for a party of five for travel in June, you're telling me that all five of us will be able to make adjacent seat assignments for free? No. No. If you don't have seat assignments, we'll make every effort. Okay ... to get you together but not the whole family together. We will put an adult, with the smaller children. Okay, fair enough. I'll experiment some more with it. Second, you know, I'm sure the 5% reduction in 2023 capacity, you know, takes some pressure off pilot hiring and, you know, I know you made an, you know, an excellent point at Investor Day emphasizing, you know, new crew bases out and back flying, you know, as, you know, lifestyle benefits. Given recent wage increases, it looks like you're now bringing up the rear in the industry in terms of pay, save, I guess, for maybe Avelo and Breeze. Obviously, this will, you know, change with the new pilot contract in 2024. Until then, why shouldn't we assume that the pilot shortage hurts you more than other low-cost airlines in the U.S.? Because it hasn't. We have an aggressive hiring program, and we're not bringing up the rear. I think we've gotten the brunt of a lot of this dialogue. This is a regional situation, right? We are significantly higher than the regionals, and we are successful in all of our classes, and we're still getting over 10 applications a day of qualified applicants. I think you're welcome to come out, Jamie. I'll introduce you to recruiting. You can go around the recruiting. We can show you our classes. It's not the problem that I think that the perception is out there. In fact, we'll have to slow our hiring in order to accommodate the Airbus delays. Excellent. Understood. Thanks so much, gentlemen. Thank you. One moment for our next question. Our next question comes the line of Helane Becker from Cowen. Your line is open. Thanks very much, operator, for your time. Thanks, team. Appreciate the color. Just one or two questions here. I heard what you said about demand, you know, in the fourth quarter. As you're looking at the cadence of demand in the first quarter, can you just talk about what you saw in January and what you're seeing, you know, for the rest of this quarter into maybe the second quarter? Yeah. Look, we've seen continued robust demand for leisure travel, and it continues to do very well. In fact, I think if you look at our results. You can see, in the fourth quarter, I think we were second place in terms of capacity compared to 2019, and we put up an impressive RASM number against that. In Q1, we continue to see that trend continue. We're gonna be in a really good RASM position, even though we are now the largest carrier in terms of size relative to our 2019 size. Even with significant growth and capacity, we are seeing a continued strength in leisure demand, and especially when we look to the peaks. We've got Presidents' Day right around the corner, and we've got, the spring break period. We see really robust demand, probably the best we've ever seen. I expect at the current rate, we will have never seen a spring break that is as good as this year. That's hugely helpful. Thank you for that. Then I think on I don't know if it's the last earnings call or the one before that, you talked about seeing trade down from other carriers to you guys. Are you still seeing that among, you know, maybe a non-traditional Frontier customer? We've seen a significant uptick in customers that did not fly us before. As a growing carrier, you're always seeing, you know, new customers 'cause you're in new markets and so forth, and you're always adding new customers in cities even that you already fly to. We did see a significant uptick in customers over the past year that have not flown us before. We've seen a significant uptick in customers that are buying our GoWild! pass, for example, who we've never seen before at Frontier. It's hard to say if that is, if that's a price pressure of them being priced out of a legacy carrier, or is it just simply that our brand's getting that much stronger? It's hard to say. Yes, we continue to see a significant amount of new customers. That's very helpful guidance or commentary. Thank you very much. Thanks, Helane. Thank you. One moment for our next question. Our next question will come from the line of Michael Linenberg from Deutsche Bank. Your line is open. Hey. Good afternoon, everyone. Hey, I guess to Barry, I guess you're sort of in a unique position in the sense that you're one of the few carriers that I think you have both the LEAP engine on your A320neo, and I believe you're bringing in the GTF on your A321neos. Curious if you're seeing anything now, or is it just because you just started getting the GTFs in your fleet? From maybe conversations that you're having with the OEMs, what is the issue? What do you think is the root cause so that when a year or two or three down the road you're not taking engines off the wing? Well, I think that's a question for the engine manufacturers. Yes, we operate both engines. We, in fact, it seems like yesterday, but we've been operating the neo now for seven years. We had a lot of teething challenges with the LEAP. There were shroud issues. There were a number of challenges, fuel nozzles, all types of things as there is with every new technology. Mm-hmm. That has come in. We are past most of those issues now. There's maybe still a few lingering. We're not as familiar with the GTF. As you pointed out, we just started out operating this aircraft, basically in the fourth quarter, and so we're very new to it. We haven't had many of the issues. A lot of the issues, as we understand them, are earlier production series parts and designs. Mm-hmm. We're fortunate to have many of those upgrades later. Mm-hmm. There obviously could be challenges. I think the biggest issue is not if the reliability is there, but the turnaround time on the engines themselves. Mm-hmm. How long it takes, if you have an engine come off wing, how long it takes to get that engine overhauled and back. I think what we're seeing, not just in engines, but in all types of components, we're seeing it take longer to get components repaired and back to the airlines. This is one of the challenges we're seeing with our provider on parts. It's just, you know, things are taking longer to get repaired, it takes longer to get them back on the shelf. I do know, yes, there's another airline that called this out recently in the United States, but there's, you know, several around the world that have in the engines space that actually have aircraft sitting without engines. We're watching this closely. Yes, we're a pretty good ways away from having any of these challenges and hopefully, given the improvements that they've already made in the engines, it's not as profound at Frontier. Okay. That's, that's helpful. It kind of reinforces the adage that you kind of never wanna be first in line for the new technology. Let it, let it teethe and, you know, be airline number four or five. That's, that's good. My second question, and maybe this is Barry to you and Jimmy. The comment in the release about second half of 2023 getting back to the profitability per aircraft in 2019. I go back to 2019, and I see 14% pre-tax margins. That makes me salivate. Probably makes you guys salivate as well. Is it a margin? Is it EBITDA per aircraft? What are you referring to? What metric do you hope to hit in the, in the, in the back half of the year? Thank you. Thanks. Yeah. Michael, we have an internal target of getting back to pre-pandemic profit levels, obviously. I mean, I think that the entire industry is trying to do that, but, like, we have a real line of sight to moving back to pre-profit per plane on a net income basis. Okay. On a run rate basis. -half of the year. Obviously, there's a lot of work to do to get there. You know, moving our unit costs and widening the cost advantage against the competition gives us a real runway to moving margins higher. Obviously, we wanna move margins higher. It's not necessarily a margin rate, it's more of a profit level per plane. Okay. Okay, very good. Thanks. Thanks, Jimmy. Thanks, everyone. Yeah. Mike, it's just, it's total $ in net income per plane. Okay. Again, just what we did with the fourth quarter kind of illustrates, if you look sequentially at the last three quarters, you can see the cost trajectory is clear. You can see that the ancillary revenue trajectory is clear. It's just math. If you look, we're already back, pretty close to pre-pandemic utilization. We've got maybe a half hour to go, but we, you know, we already did 11 and a half hours just in the fourth quarter. It's all systems go, and we have a clear path. It's not a maybe someday. It's right upon us. Great. Thanks. Thanks, Barry. Thanks, everyone. Thank you. 1 moment for our next question. Our next question will come from line of Duane Pfennigwerth from Evercore ISI. Your line is open. Hey, thanks. The, the take down on full year growth makes sense. More near term, can you just speak to the March quarter? How much of this is just short on deliveries in the, in the here and now, versus some increased conservatism in your, in your planning assumptions? Duane, it's all delays in aircraft deliveries. We have been working with Airbus for some time on understanding the supply chain issues that they have in their business. We've been notified recently of significant delays across this year that we're previously unaware of. What we have been seeing is delays of between four and six weeks in aircraft deliveries. We've now seen that extend out between one, as we said in the release, between one and five months. The change in capacity is really driven by those aircraft delivery delays. In Q1 in particular. How many? Sorry, go ahead. Well, in Q1 in particular, this is the first time we've had kind of this close in, this many aircraft be late, but we had to pull four lines out as a result. It's, it's pretty significant even close in, Duane. Yep. How many are you short, like, right now? Where do you think you would be and where are you? what we're seeing, Duane, is aircraft delays start to, like, extend out. You're seeing delays that were occurring months, six weeks, two months, now going to three, four months. That's what you're seeing cascading across the year. If you go all the way to the end of the year, given the profile of our delivery schedule, you see nine aircrafts actually dropping out of the 4th quarter and into the 1st quarter and a bit beyond the 1st quarter of next year. That's what you're seeing. Right now, you know, we've taken, as Barry said, four lines out, especially for aircraft. There was already one. We're actually down five now into this quarter, and it grows to nine by the end of the year. Okay, that's helpful. Maybe a hypothetical, maybe more than a hypothetical. On Spirit slots and gates, if there was a package that became available, can you comment on your willingness to bid on that? Any thoughts on that conceptually? No, we can't comment. Okay. Thank you. One moment for our next question. Our next question will come from the line of Brandon Oglenski from Barclays. Your line is open. Hey, good evening, everyone, and thanks for taking the question. Barry, can you talk to, I guess, the resiliency of your network and your operation? I mean, I hear you on the pilot issue that maybe that's, you know, not really one that's fair to apply to you guys. Last summer, you did have constraints across the network, whether it was like airport capacity or FAA, ATC capacity. What are you doing to mitigate those challenges this year? What gives you the confidence you can grow at the levels you think you are? Actually, it wasn't the summer. It was actually in the spring, we saw some challenges, particularly in Florida. Some carriers got, I guess, a bigger brunt of it than we did. What we did is we reoriented our flying on crew pairings that actually crossed Jacksonville Center. Effectively, you don't have any aircraft or any crew that actually crosses Jacksonville more than twice. This helps mitigate, you know, if we end up with three and four-hour ground delay programs again, we can just trim the flying and unfortunately, we'll have to cancel for ACF, but it doesn't disrupt the aircraft for the next several days, right? You don't get in these situations, where these carriers that have airplanes that are, you know, kind of do these daisy chain, multi-leg all across the United States, that leave crew in all these different cities. We're not impacted by that. That's one of the reasons why I think, you know, you look at the storm, we did so much better, I think recovering after the fact, even though we were much more impacted than most when you look at our geography. I don't know, Daniel, you wanna talk about schedule construction? No, I was gonna say one thing I'll say, one thing that's changed since last spring and summer is, Brandon, we've increased the level of modularity. We've further tightened up. We've got a higher percentage of crew just doing a one-day pairing. We've got almost all are flying in one and two-day pairings from a crew perspective. We've got more aircraft based overnight in our biggest crew bases. We've simply created a more resiliency with the getting further increase in the modularity of the network that sets us in a good place going into the summer of 2023. Okay, guys. Appreciate that. I guess, you know, I appreciate the outlook as well for second half profitability, just like the earlier question. Barry, what's the view or Jimmy, maybe, you know, the right now that you can't generate that profitability because you have got your costs down here recently, you know, aircraft utilization is coming up. Is it really just the outlook for lower fuel prices that's the difference? I mean, there is a relationship between fuel prices and revenue that you've seen over the course of the last year. I mean, it's not just lower oil prices. If you look in our guide today, you know, we've given you the market price for oil for Q1. We've given you what the curve is for that we're seeing for oil prices for the year, that's reflected in what we believe we can achieve throughout the year. You know, what we've seen so far this year, particularly going actually towards the end of last year and going into the peak parts of this quarter is a real strength in demand coming through into the business. That allied to $82 going to $85 a non-ticket plus your unit costs, moving towards $0.06, puts the business in a really good position to improve profitability, which is really the objective that we're working towards. Specifically to your question, Brandon, about why not now? Well, look, you're seasonally Q1 is actually the worst, you know, for our network, the lowest, rev in time. The seasonality does come back, also your costs continue to sequentially go down. It's just mechanical. I mean, as the revenue comes up seasonally and the costs continue to go down, and we've also got further tailwinds coming in through the ancillary that Daniel kind of mentioned, you know, 82 going to 85 by unit. Those things come together to put us back to pre-pandemic profitability. Thanks, Barry. Thanks, Jimmy. Thank you. One moment for our next question. Our next question comes the line of Connor Cunningham from Melius Research. Your line is open. Everyone, thank you. Maybe just talk a little bit more about just the pilots in general and staffing. Some of the other airlines have talked about needing to have 5% more pilots to hit their, like, prior production levels. You appear to be overstaffed right now, but I assume that has to do with delays and, you know, hopes of growth. Just long term, do you think that there's a structural change in staffing and maybe, you know, employee productivity at Frontier? We don't completely understand that. We've heard that commentary, but we do not have more pilots per plane. We have not seen a need for more pilots per plane. There is slightly higher pilot costs because we do have attrition that we've talked about in the past, and we have a higher level of attrition, which causes you to have to train more. If you look at like credit to block, for example, that's the main source. In fact, we see more efficiencies as Daniel kind of talked about the modularity network. We actually see more efficiencies coming to this. We're not sure what those businesses, what other things they're doing, but we don't understand, you know, why they would need more pilots per plane. Okay. I'll take that. Then, just on crew bases in general, you've opened up a lot, and I understand the idea around, you know, the modularity of your network, and I get the benefits to the operational side of the business. You know, when a crew base is opened, why shouldn't we just turn around and assume that there's an additional cost to Frontier? You know, like a structurally higher cost. The fact that, I mean, it is a much different stance than you had pre-pandemic. Just curious on how you think about crew bases and the impact to your overall profitability. Thank you. Yeah. We spent a lot of time on this and Daniel can spend hours with you explaining it. As long as we have a minimum amount of sizing, in fact, today we're in Phoenix, hosting this call and we just opened a base here, and we're already at the minimum scale that we need. The only inefficiencies, if you will, that you get with a base are in reserves. As long as your reserve ratios don't get too high as a result of your base coverages, it's not a big deal. Sometimes, what we have learned is, depending upon the windows that you cover for your reserves, you could end up with percentages that don't make sense if the base gets too small. We believe we've largely cracked the nut on this and, we are not opening bases, that we don't believe will fit our efficiency on a ratio perspective. When we think about from a reliability perspective and a resiliency, there's not a better way to operate. Appreciate it. Thank you. One moment for our next question. Our next question comes from the line of Christopher Stathoulopoulos from Susquehanna International Group. Your line is open. Good afternoon, everyone. Barry, going back to the outlook for pre-pandemic profitability per plane, what are the assumptions around seasonality there and utilization? Does the outlook assume any macro softening or is seasonally in line plus or worse? Any color here in how you're thinking about demand as we move through the quarters and utilization. Thank you. Yeah. From a utilization perspective, we look to be at 12 hours. We were actually at 11.5 in the fourth quarter. We've been operating close to that level now. There's not much more to go in utilization. Utilization will be what it is. The big leverage that you get is the delivery of the A321neo. I mean, with 240 seats, it just simply delivers a major CASM advantage. We actually do assume as a result of that RASM is going down. I mean, we actually have assumed that those incremental seats will come at a marginal fare. We expect that there will be a kind of ability to withstand any kind of weakness, if you will, in the economy by us further reducing our cost levels. Are we planning on a major 2009 type event? No. We can withstand a medium to mild recession. Okay. My follow-up, November's outlook modestly above six, I think it was to, or, yeah, today's outlook modestly above six to November is less than six. I understand the slippage here, but if there are more delays, you called out the four-six weeks has moved to one-five months, what are some of the levers that you could pull here? Because it sounds like at 11.5 or 12, there's not much more you can do on utilization to offset what could be perceived as upward pressure on unit costs should the different additional tails slip. Thank you. Well, let's just clarify. Our trajectory on unit cost is heading in a really good direction. What's happening with the Airbus delays is a delay in that benefit of the A321neo coming into the fleet. And that's maybe a quarter. You're on a very strong trajectory on a unit cost benefit and efficiency benefit in the business. In order to mitigate the delays, I mean, we've certainly looked at infilling some capacity by extending leases or looking at distressed aircraft around the world to replace some of the capacity. What we believe is that this is not a single year event where the manufacturer has delays and supply chain issues in deliveries. We believe this is a multiyear event, and so we're looking to plan our business accordingly. We may look to infill some capacity, from outside of the business or from within the business by extending some leases in order to manage the capacity profile of the business. The changes that we're seeing, in deliveries create some lumpiness in capacity supply to the business, and we may choose to smooth that out. Just to clarify on the what we thought versus November, I mean, we were looking at sub six, and now we're talking low six for the year, right? We expect it to still be below six in the second half, even with the delays. Okay. Thank you. One moment for our next question. Our next question comes from line of Savi Syth from Raymond James. Your line is open. Hey, good afternoon, everyone. Just for the first question, just a follow-up on fourth quarter. You know, your costs came in much better than you had thought, even though you had these storms. I was just curious what was driving that and just trying to gauge, you know, what level of conservatism might be there in your kind of non-fuel guide here for 2023. I mean, look, the big driving force in our business, as you know, is overcoming the fixed overhead that exists and moving utilization to 11.5 hours for the full quarter. Has a big impact on unit cost metrics if you measure CASM ex-fuel or something like that. I mean, look, I mean, we are giving you what we know today in terms of our outlook on cost for the year. Where the business is very focused is ensuring that we have a structural cost advantage versus the industry that's sustainable. You know, as we move towards the $0.06 zone, you know, that puts us in a very strong place versus the competition. I mean, if we come in at $0.06 or $0.061, I mean, it still puts us in a place overall on total cost plus net interest, you know, somewhere in the mid-30s% lower cost than the entire industry average. I think Barry talked about it earlier, like we were over $70 a passenger in lower cost than the industry average in the last quarter, and that's moving higher as your unit costs come down. It puts us in a great place to grow the business in the short term and the medium term, you know. That's something that we're very focused on achieving. What we're trying to do with you guys is educate you on how we get there. In the fourth quarter, you're seeing a really good move towards $0.06. If you look sequentially across the year, utilization was lower, it came up. Unit cost came down, and we expect that to continue as we progress through this year. That's where we get our competitive edge. That makes sense. Just to clarify too, we were 70, we were over $70 advantage for the full year of 2022, and by the fourth quarter that had expanded to over $80 per passenger. With this cost advantage, this is what gives us the confidence that the momentum's gonna continue, and we'll be back to a pre-pandemic profit per plane in the second half. That makes sense. Thanks. Then if I might, at the Investor Day, you talked about, you know, some of the moving from high touch to self-service, and some of those things should drive some cost benefits as well, not as much as a three twenty-ones. I was curious on how the kind of the switch in call center and how some of those initiatives are being kind of accepted by customers. Yes. Look, I think, contrary to maybe some of the news reports, we've actually seen really good performance. In fact, we're just reviewing it this morning. We've seen NPS go up dramatically compared to the call center. The reality is, I mean, if you just think about it in your personal life, how often do you text versus how often do you call? I think, you know, this is the way people wanna interact. What we see is the biggest driver, can you solve their issue and do you do it promptly? When I think when you compare to some of these other carriers that recently have had, you know, 10, 20, 30-minute waits to get a hold of an agent, that's why we're seeing such an advantage. look, customers like it and it's working well. Thanks. One moment for our next question. Our next question comes from the line of Scott Group from Wolfe Research. Your line is open. Hey, thanks. Afternoon, guys. If I look in the fourth quarter, capacity is up about 15% versus 2019 and CASM ex is up low 20s%. If I look at Q1, capacity is now gonna be up about 40% versus 2019, but CASM ex is still up low 20s%. I guess my question is, why aren't we seeing better sort of unit cost leverage as capacity is, you know, really already ramping up pretty meaningfully? Well, Q1, you have a lower utilization quarter than is typical in our business. You've got to see that progression throughout the year where utilization is higher in second, third, fourth quarter than it is in Q1. Just purely comparing Q4 and Q1 puts a challenge on your unit metric. We haven't hidden behind the fact that the three twenty-one introduction to the fleet drives a substantial efficiency into our business. The three twenty-one NEO, just so to remind you, has 240 seats. Our fleet today is dominated by the three twenty NEO with 186 seats. Your average seats per departure move quite dramatically, creating a lot of efficiency into the business. The more deliveries of those, the more that they operate in our business, the more efficiency that comes into our airline. That's a large part of the efficiency and drive from where it is in Q4, $0.064 CASM ex-fuel, down to where our targets are for the year. Okay. Then any thoughts on... By the way. Oh. Sorry, Scott. Look, we like to look at total unit costs. One of the things that we've watched in our business as a metric is watching our comparison total costs versus the industry. That includes that is CASM, including fuel, because we have a very fuel efficient fleet. It's very important to how you price your tickets. The input cost of fuel is very important, plus also net interest. If you're looking at just purely our CASM ex-fuel, and you're ignoring the ownership costs that a lot of the other airlines have in their business and also the investment that we've made in our business on fuel efficient aircraft over the last seven years and continue to make. Yeah, that's a good point. Can you just talk about within your view of getting back to the margins you were at or the profitability you were at per plane, how should we think about full year revenue growth or RASM, just what's in the plan? We don't guide unit revenues, obviously, it's a function of what happens with oil prices across the year. We've given you a sense of where we see oil prices at the moment based on, I think it was January 30th today per. We're not guiding unit revenues across the year. Okay. All right. Thank you, guys. Thanks, Scott. Thank you. I'm not showing any further question in the queue. I'd like to turn the call back over to the company for any closing remarks. I wanna thank everybody for joining our call today. Especially wanna thank the Phoenix Airport for hosting our call. We look forward to talking again after the first quarter. That concludes our call. Thanks, everyone. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.