John Godin

John Godin asked for a breakdown of what is included in the 9.5% RASM guide versus what constitutes potential upside, particularly regarding ancillary expectations. He also inquired about how Southwest plans to reaccelerate growth to meet return targets, given that previous all-time high EPS years had considerably higher ASM growth.

Answer

President and CEO Bob Jordan stated that all 2026 guides include run rates from 2025 implementations and the assigned seating launch, with additional upside expected from optimizing initiatives, network optimization, and further cost takeout. COO Andrew Watterson emphasized reallocation of capacity within the current footprint and increased profitability across markets rather than 'crazy growth rates'.

John Godin asked for a breakdown of what is included in the 9.5% RASM guide versus potential upside. He also questioned how the company is thinking about a reacceleration in growth, given the expectation of an all-time high EPS year with considerably lower ASM growth compared to past high EPS years.

Answer

CEO Bob Jordan stated that the 2026 guides include run rates from all 2025 initiatives and the assigned seating launch, as these are now integrated into the business model. COO Andrew Watterson clarified that the focus is on reallocation of capacity within the current footprint and optimizing profitability, rather than 'crazy growth rates,' which offers additional upside.

John Goddin asked how Booz Allen Hamilton prepares for the possibility of a significantly larger defense budget, such as $1.5 trillion, and how such potential growth influences strategic thinking regarding investments and M&A.

Answer

Chairman, CEO, and President Horacio Rozanski stated that the company has been preparing to support defense priorities, including recapitalization and new technology for warfighters, consistent with presidential messaging. He highlighted investments in Golden Dome, space, cyber, and AI, and leveraging commercial partners to bring solutions quickly. He also noted increased agility in management to respond to a dynamic environment.

John Godin (Citigroup) asked about the future trajectory of CACI's margins, noting strong recent performance and incremental margins suggesting potential for further increases, and sought insight into the puts and takes for margins going forward.

Answer

CFO Jeff McLaughlin explained that CACI's primary focus (North Star) is free cash flow generation, meaning the company prioritizes investments that accelerate top-line growth and maintain margins over solely expanding margins. He highlighted the opportunity-rich environment, accelerating technology content, and effective cost structure management as key drivers for strong free cash flow generation, allowing for modest margin expansion while investing.

John Godin asked for a dialogue on the potential trajectory of CACI's margins, given the strong recent performance and incremental margins suggesting higher potential.

Answer

CFO Jeffrey D. MacLauchlan reiterated that CACI's 'North Star' is free cash flow. He explained that the company prioritizes investments that accelerate the top line and maintain margins, rather than aggressively expanding margins, to maximize free cash flow generation. He sees ample opportunities to invest, maintain or modestly expand margins, and, more importantly, accelerate free cash flow generation.

John Godin from Citigroup asked about CEO Scott Kirby's thoughts on the future shape of industry structure, including M&A among smaller carriers, industry equilibrium, and any scenario where United might engage in M&A.

Answer

CEO Scott Kirby stated that low-cost carriers would shrink to their niche, and the industry would ultimately feature two brand-loyal airlines (United and Delta). He believes the structure will evolve with or without consolidation, with other carriers finding specific network niches.

John Godin asked for more details on the 'hundreds more aircraft in active negotiation,' including the types of aircraft and customers, and sought clarification on the aftermarket backlog being four times the aircraft sale backlog.

Answer

Kyle Clark, CEO of BETA Technologies, indicated that negotiations include major regional carriers like Republic Airways, primarily for CTOL aircraft with an intent to transition to VTOL. He clarified that the aftermarket backlog is three times the aircraft sale backlog, making the total backlog four times higher. Herman Cueto, CFO, emphasized the significant and durable nature of aftermarket revenue, with batteries changed annually over a 20-year aircraft life.