Financial Performance and Margins
Q: How will you improve margins and cover the cost of capital?
A: We are focused on expanding margins and covering our cost of capital in 2024, currently running roughly 4 points under our cost of capital. " We have a solid plan to achieve this through margin expansion, setting us up for momentum into 2025. "

$1.5 Billion Revenue Initiatives
Q: Can you share more details on the $1.5 billion revenue initiatives?
A: We are confident in achieving the incremental $1.5 billion in revenue, primarily through network improvements that began in March and will be fully in place by early summer. " About two-thirds of this is revenue-related, including network optimization and maturation of our development markets returning to normal mix levels by the end of 2024. "

Unit Cost Outlook
Q: Why are unit costs up 6–7%, and what about 2025?
A: The increase is mainly due to labor rate cost inflation from new contracts, with pilots receiving a 4% rate increase, and maintenance pressures from 800 engines coming off warranty, contributing a couple of points. " We plan to improve efficiency by controlling headcount, aiming to end 2024 with the same or fewer employees than in 2023, setting the stage for cost deceleration in 2025. "

Capacity Growth and Unit Revenue
Q: How will decelerating capacity growth impact unit revenue trends?
A: Capacity growth decelerates from 10% in Q1 to 8–10% in Q2 and 3–5% in Q3, with trips and seats down in the back half of the year. " Concurrently, revenue initiatives will accelerate throughout the year, leading to improved unit revenue trends as capacity growth slows and benefits from network optimization materialize. "

Demand Environment
Q: What is your outlook on the macro demand environment?
A: The overall macro environment for demand is very strong. " We closed the fourth quarter above expectations, and demand in January and February—typically trough periods—is robust. " Managed business trends are improving, with the first quarter expected to be better than the fourth. "

Fleet Strategy with Boeing
Q: Will you consider a second fleet type given issues with Boeing?
A: We routinely evaluate aircraft types, but our focus remains on our fleet plan with Boeing. " We have great confidence in the MAX 8 and are eager to get the MAX 7 certified. " Even with multiple providers, risks remain, so we are working with Boeing to make them a better company. "

Competition and Capacity Cuts
Q: Have you noticed changes in competition beyond capacity cuts?
A: There are many moving parts, including capacity shifts and mergers, making it tough to isolate factors. " We are focused on our performance and have not seen significant changes beyond industry-wide capacity reductions. "

RASM Improvement and Premiumization
Q: How are you addressing premiumization to improve RASM?
A: While we operate a single cabin, we enhance RASM through record ancillary revenue from products like EarlyBird Check-In and upgraded boarding. " Premium revenue is cyclical, so we focus on improving RASM through these offerings. "

Efficiency Initiatives
Q: What are your plans for improving efficiency?
A: We peaked in hiring and plan to end 2024 with the same or fewer employees than in 2023, improving efficiency. " We have significant initiatives planned to enhance aircraft and personnel efficiency, details of which will be shared at our Investor Day. "

Flight Attendant Strike Vote
Q: Will the flight attendant strike vote affect operations?
A: We are not worried about a strike despite the strike authorization vote. " We have ratified nine agreements in over a year and are confident in reaching an agreement with our flight attendants. " There's no evidence of customer concern or impact on demand. "

Product Importance
Q: Does product matter more on longer flights like Hawaii?
A: Absolutely, product matters. " Our coach product is considered the best in the industry, and we beat our own expectations for Hawaii in the fourth quarter. " We continue to monitor customer demands and are open to adapting if needed. "

Cost of Capital
Q: What is your current weighted cost of capital?
A: Our weighted average cost of capital is approximately 8.6% to 8.7%, historically closer to 9%. " We consider this in our planning to ensure returns on invested capital meet our longer-term views. "

Shift to the Cloud
Q: How is the shift to the cloud progressing, and what savings do you expect?
A: We've shifted just below 50% to the cloud and aim to increase that. " Cost savings are modest—more in the tens of millions than hundreds—but the main benefits are reliability and resiliency, reducing operational issues. "