Q2 2023 Frontier Group Holdings Inc Earnings Call
Okay.
Thank you for standing by and welcome to the Frontier groups Holdings second quarter earnings call. At this time, all participants are in a listen only mode.
After the Speakers' presentation, there'll be a question and answer session.
I asked a question at that time, Please press star one one on your telephone.
Please be advised today's call is being recorded.
Now I'll turn the call over to your host Mr. David Erdman Senior director of Investor Relations. Please go ahead.
Geneva, and everyone and welcome to our second quarter 2023 earnings call today's speakers will be Barry before president and CEO , Jimmy Dempsey, EVP and CFO , Daniel shirts, senior Vice President commercial each will.
Liver brief prepared remarks, and then we'll get to your questions, but first let me quickly review the customary safe Harbor provisions. During this call we will be making forward looking statements, which are subject to risks and uncertainties.
<unk> 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'll also discuss non-GAAP financial measures, which are reconciled to the nearest comparable GAAP measure in the appendix of the earnings announcement.
The Florida barrier to begin his prepared remarks, Barry Thank you David and good afternoon, everyone.
Despite challenging operational conditions, we generated strong second quarter results with a pretax margin of nine 1% our highest post pandemic margin on an industry, leading capacity growth of 23% compared to the prior year quarter. Our continued focus on cost management helped drive a beat on our non fuel operating expense. Our total cost structure is significantly lower than the industry average.
<unk>, an advantage of more than $70 per passenger today.
Our cost structure is a key element and underpinning our growth strategy and I'm proud of the organization is continue to ensure we remain the leader among our peers.
Ancillary revenue continued its strong performance during the second quarter, achieving $80 per passenger $5 higher than the comparable quarter.
Last year, we expect our industry, leading ancillary platform to continue to provide us with pricing flexibility to tend to our suite of products and services to our customers needs. It also enables us to maintain low fares and enhanced engagement and loyalty with our brand.
Our go Wild all you can fly past is a great example.
It's a substantial number of our pass holders did not have prior travel history with frontier, we've had the opportunity expand brand awareness and preference along with driving incremental revenues as these customers engage with our other loyalty platforms such as discount in our co branded credit card as well.
It's a key part of our strategy to increase the contribution from loyalty and subscription related products as we look to the third quarter, we expect a moderation fairs largely due to an increase in competing long haul international travel close to better understand this phenomena. We recently surveyed our frontier customers survey found that 5% or more of our customers who've traveled.
We're planning to travel to Europe versus last year, we estimate this environment to be a three point temporary headwind on a pre tax margin basis.
Currently our survey also revealed over 90% plan to travel the same or more with over half planning to travel more on a go forward basis, giving us the confidence that once the balance shifts back to domestic we believe RASM will normalize.
Turning to the operational environment challenging conditions experienced in June continue to cause and historically elevated level of cancellations.
Weather across the United States in particular in Florida has produced record air traffic control delay programs, resulting in the cancellation of over 3% of our flights in July we are incorporating ATC constraints into our network design going forward and.
And we expect this environment to impact our third quarter pre tax margin by approximately three points.
Accordingly, we anticipate our third quarter adjusted pre tax margin to be 4% to 7%.
We're the lowest cost structure of any carrier in the United States and we are focused on sustaining that advantage with ongoing induction of the high gauge fuel efficient <unk> hundred 21, neo aircraft and by leveraging our high utilization capabilities to drive low fares and stimulate demand with.
I'll hand, the call over to Daniel for a commercial update thank you Barry and good afternoon, everyone total operating revenue for the second quarter of 2023 was $967 million more than 6% higher than the prior year quarter.
RASM was down 14%, 10% on a stage adjusted basis from a strong prior year quarter on capacity growth of 23% over the same period and an 8% increase in stage length.
Revenue per passenger was $127, 9% lower than the 2022 quarter during which time fuel prices were 40% higher and post COVID-19 domestic travel demand surged.
In May we launched promotional another go while seasonal product the fall and winter costs for travel from September through February The <unk> Festival, 95, U S and international destinations.
Furthermore, last week, we put the newco or monthly pass and sell Goodman, even more customers the opportunity to enjoy the best part of me when I travel.
Turning to a brief network update in the second quarter, we launched 2060 routes origination from Atlanta, Baltimore, Chicago, Midway Cleveland, Detroit, Houston, Orlando, San Juan St Thomas from Tampa.
These viewers rollout to existing frontier airports, which increases our customer appeal in key markets.
That concludes my remarks, and I'll now yield to call to Jimmy Thank.
Thank you Daniel second quarter results reflect a pre tax margin of nine 1% of post COVID-19 record the results reflect strong demand throughout the quarter and intelligent management of our cost base.
Revenue increased 6% on a 23% increase in capacity while fuel expense was in line with guidance on average cost per gallon of $2.69.
Adjusted non fuel operating expenses were 644 million, beating guidance are $6.09 on a unit basis, 5% lower than the 2022 quarter.
We ended the quarter with 780 million of unrestricted cash and cash equivalents were 350 million net of total tests and.
In addition to our cash balance we also have access to substantial liquidity through our unencumbered loyalty and brand related assets.
We had 126 aircrafts in our fleet at June 30, after taking delivery of three <unk> hundred 21 Neo aircraft during the quarter two of which were financed with direct leases.
Having already experienced significant aircraft delivery delays across the first half of the year Airbus has informed us that any further delays should be modest as such we expect to end the year with 136 aircraft.
Turning to guidance third quarter capacity growth is anticipated to be in the range of 21% to 23% over to 2022 quarter. While full year 2023 capacity is expected to reflect growth of between 19% to 21% over the prior year fuel.
Fuel costs are expected to be between two <unk> and $2 90 per gallon in the third quarter and $2 90 to $3 per gallon for full year 2023 based on the blended fuel curve on July 24th adjusted.
Adjusted non fuel operating expenses in the third quarter are expected to be between $650 to $665 million and $2 535 billion to $2 585 billion for the full year.
This range incorporates the cost related to challenging operating conditions.
Finally, reflecting barry's earlier comments on the operating environment adjusted pre tax margin in the third quarter is expected in the range of 4% to 7% and 4% to 6% for the full year with that I'll turn the call back to Barry for his closing remarks. Thanks Jimmy.
Want to personally thank team frontier for their dedicated service during the quarter in a difficult operating environment and for delivering low fares done right. We remain focused on controlling the things we can control to run a sound operation. Despite challenges posed by extraneous factors, our competitive edge lives and sustaining our cost advantage over the industry and we intend to utilize this advantage to stimulate leisure travel.
Demand and maximize shareholder value.
I want to be clear.
While we are disappointed in our projected results I strongly believe the company will return to double digit margins given that most of the headwinds are temporary and we think.
Everyone again for joining this afternoon, and we're ready to begin the Q&A portion of the call.
Thank you again, ladies and gentlemen, if you'd like to ask a question. Please press star one one of your telephone again to ask a question. Please press star one one our first question comes from Brandon <unk> of Barclays. Your line is open.
Hey, good afternoon, and thanks for taking my question.
Barry I guess can you expand on that a little bit because you had been guiding I think for like 10 to 12 or 10% to 13% pre tax margin in the back half of the year. It seems like youre pulling that back you know somewhere around 4% to 6% at the midpoint I think you did.
<unk> three points from restructuring operations around Florida at ATC.
So can you maybe dive deeper into that please.
Yes, sure, it's pretty simple math, we laid out.
We've put out a 10% to 13.
Expectation for the second half and we are seeing roughly three points and the operational challenges.
As we discussed.
The ATC ground delay programs and so forth and we're seeing the additional three points in the.
The revenue environment, which is primarily driven by the shift of European travel. So that's pretty much explains the six points I think there might be a little bit more fuel in there as well but.
Explains it all.
Well I guess, Barry can you talk about the changes around those operational challenges because it looks like your capacity guidance may be didn't move all that much. So does this go beyond just capacity.
No no. This is this is just simply.
It started a little bit in may, but really took effect in kind of your mid June timeframe and its continued for the last six weeks pretty heavily.
We see maybe even a similar storm events.
C ground delay programs start hours and hours before.
With significantly longer with lots more minutes and so.
We planned our airline in the past we had roughly three hours of buffer built in and we're seeing consistently with these kind of ground delay programs, we need around four hours. So we've made some tweaks to it but theres no real immediate fixes.
That will fix this in the near term.
Until but when we look forward to next year and beyond we will start factoring this into our plan.
<unk> is issuing more graduate programs and they are at lasting considerably longer.
Then we had seen in the past and so we've got a plan for that but in the meantime, it's a drag until we can get it.
Schedule around it.
Okay I appreciate that Barry and then Daniel maybe can you expand on the European carbon overseas travel because it's not the first time, we've heard it this quarter.
Should we be thinking that folks have more propensity to travel internationally this year than they will next year.
Hello.
We know Brandon.
As far as our customers, we surveyed our customers traveling to Europe , but this comment obviously from from others that seems to us that seems to be this.
Clearly pent up demand for long haul international travel in from a U S point of origin perspective.
<unk> is very very heavily to Europe .
We don't know we don't know, we don't obviously know exactly what's going to happen in the future, but what we've seen in pent up demand what are we seeing a pent up demand in Germany is the first time, you see that pent up demand that's when our strongest on it it tends to ease off as you go forward.
Okay guys. Thank you.
Thank you one moment please.
Our next question comes from the line of Duane <unk> of Evercore ISI. Your line is open.
Yeah.
Hey, thanks.
Just on on network development, a couple of questions.
On your planning horizon, and how that relates to the booking curve, we're a little surprised to see.
A large changes to October here in early August or late July Glen It granted they were capacity adds or theyre not delete, but can you just talk a little bit about how your.
Network planning process has changed.
And how you see it evolving over time, what prevents you from.
Im planning.
With stability kind of further out where you're waiting to see aircraft available availability et cetera.
And I guess, most importantly, do you think this cost you at all from a from a sort of long term bookings curve perspective or is all of the action.
Kind of close in.
Okay, Okay, Brian I'll unpack.
I think Paul we have made tweaks to our schedule on some of our scheduled rules scheduled design rules.
To try and address some of what we've seen in the operational and the operational environment, we're going through at the moment. We made we made those changes we made those changes as close in as we toured that did that did cause us to be somewhat to get somewhat behind on actually loading loading all of our schedules are particularly affected us. So thats actually September had the most of it does go ahead of us.
Okay.
We're expecting that to be sort of a relatively one off we're actually we're actually we're actually moving forward to adding the capacity, we want to add a layer, but we.
We did we did want to make sure that we did we did we did make the adjustments that we needed to make we need we need to say when its improvements all of them and that's something we've made some improvement made some improvements. We think we made some changes that we think will improve operations.
Yes.
From that from the book from the booking curve perspective, it's a very minor impact we are saying we seek we see species that we still see most of it most of our volume closer at much closer in the map.
There's a small impact but it truly is a truly is small and going forward as we get schedules from sell further out with just extended our scheduled <unk>.
That impact will go away altogether.
Okay. Thank you and then just just with respect to the booking curve at least at least one.
<unk> in the U S talked about kind of the surprising strength close end, but that they basically didnt assume that going forward for the rest of the quarter does that ring true to you and what assumptions have you made with respect to kind of close in bookings for the balance of the quarter.
We've.
We have a value proposition that <unk> start the works very well from a from a classroom perspective, and we've said we've seen continued environmental has seen a continued trend since the pandemic hall since panned out a recovery in 2022.
Strong strong strong close and strong close in demand.
Our anticipated anticipation broadly speaking is that that will maintain a relatively similar to the way we've seen it over the last number of months.
Okay I appreciate the time.
Yeah.
Thank you one moment please.
Our next question comes from the line of Michael Lindenberg.
Of Deutsche Bank. Your line is open again, Michael Lindenberg. Your line is open.
Great Hey, good afternoon, everyone, Hey, I guess, one part one question here, but sort of two parts.
When we think about your network and we sort of think about what percent is under development and I'm trying to get a sense of what percent can we look at a same stores basis, and then what would be new.
There's obviously I know you are in a lot of seasonal markets and so they go away and they come back.
How.
How should we think of that like if I were to look at your market today take a snapshot like what percentages under development or are relatively new markets, maybe something that's been added in the last 12 months.
Something that is not seasonal.
It comes in and out every six months out of the year at 10 six months out.
Can you give us a better sense of that I guess that would be to you Daniel and then I have sort of a follow up tied to that.
So well first first of all I want to first highlight first thing I want to mention with regard to this is we are we are obviously, we are growing at the moment faster than often are intended medium term trend line growth.
Is it to mid teens grasping a standard medium so I'm trying to.
And as weak and as we come out of Covid, we're continuing to Recut, Wisconsin recover capacity and we'll continue we're continuing to grow out will continue to grow this year.
At a rate of Reagan break in the Twenty's and the trend in the 20%.
That's 10 best tenant that tenant that tenant that tenant that tenant pushed us to push this off on rapidly scrambling to get you an actual number.
I'm ready for us.
But look we're always going to happen, we're going to we're going to test we're going to tend to have a we are going to tend to have a higher sense of the network and development broadly because we are growing.
We have.
We are where we are.
She's looking to outweigh the we're always looking to add and we're always looking to add new capacity.
And it's an and.
The key the key thing at the moment is we're not adding unit.
New airports. So the network, we're adding we're adding we're adding joined the dock service around around around the contract I will get back I will get back to you I'll get back to you on the offsetting factor on the exact current percentage in development.
This is Barry.
Good thing that I would say is look if you're in the twenties on growth.
That just tells you right there that is all new.
And then Ed.
In every given moment, you've got anywhere from 15% to 35% of your flying that you did the year before that didn't work. So you redeploy it that's kind of how growth airlines work and so that's going to push you.
I'd say, 20% of 25% from last year, 30% actually.
So you're in the over 30% is immature okay.
And so yes, we have a significant amount and I think this is an underappreciated part of frontier.
People have picked on us about underperforming our historical margins, but I think what people don't grasp is that when you are growing at 10 plus points higher than your target rate and you take a 20% to 30% discount on that that's just a flat out three point drag on margin and it could likely be even more just Tim.
Simply because youre also still coming out of Covid. So.
That's a long way of telling you yes. It is it is over 30% in the IB.
Immature stage and that will come down as our growth moderates into 2024, we now expect it to be in the mid teens mid to upper teens.
And the reason I was asking Barry and Daniel is that look <unk> got a nice job on ancillary right I mean, Europe year over year five box moving you are at 80 now, but when I look at the base fares youre down almost $20 and so the question is.
What youre, making up on ancillary youre, losing on base and presumably you are.
A growth carrier demand stimulation, but we're also in a pretty high inflationary environment and we are seeing average fares for a lot of carriers. They are flat to up and now they are moderating as we move forward, but to see that down as much as it is in the June quarter.
Presumably that's because they're like you said you're in a lot of relatively new markets call. It a third.
So you are engaging in demand stimulation, which is which is your model I guess and maybe maybe I'm answering your question or maybe I'm missing it.
If theres anything you can add on that because thats, a pretty meaningful drop on the base.
We're very aware, Mike and that is why we are extremely focused on on getting back to double digit margins in a big part of that is getting our growth rate normalized.
We are largely back to a normal growth rate once we get to 2024, yes, we have we've swallowed a lot of capacity.
To get the utilization back and we're finally to almost through that and yes. It has a corresponding impact to fares and we need that to stimulate the good news is we're growing everything whether it be your emails.
<unk> Flyers or Youre, just Dan members should go out so the good news is that those things are keeping up with our growth and so as that moderates, we expect to see the benefit of that as we move into 2024, okay. Okay very good thanks, everyone.
Thank you one moment please.
Our next question comes from the line of Jamie Baker of Jpmorgan. Your line is open.
Hey, good afternoon, gentlemen, so appreciate the Airbus commentary before just wondering if you have any specific GTS related assumptions embedded in the forward six months guide.
Or if it's just.
Business as usual.
So thanks, Jami, we don't have any of the engines and in fact, the ones that were impacted were manufactured.
Through September of 2021, we.
We did not take an aircraft we didn't take a DTF until actually a year later and that.
You'll engine was manufactured.
Both those interests were manufactured in May of 'twenty. Two so so we are about six to eight months past.
The risk profile of those so good good.
And looking forward later this year when you gave us some color on 2024 costs any updated thoughts on whether you may choose to accrue for new pilot economics or are you still debating this internally.
I suppose more importantly, when you think about.
Your earnings profile ones pilot costs Mark to market.
Do you think about the network any differently and basically do you envision flying any differently or is it just as simple as hopefully raising fares.
In hopes of preserving margins.
Yes, so I think there's a couple of things.
One we're very early on I know there is.
And there was a group of you asking another airline about whether they should include it in their contract I think had been open for several years.
We're not in that situation. So right. So it's very early which had our first meeting. So I don't think I think we're a little premature on that.
But let's just talk about yes, we are going to pay our pilots more at some point, we're going to pay all of our work groups more at some point and so that's why we're constantly innovating and looking for ways to improve our situation. So I'll go back to the previous question about moderating growth that's going to be worth several points right. There just in and RASM.
To help pay for it we can get past the current operational environment or at least I don't know that we will get past the operational environment, because I believe the.
The forecast is the Hec staffing stays stays low for a few years, but we can plan around it much better and so I expect that by 2024, we've made some some closer tweaks.
But when you like any plan in your airline Geek.
I know the network works.
The more the sooner you know the inputs to putting together a plan to better and more optimized. It is so as we think about 2024, and probably really our spring and beyond which is most impacted just simply because of the weather related impacts we're going to build from the ground up a completely different firebreak assumptions and buffers.
So you would expect that we would get the majority of this.
Fit back by planning around the operational impact got it and then and then as you well know.
I think we've probably been the leaders in ancillary.
Revenue related pipeline. So we've got it kind of have a robust pipeline. There. So I believe that we will have by the time, we get new labor contracts, we will have ample.
Pasty to pay for it with all of the things that we have in the tank.
<unk>.
To expand our margins okay very helpful. Thank you.
Thank you again, ladies and gentlemen, Ms you'd like to ask a question. Please press star one on your telephone again to ask a question. Please press star one one.
One moment for our next question.
Our next question comes from the line of Savi <unk> of Raymond James Your line is open.
Hey, good afternoon.
Can I ask.
Getting to kind of mid to upper teens in 2024 in terms of capacity growth and making some of these changes to ATC I'm guessing you'll have some improvements in kind of Iraq cost and things like that but like putting all that together, what's your kind of revised view on what CASM. What you can get CASM ex to be there in 2024, and I know, it's really earn.
Early stages, but generally kind of whats your revised view on CASM next year.
That's obvious Jimmy here.
We haven't published a view on CASM going into next year.
We're just putting together our capacity plans so that we can get.
An idea over the next couple of months on where we think Directionally CASM is going given given some of the changes that we have but we're really focused on is sustaining the differential we have to all of our competitors.
In the last quarter were comfortably $70 per passenger and lower costs in all of our competitors across the average of the <unk> aviation space here in the states.
And we would anticipate that we sustain this going through next year.
This year, our CASM is probably slightly above six five.
We would anticipate them going into next year it'll be in that area code.
One of the things Thats benefiting us going into next year as the more normalization profile of Airbus deliveries that we expect across 2024 in comparison to 2023, so that will help us.
Okay. Thank you thanks for that and then.
Last quarter, you talked about kind of reshaping capacity I was wondering if you can provide an update on <unk>.
That's playing out I realize it's kind of the overall revenue pricing environment's a bit softer, but generally how has your kind of capacity reshaping <unk> been playing out.
Well.
So the first month, where we see an actual significant amount of that capacity shaping savi is actually is actually going to be the month of September .
The first month with the most significant.
With the most significant.
Discuss some we're continuing to see the same travel demand patterns are and will continue as we look at what's happening.
Happening with September bookings, we do if we do absolutely see the two the day of week patterns that we described when we when we announced when we announced these changes and so we're confident that with the right approach to take.
We're continuing to roll it out as we rollout schedules into.
Into 2024.
I appreciate that thank you.
Yeah.
Thank you.
One moment please.
Our next question comes from the line of Ravi Shanker.
I'm Morgan Stanley Your line is open.
Hi, Good afternoon, everyone. This is Kathryn <unk> on for Ravi. So thank you for taking my question.
I wanted to just quickly follow up on a previous question asked about international travel pressuring the shorter haul that you are guiding towards in through Q.
Just curious your thoughts around whether or not this might reverse in Q4 as the holidays are typically more favor towards visiting friends and family and whether or not that's something you are baking in for the full year assumptions. Thank you.
Sure. We don't know, we surveyed customers and we know that.
Many of them continue to planned travel this fall.
It appears to US is that the summer did get very expensive relative to some people's expectations and so we actually believe a lot of the demand is going to spill into the fall and therefore, we have not made an assumption that this environment changes before we get into the heart of winter, Although I do know that.
Once we get to January February it's a heck of a lot better to be in in Florida than it is in most parts of Europe .
Thank you.
One moment please.
Our next question comes from the line of Stephen Trent of Citi.
Mr. <unk> your line is open.
Yes.
Good afternoon, gentlemen, and thanks very much for taking my question.
Just one or two for me. So the first one is definitely appreciate what you guys had mentioned about weather.
Did you see sort.
Sort of any episodes in July where.
Let's say extreme heat in places like Vegas.
Maybe led you to bump some.
Daytime capacity into the evening for example, or.
Kind of we're primarily talking about Thunder software that were the main headache.
The biggest challenge is simply that we are seeing more ground delay programs and we're seeing them put on much sooner and for much longer duration.
And then we've seen in the past I mean, we've seen upwards of five to 10 times the amount of ground delay program minutes that we've seen in the system versus years past.
That's the big challenge as far as <unk> goes.
So I've seen some of those and I know there was a plane stuck.
Another carrier.
Secondly, I really got hot the only specific thing that we've had is there have been the normal challenges with more tires that are that are damaged as a result of heat.
And in particular, we did have one day, where the temperatures were so high in Las Vegas that it caused a temperature warnings.
Cause the fuel.
And the aircraft to exceed a temperature warning, which actually had to cancel flights a week.
We've actually been tapering fuel now and they're too.
To mitigate this but we've had I think it's probably less than a dozen or two just related specifically to heat everything is mainly aircraft control graduate programs.
Okay, No that's great.
Definitely appreciate that.
Thank you, Brian and one other quick thing I appreciate what you've mentioned about long haul demand and what have you.
When we think about Florida over the last kind of two to three years for a lot of the time that was kind of the only place that was open.
Are you seeing any specific sort of nuances and demand trend aside from more people flying long haul.
You are hearing one or two organizations on a boycott the state et cetera, et cetera, but I'm not sure if youre seeing anything like that and in your data. Thank you.
Yes.
We have not seen anything quite like that.
There is some theories around temperature.
And when it's really hot.
Certainly we want to go to Phoenix right now.
And some other places and it doesn't help when those destinations are actually in the news.
We're being very very hot.
And when you talk to certain hotels I think they have they have actually experienced it but in our data we haven't really seen.
Anything in particular.
Points too.
Right or specific destination.
Performing or underperforming.
In fact, I think if you go back.
The COVID-19 recovery and the pent up demand was very uneven.
Really benefited the Florida as you mentioned it benefited even some of the kind of secondary destinations in their off seasons.
And then it's taken a little longer for the coasts the new York's the California's to come back, but but in our business. We've now see California. It bounce back as an example.
And so we can see a pretty even recovery are forming this is the big shift to to go to Europe . This summer and into the fall is look at it it takes money.
There are so many consumer dollars.
When we look at just our customers we surveyed our customers.
The whole traveling public and when we lose 5% of our people to go to Europe .
That's a lot of customers and so they're spending a lot of money to go on those trips so that as that is a pretty big dip.
But we think that it will normalize just like we saw huge spikes to Florida and other places when the pent up demand hit.
I think that we're going to see this moderate the question is is it three more months or is it six more months, but.
It will moderate at some point.
Okay really appreciate that Barry Thank you very much.
Okay.
Thank you one moment please.
Our next question comes from the line of Conor Cunningham.
Of Malice research your line is open.
Okay.
Hi, everyone. Thank you just on this network reshaping debate you guys had actually started it last quarter and now it seems like Theres been a bunch following you.
As there are adjustments are made to Tuesdays and Wednesdays.
The capacity is added to the peak days.
Some fear around just potential impacts deferred there.
I know you don't want to talk about Florida variance, but if you could just provide any expectation around.
How much are you spilling during peak days or how much do you think you you should be getting from a fair share standpoint on the peak days that you are not right now.
<unk>.
Alright.
Carlos Thanks for the question is Daniel I'm not sure there's a huge amount of change coming on kicks hung on peak days.
We are we were low fast demand stimulating online right, but what youre seeing what youre hearing mainly on want without spending what I've heard mainly as other airlines have talked about this is really taking capacity out of the days, where the revenue isn't strong enough to justify.
World to generally speaking as an industry flying our capacity intensely on peak days because of that that's why the revenue is highest that's why the demand is highest so.
We think.
The general the general trend in Sunny Sunny.
One thing that helps the more capacity comes out amid weak the more at stake the morning, stabilizes Morton stabilizes midweek SaaS and the more it helps it helps the demand level.
On peak days, but that's all that's all we can really say from one from the booking for her.
I'll just add to look.
<unk> and <unk>.
How revenue is spread across the days of the week is not a new phenomena.
What we were just the first ones to point out.
Maybe controversial at the time and yes, as you point out it seems like just about everyone has followed us once we've laid the groundwork for that.
But what you what you see even pre today and go back 10 years 20 years is that the midweek capacity as an example, youre Tuesday Wednesday, that's when your lowest fares exist traditionally.
And so what it does actually pulls people from the peak days over to those days, because theres, a lower fare option, what's going to happen not only with our changes and now that so many have followed us theyre just going to be a lot less Tuesday Wednesday seats, so theres going to be a lot less discounting. So so generally benefits those.
<unk>, but but you also find that it makes you as your peak days, even better as well you typically will see a RASM benefit when you make those trends across across every day a week just simply because you removed the most marginal capacity.
That's helpful and then.
You actually finished prepared better weather this quarter and I know you made the adjustments that modular network I'm just curious on.
I realize a lot of the stuff out of your control from ATC, but just how you held up from a comparability standpoint.
Given given the changes in that modular network. Thank you.
Well I think there's two things I'd say one.
We often we often see it as a positive that we're diversified and acts.
So you're very spread across the United States with multiple bases in multiple jurisdictions and we pretty much follow all the major travel flows in the United States set another way, there's really no way that were not impacted by weather. Some airlines maybe operate in the western northwestern United States.
David Scape. This this weather this year, but if you are in if you like like us or in.
Denver Central time zones, Florida.
Northeast capacity, we've gotten hit by that.
So we are exposed.
In terms of the modularity what we're learning is we don't have we typically don't have the 345 up to seven day rolling event.
Because we only.
Mainly only have one and two day crew pairings.
But what we have found is that we are likely to be more impacted on the day up. So so if an airplane goes out add back and has to go through the same weather system twice or in some cases three times. If you catch a two hour delay every time you go through by the third leg that aircraft I can just guarantee you there is not a crew planning world.
That that crew hasn't timed out so so while it makes us easy to not have these like catastrophic multi day weeklong events. We are more susceptible on the day that you do have a weather event if that makes sense.
Hey, guys. Thank you.
Thank you again, ladies and gentlemen, if you would like to ask a question. Please press star one one of your telephone again to ask a question. Please press star 111 moment. Please.
Thank you I'm showing no further questions at this time I'd like to turn the call back over to Barry default for any closing remarks.
Well, thank everyone for joining our call today I appreciate all the questions and we look forward to talking to you next quarter. Thank you.
Thank you ladies and gentlemen, this does conclude today's conference. Thank you all for participating you may now disconnect have a great day.
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