Q4 2023 Delta Airlines Inc Earnings Call
Good morning, everyone and welcome to the Delta Airlines December quarter, and full year 2023 financial results Conference call.
Matthew: My name is Matthew and I will be your coordinator.
Matthew: At this time all participants are in a listen only mode until we conduct a question and answer session. Following the presentation.
Matthew: As a reminder, this call is being recorded.
Matthew: You have any questions or comments during the presentation you May press star one on your phone to enter the question queue at any time.
Matthew: I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations. Please go ahead.
Julie Stewart: You Matthew and good morning, Thanks for joining us for our December quarter, and full year 2023 earnings call joining.
Julie Stewart: Joining us from Atlanta today are our CEO, Ed Bastian, our president Glen Hauenstein, and our CFO, Dan Jenkins, Ed will open the call with an overview of Delta's performance and strategy Glenn will provide an update on the revenue environment and Dan will discuss costs in our balance sheet.
Julie Stewart: After the prepared remarks, we will take analyst questions. We ask that you. Please limit yourself to one question and a brief follow up so that we can get to as many of you as possible. After the analyst Q&A, we'll move to our media question.
Julie Stewart: As a reminder, today's discussion contains forward looking statements that represent our beliefs or expectations about future events. All forward looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward looking statements.
Julie Stewart: Some of the factors that may cause such differences are described in delta's SEC filings.
Julie Stewart: Well also discuss non-GAAP financial measures and all results exclude special items unless otherwise noted you can find a reconciliation of our non-GAAP measures on the Investor Relations page at IR Dot Delta Dot com and with that I'll turn the call over to Ed well. Thank you Julie and good morning, everyone. We appreciate you joining us this morning earlier.
Edward H. Bastian: Earlier today, we reported our full year and December quarter results, posting fourth quarter earnings of $1 1 billion or $1 28 per share on record quarterly revenue that was 11% higher than 2022, and an operating margin of 10%.
I wanted to securely. Thank the 100000 strong delta team for their outstanding work in delivering these results and serving our customers.
Edward H. Bastian: Delta carried more travelers this holiday season than any other time in our history and we delivered industry, leading operational performance with a number one system completion factor amongst our peer set throughout the December quarter to put that in context, we carried 9 million customers a record 9 million customers I'd add.
Edward H. Bastian: On 60000 mainline flights over the holiday period with fewer than 40 cancellations in aggregate.
Edward H. Bastian: Our December quarter results marked a strong close to year two of our three year plan.
For the full year, we reported earnings of $6 25 per share. The second highest EPS result in our history on revenue that was 20% higher than the prior year, we delivered an 11, 6% operating margin and pre tax income of $5 2 billion.
Edward H. Bastian: A near doubling over 2022.
Edward H. Bastian: We generated free cash flow of $2 billion, while investing $5 3 billion back into the business and we improved our leverage by two full turns and reinstated our quarterly dividend.
Edward H. Bastian: Return on invested capital was 13, 4% a five point improvement from 2022, a tremendous amount of progress, especially if you consider where we sat a short three years ago.
Edward H. Bastian: So proud of our team across the board.
Edward H. Bastian: Sharing our financial success is a longstanding pillar of deltas culture.
Edward H. Bastian: I'm thrilled to announce that we will be rewarding our employees with one $4 billion in well learned profit sharing on Valentine's day.
Edward H. Bastian: For our employees the estimated payout will be approximately 10% of eligible 2023 compensation about double of what last year's payment was <unk>.
Edward H. Bastian: I expect our profit sharing payments will be more than our three largest competitors combined.
Our people consistently deliver operational excellence with a relentless focus on raising the bar at every stage of the travel journey to deliver safe reliable and carrying service for our customers.
Edward H. Bastian: They are the reason our brand and our customer loyalty to lead the industry.
Edward H. Bastian: Why Delta was recognized as the world's most admired company by Fortune.
Why glassdoor named US yesterday, as the 13th best employer in the country.
Edward H. Bastian: In 2023, we've made meaningful investments in our people our operation and our customers.
Edward H. Bastian: We provided well deserved pay increases for the Delta team, continuing our philosophy of industry, leading pay for industry leading performance.
Edward H. Bastian: In the operation the investments that we've made supported the best in class operational performance that Delta has long been known for our.
Edward H. Bastian: Our operational excellence was recognized by Cerium last week, which named US yet again, the most on time airline in North America.
Edward H. Bastian: Our people and our operational reliability are the foundation of Delta's trusted consumer brand and we are building on that foundation as we elevate the premium flying experience and grow our skymiles members engagement with Delta.
Edward H. Bastian: Today, We also announced an order for 20 Airbus 351000 aircraft with options for 20 more for delivery starting in 2026.
Edward H. Bastian: These planes complement our fleet strategy and we will offer a world class customer experience for international travelers with more premium seats higher gauge and great customer amenities. These aircrafts are over 20% more fuel efficient than the 760 sevens that there'll be replacing further supporting our long term.
Our sustainability goals.
Edward H. Bastian: And with the successful launch of fast free Wi Fi and Delta sync, we are enhancing the in flight entertainment experience through Skymiles members. We expect to have these products rolled out globally by the end of this year.
Edward H. Bastian: On the ground, we are building the airports of the future and some of the most important markets and adding new Delta Sky clubs to provide our customers a world class Airport experience.
We completed our transformation that Los Angeles 18 months ahead of schedule, including a state of the art facility and a new Delta Sky Club that was named North America's Best airline lounge for 2023 by business traveler.
We opened the latest phase of our Salt Lake City expansion and we will complete the generational rebuild of Laguardia This year.
Edward H. Bastian: Our digital investments continue as we work to increase our agility and provide employees with better tools and customers with a more seamless experience.
Edward H. Bastian: Customers visited the fly Delta App over 1 billion times last year.
Edward H. Bastian: Using our self service tools, almost 10 times more often than 2019 with much higher overall satisfaction.
Edward H. Bastian: As 2024 begins our enterprise has moved from a period of restoration to optimization.
Edward H. Bastian: We are focused on delivering delivering excellent reliability elevating the customer experience and improving efficiency across the company to support continued growth in our earnings and our cash flow.
Edward H. Bastian: We expect demand to remain strong, particularly for the premium experiences that delta provides.
Edward H. Bastian: Sumer spend is continuing to shift from goods to services and our customer base is in a healthy financial position with travel remaining a top priority.
Edward H. Bastian: In corporate travel continues to improve with demand accelerating into year end.
Edward H. Bastian: On supply industry growth is normalizing after several years of network restoration.
Edward H. Bastian: For 2024, we plan to grow deltas capacity, 3% to 5% below the mid single digit range that we discussed at our June Investor day, as we've refined our plan.
Edward H. Bastian: Domestically supply and demand are coming into better balance as the industry adjusts to rising cost of production and we are seeing a positive inflection in domestic unit revenue growth.
Edward H. Bastian: Internationally, we expect another strong year as we optimize our network and leverage our global JV partners.
Edward H. Bastian: With that backdrop, we are providing full year 2024 guidance for earnings of six to $7 per share.
Edward H. Bastian: Excuse me and free cash flow of $3 billion to $4 billion.
Edward H. Bastian: Free cash guidance is up to $2 billion higher than 2023, driven by growth in profitability lower capex and improved mix of cash sales.
Edward H. Bastian: As we continue to grow earnings and reduce debt, we will further reduce leverage and advance our balance sheet towards investment grade metrics.
And Dan will provide more details shortly including our outlook for the March quarter.
Dan J. McKenzie: In closing the people of Delta delivered a remarkable 2023, leading the industry operationally and financially while providing a world class experience for our customers Delta is well positioned to build on our momentum in the new year with continued growth in earnings and cash flow in 2024.
Dan J. McKenzie: I could not be more excited about what's ahead for delta and our customers and I am confident that our returns focused strategy will drive significant value creation for our owners in the years to come.
Speaker Change: Thank you again for the support you show to our company and with that I'll turn it over to Glenn.
Glenn: Thank you Ed and good morning, everyone.
Glenn: I want to start by thanking all of our employees for their hard work and dedication this year.
Glenn: For the full year, we delivered record revenues of 55 billion about 20% higher than pre pandemic.
Glenn: Strong execution on our commercial strategy resulted in significant outperformance against the industry.
With international delivering record margins and profits.
Glenn: We finished the year with unit revenues, 3% higher than 2022 also about 20% above pre pandemic levels.
Glenn: Diversified revenue streams, including premium and loyalty generated 55% of revenue, reflecting delta is differentiated strategy.
Premium led all year with record paid load factors and yield growth outpacing main cabin.
Glenn: The rollout of Delta premium select on long haul international is nearly complete and the revenue generation has been above our expectations.
As we continue to increase our premium seat mix and segment the cabin through our five product strategy, we have structurally improved the international margins.
Glenn: Our loyalty program continued to exceed our expectations with record scarred malls acquisitions in 2023.
Glenn: Total royalty revenue was up 19% over the prior year with 15% growth in co brand spend and increasing mix of premium cards, and our Amex co brand portfolio.
Glenn: In recognition of our commitment to the business traveler Delta was named number one in business travel news airline survey for an unprecedented 13th consecutive year.
Glenn: Delta gained corporate share during the year and successfully launched sky miles per business, providing small to medium sized companies new benefits to support further growth in your important SME segment.
Corporate sales accelerated into year end, including double digit year over year growth in the month of December.
Glenn: Technology and financial services led this momentum for the December quarter with media and auto sector is seeing notable traction following the strike resolution.
Glenn: December quarter revenue was a record $13 7 billion, 11% higher than 22.
Glenn: While unit revenues were 3% lower than last year, we are entering the year with momentum in our highest and had experienced our highest cash sales day in history. This week.
We expect March quarter revenue growth of 3% to 6% over 2023 on capacity growth of 6%, which includes one point from leap day, implying unit revenues will be flat to down 3% over last year.
This is a two point sequential improvement on a year over year basis from the December quarter.
Glenn: Our March quarter faces headwinds from three dynamics when compared to last year.
Glenn: These include higher international mix, the normalization of travel credit utilization and lapping a competitor's operational challenges.
Glenn: Looking through these headwinds the core fundamentals of the business are improving faster than the headline numbers suggest.
Glenn: With encouraging developments in the domestic environment, we expect domestic unit revenues to inflect positive in the March quarter.
Glenn: The Trans Atlantic our largest international entities continues to perform well with strong demand through the shoulder period, and we expect unit revenues to grow in the March quarter.
Glenn: In Latin in Pacific, we are rebuilding our networks and improving connectivity with our JV partners accounting for the majority of the capacity growth in the March quarter. These.
Glenn: These investments are supporting higher short term profitability, but with lower unit revenues.
Glenn: Turning to our outlook for the full year premium consumer trends remained strong and spending on travel experiences continues to outpace overall GDP by two to three points.
We expect solid growth in business demand with nearly 95% of respondents in a recent corporate survey expecting to travel as much or more in <unk> than <unk>.
Glenn: This is a double digit improvement in travel intentions from our last survey.
Our commercial strategy in 'twenty four builds on delta's competitive advantages by optimizing our network growing high margin revenue streams and investing in our future.
Glenn: First we have a unique opportunity to further optimize delta's network to capitalize on our strengths and core hubs and JV partner hubs and.
Glenn: And reflect evolving travel trends.
Glenn: This is the first time, we've been able to optimize since pre pandemic as we now have a good set of demand to optimize from.
Second growing revenue diversification through higher margin sources remains an important differentiator for Delta. We have runway ahead as we continue adding more premium seats to our aircraft further improve our retail capabilities and expand royalty revenues and travel adjacent services.
Glenn: We expect American express remuneration to grow 10% over 2023 levels.
Glenn: Finally, we are investing in the future to enhance the premium travel experience through our next Gen fleet generational airport builds and digital transformation with continued investment Delta's brand strengthened leadership position will extend in the years ahead.
In closing I'm incredibly proud of the team's performance in 2023, and we're entering the new year with momentum I'm excited about delta as opportunities to grow our lead in 2024.
Glenn: And with that I'll turn it over to Darren to talk about the financials.
Darren: Thank you Glenn and good morning to everyone.
Darren: 23 was another meaningful milestone in restoring our financial foundation.
Darren: We delivered earnings of $6 25 per share and pre tax income of $5 2 billion nearly double our performance of last year.
Darren: Operating margin of 11, 6% was up four points from last year and expected to lead the industry.
Darren: We generated operating cash flow of $7 2 billion <unk>.
Darren: Enabling reinvestment in our people our fleet and technology.
Darren: After gross Capex of $5 3 billion, we generated free cash flow of $2 billion.
During the year repaid more than $4 billion of gross debt.
Darren: This included accelerated repayment of $1 7 billion of higher cost debt.
Darren: We ended the year with liquidity of $6 8 billion.
Darren: And grew our unencumbered assets to 26 billion.
Darren: Our leverage ratio improved two turns to finish the year at three times.
Darren: Return on invested capital improved to 13, 4% up five points over 2022.
Darren: S&P upgraded our credit rating in the second half of last year.
Darren: We are investment grade rated at Moody's and we are now only one notch away from investment grade with outlooks, improving at both S&P and Fitch during the year.
Darren: With this progress we reinstated our dividend last summer broadening our appeal to yield focused investors.
We closed out the year strong reporting a December quarter pre tax profit of $1 1 billion on.
Darren: On operating margins of nine 7%, resulting in earnings of $2 28 per share.
Darren: Non fuel unit costs were up one 1% year over year in line with our guidance.
Darren: Now moving to our outlook for the March quarter, we expect earnings of 25 to.
Darren: To <unk> 50 per share.
Darren: An approximately 5% operating margin.
Darren: We expect March quarter fuel price to be $2 50 to $2 70 per gallon.
Darren: With a 5% to 10% refinery benefit.
Darren: The refinery profit is expected to be down more than $130 million from last year due to elevated crack spreads in early 2023.
Darren: For the full year, we expect to deliver earnings of $6 to $7 per share.
Darren: With our reduced outlook for capacity growth, we expect full year non fuel unit costs to be up low single digit over 2023 with the March quarter unit costs up approximately 3%.
Darren: The last two years were a period of intense restoration with unnatural high growth to rebuild our network.
Darren: Growth is normalizing and we've entered a period of optimization with a focus on restoring our most profitable core hubs and delivering efficiency gains across the enterprise.
The intensity of hiring and training has moderated and investment and reliability are beginning to pay off with continued improvement in operational.
Darren: Performance.
We expect to deliver efficiencies through the year that will help fund investments in our people the customer experiences that had spoke to earlier.
Darren: On maintenance, we have a higher number of heavy airframe and engine checks this year, resulting from the timing of new aircraft deliveries over the last decade.
Darren: And the reactivation of our flex fleets.
Darren: At the same time industry wide supply chain constraints are continuing driving higher cost and extended turnaround times.
Darren: For the full year, we expect maintenance expense to be up $350 million over 2023.
Darren: As we prioritize continued improvement in operational reliability.
And reading our fleet for the peak summer period, we expect the majority of this increase to be in the early part of the year.
Unit cost growth is expected to improve for the March quarter levels, as we deliver efficiency and lap investments we've made in the second half of 2023.
Now on to cash flow, we expect cash flow of $3 billion to $4 billion of free cash flow, including Capex of $5 billion. The.
Darren: The improvement in free cash flow was driven by growth in profitability.
Darren: Lower capex.
A higher mix of cash sales.
As cash sales are expected to compose a larger percentage of overall bookings as travel credit utilization normalizes.
Darren: We pan.
We plan to pay cash for $3 billion of 2024 debt maturities.
Darren: And for approximately 45 aircraft deliveries growing our unencumbered asset base at $30 billion.
Darren: We expect to reduce leverage to under three times, returning the balance sheet to investment grade metrics, while continuing to invest in the business remains our focus for capital allocation.
We will continue to evaluate shareholder returns with a focus on dividend growth as we reach our targeted leverage.
Darren: In closing Delta as well positioned as we enter the final year of our three year plan to restore our financial Foundation.
Darren: We are continuing to prioritize the objectives, we laid out at Investor day with emphasis on earnings <unk>.
<unk> ability free cash flow and capital efficiency.
Darren: Our industry, leading operational and financial performance as a result of the hard work and dedication of the Delta people.
Darren: I'd like to thank each of them for what they do every day.
Darren: With that I'd like to turn it back to Julie for Q&A.
Julie Stewart: Thanks, Dan Matthew can you please remind the analysts how to queue up for questions.
Matthew: Certainly at this time will be conducting the analyst question and answer session. If you have any questions or comments. Please press star one on your phone at this time, we do ask that will posing a question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.
Matthew: We do ask that all Q&A participants please limit to one question and one follow up question and then reenter the queue.
Matthew: Once again, if you have any questions or comments. Please press star one on your phone.
Speaker Change: Your first question is coming from Michael Lindenberg from Deutsche Bank. Your line is live.
Oh, Hey, good morning, everyone. This is a question probably.
And Glenn.
Speaker Change: The new <unk> hundred 51, thousands coming into 2020, and knowing that you do have some additional Airbus wide body is delivering over the next few years are you still going to be in a situation, where maybe you have to extend your 767 fleet I know that that is to be fully retired I think it was going to be by 2025.
Will you have enough lift and if not are we going to see additional investments into maybe some of these older aircrafts to keep them.
Speaker Change: Running through.
Until you take delivery of the bigger airplanes.
Speaker Change: As we move through 2025 20, <unk> through the back half of the decade, we expect to retire the 767 three hundreds through that period of time on a pretty consistent basis as you step through while continuing to fly the four hundreds.
So youll continue to fly the four hundreds beyond 2025.
Speaker Change: Yes, Mike I don't think we've never wanted to have the fleet grounded by 'twenty five it was our intent to have them out of international long haul by 2028 and retired by 2030, okay. Okay. It makes sense there a bit younger and then Glenn just on my second question.
Speaker Change: What was that.
Speaker Change: Headwind down due to the cancellation of the Israel surfaces in.
Israel services in the fourth quarter and.
Speaker Change: Is that a good way to think about the March quarter impact if you don't restart those services by the 31st Thanks, Mike.
Speaker Change: Mike.
Speaker Change: Initial hit was clearly the greater thats, because as we move through the quarter, we redeploy the assets to other markets. So I would say it was about one point of revenue in four Q and that really goes to.
Speaker Change: Very little impact in <unk> and beyond.
Of course, we're assessing the issues in Israel. Our current intent we have loaded for sale April we'll see how that manifest as we move through but our priority is always safety <unk> safety of our customers and our crews and that's going to be our priority.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you. Your next question is coming from Helane Becker from TD Cowen Your line is live.
Helane Becker: Thanks, very much operator, hi team thanks for the time.
Helane Becker: So two questions one for I think Ed.
Edward H. Bastian: You mentioned this morning on CNBC that you were seeing improvement in corporate especially in the tech sector.
Speaker Change: I was wondering if you or Glenn can talk about what youre seeing in corporate.
Speaker Change: By sector, and maybe by geographic region.
Well I'll start and Glenn can add his color as well, although we are seeing continued improvement in the corporate sector and we had a number of number of laggards tech being by far the largest in terms of that had essentially not returned to travel and we're finally starting to see the tech companies.
Traveling again and again I think a lot of it has to return to office that is driving some of that the consultancies as well, which have also been laggards.
Again, given their clients have had their offices.
Speaker Change: On what reduced.
Office hours opening is helping there and we've seen it across the board.
Speaker Change: The other thing I mentioned this morning also.
Speaker Change: Auto and.
Speaker Change: Entertainment.
Sectors.
Speaker Change: Have rebounded nicely entertainment and clearly in the auto is starting to rebound following the strikes in the fourth quarter.
Speaker Change: That's very helpful. Thank you and then just for my follow up question as you think about international.
Speaker Change: I noticed that in your schedules here Ilan gating this season.
Speaker Change: With maybe just January and February and international being <unk>.
Speaker Change: Seasonally lower are you seeing travel move into those months.
Speaker Change: Well, so that you would extend or add especially to your coastal hubs more international service going east.
Speaker Change: <unk> I think we've disclosed this previously is that we've seen in the seasons along eight.
Speaker Change: Leisure travel to Europe.
Speaker Change: Really March through October now is.
Speaker Change: Pretty strong of course, the shoulder is still not as strong as the peak summer.
In response to that and again this is part of our optimization of how we fly.
Speaker Change: <unk>.
Speaker Change: Tailoring our capacity when demand actually exist.
Speaker Change: Okay. That's really helpful. Thanks, Tim I have a nice day. Thank.
Speaker Change: Thank you. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you. Your next question is coming from Jamie Baker from Jpmorgan. Your line is live.
Jamie N. Baker: So good morning, everybody Glen on the pending inflection in domestic RASM.
I appreciate we're seeing capacity plans tighten up across the industry. My question is whether you are seeing.
Jamie N. Baker: Any revisions in how the growth your airlines are behaving.
Jamie N. Baker: Side of cutting capacity anything else interesting, we should be focused on or is it simply a supply exercise.
Speaker Change: That's driving the improvement.
Speaker Change: Well I think Jim you have got a couple of contributors to it one is what Ed just mentioned the improving conditions in the corporate environment.
Speaker Change: It's been a slow and steady rebuilt since the end of the pandemic, but we are post pandemic highs.
Speaker Change: Somewhere right around 90% restored to pre pandemic levels as we head into this year. So that I think is an exciting.
Back drop for domestic turnaround of course, we have some of the rationalization of capacity, but we also have continued improvements in the segmentation in pricing.
Speaker Change: Can't talk to our competitors I just know how we are working now.
Speaker Change: 20 years ago, we were only.
Speaker Change: Only worried about the lowest fares in the market and they're worried about the entire ladder and a relativity within those letters and trying to get people to experience the higher quality products and I think that's really led to our ability to continue to segment the customers.
Speaker Change: More enlightened way moving forward and thats going to be one of the key drivers as we head through this year.
Speaker Change: Okay I appreciate that and then second question for Ed.
During your interview with Bill this morning.
You mentioned, you're still holding out hope for the $7 earnings outcome. This year.
Speaker Change: If we fast forward to a year from today.
Speaker Change: Take.
Speaker Change: And that indeed has been the outcome what.
Speaker Change: What do you think the primary driver will have been I guess better way to asking do you think there is upside.
Speaker Change: What delta clinical control or do you think it'll simply be.
Speaker Change: <unk> unit factors like Hey, fuel cooperated or I don't know, maybe the consumer lean even.
Speaker Change: Further in the premium that that sort of thing.
Speaker Change: Sure. Thanks, Jamie.
Speaker Change: I get the question.
Speaker Change: I think the level of volatility that we see is what causes us to be a bit cautious and prudent in giving that 6% to $7. EPS guide in 2024, we've been signaling that a bit for the last.
Speaker Change: Six months end and Thats, where we sit today I have great confidence in us hitting hitting that guide, which is what I think the street wants to know where our confidence level is.
Speaker Change: There are a bunch of macros.
Speaker Change: We look at into the year, which will have to see how they play out clearly.
Speaker Change: Political front continues to be quite testy ing.
Speaker Change: Including the fact that this is a politically.
Speaker Change: Election season, not just in the U S, but around the world.
Speaker Change: Energy prices, we saw this morning, just how volatile energy prices are.
Speaker Change: And to me the supply chain.
Speaker Change: Both the cost and the constraints that we see in this industry.
New unabated.
Speaker Change: Not making nearly the progress on the supply chain improvements if anything.
Speaker Change: Every news, we get seems to be a bit worse, not better so that constrains growth and increased cost.
Speaker Change: That all said.
Speaker Change: My internal stretch for myself and our team is still get to that $7 number. This year I think we have a possibility to get there, but I also think that the macro weighs on that assessment and I think to be prudent we should we should set expectations, maybe a little bit lower than that.
Speaker Change: Hope to overachieve just by the way we did in 2023, we gave a five to $6 guide came in on the top end and I'd like to see a year from now that were reported in that same type of results.
Speaker Change: Glenn and Ed. Thank you very much for taking my questions. Thank you Sir.
Speaker Change: Okay.
Speaker Change: Thank you. Your next question is coming from Connor Cunningham familiar research your line is live.
Hi, everyone. Thank you Jess.
Conor Cunningham: On the regions in general obviously, some more constructive domestically, but I think you mentioned that you still see.
Conor Cunningham: A fair bit of upside in terms of international if you could just level set on your on your overall like regional expectations in 'twenty four I think that would be would be helpful. Thank you.
Conor Cunningham: I think we're expecting domestic to continue to improve the comps get easier as we move through the year. So we should see some nice momentum there.
Conor Cunningham: We had a fantastic year in the Trans Atlantic, we're hoping to beat that but.
Conor Cunningham: A really high bar as we move through the year, what we have on the books today is really pretty exciting for the month of April where we have about 40% of our transatlantic bookings in place. We have unit revenue sitting at high single digits up which I think most people Wouldnt expect of course, we have a lot of bookings to go there, but the early returns or <unk>.
Conor Cunningham: And some are very favorable as we sit today <unk>.
Pacific, where we have an incredible amount of capacity, that's being absorbed nicely and we expect that to inflect into a positive territory as those growth rates come down we move through the year and last but not least Latin at R.
Conor Cunningham: Our ambitious build in South America with our partners, what Tom is paying very strong dividends were improving our profitability.
Conor Cunningham: At lower unit revenues, so I think.
Conor Cunningham: We're very excited about where south America sits in there.
The beaches.
Winter seem a little over saturated that we'll rationalize itself out as we move through the year.
I appreciate that and then Dan.
Speaker Change: 124 cost I was hoping if you could provide some thoughts.
On the shape of the cost trajectory. It seems like a lot of it just has to do with timing of maintenance and I really really that type of stuff just any additional color there could be helpful. Thank you.
Speaker Change: Yes.
Speaker Change: Maintenance was up $3 50 for the year.
Speaker Change: With a focus on the first part of the year. The other piece of it as you think about efficiencies efficiencies just build as you progress through the year.
Speaker Change: One example is we're down on we're fully staffed but one place we're hiring as pilot that will be down 50% over 50% from last year, but again front half centric with training associated with it as you get ready for the summer and that really normalize to historical levels in the back.
Speaker Change: Half of the year, so just a good steady drumbeat of efficiencies as we pace through the year.
Speaker Change: I appreciate it.
Speaker Change: Thank you. Your next question is coming from Stephen Trent from Citi. Your line is live.
Stephen Trent: Good morning, everybody and thanks very much for taking my question.
This might be for for Ed or Glen but.
Stephen Trent: Addressed it a little bit in an earlier response, but.
Stephen Trent: How do you think the supply chain stuff goes first we have the GTS engine now the Max nine door plug.
Speaker Change: We've kind of reached the bottom or are you concerned there could be more to come six to 12 months from now.
Speaker Change: Thanks, Steven this is Ed.
Edward H. Bastian: Hope there is.
Edward H. Bastian: No more surprises, but I'd be I'd be lying to you if I thought thats. The case I mean, I think we're we're continuing to work through the in this post pandemic world the implications of the supply chain issues that we saw in the Max the Max nine issue is the one off separate issue I'm not referring to that.
Edward H. Bastian: I am referring principally to the engine side of the business.
Edward H. Bastian: There's a lot of work on we have a lot of reliance on Pratt.
Edward H. Bastian: There are challenges that theyre facing have been well.
Edward H. Bastian: Chronicled one of the things that we see on the engine side is as a lot of the incremental resources that our engine providers and suppliers have.
Edward H. Bastian: Put their resources against its also strips away resources from the maintenance work on their existing biz.
Edward H. Bastian: Business with us so we're working through in as efficient a manner with prostate were in this week and we spent a lot of time with them.
<unk> everybody the engine World has as challenges not just on the original go but more importantly on the parts and the repair side of the business.
Edward H. Bastian: A lot of it is an experience factor level all the suppliers in our industry.
Lawsuit, a tremendous amount of experience due to the pandemic and its taking time to get that back to get the turn times down to where they need to be and we have higher turn times that not only delays.
The entry into service. It also causes cost to go up.
Speaker Change: I appreciate that thank you.
Speaker Change: And as my follow up.
Speaker Change: I appreciate as well the what you mentioned on the.
Latin market doing well.
Speaker Change: Any high level color respect to with respect to sort of deep Latam versus say, a short haul Latam I mean.
Speaker Change: I presume.
Speaker Change: Lot of the uplift you're seeing is from the GBA spooling up but just wanted to make sure I understood that correctly. Thank you yes.
Speaker Change: Yes, I think you described it perfectly theres a little pressure on the short haul out and particularly on the resorts, where a lot of capacity was added by the industry year over year, but we are having really incredible performance into deep South America as we continue our coordination of launching the JV, where blood com and we're very excited about the short term.
Speaker Change: And the long term prospects there.
Speaker Change: Great I appreciate that Glenn and thank you very much.
Speaker Change: Thank you. Your next question is coming from David Vernon from Bernstein. Your line is live.
David Vernon: Hey, good morning, guys and thanks for taking the question.
Speaker Change: So Dan as you think about.
Speaker Change: What happened in 2023 as far as kind of.
The cost creep that led us to a little bit of a higher cost position than maybe you would have thought in the beginning of the year can you give us the kind of run down around kind of what you missed in 2023, and then with that as kind of a backdrop talk to some of the sources of risk that you might see to that low single digit outlook for CASM ex in 2024.
Yes, predominantly yes, David certainly.
Speaker Change: Two drivers first.
Speaker Change: We flew less capacity and kept the cost into invest back into the business that was one and the second piece was what we talked about a lot in the second half of the year was the.
Speaker Change: The investment in maintenance and the cost associated with maintenance and.
Speaker Change: Those were really when you look at where we were from what we got it to where we ended up just over plus two those were the single tube.
Biggest drivers associated with that.
Speaker Change: When you think about that as we go into new year for here.
Speaker Change: A lot different.
Speaker Change: Backdrop as we're in a more normalized growth environment. When you are thinking and planning and the teams are executing the 3% to 5% growth versus 17% to 20% growth the focus really less on this training and hiring and the restoration of the airline and our operating teams are focused on.
Speaker Change: On the operational performance and fine tuning that and as you do that that sets the stage to drive the efficiency and.
Speaker Change: And things that we actions that we took in if we are paying off if you look at the maintenance doing a lot of work and there is a lot to still go but.
Speaker Change: The fourth quarter performance aircraft out of service down, 30% maintenance cancels down over 80%.
Speaker Change: So that.
Speaker Change: Those actions that they are taken around proactive reliability getting the touch time on the aircraft paying dividends, but that's really what allows us when youre in that normalized <unk> you can really stay after that consistently day in and day out that sets the stage for the execution around efficiency.
Speaker Change: David if I could jump in here it.
David Vernon: It's hard to overstate just how hard it was to bring full business back up again over the last two and a half years and the intensity of that has been phenomenal and our team has done a great job at is taken every fiber of our being in hiring and resource we have to try to get ahead of it.
David Vernon: Are there now and.
David Vernon: And Youll see the results in the fourth quarter. They were remarkable the best fourth quarter operational results. I think this company has ever posted and that is I think that the big opportunity as we entered the year I don't know that we know yet just how how much we have available to us as we start to return to a normalized environment.
David Vernon: Start tweaking those efficiencies I think it's going to be significant and.
David Vernon: It's kind of hard to forecast because this team has been for the last two plus years in a very different part of the build but I'm confident we're going to see some great great opportunities and Thats to Jamie's earlier question. Some of my internal expectations of hoping that we can get to that $7.
David Vernon: EPS number.
David Vernon: I'm willing to put that number on paper quite yet but.
I think the opportunities there.
Speaker Change: Alright, thanks for that color and just to maybe kind of follow up on that point, a little bit as you think about the optimization of efficiency gains that are that are ahead of you.
Speaker Change: I appreciate that.
Hard to quantify at all which can you give us a sense for.
Speaker Change: What's the driver.
Speaker Change: Some of these things are kind of big picture wise is it about utilization of aircraft is it about getting the staffing optimized or is it more about just.
Speaker Change: Working some of the friction costs in the business out.
And sort of a continuously improving chasing down a bunch of little dogs and cats across the business I'm, just trying to get a sense for kind of what.
Speaker Change: What are we looking at here are we looking at a large set of projects or are there one or two things that are going to be super pivotal around the optimization plan.
David I think it's all of the above and it's not just what you mentioned on the cost side. It's also on the revenue side consumer behaviors have changed a lot.
Speaker Change: And to this point, we've been using somewhat older models to predict behavioral patterns.
Speaker Change: And we now have actually a good baseline over the last year and a half of what how consumers are purchasing what they're purchasing when they want to travel with Glenn and his team will who will use to drive better network and revenue outcomes for our business. It's in the cost line. The fact that we have 10% more employees today.
Speaker Change: And then we had at this point pre pandemic essentially driving the same level of operations tremendous amount of opportunity to get to get efficient, but when the operators know what they can count on and they've got their arms around the full the full operation I think youre going to see the see the cash register start to ring with.
Speaker Change: With cost savings.
Speaker Change: Savings efficiencies so.
Speaker Change: I know it's.
Speaker Change: It's a bet on the come a little bit, but I'm optimistic we'll get there but.
But it's really hard to quantify it at the same time.
Speaker Change: Excellent. Thanks, a lot for the added color.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Your next question is coming from Ravi Shanker from Morgan Stanley. Your line is live.
Ravi Shanker: Hi, Thanks, good morning, and happy New year, everyone. I know your commentary on demand sounds pretty good but can you unpack a little bit more detail on what youre seeing in the forward booking curve to a spring break and maybe even the activity through the Paris Olympics over the summer.
Ravi Shanker: What kind of kind of forward indicator do you have that people might be traveling more.
Ravi Shanker: Well I think I mentioned it is a response to one of the other questions, but we have pretty good visibility on the early bookings for the summer Trans Atlantic season, and we have a higher <unk>.
Ravi Shanker: Booked load factor as well as higher yields so.
Those are the two things that you watch for and both are indicating quite positive for the Trans Atlantic.
Ravi Shanker: The U S as of course, the closer in booking curve, but as far as we can see out through spring break things look great for the U S. As I mentioned earlier some of the closer in beach resorts have a little bit too much industry capacity. This year that will probably get rationalized out over time, but still be very profitable as we move through the peak winter season and then.
Ravi Shanker: Specific rush as we continue to lap the buildup of our Pacific as we move through the year, we expect those unit revenues to accelerate demand, particularly strong two two.
Ravi Shanker: <unk>.
And Sean hub as well as to Japan in the spring season.
Ravi Shanker: Very exciting.
Ravi Shanker: Look forward I hope, we can be out to our plan.
Got it and I apologize if I missed this earlier, but did you.
Ravi Shanker: Of your peers are having issues with the potential extended grounding of some aircraft for inspections.
Ravi Shanker: Do you see any kind of spillover benefit for that in the short term.
Ravi Shanker: Is any of that in your <unk> guidance.
Speaker Change: Yes, we've seen minimal.
Speaker Change: <unk> and what we have seen is mostly in Seattle.
I had to cancel a significant portion of their schedule out of Seattle.
Speaker Change: We'll see how long that stays out but right now I wouldn't say, it's a significant number of the grander scheme of things, it's significant for Seattle, but not significant for our whole network.
Speaker Change: Understood. Thank you.
Speaker Change: Yes.
Speaker Change: Thank you. Your next question is coming from Duane <unk> from Evercore ISI. Your line is live.
Duane: Hey, good morning.
Duane: Maybe just on the cadence of the non op savings and.
Duane: And the component drivers of that is it spread pretty evenly throughout the year or is it more kind of second half weighted.
Duane: Okay.
The driver is $75 million to $100 million really driven by interest expense.
Duane: And as we've accelerated.
Duane: The debt reduction action that drives the benefit we expect pension.
Duane: Be flat on a year over year basis.
Duane: <unk>.
Duane: The team did a great job the pension delivered at or slightly above its targeted return so no headwind associated with that you.
Duane: You get some about a little bit around some of the equity earnings of our partners.
But we expect to be pretty consistent throughout the year due to the interest reduction and savings coming through as you progress through the year.
Speaker Change: Thanks, and then just just a follow up for Glenn you've done a nice job and taken some active steps to on the capacity sequentially <unk> to <unk>.
Glenn: But could you just speak to seasonality and maybe by entity.
Glenn: Where is seasonality a lot different than it used to be where is it kind of normalize so any.
Glenn: Any sort of key trends you would highlight.
<unk> change in the underlying seasonal patterns here.
Into the first quarter.
Speaker Change: Yes, I think we are.
Speaker Change: Where our new norm and our new norm is different than 19, but.
Speaker Change: What I see mainly as an extension of the international seasons. So we mentioned that in an earlier question.
It used to be the summer peak was just June July August and now I think we're moving into a.
Speaker Change: April through March all the way through October is a very strong season, particularly for southern Europe.
Speaker Change: Northern Europe starts a little bit later and then the other thing I, just mentioned and I mentioned in an earlier call as well is that the.
Speaker Change: The Beach, Mexico, and the Caribbean beaches, just seem to have a little bit too much capacity this year.
Speaker Change: We will work through that as we go through the year, but.
Speaker Change: If you look those are all 2030% across the board and having a little trouble keeping up with that demand and keeping up with that kind of capacity increase and I imagine. It is people planned next year that will trim on the margin those back down again.
Speaker Change: Demand catch up so generally I think we're in a good spot here with supply and demand as far as the eye can see.
Speaker Change: We're positive in all the future months in all almost all of the future in almost every entity with the exception of oil.
Thank you.
Speaker Change: Thank you. Your next question is coming from Brendan Glinski from Barclays. Your line is live.
Hey, good morning, everyone and thanks for taking my question.
Speaker Change: I guess, Ed or Dan I mean looking back from your prior 2021 targets you guys are guiding at the top end here to effectively reach that I think not a lot of people give you credit. So that's the context of my question, but that said.
Speaker Change: <unk> in your stock still pretty low I think investors are just concerned that we've seen peak airline profitability and your guidance would typically say about flat profitability. This year and 24 versus 23, so maybe coming back to some of these prior questions. You know what is in your control that can get profitability higher maybe looking beyond.
Speaker Change: This year that can give investors comfort that this business should be earning mid teens.
Speaker Change: Thanks, Brandon and you're right. When you think about when we set that target. It was in December of 'twenty one.
Speaker Change: I'll never forget we were at the exchange.
Speaker Change: Believe you are there and omicron was just being announced.
The newest area. So the level of knowledge that we had to the future and where.
This thing was going it was candidly.
Maybe a bit crazy for us to put out a three year plan, but I thought it was really important and instructive for us as well as our investors too.
Speaker Change: See how we're thinking about.
Speaker Change: The progress and the Great news is through the first two years. We're at if not ahead of plan along that way and I think if I was to go back and say what has changed that maybe is giving me a little bit of pause for seven not longer term, but just in the short term.
Speaker Change: I think it's the higher cost of labor certainly was not known back then the higher inflation rates were not known back then and most importantly, the supply chain constraints.
Speaker Change: Full extent, we're not clearly not no I have no knowledge of the challenges we face. So when you think about all the macros, we encountered I think we've done a very good job of controlling those things that we can control.
And as you've heard from several of the questions I still internally im targeting us to get to that $7 number this year and I think we can really do but I think it's also prudent that we give a give a nod to some of those macros that were facing I think the optimization opportunities as I mentioned are significant and they are.
Speaker Change: Run across every single part of this business and all of our leaders are working hard too.
To ensure that we're delivering and excellent quality product, which unleashes that optum optimization.
Speaker Change: Benefits I think the work that we're doing on the balance sheet with all the debt reduction is the risking taking taking that down is important.
Speaker Change: We're on track with our free cash flow guidance $3 to $4 billion. This year.
We're still looking at a $10 billion target between 23 and 25 for free cash. So I think there is youre right Theres a lot of noise that quote unquote, we're lowering guidance I don't really look at it that way I, just think it's giving not to the some of the macro realities and wanted to give you a prudent estimate to what we we are confident we can deliver this year with a nod.
Speaker Change: Towards Theres, some real upside here.
Thank you for that and then Dan the maintenance issues have been.
Dan: Now for probably over a year, if not longer I guess, what are you doing longer term planning to maybe mitigate that and is there any favorable offset longer term hearing your MRO business.
Dan: Yes.
Dan: The.
Dan: One is we continue as we get into a period here where were more normalized and growth, that's allowing us to extend our planning horizon, where we're able to look out on a rolling not only 12, 18, 24, 36 months and I think the more visibility and stability that we get from that allows us to.
Dan: Better plan as it relates back into how we run our fleet and how we balance that capacity with cost and I think that will continue to give us more certainty around that the other piece is just the heavy lift at our our entire tech ops team has been working closely with the supply chain and with all our partners across that getting clarity in regards to that.
Dan: Things that they need to do and we can do on their behalf as it relates to delta in regards to continuing to improve the execution of that over time and we've got to work closely with those partners to continue to improve that.
Dan: And then to the last piece on MRO, yes, there will be an opportunity to continue to grow I think as we've talked about before we're well positioned on all these platforms.
Dan: The focus has been and will be right here, making sure that we've got strong foundation on Delta and Delta's fleet.
Dan: But we also do have an eye to continue to grow the MRO business and Youll start to see that start this year, but really in earnest in the years, two and three years out.
Thank you.
Speaker Change: Thank you. Your next question is coming from Andrew <unk> from Bank of America. Your line is live.
Hi, good morning, everyone.
Andrew: Question for Glenn.
Andrew: I think you started ramping up your core hub growth in the middle of 2023.
Is there any way you can quantify it.
Andrew: What the benefits of this buildout work a year revenue performance over the back half and what share of your capacity growth. This year will be growth in these hubs.
Speaker Change: Yes, I think we just alluded to a majority of our growth.
Speaker Change: We will be in our core hubs or to partner hubs, so probably 75% to 80% of our growth will be in those locations. We feel that we have.
Speaker Change: Accelerating.
Speaker Change: Coastal gateway growth earlier in the process.
Speaker Change: With our once in a lifetime opportunities too.
Speaker Change: From the leading carriers in markets like Los Angeles and Boston.
Speaker Change: Those are paying huge dividends for us as we head into 'twenty four with Boston for example, leading the unit revenue.
Speaker Change: Sanction for this quarter.
Speaker Change: We're really really pleased.
Speaker Change: Shaked out and we still have some more rebuilds to do in our core hubs. It will probably take us through this year and into next year, given the lower growth rates that we have.
Speaker Change: That's what we're working on for the next 18 to 24 months.
Got it that's helpful. And then just Dan in the three months to $4 billion of free cash flow are you, assuming any sort of cash taxes this year or when.
When do you expect to become a cash taxpayer I thought it was number of years out, but just curious if there's any update there. Thank you.
Speaker Change: So we don't expect cash taxes, this year and would expect that potentially cash tax payments starting in 2025 and beyond.
Speaker Change: Thank you.
Speaker Change: Matthew will now go to our final analyst question before then going over to the media.
Speaker Change: Certainly your next question is coming from Savi <unk> from Raymond James Your line is live.
Savi: Hey, good morning, everyone, maybe a quick one for me just.
You talked about pilot hiring being down 50% year over year and you've heard similar comments from from the industry. Just curious what that means for and our regional operation and if there was much of a drag in 2023.
Savi: Two cost or to two.
Revenue from that operation and what you can expect this year and next year.
So thanks for that question and I think that plays well into some of the other things that we've talked about are what are the potential upsides to our plan that could get you towards the $7. We have planned for stability in the regionals after.
Savi: Two five years of really instability, where we didn't know how how many hours we have really three to four months ahead of time.
And what we've seen is that.
There is a lot more stability, while we haven't accounted for as the full utilization of our fleet. So we still have 50 to 100.
<unk>.
Less of utilization than we are that we have on the ground in our fleet.
So should the lower.
Our hiring at the mainline translated into more availability in the back half of the year that would be potential upside to our P&L.
Speaker Change: Perfect all right. Thank you.
Speaker Change: Alright that will wrap up the analyst portion of the call I'll now turn it over to Tim maybe starting with your question. Thank you Julie Matthew if we could reiterate for the members of the media the instructions with regard to accessing the call and follow ups. Please.
Tim: Certainly at this time, we'll be conducting a Q&A session for media questions. If you have any questions or comments. Please press star then one on your phone. Please hold while we poll for questions.
To your first question is coming from Ted Reed from Forbes Your line is live.
Alright, thanks for taking the question Glenn.
Ted Reed: Wondering if the delta passenger in 2024, it looks different in the passenger in 2023 and I'm also asking whether.
The age of revenge travel leaves over in <unk>.
We passed we have been traveling thank you.
Speaker Change: Well I mean this is all an opinion right.
Speaker Change: Revenge travel I think has years to go particularly enrolling all international when you look at the aging of the demographics that.
Speaker Change: People.
In their retirement years.
Want to travel and they were robbed the ability to travel for three years, and we werent able to accommodate all of last year.
Speaker Change: But we continue the combination of that over the next several years until that point.
Speaker Change: I think domestically we're done the revenge travel was early in the process and we're kind of at our new equilibrium and that gives us the opportunity to optimize as we move forward.
And.
Speaker Change: And they always look.
Speaker Change: Yes.
Speaker Change: As for destinations are we more unique.
Speaker Change: Okay is it more unique trans Atlantic that Theyre looking at her more than traditional trans Atlantic or something else.
Speaker Change: It's more of the traditional Italy, Spain, those are two of the Italy, Spain and Greece.
Speaker Change: Such hotspot, Portugal as a hotspot.
Speaker Change: I think.
Speaker Change: During those peak summer, we're really excited about the prospect of bringing SaaS, along with us and now having hubs in Copenhagen, and Stockholm. It will allow us to have even more destinations in Europe that we serve today.
Speaker Change: Alright, Thank you Glenn.
Speaker Change: Thank you. Your next question is coming from Kelly Yamanouchi from Atlanta Journal Constitution. Your line is live.
Kelly Yamanouchi: Thanks, and you mentioned, having 10% more employees than pre pandemic.
Kelly Yamanouchi: And essentially driving the same level of operations and the opportunity to get efficient.
I was wondering if that means growing operations with the same number of employees or potentially cutting the staffing level.
Hi, Kelly no Theres no plans.
Speaker Change: Two cut staffing levels at all this is about our people being able to.
Speaker Change: Garner more experienced because a lot of the new employees that we've added over the last few years are adding to that 10% and continuing to be a bit more efficient.
Speaker Change: Productivity in the staffing levels, but we.
Speaker Change: We have no intention to make any reductions in people.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thank you. Your next question is coming from Leslie Joseph from CNBC. Your line is live.
Leslie Josephs: Hi, Good morning, everyone I'm wondering if you're seeing any increased bookings since United in Alaska has had the ground there Max nine and then separately. Maybe this is a question more for Glenn but do you think youre done with the measures that you have to take last year.
Leslie Josephs: In terms of the Sky miles program and lounges to sort of combat crowding. Since this year is going to be so busy.
Leslie Josephs: And if you have enough premium seats to offer the market currently.
Leslie Josephs: Well.
Leslie Josephs: I'll take the second question first is we.
<unk> made some serious changes to our programs that were designed to really put the right people in the right categories. So that we could deliver industry leading premium experiences.
Leslie Josephs: And as you know, while they were announced in the fall most of them don't take into effect until 2025.
Leslie Josephs: What we have.
Leslie Josephs: What we've estimated is that should we should be done with that those kinds of major changes to our programs and of course those programs are always changing but I think the changes moving forward will be much more minimal.
Leslie Josephs: So I think that's behind US, we'll see how that plays out at the end of by the end of this year and into 'twenty five and.
Speaker Change: And your other question was.
Speaker Change: The bookings yes.
Speaker Change: Yes.
Speaker Change: We've seen a small uptick specifically in Seattle.
Speaker Change: <unk> is a small portion of our entire system. So.
Speaker Change: It's kind of minimal in the grander scheme of things, but it's relevant in Seattle.
Thank you.
Speaker Change: Thank you. Your next question is coming from Mary Lincoln Stein from Bloomberg News Your line is live.
Speaker Change: Yes. My question was asked thank you.
Speaker Change: Thank you. Your next question is coming from Alison Sider from Wall Street Journal Your line is live.
Alison Sider: Thank you I was wondering do you think delta still has the same advantage over rivals just in terms of reliability in its operation is that something that youre kind of working on.
Speaker Change: Hi, Al This is Ed.
Edward H. Bastian: You know the one thing that we've seen over the last couple of years, which has been great for our customers is that the overall reliability of the industry has improved and carriers increasingly are competing over operational performance rather than other some other things in the past that people.
Edward H. Bastian: May have been been focused against and I think thats, great and I think it pushes us to be even better and I think it's a great outcome for the industry as a whole so yes. The competition is definitely.
Edward H. Bastian: More focused on reliability than ever before.
Edward H. Bastian: I still expect delta to maintain its premium lead in that sector.
Edward H. Bastian: And then if I could ask about.
Edward H. Bastian: Sort of labor shortages are you concerned at all or starting to feel the impact of this shortage.
Edward H. Bastian: <unk> workers is that something you expect to come to that this year.
Edward H. Bastian: We are not experiencing any issues around labor shortages, maybe in very small isolated places we still have shown some additional people we'd like to bring in but we are at where we need to be.
And.
For us it's less about the shortages, it's more about the new people that we brought on continuing to gain experience and that's a big deal, particularly in the maintenance area.
Thanks.
Speaker Change: Thank you Elliot Matthew we have time for one final question. Please.
Speaker Change: Certainly your last question is coming from Robert Silk from travel weekly your line is live.
Robert Silk: Hi, Yes. Good morning, Glenn you mentioned that you all are doing corporate share. This year I'm wondering if you can elaborate on.
Robert Silk: What caused you think how you changed it and so on.
Robert Silk: Was there any impact some of it might have come from the removing the burden from the traditional GDS channel but.
Robert Silk: Your main competitors.
I think one of the issues, where we were very inventory constrained in 2022, as we were behind the industry in our rebuild and in 2023.
Robert Silk: We caught up back to.
Robert Silk: Basically.
Pre pandemic level of capacity in those additional seats were enabled more corporates to get on the aircraft I'd say, what's different about now versus pre pandemic is.
Robert Silk: <unk>.
Robert Silk: Before the pandemic and before the segmentation of customers the differential between the yields are incorporated in the yields on non corporate high end leisure was significant and these days those are close. So now you have competition for the premium seats between those two categories that didn't exist pre pandemic and that's exciting for us as we manage them.
Robert Silk: But I think getting more seats available as one of the key priorities in the premium sector. So that we can accommodate all the demand.
Speaker Change: Okay, Thanks, and what about seeing any photo share shift based upon your strategy of leaving all your fares available in the traditional it affects etfs.
Yes.
Speaker Change: Clearly, we think that our strategy is more customer friendly and.
Speaker Change: And I am sure Thats part of it but we don't quantify it.
Speaker Change: Okay. Thank you.
Speaker Change: Matthew that will wrap up the call if you want to close it up.
Matthew: Certainly that concludes today's conference. Thank you for your participation today.
Matthew: Okay.
Matthew: Okay.