Q1 2024 Frontier Group Holdings Inc Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to the Frontier Group Holdings Inc. Q1 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, David Erdman, Senior Director of Investor Relations. David, you have the floor.

Good day, and thank you for standing by welcome.

Speaker Change: Welcome to the Frontier Group Holdings incorporated Q1, 'twenty 'twenty four earnings call. At this time, all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone you will then hear in automated message advising us at your hand is raised to withdraw your question. Please press star one again, please be advised that today's conference is.

Operator: Being recorded.

Operator: I'd now like to hand, the conference over to your first speaker today, David Erdman Senior director of Investor Relations, David you have the floor.

David Erdman: Thank you and good morning. Welcome everyone to our first quarter 2024 earnings call. On the call with me this morning is Barry Biffle, Chief Executive Officer, Jimmy Dempsey, President, Mark Mitchell, Chief Financial Officer, and our new Chief Commercial Officer, Bobby Schroeder. Before yielding, I'll recite the customary safe harbor provisions. During this call, we will be making forward-looking statements that are subject to risks and uncertainty. The actual results may differ materially from those predicted in these forward-looking statements.

David Erdman: Thank you and good morning, welcome everyone to our first quarter 2024 earnings call on the call with me. This morning is very Biffle, Chief Executive Officer, Jimmy Dempsey, President Mark Mitchell Chief Financial Officer.

David Erdman: And our new Chief commercial officer, Bobby Schroeder.

David Erdman: Before yielding oversight the customary safe harbor provisions during this call we will be making forward looking statements, which are subject to risks and uncertainties.

David Erdman: <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 Jimmy announcement, we released earlier along with reports we file with the Securities and Exchange Commission. We will also discuss non-GAAP financial measures, which are reconciled.

David Erdman: To the nearest comparable GAAP measure in the appendix of this morning's earnings announcement.

David Erdman: Additional information concerning risk factors which could cause such differences is outlined in the announcement we released earlier along with reports we filed with the Securities and Exchange Commission. We will also discuss non-GAAP financial measures which are reconciled to the nearest comparable GAAP measure in the appendix of this morning's earnings announcement. Now, I'll give the floor to Barry to begin his prepared remarks. Barry?

Barry L. Biffle: I'll give the floor to bear to begin his prepared remarks Barry.

Barry L. Biffle: Thanks, David, and good morning, everyone. First, I'd like to welcome Bobby Schroeder to the team and introduce him as our new Chief Commercial Officer. Bobby has extensive experience in the industry with nearly 25 years combined at Spirit, U.S. Airways, and America West. He's in the process of relocating his family to Denver and, in his new role, assumes responsibility for commercial teams reporting to Jimmy Dempsey.

Speaker Change: Thanks, David and good morning, everyone.

Barry L. Biffle: First I'd like to welcome Bobby Schroeder to the team and introduce him as our new Chief commercial officer.

Barry L. Biffle: Bobby has extensive experience in the industry with nearly 25 years combined spirit U S Airways and American West is in the process of relocating his family to Denver and in his new role assumed responsibility for our commercial teams reporting to Jimmy Dempsey.

Barry L. Biffle: We're fortunate to have him on Team Frontier. Along with the recent additions of Alex Clark, our Senior Vice President of Customers, and Rajat Khanna, our Chief Information Officer, we now have the strongest senior leadership team we've ever had. Turning to the quarter, we reported an adjusted pre-tax loss margin of 2.8%, significantly better than our guide on cost and revenue performance. The adjusted pre-tax loss margin was within one percentage point of the prior year quarter despite continuing to encounter far greater excess capacity in some of our key markets, as we previously highlighted.

Barry L. Biffle: We're fortunate to have him on the team frontier along with the recent additions of Alex Clark, Our senior Vice President of customers and Roger Krone, Our Chief Information Officer will now have the strongest senior leadership team we've ever had.

Barry L. Biffle: Turning to the quarter, we reported an adjusted pretax loss margin of two 8% significantly better than our guide on cost and revenue performance. The adjusted pretax loss margin was within one percentage point of the prior year quarter. Despite continuing you encounter far greater excess capacity in some of our key markets as we've previously highlighted.

Barry L. Biffle: While we're not insulated from inflation, we continue to hammer on costs with the objective to maintain and widen our relative cost advantage to the industry. To that end, we exceeded our expectations in the first quarter, and our cost advantage to the industry widened to 42% on a trailing 12-month basis. The cost divergence between Frontier and the industry is indeed real.

Barry L. Biffle: Well, we're not insulated from inflation, we continue to hammer on costs with the objective to maintain and widen our relative cost advantage to the industry.

Barry L. Biffle: And we exceeded our expectations, the first quarter and a cost advantage to the industry widened to 42% on a trailing 12 month basis cost divergent between frontier and the industry is indeed real.

Barry L. Biffle: We're on track to achieve our target of 80% out-and-back flying by June, and the corresponding $200 million of annual run rate cost savings by year-end. With that, we're reaffirming our guidance of a 1-3% reduction in our adjusted CASM-X fuel, stage-adjusted to 1,000 miles. Redeployment of our capacity from oversupplied markets is on track and progressing as planned. To this end, we opened our 10th crew base in Cleveland last month, while Cincinnati and Chicago will launch later this month, and finally San Juan, Puerto Rico, in June.

Barry L. Biffle: We're on track to achieve our target of 80% out and back flying by June and the corresponding $200 million of annual run rate cost savings by year end with that we're reaffirming our guide of 1% to 3% reduction in our adjusted CASM ex fuel stage adjusted to 1000 miles.

Barry L. Biffle: Redeployment of our capacity from oversupplied markets is on track and progressing as planned to this end we opened our 10th crew base in Cleveland last month, while Cincinnati in Chicago will launch later this month and finally, San Juan Puerto Rico in June.

Barry L. Biffle: The addition of these crew bases supports our ability to achieve our target of out-and-back flying by June and drives further network efficiency. Our San Juan base will not only support demand growth from the U.S. mainland to compete with significantly higher-cost carriers, but it will also serve as our gateway to other Caribbean destinations. In the second quarter, a significant portion of our flying will be in new markets, more than double what we would expect in a normal year.

Barry L. Biffle: The addition of these crude basis supports our ability to achieve our target of out and back flying by June and drives further network efficiency.

Barry L. Biffle: Our San Juan base will not only support demand growth from the U S mainland to compete with significantly higher cost carriers. It will also serve as our gateway to other Caribbean destinations.

Barry L. Biffle: In the second quarter, a significant portion of our flying will be in new markets more than double we would expect in a normal year as these new markets mature over the next year, we expect a meaningful improvement in our system RASM further we have a range of revenue initiatives, including various distribution and merchandising enhancements as well as launching loyalty and premium products.

Barry L. Biffle: As these new markets mature over the next year, we expect a meaningful improvement in our system RAS. In addition, we have a range of revenue initiatives, including various distribution and merchandising enhancements, as well as the launch of loyalty and premium products, all of which diversify our revenue sources. Jimmy will go into more detail on these products as part of the commercial update. Despite the immaturity of new markets, we expect to generate a 3-6% adjusted pre-tax margin in the second quarter.

Barry L. Biffle: All of which diversify our revenue sources, Jimmy will go into more detail on these products as part of the commercial update.

Barry L. Biffle: Despite the maturity of new markets, we expect to generate 3% to 6% adjusted pre tax margin in the second quarter. We're also reaffirming our full year guide of 3% to 6%. Despite fuel prices, which are 10 cent per gallon higher than they were in early February when we gave our guide for the year.

Barry L. Biffle: We're also reaffirming our full-year guide of 3-6% despite fuel prices which are $0.10 per gallon higher than they were in early February when we gave our guide for the year. As we move to 2025, we are confident in our 10 to 14% adjusted pre-tax margin due to our cost tailwinds, expected network maturity, and overall revenue diversity initiative. Finally, I'd like to thank every member of Team Frontier. They deserve recognition for their significant effort to achieve the milestones I highlighted today.

Barry L. Biffle: As we move to 2025, we are confident in our 10% to 14% adjusted pre tax margin due to our cost tailwind expected network maturity and overall revenue diversity initiatives.

Barry L. Biffle: Finally, I'd like to thank every member of team frontier. They deserve recognition for their significant effort to achieve the milestones I highlighted today and for the remaining cost.

Barry L. Biffle: And for the remaining cost, Discipline and Remaining Cost Discipline and stay focused on our top priority of delivering a safe and reliable experience to our customers. I'll now turn the call over to Jimmy for a commercial overview.

Barry L. Biffle: Discipline and remaining cost disciplined and staying focused on our top priority of delivering a safe and reliable experience to our customers I'll now turn the call over to Jimmy for a commercial overview Jimmy.

Jimmy Dempsey: Thanks, Barry, and good morning, everyone. I want to echo Barry's comments and welcome Bobby to the team.

Jimmy Dempsey: Thanks, Barry and good morning, everyone I want to Echo Barry's comments and welcome Bobby to the team.

Jimmy Dempsey: Briefly recapping the quarter, total operating revenue increased 2% to $865 million on capacity growth of 8%, both compared to the 2023 quarter, resulting in a RASM of 9.2%. Departures increased 14% on a 9% shorter average stage length, and total revenue per passenger was $124, down 1% all compared to the 2020 budget. During the quarter, our transition to out-and-back flying developed as planned.

Jimmy Dempsey: Briefly recapping the quarter total operating revenue increased 2% to $865 million on capacity growth of 8%, both compared to the 2023 quarter, resulting in RASM of nine point too.

Jimmy Dempsey: [noise] departures increased 14% on a 9% shorter average stage length and total revenue per passenger was $124 down 1% all compared to the 2023 quarters.

Jimmy Dempsey: During the quarter, our transition to add backs line developed this plan by March we were operating at a 67%, adding back network and achieve 75% in April this progression as a key driver in our ability to reduce our cancellation rates by 10% and improve on time arrivals by over five points January through April year over year.

Jimmy Dempsey: By March, we were operating at a 67% out-and-back network and achieved 75% in April. This progression is a key driver in our ability to reduce our cancellation rate by 10% and improve on-time arrivals by over 5 points from January through April. A key milestone was the opening of our Cleveland crew base, which was successfully launched in mid-March and, by summer, will serve a total of 30 destinations from Cleveland. Our planned schedule is to achieve 80% out and back flying by June, supported by the planned opening of the Cincinnati and Chicago crew bases in May and San Juan, Puerto Rico, in June, bringing our crew base footprint to 13 by the end of the second quarter.

Jimmy Dempsey: A key milestone with the opening of our of our Cleveland crew base, which was successfully launched in mid March and by summer will serve a total of 30 destinations from Cleveland.

Jimmy Dempsey: Our planned schedule is to achieve 80% out and back flying by Jim supported by the planned opening of the Cincinnati in Chicago crew bases in May in San Juan Puerto Rico in June, bringing our crew base footprint to 13 by the end of the second quarter. One of the most significant long term investments as is in our San Juan base, where we see a massive opportunity for flights to the mainland.

Jimmy Dempsey: One of the most significant long-term investments is in our San Juan base, where we see a massive opportunity for flights to the mainland United States, given our cost advantage versus the competition. In addition, the geography of San Juan provides a logical gateway to the broader Caribbean region, where we believe our low fare stimulation will have a dramatic effect on traffic flows within the region. We want to thank the Government of Puerto Rico and its elected officials for helping make this investment possible.

Jimmy Dempsey: States given our cost advantage versus the competition. In addition to the geography of San Juan provides a logical gateway to the brother broader Caribbean region, where we believe our low fare stimulation that will have a dramatic effect on traffic flows within within the region, we want to conquer the government of Puerto Rico and their elected officials for helping.

Jimmy Dempsey: This investment possible.

Jimmy Dempsey: Today we fly to more destinations from San Juan, Puerto Rico, to the mainland United States than any other airline, and by this summer, we will serve Santiago, Punta Cana, and Santo Domingo in the Dominican Republic, as well as St. Thomas, St. Croix, St. Martin, Barbados, and Trinidad within the region.

Jimmy Dempsey: Today, we fly to more destinations from San Juan, Puerto Rico to the mainland United States than any other airline and by this summer we will start Santiago Punta Cana in Santo Domingo and the Dominican Republic as well as some Thompson Thomas centrally San Martin Barbados in Trinidad within the region overall, we remain focused on maximizing total revenue.

Jimmy Dempsey: Overall, we remain focused on maximizing total revenue, as evidenced in the first quarter by our trade for yield over load factor, which resulted in total revenue exceeding our expectations. We believe that further revenue initiatives will not only diversify our revenue but improve overall demand and increase load factors as we move through the coming years. We launched our reimagined Frontier Miles loyalty program late last year and have seen the highest spend on record per cardholder because of these enhancements.

Jimmy Dempsey: As evidenced in the first quarter by our trade for yield overload factor, which resulted in total revenue exceeding our expectations. We believe that further revenue initiatives will not only diversify our revenue, but improve overall demand and increased load factors as we move through the coming years, we launched a re imagined frontier miles loyalty program late last year and I've seen.

Jimmy Dempsey: The highest spend on record per car cardholder because of these enhancements. It's very early in our journey to close the gap in our loyalty revenues, but we believe there are several dollars per passenger of opportunity over the next several years.

Jimmy Dempsey: It's very early in our journey to close the gap in our loyalty revenues, but we believe there are several dollars per passenger of opportunity over the next several years. Following our recent introduction of BizFair, we recently launched our Upfront Plus product for customers that value a premium product. Upfront Plus is a new upgraded seating option with extra space and comfort in the first two rows of the aircraft. Customers in Upfront Plus will enjoy a window or aisle seat with extra legroom and a guaranteed empty middle seat, providing additional personal space and comfort at an exceptional value.

Jimmy Dempsey: Following our recent introduction of bus fare, we recently launched our upfront plus product for customers that value our premium product upfront.

Jimmy Dempsey: Upfront pluses, a new upgraded seating option with extra space and comfort in the first two rows of the aircraft customers, an upfront plus will enjoy a window or aisle seat with extra legroom on a guaranteed empty middle seats, providing additional personal space and comfort at an exceptional value.

Jimmy Dempsey: It's very similar to the intra-European business class product. The new offering, combined with our premium seating options, expands our ability to offer choice to our customers. Later this year, we will introduce NDC, a new website, and a mobile app that will include improved merchandising, the day of travel, and the post-travel experience for our customers. We believe the distribution and merchandising changes will increase our revenue for passenger and load factors over the next several years. That concludes my remarks, so I'll now yield to Mark to provide a financial overview. Thanks, Jimmy, and good morning, everyone.

Jimmy Dempsey: Similar to the intra European business class products.

Mark: The new offering combined with our premium seating options expand our ability to offer choice to our customers.

Mark: Later this year, we will introduce N D C. A new website and our mobile App that will include improved merchandising day of travel and post travel experience for our customers. We believe the distribution and merchandising changes will increase our revenue per passenger and load factors over the next several years.

Mark: That concludes my remarks, so I'll now yield mark.

Mark: To provide a finance update.

Mark C. Mitchell: On a stage-adjusted basis to 1,000 miles, Adjusted Chasm X-Fuel was down 3% compared to the 23rd quarter due to three additional sale-e-spec transactions in the quarter, along with our aggressive cost management across the organization that helped mitigate year-over-year inflationary impact. As Barry mentioned, our relative cost advantage to the industry widened to 42%, and we remain on track to achieve our annual run rate cost savings target of $200 million by the end of the year.

Mark C. Mitchell: Total revenue was $865 million, 2% higher than the comparable 2023 quarter. Fuel expense was $263 million, 10% lower than the 23rd quarter, at an average cost per gallon of $2.93. The year-over-year decline in fuel expense was the result of 15% lower fuel prices and 2% greater fuel efficiency, enabling us to achieve an industry-leading 105 ASMs per gallon, partly offset by higher consumption from the 8% capacity growth during the quarter. Adjusted non-fuel operating expenses were $633 million, or $0.0671 per ASM, due to better-than-expected cost performance.

Mark: Thanks, Jimmy and good morning, everyone.

Mark C. Mitchell: Total revenue was $865 million, 2% higher than the comparable 2023 quarter.

Mark C. Mitchell: Fuel expense was 263 million, 10% lower than the 23 quarter at an average cost per gallon of $2 93.

Mark C. Mitchell: The year over year decline in fuel expense was the result of 15% lower fuel prices and 2% greater fuel efficiency, enabling us to achieve an industry, leading 105% ASM per gallon, partly offset by higher consumption from the 8% capacity growth during the quarter.

Mark C. Mitchell: Adjusted non fuel operating expenses were $633 million or $6 71 per ASM due to better than expected cost performance on a stage adjusted basis to 1000 miles adjusted CASM ex fuel was down 3% compared to the 23 quarter due to three additional sale leaseback.

Mark C. Mitchell: Actions in the quarter.

Mark C. Mitchell: Along with our aggressive cost management across the organization that helped mitigate year over year inflationary impacts as Barry mentioned, our relative cost advantage to the industry widened to 42% and we remain on track to achieve our annual run rate cost savings target of $200 million by the end of the year.

Mark C. Mitchell: Our first quarter pre-tax loss margin of 2.8% was lower than anticipated due primarily to better cost and revenue performance than expected. We ended the quarter with $622 million of unrestricted cash and cash equivalents and $156 million of cash net of total debt at quarter end, slightly higher than our net cash position at year end. We had 142 aircraft in our fleet at quarter end after taking delivery of 6 A321neo aircraft during the quarter. We expect to take delivery of another 6 A321neos in the second quarter and 11 A321neo aircraft in the second half of 2018, all of which are expected to be financed through sale-leaseback transactions.

Mark C. Mitchell: Our first quarter pretax loss margin of two 8% was lower than anticipated due primarily to better cost and revenue performance than expected.

Mark C. Mitchell: We ended the quarter with $622 million of unrestricted cash and cash equivalents and $156 million of cash net of total debt at quarter end slightly higher than our net cash position at year end we.

Mark C. Mitchell: We had 142 aircraft in our fleet at quarter end after taking delivery of six <unk> hundred 21 Neo aircraft during the quarter, we expect to take delivery of another 600 <unk> hundred 21 Neo is in the second quarter and 11 <unk> hundred 21 Neo aircraft in the second half of 'twenty four all of which are expected to be financed through sale leaseback.

Barry L. Biffle: Turning to second quarter guidance, capacity growth is anticipated to be in the range of 12 to 14% over the 23rd quarter on stage length, which is expected to approximate 900 miles. We expect fuel to remain elevated at $2.80 to $2.90 per gallon based on the blended fuel curve on May 1st. Adjusted non-fuel operating expenses are expected to be between $705 million and $720 million, driving an expected sequential decrease in our adjusted CASM-X fuel on a stage-adjusted basis to 1,000 miles.

Mark C. Mitchell: <unk>.

Speaker Change: Turning to second quarter guidance.

Barry L. Biffle: <unk> growth is anticipated to be in the range of 12% to 14% over the 23 quarter on stage length, which is expected to approximate 900 miles we expect fuel to remain elevated at $2 80 to $2 90 per gallon based on the blended fuel curve on may 1st adjusted non fuel operating.

Barry L. Biffle: Expenses are expected to be between $705 million to $720 million driving an expected sequential decrease in our adjusted CASM ex fuel on a stage adjusted basis to 1000 miles.

Barry L. Biffle: Adjusted pre-tax margin in the second quarter is expected to be in the range of 3 to 6 percent, including the impact of higher fuel prices and our network transition. As Barry mentioned, we are also reaffirming our full year 2024 adjusted pre-tax margin range of 3-6% despite the expectation of higher fuel prices. Additionally, we are also reaffirming our guidance for CASMX fuel during 2024 on a stage-adjusted date of 1,000 miles to be lower by 1 to 3 percent versus the prior year. With that, I'll turn the call back to Barry for closing remarks.

Barry L. Biffle: Adjusted pre tax margin in the second quarter is expected to be in the range of 3% to 6%, including the impact of higher fuel prices and our network transition.

Barry L. Biffle: As Barry mentioned, we are also reaffirming our full year 2024, adjusted pre tax margin range of 3% to 6% despite the expectation of higher fuel prices. Additionally.

Barry L. Biffle: Additionally, we are also reaffirming our guidance for CASM ex fuel during 2024 on a stage adjusted basis 1000 miles to be lower by 1% to 3% versus the prior year with that I'll turn the call back to Barry for closing remarks.

Barry L. Biffle: Yes.

Barry: Thanks Mark.

Barry L. Biffle: We're proud of the significant progress we're making in revenue and cost performance. The hard work and dedication of Team Frontier are showing that low costs have always mattered, and they will continue to matter. Thanks again for joining us this morning. We're ready to take the Q&A portion of the call.

Barry: Proud of the significant progress, we're making in revenue and cost performance. The hard work and dedication of team frontier are showing that low cost has always mattered and they will continue to matter. Thanks again for joining us. This morning, we're ready to take the Q&A portion of the call.

Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while I compile the Q&A list. Our first question comes from Brandon Oglenski with Barclays. Brandon, go ahead with your question.

Speaker Change: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your.

Operator: Your question. Please press star one one again, please standby, while we compile the Q&A roster.

Brandon Robert Oglenski: Our first question comes from Brandon <unk> with Barclays. Brandon go ahead with your question.

Jimmy Dempsey: Hey, good morning, guys. And thanks for taking the question. Barry or Jimmy, can you guys talk about some of the network changes that you've made and the results that you're seeing in forward bookings, especially in the second quarter here, given the improvement in the margin guide on top of, you know, a lot of capacity growth?

Brandon Robert Oglenski: Hey, good morning, guys and thanks for taking my question.

Jimmy Dempsey: Barrier Jimmy can you guys talk to some of the network changes that you've made.

Jimmy Dempsey: The results that Youre seeing in forward bookings, especially in the second quarter here given the improvement in the margin guide on top of a lot of capacity growth.

Barry L. Biffle: Yeah sure I'll go ahead and take it. I think you know if you look at the changes we've made so far they really just started in in April in terms of the additions and they kind of continue to roll through the summer but I'll tell you we're really excited we've got a lot of new routes that we just started just in the last few weeks that are running in 90 load factors so I think that our network planning team has picked well on many of these so we're really excited about how it's how it's shaping up but it's very early right I mean you know we as I said while ago with with over double the amount of new new flying that we would normally have because of this repositioning you know it's a significant you know we estimate five to ten point drag on RASM with this investment but it's the right thing to do to get the network up

Barry: Yes, sure I'll go and take it I think.

Barry L. Biffle: If you look at the changes we've made so far are they really just started in April in terms of the additions and they kind of continue to roll through the summer, but I'll tell you. We're really excited we've got a lot of new routes that we just started this in the last few weeks that are running a 90% load factors. So I think that our network planning team has picked well on many of these so we're really excited.

Barry L. Biffle: How it's how it's shaping up but it's very early right.

Barry L. Biffle: As I said while ago.

Barry L. Biffle: Over double the amount of new new flying that we would normally have because of this repositioning.

Barry L. Biffle: Significant we estimate five to 10 point drag on RASM with this investment, but it's the right thing to do to get the network optimized.

Mark C. Mitchell: And Barry, I guess going forward from here, do you expect to be profitable every quarter going forward, especially with, you know, reiterating a much higher margin target for 2025? Yes. Okay, appreciate that. And then on the 200 million dollars in cost reduction, can you give us, you know, some idea of where that's going to impact the cost line as you get to more outback fines in the network? Thank you. Yeah, hey Brandon, this is Mark.

Speaker Change: And Barry I guess going to head from here do you expect to be.

Mark: <unk> every quarter going ahead, especially with you know reiterating a much higher margin target for 2025.

Mark C. Mitchell: Yes.

Mark: Okay appreciate that and then.

Mark: On the 200 million of cost reduction can you give us some.

Mark: Do you have where that's going to impact the cost lines as you get to more outback fine in the network. Thank you.

Mark C. Mitchell: Hey Brandon, this is Mark. So on the $200 million cost savings plan, we're on track as we indicated in the prepared remarks, and where you're going to see that, I mean, you're going to see real benefits across the operation. So you're going to see, as we've talked about previously, lower travel-related costs, you're going to see Crew Efficiency Benefits, you're going to see benefits on the station operations front. You're also going to see a higher capture rate from a maintenance standpoint at our crew bases, which is going to drive some improved favorability on the maintenance front. And then, with the initiatives that we have to simplify the network, you're going to see an increase in utilization that's going to provide benefits across the P&L.

Mark C. Mitchell: Yeah, Hey, Brandon this is mark.

Mark: The $200 million cost savings plan. So we are on track.

Mark C. Mitchell: As we indicated in the prepared remarks, and where youre going to see that I mean, youre going to see really benefit across the operations. So youre going to see as we've talked about previously lower travel related costs youre going to see it.

Mark C. Mitchell: Crew efficiency benefit youre going to see benefits on the station operations front Youre also going to see a higher capture rate from a maintenance standpoint, but our crew basis, which is going to drive some improved favorability on the on the maintenance front.

Mark C. Mitchell: And then with the initiatives that we have to simplify the network you're going to see an increase in utilization that's going to provide benefit across the P&L.

Speaker Change: Thank you.

Operator: Standby for our next question. Our next question comes from Duane Pfennigwerth with Evercore ISI. Duane, go ahead with your question.

Speaker Change: Standby for our next question.

Operator: Okay.

Duane Thomas Pfennigwerth: Our next question comes from Duane <unk> with Evercore ISI Duane go ahead with your question.

Operator: Hey, thanks. Good morning, guys. This is Jake on for Duane.

Operator: Hey, Thanks. Good morning, guys. This is Jake on for Duane.

Jimmy Dempsey: So appreciate the capacity guidance, but based on what we're seeing in the schedules, we would expect it to be higher in 2Q than you're guiding. Is there just a level of conservatism there around completion, or are you still refining the schedule?

Jake: So appreciate the capacity guidance, but based on what we're seeing in the schedules, we would expect it to be higher in <unk> and you're guiding is there just a level of conservatism there around completion or are you still refining the schedule.

Jimmy Dempsey: Yeah, I mean, look, we always put in something that there's going to be air traffic control and weather issues. So we continue to put in what we believe is going to be realistic capacity.

Speaker Change: Yes, I mean look we always put in something there's going to be air traffic control and weather issues. So we continue to put in what we believe is going to be realistic.

Jimmy Dempsey: Capacity.

Jimmy Dempsey: Okay. And then, you know, you have this load factor and yield dynamic. How would you think about that evolving over the course of the year? Like, would you expect yields to be positive again in 2Q? And then, I guess, what impact is that lower load having on ancillary performance? Go ahead, sir.

Jimmy Dempsey: Okay.

Jimmy Dempsey: And then just you know you have this load factor and yield dynamic how.

Jimmy Dempsey: How would you think about that evolving over the course of the year would you expect yields to be positive again in <unk> and then I guess, what impact is that lower load, having an ancillary performance.

Jimmy Dempsey: Actually, I'll just answer the second part of the question first. In fact, the lower load factor actually had a positive impact on non-ticket performance in the quarter. You saw some recovery in the non-ticket through January, February, and March. Look, we obviously focus on the total revenue output that's coming from the business. We're seeking to optimize that total revenue output, and in the quarter, we saw an opportunity to trade some load factor for yield, particularly in the off-peak months, so it actually worked out very well for us, and it exceeded our expectations in terms of revenue output. But going forward, you know, we'll always optimize it. So it'll depend on the situation and the environment that we're in. And certainly, in peak periods, we'll be pushing for very high load factors.

Speaker Change: Go ahead Sir.

Jimmy Dempsey: Actually I'll just answer the second part of the question first actually the lower load factor actually had a positive impact on on non ticket performance in the quarter you saw some recovery in the non ticket through through January February and March.

Jimmy Dempsey: Look we obviously focus on the total revenue output that's coming from the business.

Jimmy Dempsey: We are seeking to optimize.

Jimmy Dempsey: That total revenue outflows in the quarter, we saw an opportunity to trade some load factor for yield.

Jimmy Dempsey: Particularly in the off peak months, so it actually worked out very well for us and it exceeded our expectations in terms of revenue.

Jimmy Dempsey: But like going forward.

Jimmy Dempsey: These optimize it so it will depend on the situation on the environment that we're in and certainly in peak periods will be pushing for very high load factors.

Operator: I.

Speaker Change: Alright, thank you.

Operator: Yeah.

Operator: Standby for our next question. Our next question is coming from Ravi Shanker with Morgan Stanley. Ravi, go ahead with your question.

Speaker Change: Standby for our next question.

Operator: Our next question is coming from Ravi Shanker with Morgan Stanley Ravi go ahead with your question.

Operator: Good morning, this is Catherine on behalf of Ravi. So, thank you for taking my question. As you guys mentioned in your opening remarks, you recently introduced the upfront plus seating option, and premiums are obviously a large focus. So how has that kind of been trending since introducing it? And what do you guys think the non-corporate premium domestic opportunity for Frontier is like? And, you know, do you think that gets more competitive amongst peers?

Operator: Good morning. This is Katherine on for Ravi. So thank you for taking my question.

Operator: You guys had mentioned in your opening remarks, you recently introduced the upfront plus seating option.

Operator: And premiums obviously been a large focus so how is that kind of been trending since introducing it and what do you guys think the non corporate premium domestic opportunity for frontier is like and do you think that gets more competitive amongst peers.

Jimmy Dempsey: Look, we introduced UpFront Plus just recently. It's been in place for a few weeks now, and we're actually quite encouraged by its performance. It's really exceeding our expectations.

Speaker Change: Look we introduced upfront plus just recently it's been in place for a few weeks now we're actually quite encouraged by its performance its really exceeding.

Jimmy Dempsey: It's giving our customers an opportunity to buy effectively more space at the front of the aircraft. We think that's really, really helpful to our customer base. And so we're quite excited about it. That, plus the business fair option that we gave to customers earlier in the year, we think is a nice complement to the business that we have today. Clearly, we're still focused very much on unit costs and delivering very, very strong unit costs. But these options, we think, will be helpful in giving choice to our customers.

Jimmy Dempsey: Our our expectations, it's giving our customers an opportunity.

Jimmy Dempsey: To buy effectively more space at the front of the aircraft, we think Thats really really helpful to work through our customer base.

Jimmy Dempsey: And so we're quite excited about that plus the business fare option that we gave to customers earlier in the year we.

Jimmy Dempsey: We think is a nice complement to the business that we have today clearly we are still focused very much on unit costs and delivering very very strong unit cost, but these options.

Jimmy Dempsey: We think will be helpful to giving choice to our customers.

Jimmy Dempsey: And just as a quick follow-up, with domestic yields down in the first quarter and some harder comps coming up, what are you guys seeing in the domestic space as we move into 2Q and maybe in the back half of the year as well? Thank you.

Speaker Change: And just as a quick follow up with domestic yields down in the first quarter and some harder comps coming up what are you guys seeing in the domestic space as we move into <unk> and maybe in the back half of the year as well. Thank you.

Barry L. Biffle: Look, I think you see overall capacity going up. I think, you know, Frontier is probably leading the charge in probably bucking the system because we've pivoted away, you know, we're six, eight months now into this, pivoting away from the oversupply in Florida. So for us, we see a really good landscape setting up for the markets we're in. We see the fares in the markets that we're going into being higher than the existing system, and so we see a lot more kind of ripe opportunities for market stimulation where we're headed.

Barry L. Biffle: Well look I think you see overall capacity going up I think frontier is probably leading the charge and probably bucking.

Barry L. Biffle: The system, because we pivoted away.

Barry L. Biffle: Six to eight months now into this.

Barry L. Biffle: Pivoting away from the oversupply in Florida.

Barry L. Biffle: So for US we see a really good landscape setting up for the markets. We're in.

Barry L. Biffle: See the fares in the markets that we're going into higher than than the existing system and so we see a lot more kind of ripe opportunities for market stimulation.

Barry L. Biffle: I can't really speak for the rest of the industry, but we see good demand for summer and are excited about the network changes and what that can do as these things mature for our revenue over the next Thank you.

Barry L. Biffle: Where we're headed I can't really speak for the rest of the industry, but we see good demand for summer and we're excited about the network changes and what that can do.

Barry L. Biffle: As these things mature for our revenue over the next year.

Speaker Change: Thank you.

Operator: And bye for our next question. Our next question comes from Savi Feith with Raymond James. Savi, go ahead.

Speaker Change: And thank you Sir our next question.

Operator: Okay.

Savi Feith: Our next question comes from Savi <unk> with Raymond James So let me go ahead.

Operator: Hey, good morning, everyone. And you mentioned the ability of San Jose to kind of expand into kind of connecting to some of those Caribbean markets. I was curious if you could talk about what you're seeing in the short haul leisure market, given that some of your competitors have talked about a lot of kind of overcapacity in that market. And, and why you find this kind of an attractive place to add capacity.

Savi Feith: Hey, good morning, everyone.

Operator: You mentioned, the ability with San Jose to kind of expand into kind of connecting into from the Caribbean markets. I'm. Just curious if you could talk about what youre seeing in that.

Operator: Short haul leisure.

Operator: Given that some of your competitors have talked about a lot of kind of overcapacity in that market.

Operator: And kind of why why you find us.

Operator: Truck to place to add capacity.

Jimmy Dempsey: We see a really attractive opportunity in Puerto Rico, Savi. Our cost base gives us a real opportunity to stimulate that market, where there's been very high fares for a long period of time. So we see great opportunity there. It's very early days in terms of investment in Puerto Rico. The base opens next month, but the early results, as Barry mentioned across the new network changes, look promising for our business given our cost base. And so we're quite excited about opening up in Puerto Rico.

Operator: We see a really attractive opportunity.

Jimmy Dempsey: In Puerto Rico Savi.

Jimmy Dempsey: Our cost base gives us a real opportunity.

Jimmy Dempsey: To stimulate that market, where there has been.

Jimmy Dempsey: Very high fares for a long period of time, so we see great opportunity. There. It's very early days in terms of the investment in Puerto Rico.

Jimmy Dempsey: The base opens in next month and so.

Jimmy Dempsey: But the early results as Barry mentioned across the new network changes.

Jimmy Dempsey: Look promising for our business given our cost base and so we're quite excited about opening up in Puerto Rico.

Jimmy Dempsey: Is the national segment, then, beyond just maybe Puerto Rico, is the international segment doing fairly well, despite some of the comments by the industry?

Jimmy Dempsey: Mesa is the international segment then.

Jimmy Dempsey: Beyond just maybe Puerto Rico, there is international segment doing fairly well.

Jimmy Dempsey: Despite some of the comments by the industry.

Jimmy Dempsey: Oh, we've done, well, we've done really well on our intra-San Juan flights up until now just because it's relatively small. I think some of that commentary, I mean, look, I don't know what they're talking about. We're not seeing that. I think it's, you know, could be some other destinations in the region, but not necessarily where we're starting service.

Jimmy Dempsey: We've done well, we've done really well on our intra San Juan up until now just because it's relatively small I think some of that commentary I mean look I don't know what theyre talking about we're not seeing that.

Jimmy Dempsey: I think it's month could be some other destinations in the region, but not necessarily where we're starting service too.

Barry L. Biffle: That's helpful. And if I might, just on the comment, Barry, that you mentioned about, you know, the new markets being double what they normally are. And although it's probably I guess I'm surprised that it's having a five to 10 point drag on RASM, given that I would think that the reason you're going into these is because they're better. So could you add a little bit more color on, like, what the percentage is and and how you think that that should kind of progress?

Speaker Change: That's helpful.

Barry L. Biffle: If I might just with the the comment there that you mentioned about.

Barry L. Biffle: Yes.

Barry L. Biffle: New markets being double what they normally are.

Barry L. Biffle: And although it's probably and I guess I'm not surprised that this having a five to 10 point drag on RASM given that I would think.

Barry L. Biffle: The reason youre going into these are because they're better. So I'm just kind of could you add a little bit more color on like what the percentage is and and.

Barry L. Biffle: And how you think about that should kind of progressed.

Barry L. Biffle: Yes, sure. So here's the thing.

Barry L. Biffle: Yes, sure. So here's the thing we are chasing higher yield opportunities right. So if we fast forward to a year from now.

Barry L. Biffle: We are chasing higher yield opportunities, right? So if we fast forward to a year from now... We're going to love these markets because once they're mature, they're likely, in many cases, to produce a higher RASM than our existing system. However, when they're brand new, literally some of them are still starting in the next week or two, I'm doing an inaugural in another week, like they're brand new. And so they're likely to produce a third or even half the revenue that a mature market will when they're brand new.

Barry L. Biffle: We're going to love these markets because once they are mature they're likely in many cases to produce a higher RASM than our existing system.

Barry L. Biffle: However, when Theyre brand, new literally like some of them still starting in the next week or two I'm doing an inaugural in another week.

Barry L. Biffle: They are brand new and so.

Barry L. Biffle: They are likely to produce a third or even half the revenue that a mature market well when they are brand new.

Barry L. Biffle: And so all we're saying is that when you have double the amount you would normally have in brand new markets, that is a bigger drag than normal. And there, and we have calculated this, we believe this to be in the high single digits of a drag on the company's RASM, and it goes straight through to margin. & Co. & Co. & Co. & Co.

Barry L. Biffle: And so all we're saying is that when you have double the amount you would normally have in brand new markets that is a bigger drag than normal and there and we've calculated. This we believe this to be in the high single digits of a drag on the on the company's RASM and it flows straight through to margins.

Barry L. Biffle: And because of this this much new capacity, but it will mature as we move through the year, especially when we get towards the fourth quarter and into the first quarter. We expect significant improvement and you should see a natural kind of seven in that case kind of a natural seven eight point improvement.

Barry L. Biffle: In our RASM over the next year as these markets mature.

Barry L. Biffle: That's clear. That's very helpful. Just to clarify, Barry, what was the percentage of markets under development in 2Q?

Speaker Change: That's clear.

Speaker Change: Helpful and just to clarify Barry what's the percentages.

Speaker Change: On the development and <unk>.

Barry L. Biffle: Well, we believe it's over 20% is a new

Barry L. Biffle: Well.

Barry L. Biffle: We believe that over 20% is in new markets. Okay, that's helpful. Thank you.

Speaker Change: We believe it's over 20% as in new markets.

Speaker Change: Okay. That's helpful. Thank you.

Operator: Standby for our next question. Our next question comes from Michael Linenberg of Deutsche Bank. Michael, go ahead with your question.

Speaker Change: And our next question.

Operator: Okay.

Michael John Linenberg: Our next question comes from Michael Lindberg Deutsche Bank. Michael Go ahead with your question.

Operator: Hi there, this is actually Shannon Doherty on for my First question, Barry, how many aircraft are you planning to take this year? Presumably you may be getting impacted just like every other carrier by delivery delays, even Airbus, right? So I'm just trying to understand the capacity growth in the back half of the year and corresponding CASMX trends.

Operator: Hi, there this is actually Shannon Doherty on for Mike.

Operator: First question Barry how many aircraft are you planning to take this year, presumably you may be getting impacted just like every other carrier by delivery delays.

Operator: Airbus right. So I'm, just trying to understand the capacity growth in the back half of the year and corresponding CASM ex trends.

Barry L. Biffle: Yes, so real fast, I'm going to let Mark answer the actual numbers, but... Are the aircraft delayed from our original order? Yes. However, are the delays known, and have they been known now for over six months? And the answer is yes.

Speaker Change: Yes, so real fast I will let mark answer the actual numbers, but.

Barry L. Biffle: Are the aircraft delayed from our original order yes.

Barry L. Biffle: However are the delays known and have they've been known now for over six months and the answer is yes. So so we're not seeing the disruption that we were seeing before so yes. They are late but that was really just a problem call. It a year ago when everything got moved to the right. We're now at a point where yes, we are.

Mark C. Mitchell: So we're not seeing the disruption that we were seeing before. So yes, they're late, but that was really just a problem, call it a year ago, when everything got moved to the right. We're now at a point where, yes, we have airplanes that are delayed from now, that were maybe just supposed to be delivered now, but I'm now catching a delivery that was delayed that was supposed to be here three or four months ago, if that makes sense. So it's not as impactful to the business anymore. We've seen this really smoothed out, and Mark, yeah, from a number standpoint.

Mark C. Mitchell: Have airplanes that are delayed from now that where maybe they're supposed to be delivered now, but I'm now catching a delivery that was delayed that was supposed to be here three or four months ago. If that makes sense. So it's not as impactful to the business anymore. We've seen this really smooth out and mark yes from it yet from a number standpoint, I mean, we're still at 23 deliveries for this year all $3 21.

Mark C. Mitchell: From a numbers standpoint, we're still at 23 deliveries for this year, all 321 NEOs. Six expected in the second quarter, and 11 in the back half of the year.

Mark C. Mitchell: Fixed.

Mark C. Mitchell: <unk> expected in the second quarter <unk> 11 in the back half of the year.

Operator: Very helpful. Thank you, guys.

Speaker Change: Very helpful. Thank you guys and then my second question.

Operator: And then my second question, you know, what drove the 6% decline in aircraft utilization? You know, are you still pursuing to get to 12 plus hours with the network changes? You know, we're getting to the 80% out and back flying. It sounds like you got to 75 already. I thought that, you know, we would have had much better aircraft utilization by now. But maybe, to your earlier point, because the markets are still ramping up, any color here would be helpful. Yeah, Shannon.

Operator: What drove the 6% decline in aircraft utilization are you still pursuing can you guys talk with ours with the network changes that we are getting to the 80% out of backlog. It sounds like you got to somebody's already I thought that we would have had much better aircraft utilization by now, but maybe to your earlier point because mortgage are still ramping.

Operator: Any color here would be helpful.

Mark C. Mitchell: Yeah, Shannon, we're still managing the oversupply that we saw in the back six months of last year, particularly in the January and February period. And so in managing that, we took utilization down, like we've done previously in the January and February off-peak periods. But we're expecting utilization to be up in the high 11s, and 12s for the rest of the year.

Operator: Yes.

Mark C. Mitchell: Shannon.

Mark C. Mitchell: We're still managing the oversupply.

Mark C. Mitchell: What we saw in the back six months of last year, particularly in the January and February period, and so managing that we took utilization down like we have done previously in the January and February off peak periods.

Mark C. Mitchell: But we're expecting utilization to be up in the high Elevens 12 for the rest of the year.

Mark C. Mitchell: Thanks.

Operator: Standby for our next question. Our next question comes from Helane Becker with T.D. Cohen. Helane, go ahead with your question.

Speaker Change: Standby for your next question.

Operator: Our next question comes from Helane Becker with TD Cowen Helane go ahead with your question.

Operator: Thanks very much, Operator. Hi, team. Thanks for the time. Two questions. One, at one point, your flight attendants were objecting to the new schedule because they would earn less. Was that issue ever resolved?

Helane Renee Becker: Thanks, very much operator, hi team thanks for the time.

Operator: Two questions one at one point your flight attendants were.

Operator: Objecting to the new schedule, because they would earn less with that issue ever resolved.

Barry L. Biffle: Yeah, thanks, Elaine. So we actually negotiated on this very issue. They had wanted a guarantee of a minimum number of multi-day trips in past negotiations, and we did not agree to that. So it's not really a dispute. It's been settled.

Helane Renee Becker: Yeah. Thanks, <unk>. So so we actually negotiated on this very issue. They had wanted a guarantee of a minimum amount of multi day trips and.

Barry L. Biffle: In past negotiations and we did not agree to that so it's not it's not really a dispute its been settled.

Barry L. Biffle: We do know that there are flight defense that prefer multi day trips.

Barry L. Biffle: Alright, and that prefer to get the per DM and St hotels.

Barry L. Biffle: This is a challenge for some of them.

Barry L. Biffle: We do know that there are flight attendants that prefer multi-day trips and that they prefer to get the per diem and stay in hotels. This is a challenge for some of them. However, when you look at our growth. As we grow, if you think about it, every day, even though it's only 20 percent, call it multi-day trips, versus, you know, call it 40, 40, 45 percent, maybe six months ago, we cut that in half.

Barry L. Biffle: However, when you look at our growth.

Barry L. Biffle: As we grow if you think about it.

Barry L. Biffle: Every day, even though it's only 20% call it multi day trips versus call. It 40, 40% to 45% maybe six months ago, we cut that in half, but everyday we grow the percentage of the total growth and within a year or so we will likely be close to the number of people that want multi day trips will be able to have them.

Barry L. Biffle: But every day we grow, the percentage of the total grows, and within a year or so, we'll likely be close to the number of people that want multi-day trips. We'll be able to have them. And when you look at the fact that, in our hiring for the last six months, we have targeted specifically bases, especially these out-and-backs, but Cleveland is a great example. Like almost everyone in Cleveland, we hired locally, and they are doing out-and-back from that city.

Barry L. Biffle: And when you look at the fact that what we've done in our hiring for the last six months, we have targeted specifically into bases, especially these outback with Cleveland is a great example, like almost everyone in Cleveland, we hired locally and they are doing out and back from that city. So so it's I know, it's a challenge for us for <unk>.

Barry L. Biffle: So it's – I know it's a challenge for a small minority that still wants the out and backs. But as we continue to grow, we expect those that want it within a year should all be able to get it. So we don't see it as it being a major problem. Okay, that's really...

Barry L. Biffle: <unk> minority.

Barry L. Biffle: That's still want the box, but as we continue to grow we expect those that want it within a year all of them should be able to get it. So we don't see that as being a major challenge.

Barry L. Biffle: Okay, that's really helpful. Thanks for explaining that. And then my other question is, you guys talk a lot about your cost advantage relative to the peer group, and I'm just wondering, how much does that advantage matter anymore, given everybody's changes in the way they're operating their root networks?

Speaker Change: Okay. That's really helpful. Thanks for explaining that and then my other question is can.

Barry L. Biffle: Can you guys talk a lot about your cost advantage relative to the peer group and I'm just wondering how much does that advantage matter anymore given.

Barry L. Biffle: Everybody is changes in the way they are operating their route networks.

Barry L. Biffle: Well.

Barry L. Biffle: I think it matters a lot. I think we have clearly shown, Helane, you know, I know that there's been this thought of bifurcation that the network carriers are somehow in a different place than now, and low-cost carriers are now in trouble. I think, number one, the capacity deployment and the oversupply and the imbalances of that across the network are very clear and well understood now, which has had a greater impact on low-

Barry L. Biffle: I think it matters a lot I think we have clearly shown helane.

Barry L. Biffle: I know that Theres been this thought of bifurcation that that the network carriers or are somehow in a different place than that low cost carriers are now in trouble.

Barry L. Biffle: I think number one the capacity deployment and the oversupply in the imbalances of that across the network is very clear and well understood now, which which had a greater impact of low cost carriers, but I think more materially I think when you look at those that call themselves low cost carriers, but yet their costs have been going up.

Barry L. Biffle: But more materially, I think when you look at those that call themselves low-cost carriers, but yet their costs have been going up 5, 10 percent a year. That eats into margins. That eats into margins. And the fact that we're hell-bent on being number one and continue to widen our cost advantage is why we're starting to outperform, why we have the three-to-six guide for Q2 despite a five-to-ten percent drag from new markets, and why we're confident with the cost tailwinds that we're going to have from completing the out-and-back, the $200 million that Mark and I have So costs matter, and they always will, Helane.

Barry L. Biffle: 5% to 10% a year.

Barry L. Biffle: Tinder margins that eats into margins and the fact that were held bit to be number one and continue to widen our cost advantage is why we're starting to outperform why we have the three to six guide for Q2 despite a.

Barry L. Biffle: 5% to 10% drag of new markets and why we're confident with the cost tailwind that we're going to have from completing the back the 200 million that mark and I.

Barry L. Biffle: <unk> talked about over and over and over plus these things that cost advantages, what's going to deliver us and get us back to 10% to 14% margins in our target next year.

Barry L. Biffle: Better.

Barry L. Biffle: And they always will Helane.

Operator: Okay. No, that's really fair. I appreciate it. Just one quick one for Mark.

Speaker Change: Okay, Yeah, that's really fair I appreciate it just one quick one for Mark.

Speaker Change: How do we model the sale leasebacks for the rest of the year.

Operator: How do we model the salee specs for the rest of the year?

Mark: Yes, so from an overall perspective, I mean, I think if you just follow the fleet profile.

Mark C. Mitchell: Yeah, so from an overall perspective, I mean, I think if you just follow the fleet profile, you know, that we've outlined, so, you know, 23 deliveries this year, all sale leaseback finance, six expected in the second quarter, 11 in the back half of the year, you know, so I think that's the way to look at it.

Mark C. Mitchell: Outlined so 23 deliveries this year all sale leaseback financed six expected in the second quarter <unk> 11 in the back half of the year.

Mark C. Mitchell: I think that's the way to look at it.

Mark C. Mitchell: Okay, all right, so divide that 11 by 2 ish.

Speaker Change: Okay, Alright, so divide that 11 by <unk>.

Mark C. Mitchell: Yeah, I mean, we haven't got it specifically, but I think, you know, it's not a bad approximation. Okay.

Speaker Change: Yes, I mean, we haven't guided specifically, but I mean I think.

Mark C. Mitchell: Not a bad approximation.

Operator: Okay. All right. Thanks, team.

Operator: Okay, Alright, thanks, Tim.

Operator: Standby for our next question. Our next question comes from Jamie Baker of J.P. Morgan. Jamie, go ahead with your question. Hey, good morning.

Speaker Change: Okay standby for our next question.

Operator: Our next question comes from Jamie Jamie Baker of JP Morgan.

Operator: Hey, good morning. So a follow up on that. It looks like you had 71 million in sales back, you know, proceeds in the first quarter that you used to offset Chasm. I mean, it feels like the business model is becoming increasingly dependent on aircraft financing decisions, as opposed to the, you know, rasm and chasm stuff that we're all kind of, you know, accustomed to. So I guess my first question is, you know, when the sale leaseback proceeds begin to fade, have you given any thoughts on how you might manage the business differently?

Jamie Nathaniel Baker: Jamie go ahead with your question.

Operator: Hey, good morning, So a follow up on that it looks like you had $71 million of sale leaseback proceeds in the first quarter that you use to offset CASM.

Operator: I mean.

Operator: It feels like the business model is becoming increasingly dependent.

Operator: On aircraft financing decisions as opposed to the RASM and CASM Steph.

Speaker Change: Kind of.

Operator: Accustomed to so I guess my first question is.

Operator: When sale leaseback proceeds begin to fade have.

Operator: Have you given any thoughts on how you might manage the business differently.

Barry L. Biffle: Thanks, Jamie. This horse has been beaten pretty dead.

Speaker Change: Thanks, Jeremy.

Barry L. Biffle: This this horse has been pretty beaten pretty dead. We covered this significantly I think a few months ago, but the bottom line is this.

Barry L. Biffle: We covered this significantly, I think, a few months ago. But the bottom line is this: If you buy aircraft... and you're able to deliver them at likely below market rates, you're going to get a, and we have illustrated that whether you do this through a sale lease back, or whether you do it through debt financing, the economics and the net income are. So your gain that we're calling out is simply because of accounting rules that have changed a few years ago.

Barry L. Biffle: If you buy aircraft.

Barry L. Biffle: And you are able to deliver them likely below market rates youre going to get a gain and we have illustrated that whether you do this through a sale leaseback or whether you do it through debt finance.

Barry L. Biffle: Economics and the net income is the same.

Barry L. Biffle: So your game that we're calling out is simply because of the accounting rules that changed a few years ago.

Barry L. Biffle: But if you actually, but if you're being fair, you would give the same gains to America, United, Southwest, and back. And to your point of when they fade away, well, that's not happening anytime soon in the near term. We have 200 aircraft on order. We have a clear, clear path.

Barry L. Biffle: And if you actually if you're being fair you would give the same gains to American United and southwest and back those out.

Barry L. Biffle: And to your point of when they fade away well, that's not happening anytime in the near term if 200 aircrafts on order we have a clear clear path this needs to stop being talked about as a negative Jamie and talked about as an asset and a positive to the business you need to look at the guaranteed cash flows that come from this over the.

Barry L. Biffle: This needs to stop being talked about as a negative, Jamie, and be talked about as an asset and a positive for the business. You need to look at the guaranteed cash flows that come from this over the next decade. This will not change, and we don't plan on changing this unless the financing market changes. It's a core part of the business. The cash is real. The earnings are real. And it's the same as if we had debt financed it.

Barry L. Biffle: Next decade.

Barry L. Biffle: This will not change and we don't plan on changing this unless the financing market changes. It's a core part of the business. The cash is real the earnings are real and it's the same as if we had debt financed well I guess the question, though if you were debt financed wouldn't that be more similar to amortizing the gain over the.

Barry L. Biffle: Well, I guess the question though, if you were debt financed... wouldn't that be more similar to amortizing the gain over the life of the lease? So I guess put differently, if you amortized the gain over whatever leases you struck in the first quarter, it wouldn't be a $71 million benefit. Do you know what the approximate benefit would have been?

Barry L. Biffle: Life of the lease.

Barry L. Biffle: So I guess put differently if you were.

Barry L. Biffle: Amortize the gain over whatever leases you struck in the first quarter it wouldn't be a $71 million benefit do you know what the approximate benefit would have been because I mean, it's obviously going to be.

Barry L. Biffle: Well, those aircraft would be a much smaller number, but then you would have brought in the gains from all the other aircraft that you've delivered over the last... This is why we keep saying it, and there's a really good presentation we put out on... Okay, well, that's why we did it. If you go back and look, we showed you whether you did this through the old accounting system, whether you did it through debt finance, or whether you did it the way it's being done now, which we're following proper accounting. It's the economic answer, the net income answer.

Barry L. Biffle: There are a number.

Barry L. Biffle: Well.

Barry L. Biffle: Now those aircraft would be a much smaller number but then you would have been brought in the gains from all the other aircraft that you've delivered over the last 10 years. This is why we keep saying it and there's a really good presentation. We put out on this I don't know.

Barry L. Biffle: Okay, well, that's why we did it if you go back and look we showed you whether you did this over the old accounting.

Barry L. Biffle: Whether you did it through debt finance or whether you do it the way it's being done now, which we're just we're following proper accounting.

Barry L. Biffle: The economic answer the net income answer is the same.

Barry L. Biffle: Okay. All right. I appreciate the call. But I'd rather...

Speaker Change: Alright, I appreciate the color.

Mark C. Mitchell: I think... And Jamie, just to add to what Barry said, the market value for aircraft, particularly the 321neo, is really, really strong. You know, the issues that have been happening with the manufacturers in terms of delays in aircraft, the market price for selling an aircraft into the leasing community is higher than it's ever been. It isn't a minute. Sure, the financing costs associated with that are going up with higher interest rates, but the market price of the aircraft is very, very strong, and we happen to buy aircraft at a material discount to the market, and so that's where we're getting the benefit. There's a real asset value intrinsic to our aircraft orders, and you see that every quarter.

Barry L. Biffle: Jamie just to add to what Barry said the market value for aircraft, particularly at $3 21 Neo.

Mark C. Mitchell: Is really really strong.

Mark C. Mitchell: The issues that have been happening with the manufacturers in terms of delays in aircraft.

Mark C. Mitchell: The market price for selling an aircraft into the into the leasing community is higher than it's ever been at isn't diminishing sure. The financing costs associated with us are going up with higher interest rates, but that market price of the aircraft is very very strong and we happen to buy aircraft at a material discount to the.

Mark C. Mitchell: Marcus.

Mark C. Mitchell: So that's why we're getting the benefit there is a real asset value intrinsic in our aircraft order and you see that every quarter.

Barry L. Biffle: I think we should get back to focusing on what's important. I mean, what we're excited about is that we gave you a guide for Q1 that included it. Nothing changed with that.

Barry L. Biffle: I think let's get back to focusing on what's important.

Barry L. Biffle: We're excited about is we gave you a guide for Q1 that included it.

Barry L. Biffle: And we had really great performance. And that is leading us to where we are now with what we believe is a solid guide for Q2 of the year, even despite a high single-digit RASM hit and margin hit, which gives you the confidence to get back to the 10 to 14 points that we've labeled as our target next year. That's what we need to focus on. Yeah.

Barry L. Biffle: Nothing changed with that and we had really great performance and that is leading us to where we are now with what we believe is a solid guide for Q2 and the year, even despite a high single digit RASM hit in margin hit which gives you the confidence to get back to the 10% to 14 points that we have.

Barry L. Biffle: Labeled as our target next year.

Barry L. Biffle: Uh huh.

Operator: Yeah, and I don't disagree as to the strength of the aircraft market, and we're not looking for that, you know, to reverse anytime soon. I mean, on that point, we are in full agreement. So, thank you.

Barry L. Biffle: We need to focus on.

Operator: And I don't disagree as to the strength of the aircraft market and we're not looking for that to reverse.

Operator: Anytime soon on that on that point and we are in full agreement.

Speaker Change: Thank you.

Operator: Standby for our next question. The next question comes from Conor Cunningham of Melius Research. Conor, go ahead.

Speaker Change: Standby for our next question.

Operator: Okay.

Operator: Yes.

Operator: The next question comes from Conor Cunningham of Melius Research Conor go ahead.

Operator: Hi everyone, thank you. On the 13 new crew bases that you've introduced, or I guess the 13 crew bases that you have and the couple that you're introducing now, I'm just trying to understand the cost mismatch that is currently kind of happening in 2024. Like, as you open up Cleveland, for example, and then you kind of move more to this out and back network, is there a cost mismatch where you're actually holding too many costs, too much cost this year before it starts to kind of, you know, become a good guy next year? I'm just trying to understand the dynamic on the cost side as you open up new markets.

Conor T. Cunningham: Hi, everyone. Thank you.

Operator: <unk>, new crew basis that you've entered or I guess, the 13 crude basis that you have in a couple of it you're introducing now I'm just trying to understand the cost mismatch that is currently kind of happening in 2020 for like as you open up Cleveland for example, and then you kind of move more to this out and back network is there a cost mismatch, where youre actually holding too many cost too much.

Operator: Cost this year before it starts to kind of.

Operator: Become a good guide next year I'm, just trying to understand the dynamic on the cost side as you open up new basis. Thank you.

Mark C. Mitchell: I don't think there is a cost mismatch. I think the $200 million cost savings target that we have, that run rate that we expect to get to by the end of the year, is underpinned by this network simplification and the shift to over 80% out and back. That simplifies the operation and provides efficiency across the operation. So we think it goes hand in hand. And just to add to what Mark said, the actual cost of opening the base, there are dollars involved, but they're relatively small in the context of moving really valuable assets around the network and putting them in places where they're making real money. And so the up-front investment in a base opening is relatively small from a cost perspective. So there isn't a material cost drag from the opening event itself.

Operator: Okay.

Speaker Change: Oh I'm sorry go ahead go ahead, yes, I mean, I don't think there is.

Mark C. Mitchell: Cost mismatch I mean, I think the 200 million dollar cost savings target that we have that run rate that we expect to get to by the end of the year. It is underpinned by this network simplification in the shift to over 80% out and back that simplifies the operation that provides efficiency across the.

Mark C. Mitchell: The operation and so we think it goes it goes hand in hand, and we don't think that there is a mismatch.

Mark C. Mitchell: And just to add to what Mark is the actual cost of opening the base. There are dollars involved but they're relatively small in the context of moving really valuable assets around the network.

Mark C. Mitchell: And putting them in places, where we're actually theyre, making real real money and so.

Mark C. Mitchell: The upfront investment in a base opening.

Mark C. Mitchell: <unk> is relatively small from a cost perspective, so there isn't a material cost drag from the from the opening event itself.

Mark C. Mitchell: Okay. Okay. Okay. Okay. Okay. Okay.

Mark C. Mitchell: Okay, it's actually call kind of cost savings that come quite quickly a few of them.

Mark C. Mitchell: On the base.

Operator: Okay, I got it. Perfect. And then just on your pilots, you know, the market's obviously moved a lot. You know, you have some airlines that are shutting down pilots now or furloughing pilots.

Speaker Change: Okay. Thank you.

Operator: And then.

Operator: Can you just talk about where you are in terms of your negotiations? What's the sticking point? Anything new that's kind of happening there? I mean, I obviously don't want you to negotiate in public. Just curious about what's kind of going on right now and our expectations around when that could potentially get rectified. Thank you.

Speaker Change: Just on your pilots.

Operator: The market's obviously moved a lot you have some airlines that are shutting pilots now are furloughing pilots can you just talk about.

Operator: Where you are in terms of your negotiation.

Operator: What have been the sticky anything new that's kind of happening there I mean, obviously don't want you to negotiate in public just curious on what kind of going on right now for our expectations around when that could potentially get rectified. Thank you.

Barry L. Biffle: The landscape is completely changed, right? I mean, airlines have canceled classes, and attrition rates have completely dried up. And if you want the canary in the coal mine, you actually saw this a while ago.

Barry L. Biffle: The landscape has completely changed right.

Barry L. Biffle: Airlines have canceled classes.

Barry L. Biffle: Christian rates of completely dried up and if you want the Canary in the coal mine you actually saw this a while back the fact that the regional airlines have been able to get staff hiring again tells you everything you need to do.

Barry L. Biffle: The fact that the regional airlines have been able to get staff and start hiring again tells you everything you need to know. There's not a shortage. So, yeah, there's not the pressure that was building. As far as our negotiations are concerned, it is very early. I mean, we just started. And so, we're in mediation. And, you know, the history of these things is, you know, one to two years; most of them are kind of centered around the two year time frame.

Barry L. Biffle: There's not the shortage. So yes, there is not the pressure that was building as far as our negotiations. It is it is very early as it is.

Barry L. Biffle: I mean, we just started and so and.

Barry L. Biffle: And we're in mediation and the history of these things are.

Barry L. Biffle: One to two years.

Barry L. Biffle: Most of them are kind of center around the two year timeframe. So.

Barry L. Biffle: So I wouldn't expect us anytime soon to be able to get through that process. It's just a process. Once you sign up for mediation, you're kind of locked into it. So it's going to take a long time.

Barry L. Biffle: I wouldn't expect us anytime soon to be able to get through that process is just a process. Once you sign up for mediation.

Barry L. Biffle: Kind of locked into it so it's going to take a while.

Speaker Change: I appreciate it thank you.

Operator: Standby for our next question. The next question comes from Stephen Trent with Citi. Stephen, go ahead with your question.

Barry L. Biffle: Dan Thanks, our next question.

Operator: The next question comes from Stephen Trent with Citi. Steven Go ahead with your question.

Operator: Good morning, guys. And thanks for taking my question. Two quick ones for you. One, as you look at these new products, you know, that you mentioned with the upfront plus, I think that was called. And you look at this new route network, you know, what sort of competitive response are you seeing from the network airlines or others, as you know, you launch on these new routes? Thanks.

Stephen Trent: Good morning, guys and thanks for taking my question two quick ones for you.

Operator: One as you look at these new products.

Operator: That you mentioned with the upfront plus I think you said it was called <unk>.

Operator: And you look at this new route network.

Operator: What sort of competitive response are you seeing from the network airlines or others as.

Operator: You launch on days new apps.

Barry L. Biffle: Yeah, thanks, Stephen. So, you know, look, I think we're seeing what you normally see. I mean, you know, one person's great opportunity for high revenue, opportunities with underserved or high-priced markets is another airline's definition of incursion. So we see normal reactions out there, but I think the truth is that the industry is focused on margins. And so I think, you know, any irrational things that you see, I think, generally, over time, I think most rational carriers will respond with different pricing and capacity as a result. But yeah, we're not seeing anything out of the ordinary.

Speaker Change: Yeah. Thanks, David So look I think we're seeing what you normally see.

Barry L. Biffle: One person's great opportunity for high revenue.

Barry L. Biffle: Opportunities with under underserved or high price markets is another airlines definition of of incursion. So we see normal reactions out there.

Barry L. Biffle: But I think the truth is is that the industry is focused on margins and so I think.

Barry L. Biffle: Any irrational things that you see I think generally over time I think most rational carriers will will.

Barry L. Biffle: We will respond with different pricing and capacity as a result, but yes, we're not seeing anything out of the normal.

Operator: Great. I appreciate that, Barry.

Stephen: Great I appreciate that Barry.

Speaker Change: And just one other question from a regulatory standpoint, and I have been even 100% seen all the details around this myself, but I guess the D O T a.

Speaker Change: Made some rule changes about.

Operator:

Speaker Change: Airlines, having to compensate customers for.

Speaker Change: Delayed flights and lost bags in this kind of thing.

Speaker Change: Do you sort of have any color on what's the latest on that and to what extent.

Operator: And just one other question from a regulatory standpoint, and I haven't even 100% seen all the details around this myself, but I guess the DOT made some rule changes about, you know, airlines having to compensate customers for delayed flights and lost bags and this kind of thing. You know, do you sort of have any color on what's the latest on that? And, you know, to what extent might the industry push back on that?

Operator: Industry might push back on that.

Barry L. Biffle: Yeah, look, I know there's some pushback on it, and a lot of it has to do with, you know, I think there's concern about the technology that's available, especially with third-party verification, to be compliant with the transparency. On the refund side, I would say that, you know, look, we refunded over $300 million last year, all in these same categories. We believe it is largely in compliance with what they're looking for. We don't see any financial impact from this.

Speaker Change: Yes look.

Barry L. Biffle: I know there is there is there is some pushback on it.

Barry L. Biffle: A lot of it has to do with I think there is concern about the technology, that's available, especially with third party to be compliant with the transparency on the refund side I would say that.

Barry L. Biffle: Look we refunded over $300 million last year all in the same categories. We believe largely incompliant with what they're looking for we don't see any financial impact from this.

Barry L. Biffle: And I'll just dovetail on the transparency issue. You know, we've got some big changes this year. We've got a new website coming out. We've got a new app coming out. And we've also got some kind of improved merchandising that we think will not only be good for us from a revenue perspective, but I think it will really address much of these transparency issues and make it very clean and upfront. So I think we can hit the spirit of what they're looking for, but the way they've written it, I think the reason why some of the industry is having a challenge is because I think there's not the technology But hopefully, we can all get there. But, again, we see no financial impact.

Barry L. Biffle: And I'll just dovetail on the transparency, we've got some big changes this year, we've got new website coming out we've got a new new App coming out and then we've also got some kind of improved merchandising that we think will not only be good for us from a revenue perspective, but I think it will really address much of these transparency issues that make it very clean it upfront.

Barry L. Biffle: So I think we can hit the spirit of what Theyre looking for but I think the way they've written and I think the reason why some of the industry is having a challenge is because I think theres not a technological technology in place today to do exactly what they're looking for but hopefully we can all get there, but again, we see no financial impact from this.

Operator: Okay, I appreciate it. Thanks, Barry.

Speaker Change: Okay I appreciate it thanks Barry.

Operator: Standby for our next question. The next question comes from Christopher Stathoulopoulos with Sequinia Financial Group. Christopher, go ahead with your question.

Speaker Change: And our next question.

Christopher Nicholas Stathoulopoulos: The next question comes from Christopher Stephanopoulos, Lisak Winter financial Greg Christopher Go ahead with your question.

Operator: Thank you, operator. Good morning, everyone.

Christopher Nicholas Stathoulopoulos: Thank you operator, good morning, everyone.

Christopher Nicholas Stathoulopoulos: Alright, I wanted to go back to your comments or your prepared comments around.

Christopher Nicholas Stathoulopoulos: Supply dynamic if you could put a finer point on that as it relates to key pieces of your network. A lot has changed here you've been very clear about how youre thinking about optimizing the network going forward, but also looking.

Barry L. Biffle: Barry, I want to go back to your comments or your prepared comments around the supply dynamic. If you could put a finer point on that as it relates to key pieces of your network, a lot has changed here. You've been very clear about how you're thinking about optimizing the network going forward, but also, you know, looking at the last, I don't know, a few weeks of sales promos here, coincidentally or not, they seem to be overlapping with a larger network peer and should kind of reinterpret that, that you're having confidence here with your product, particularly as it relates to these revenue initiatives, business, Thank you.

Barry L. Biffle: Looking at Alaska.

Barry L. Biffle: A few weeks of sales pro promos here.

Barry L. Biffle: Coincidentally or not they seem to be overlapping with a larger network peer and should we interpret that that you are having confidence here with your.

Barry L. Biffle: Product, particularly as it relates to these revenue initiatives business reworked loyalty and things like that thank you.

Barry L. Biffle: Well, look, you know, I said a while ago, low costs have always mattered, and the cost divergence is real. And at the end of the day, this enables us to sell to customers that can't afford a network carrier. We're in a different business in that regard. And we think that we peacefully coexist in many places with the big airlines because they offer a different product, and they cater to a different clientele. Yes, we have some new products that I think probably appeal to your more affluent travelers and those that want a little more comfort with a Front Plus or the premium product.

Barry L. Biffle: I said, a while ago low cost have always matter and in the cost divergence is real and.

Barry L. Biffle: And at the end of the day this enables us to sell to customers that can't afford.

Barry L. Biffle: Possibly a network carrier we're in a different business in that regard.

Barry L. Biffle: And we think that we peacefully coexist in many places with the big with the Big Airlines, because they offer a different product and they cater to a different clientele. Yes, we have some new products that I think probably appeal to you more affluent travelers and those that want a little more comfort with upfront plus or the premium product but.

Barry L. Biffle: But the truth is that we don't have a frequent flyer program that gets you to Dubai. We don't have, you know, eight frequencies a day on route. So we're not really for the, you know, the corporate client that they chase. But yeah, I think we serve a different market. And I think most of the more sophisticated legacy carriers have actually figured that out. Okay, and then your comments before I kind of think there was an earlier question on this yield and load factor dynamic. And, you know, if you could, you know, speak to how that's progressing, if it's sort of consistent system-wide, or is it perhaps, you know, more market specific? And is that, you know?

Barry L. Biffle: Truth is is that that we don't have a frequent flyer program that gets you to Dubai, we don't have eight frequencies a day and route. So so we're not really for that.

Barry L. Biffle: The corporates that they chase, but yes, I think I think we serve a different market and I think most of the more sophisticated.

Barry L. Biffle: Legacy carriers have actually figured that out.

Barry L. Biffle: Okay and then your comments before I didn't think there was an earlier question on this yield and load factor dynamic and if you could speak to.

Barry L. Biffle: How thats progressing if it's sort of consistent system wide or is it perhaps more market specific and as that.

Barry L. Biffle: A dynamic that we should expect to slowly shift as we get through the balance Thank you. Thank you. Thank you. Thank you.

Barry L. Biffle: The dynamic that we should expect to slowly shift as we get through the balance of the year. Thank you.

Barry L. Biffle: We always look to optimize revenue. We have teams that this is their big thing, this is what they do; they optimize revenue every day, and we found in Q1 that a greater focus on yield and less on load was a better outcome for us. We saw that we had a pretty good beat, and so obviously, it worked. However, it's not good long-term to have that kind of deficit in the load factors, and I think you're seeing that as a symptom of us still having too much capacity that was impacted by the oversupply in Florida. And so, as we move through the year, we would expect to regain all that load factor, and I think by the time you get to Q1 next year, I think we will largely close that gap back because of Okay, thank you.

Barry L. Biffle: We always look to optimize revenue I mean, we have teams that this is this is their big thing right. I mean this is this is what they do they optimize revenue every day.

Barry L. Biffle: And we found that in Q1 that a greater focus on yield and less on load was a better outcome for us and we've seen that we.

Barry L. Biffle: Had a pretty good beat and so obviously it worked.

Barry L. Biffle: It's not good long term to have that kind of deficit to the load factors and I think youre seeing that as a symptom of we still had too much capacity that was impacted by the oversupply in Florida as an example.

Barry L. Biffle: And so as we move through the year, we would expect to regain all of that load factor and I think by the time you get to Q1 next year I think we will largely closed that that gap back because of the changes, we're making to the network and getting out of the oversupplied areas.

Speaker Change: Okay. Thank you.

Barry L. Biffle: Okay.

Barry L. Biffle: Okay.

Speaker Change: Standby for your next question.

Barry L. Biffle: Okay.

Operator: Standby for our next question. Our next question comes from Savvy Seast with Raymond James. Savvy, go ahead with your question. Hey, hey, thanks.

Barry L. Biffle: Our next question comes from Savi <unk> with Raymond James Savvy go ahead with your question.

Operator: Hey, thanks for the follow up. You brought up a good point earlier that your 1Q cost performance was quite commendable and better than expected. I'm curious why your full year outlook hasn't changed and any thoughts on what drove the 1Q performance that can maybe continue.

Savvy Seast: Hey, thanks for the follow up to.

Operator: You brought up a good point earlier that <unk> perform cost performance as well.

Operator: Commendable and kind of better than expected.

Operator: Curious why your full year outlook Hasnt changed.

Savvy Seast: And any thoughts on like what Gerald.

Operator: <unk>.

Savvy Seast: Performance I can maybe continue.

Speaker Change: Yes got it.

Mark C. Mitchell: Yeah, I mean, yeah, so as we look, you know, from a cost out performance standpoint in the first quarter, you know, versus our expectations, you know, as we continue to, you know, target and work towards that $200 million cost savings plan, which, you know, which we're on target for, you know, we started to see some of the early benefits, you know, in the first quarter come through across the business. And so that's what you saw in the first quarter.

Mark C. Mitchell: Yeah, I mean, yeah, so it says

Savvy Seast: Yes, I mean, yes, so as we look from a cost out performance standpoint in the first quarter versus our expectations.

Mark C. Mitchell: As we continue to target and work towards that $200 million cost savings plan, which we're on target for when we started to see some of the early benefits.

Mark C. Mitchell: In the first quarter come through across the business and so thats. What you saw in the first quarter as you look on a full year basis.

Mark C. Mitchell: We still we're holding to that 1% to 3% given that the strategy that we put forward I mean that is what we're still holding to.

Mark C. Mitchell: As you look, you know, on a full year basis, you know, I mean, we still, you know, we're holding to that one to 3%, given that, you know, the strategy that we put forward, I mean, that is what we're still holding to. And so, you know, at this point, you know, that guide still holds.

Mark C. Mitchell: And so at this point that guidance still holds.

Speaker Change: Okay. Thank you.

Barry L. Biffle: And with no further questions, I'd like to turn it back over to Barry Biffle for closing remarks.

Mark C. Mitchell: And showing no further questions I would like to turn it back over to Barry <unk> for closing remarks.

Barry L. Biffle: Hey, I'd like to thank everybody for joining us today. We're really excited about our trajectory on costs as well as revenue and how we're improving in operations. I want to thank all of Team Frontier, and we look forward to hosting you on our next call. Talk to you soon.

Barry L. Biffle: I would like to thank everybody for joining us today, we're really excited about about our about our trajectory on cost as well as revenue and how we're improving in operations I want to thank all the team frontier and we look forward to.

Barry L. Biffle: Hosting you on our next call talk to you soon.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Operator: Okay.

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