Q3 2024 Allegiant Travel Co Earnings Call
and the other one.
Speaker Change: Thank you welcome to the Allegiant travel company's third quarter 2024 earnings call. We will begin today's call with Greg Anderson, President and CEO, providing an update on our business in high level overview of our results drill wells Chief commercial officer will walk through our revenue and customer performance.
Speaker Change: And finally, Robert Miele, Chief Financial Officer will speak to our financial performance. We have added a slide deck to be viewed in conjunction with today's call.
Speaker Change: Following commentary, we will open it up to questions. We ask that you. Please limit yourself to one question and one follow up the company's comments today will contain forward looking statements concerning our future performance and strategic plan various risk factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or.
Speaker Change: <unk> by our forward looking statements.
Speaker Change: These risk factors and others are more fully disclosed in our filings with the SEC.
Speaker Change: Any forward looking statements are based on information available to US today, we undertake no obligation to update publicly any forward looking statements whether as a result of future events, new information or otherwise the company cautions investors not to place undue reliance on forward looking statements, which may be based on assumptions and events that do.
Speaker Change: Not materialize.
Speaker Change: To view the earnings release as well as the rebroadcast of the call feel free to visit the company's Investor Relations site at IR that Allegiant Air Dot com and with that I'll turn it to Greg.
Greg Anderson: Thank you Sherry and good afternoon, everyone.
Greg Anderson: No hurricane Selina Milton caused extensive damage and destruction to areas of Florida, and North Carolina.
Greg Anderson: We extend our heartfelt thoughts to all the families and individuals impacted by those storms, both of which impacted communities, where allegiant team members live and work.
As an organization closely connected with our communities. We are dedicated to aiding recovery efforts, we have and continue to provide essential aid to affected areas by working with national organizations, we deployed our care support team to assist and operated relief flights to help get individuals out of harm's way.
Greg Anderson: I'm incredibly proud of our team for prioritizing the safety of our customers and one another.
You to the region family for all you've done.
Greg Anderson: With that let me turn to an update on our business.
Greg Anderson: As you saw in our August traffic update reported in September our business continues to improve with demand coming in stronger than expected PRASM turned positive in the back half of the month of September and fuel prices were slightly lower than previously estimated.
Greg Anderson: For the third quarter airline operating income was positive and what is our seasonally weakest quarter of the year.
Greg Anderson: These results are inclusive of the significant disruptions from the hurricanes and industry wide crowds frac outages team Allegiant jumped to action to minimize the impact on our customers.
Greg Anderson: Turning briefly to the fourth quarter, we now expect airline operating margin of roughly 7%.
In fact on demand from the Hurricanes resulted in a four point headwind. Excluding this impact we estimate fourth quarter airline operating margin would have been in the low double digits.
We anticipate our effective markets in Florida, and Nashville will be largely recovered by the first quarter of 2025.
Additionally, we have taken proactive steps to support our longer term goals around improving operational efficiency.
Greg Anderson: Including realigning certain areas in the organization and other cost actions. These changes while difficult to reduce redundancies and are expected to save approximately $20 million annually.
Greg Anderson: True and BJ will provide more details on numbers and outlook shortly.
Greg Anderson: I'd like to update you on our three key near term priorities that we talked about on our last call.
Greg Anderson: First is restoring our peak periods utilization second is bringing our merit Max aircraft into service and third is driving higher unit revenues, including adding new features into our <unk> reservation management system.
Greg Anderson: We believe a strong catalyst to improving margins is restoring peak utilization rates in July we were down 20% below we were 20% below the average daily utility utilization.
Greg Anderson: Compared to 19.
Greg Anderson: By December or schedule aims to reduce this gap to just 6% we.
Greg Anderson: We expect further improvement in 2025 by increasing capacity in periods with strong leisure demand on largely the same level of infrastructure, we have in place today.
Our next key initiative is getting our Max aircraft into service.
To that end, we received our first aircraft in September and I'm Happy to report interim revenue service in mid October.
Greg Anderson: Very quick turnaround that reflects our team's preparedness and dedication.
Equally important the early result results we are seeing so far have reaffirmed our excitement in the margin potential as the aircraft offers significant operating efficiencies, including in up to 26% improvement in fuel burn on an ASM per gallon basis.
Overall, we estimate the earnings potential of the Max to be roughly $2 million more in annualized EBITDA per aircraft as compared to our <unk> hundred 20 seriously.
Greg Anderson: The Boeing strike has obviously created some additional uncertainty to our latest delivery forecast and we don't see this being firmed up until the strike has ended.
We have built in some additional fleet flexibility to help address these challenges.
Greg Anderson: And have taken appropriate measures to better protect our schedule.
Turning to our third key initiative, which is growing unit revenue.
Greg Anderson: We have always been successful in allowing customers to choose which optional ancillary products are best for them as we pursue enhancements to our offerings.
That's why we continue retrofitting our aircraft to include a Legion extra for customers interested in premium seating.
Greg Anderson: We are also making progress integrating important features into our <unk> reservation system, including our popular third bundled product offering.
Greg Anderson: Drew will provide more details here in a few minutes.
And aside from items outside of our controls controls such as the Hurricanes and the Boeing strike I'm very pleased with our execution towards the plan, we have laid out and the strong demand we are seeing in our unaffected markets.
While some of the other low cost carriers business models are troubled or airline remains profitable and we see a clear path forward to expanding margins.
Greg Anderson: There are structural changes happening throughout the industry. However, the fact that we have our own swim lane should help isolate us from these troubled waters.
Greg Anderson: Most important allegiant is a great airline with a distinct approach we have a long track record of delivering industry, leading results. We have designed and operated our company around our unique business model since RV unit, which has built the optimum optimize margins.
Our network is a real difference maker over the years no. One has been able to match. It in fact as you've heard us say before 75% of our routes have no direct nonstop competition.
And many of those markets. We are the largest carrier. We are all we also prioritize our scheduling flexibility. So that we can properly match our capacity to the leisure demand environment.
Greg Anderson: When you put it altogether, we have a strong brand name and reputation and to customers in many markets. We are their best in Austin only option to get where they're going.
All of that is validated by our steady demand for repeat customers and the continued growth of our loyalty program and.
An essential element of our success lies in the dedication of team Allegiant are proud and committed team recognizes the significance of our brand and their role in serving our customers consistently striving to deliver exceptional service.
Greg Anderson: That is why we believe our airline is well positioned for a strong 2025 and beyond.
And before I turn it over to drew I would like to make some brief comments on our sunseeker resorts.
Greg Anderson: Despite being in the crosshairs of two major Hurricanes, the resort held up well, reflecting the strength of its construction and the resilience of its staff.
Sunseeker and amazing resort with excellent room, and suite products outstanding food and beverage offerings relaxing pools and lots of recreational amenities.
Our goal today is to make sure we're optimizing this asset and Thats why we retain best in class advisors to help us increase the value we can realize for the resort and appropriately navigate discussions with potential partners.
We are committed to making decisions that are in the best interest of our stakeholders.
We will share more as our team progressive in its work from my perspective, I am highly focused on executing our plan to restore historical profitability levels. After the airlines.
Greg Anderson: Having the right people in place at Sunseeker allows the airlines tend not to be distracted from our primary goals and objectives.
And in closing I want to extend my deepest gratitude to all of our team members for their continued dedication and hard work.
You are truly among the best the industry has to offer and your commitment is what makes allegiance such a special company.
And with that I'll turn it over to drew wells.
Thank you, Greg and thanks, everyone for joining us this afternoon.
Third quarter airline revenue was $549 million down slightly year over year due to the available pilot crew our constraints during summer flying as well as the impact from the crowd strike outage and two hurricanes in the quarter Debbie and Helene.
<unk> strengthened each month of the quarter, both year over year and versus expectations coming in at $12 two one and.
Greg Anderson: And 300 basis points higher than the initial guidance, we provided on our second quarter call and approximately 100 basis points better than the update we provided in mid September.
Just before Helene took shape.
Greg Anderson: Fixed fee performance also beat expectations and set a record <unk> performance.
Our approach of deploying capacity drives increased exposure to portions of the quarter.
And <unk> 23, or roughly 44% a quarter ASM in July meshed excellently with elevated summer demand as it does most years. It enabled allegiant to have the only positive year over year traveling performance in.
In the third quarter of 2024 are roughly 44% a quarter ASM. The July along with every other carriers July ASM face the most pressure.
However, the response in demand over the final half or so of the quarter was a positive signal for the future.
Greg Anderson: September month unit revenue was near breakeven overall on a year over year basis and positive year over year. The last three weeks of the month.
Greg Anderson: Prior to the Hurricanes, we had seen those trends continue into the fourth quarter with October travel expectations trending low to mid single digit positive on a unit revenue basis.
Overall, we are pleased with the third quarter results the pickup in demand and yields. We are seeing is a positive indicator is the booking curve shifts to the holidays in 2025.
Greg Anderson: In fact, the booking performance over the last seven days is the strongest we've had on a year over year basis since the rival propylene.
Speaker Change: As Greg alluded Hurricanes, Helene and Milton had an outsized impact on our business with approximately 37% of our anticipated fourth quarter seats in the markets affected.
Some regions such as upon our Gorda have recovered faster while other areas like Asheville are expected to recover in the coming months.
As of today, we estimate approximately 25% of our seat capacity continues to be impacted to varying degrees.
Over the course of the quarter, we canceled or removed from the schedule close to 1000 flights scheduled between the end of September and early January or 2% to 3% of our capacity.
About two thirds of which was a direct result of the hurricane weather and one third was due to the residual impact of to the regions.
Speaker Change: We believe the total revenue impact for the fourth quarter will be in the range of roughly $30 million to $40 million or approximately 5% to 7% of the total.
On a per aircraft basis aircraft utilization is on track to approach 2019 levels in the month of December despite the hurricane impact.
But December ASM is expected to grow approximately 16% year over year.
The vast majority of that growth is expected to take place over the holiday period, including a late Thanksgiving with those travelers returning home in December.
Our pre hurricane forecast would have called for fourth quarter scheduled service ASM to be up approximately three 5% to 4% was for Q2 'twenty three with.
With traveling performance flat to down 1%.
Speaker Change: Our current revenue forecast anticipates scheduled service ASM up approximately one 5% and traveling down approximately four 5%.
Looking forward our optimism has continued to build it for our strategic initiatives utilization increases continue into the on sales scheduled for early 2025, and we still have capacity slack for opportunistic market and frequency additions.
Greg Anderson: Allegiant extra our premium cabin configuration is doing very well in the market. We retrofitted another 13 aircraft in the third quarter, including our new Boeing Max that entered service in October we expect to add another 14 aircraft before Thanksgiving, bringing us to over 50 total aircraft or 40% of our fleet.
In time for this year's holiday flying.
Revenue production is maintained above $3 per passenger on flights with the extra lay out even with continued expansion.
Our loyalty programs are leading the market Allegiant always rewards visa co branded credit card program was named the best airline credit card in USA. Today's 10, best 2020 for readers choice awards for the sixth consecutive year.
We're also proud to see the USA today recognize are always rewards loyalty program is a favorite among the readers as well for the second time in three years.
Greg Anderson: Revenue from these programs is up approximately 20% year to date, reflecting the success of our efforts strong customer relationships and continues to generate immense value for the airline and our cardholders.
As Greg noted I am extremely proud of the work the team delivered in the third quarter to expand our bundling capabilities, which we expect to add roughly $1 to ancillary revenue per passenger going forward.
The team continues to work diligently to secure the remaining expected benefit of $3 per passenger which we expect to have fully implemented during the back half of 2025.
Greg Anderson: Additionally, the team delivered both Paypal digital wallet and pay later payment options to our booking flow in the quarter.
While early and complicated by weather events, we're seeing approximately 6% of bookings selected Paypal option.
Greg Anderson: In particular this outperforming in our mobile channels as the most convenient mobile option other than always rewards points.
We'll have more detail as we gather more information.
Lastly, and as expected the early feedback from our passengers has been extremely positive for the new Boeing Max aircrafts.
Feedback has been very positive thanks to in seat USB power and enhancements to the overall cabin experience.
Our foundation is solidifying and our initiatives are taking shape our award winning loyalty programs are best in class and our enhanced premium cabin offerings are reaching more customers than ever before.
The pieces have come together to operate more efficiently and successfully and with that I'd like to turn it over to Robert Neal.
Thanks Drew now I'll comment on our financial results and guidance. This afternoon, excluding any special items.
Robert Neal: We reported a consolidated net loss of $36 1 million for the third quarter.
For a consolidated loss per share of $2 <unk>.
Robert Neal: Consolidated EBITDA was $46 3 million in the quarter for an EBITDA margin of eight 2%.
Airline results were much better than expected with operating income slightly positive and what is typically our seasonally weakest quarter. We had an airline only net loss per share of $8 $8 million, resulting in a loss per share of <unk> 49, and the airlines segment.
These results included a headwind of approximately <unk> 40 from the crowd strike systems outage in July.
Robert Neal: The airline reported $56 6 million in EBITDA for the quarter, bringing the airline to an adjusted EBITDA margin of 10, 3%.
Cost performance exceeded our expectations during the third quarter on a slight capacity increase of one 5% non fuel unit costs were up by four 7% compared to the prior year quarter much better than the 7% we were expecting back in July and in line with revised guidance, we provided in our August traffic update.
Higher labor expense from updated Cba's drove roughly two five points of the increase other increases included appoint from irregular operations from the systems outage and weather events.
From pressure and airport related expenses and a point from further delays on Boeing aircraft, where we continued to carry extra head count in anticipation of additional 737 aircraft in service for the fourth quarter and then we had some offsetting reductions in maintenance and other expenses.
Robert Neal: We are taking action to manage costs that are structurally higher than today's post pandemic environment. We continue to scrutinize the business to uncover cost saving opportunities and find ways to operate more efficiently as Greg outlined we have already identified approximately $20 million in annual run rate cost savings.
Robert Neal: All of which have been implemented in the quarter.
Robert Neal: Meanwhile, our unit costs will improve as we drive peak period utilization higher with our current December and March scheduled March monthly scheduled nearing 2019 levels.
The fourth quarter.
Robert Neal: Our consolidated net leverage at the end of the quarter was four one times, which includes $94 million in costs related to the pilot retention bonus we.
We previously discussed our expectation for net leverage to peak mid 2025.
With updates to our planned aircraft delivery schedule and expected EBITDA improvement from increased utilization. We now anticipate net leverage has peaked during the third quarter and we expect to begin modest deleveraging from here.
The strength of the balance sheet remains one of our top priorities and I'm pleased with the progress we're making on this front, especially considering earnings constraints in the trailing 12 months.
Now turning to fleet. We retired 400 <unk> hundred 20 aircraft during the quarter and we took delivery of one aircraft. Our first 737 Max in September.
I mentioned on the last call that we have been working together with Boeing on an updated delivery schedule since early in the second quarter.
As you might expect this process has taken longer than expected in light of the ongoing machinist strike.
That said Boeing and CFM has been very supportive and we expect to disclose an amendment to our purchase agreement during the fourth quarter.
The updated schedule along with delays from the current machinist strike will result in a slower delivery profile than we had originally planned through 2025.
Based on delays, resulting from the stoppage. So far we are planning to end the year with just one Max aircraft in service alongside 121, <unk> hundred 20 family airplanes.
As such we have reduced our capital expenditure forecast for the year by $75 million and now expect aircraft related capex to be approximately $115 million for the full year 2024.
Other airline capital expenditures are now expected to be approximately $110 million down $15 million from our prior guidance.
And we continue to expect heavy maintenance to come in at $85 million for the full year unchanged from the last quarter.
For 2025, we are currently planning to take delivery of 11, Max aircraft and remove 10 <unk> hundred <unk> family aircraft from Operation, which would result in total fleet count up by just one unit at year end.
Please press star one on your telephone keypad raise your hand and joined the queue if you'd like to withdraw your question simply press Star. One again, we are called upon to ask your question and our listening be allowed speaker on advice. Please pick up your handset in the short at your phone is not on mute when asking your question.
Robert Neal: We asked for today's session that you. Please limit yourself to one question and one follow up question again press star one to join the queue.
Speaker Change: Our first question comes from the line of Savi <unk> with Raymond James. Please go ahead.
Speaker Change: Hey, good morning, good afternoon, everyone and if.
Speaker Change: If I might ask on the capacity side, just given the uncertainty.
How are you thinking about it and including like fourth quarter, what you're seeing in terms of increasing utilization how much of that is showing up in kind of the peak days and Pete you fly the peak days, but it can peak travel periods versus you know the off peaks and you know how does that progress as you kind of look into <unk>.
And into the summer.
Sure Savi I'll take that.
Speaker Change: So four for December in particular.
We're going pretty full throttle over the holiday period day week isn't quite as sensitive as you can imagine around Christmas and new year's.
How many days are not in school already off from work.
That goes pretty much all the way through with some exception around the actual holiday itself.
Going into the first quarter will still have a higher percentage of our ASM.
On peak days in January and February than we did in either last year or 2019.
In March we will go slightly off peak day than last year, but still higher peak day than 2019.
Summer has not yet released for sale. So I'll stop short of talking now on that but hopefully that got to your question Savi Hey, It's Greg I just wanted to add one comment.
Greg Anderson: To that point and it's.
Greg Anderson: No brainer to lose those.
Greg Anderson: Pick up so many premiums.
The Boeing will have 21 upfront there'll be brand Norwegian extra and I'll have some more of that or just kind of a leg room plus.
After the exit row.
Greg Anderson: Not before the full product there.
Greg Anderson: For the Airbus aircraft, we have pretty good line of sight when those are going to be retrofitted, how we can get back into the schedule.
Like we're able to merchandise that extremely well.
Very much too early to talk about the Boeing aircrafts, yet is we havent had really a full booking cycle.
For those aircraft to be on sale, so standby for another 90 days or so on that one.
Okay, and I guess just on the again the ancillary callout that you made there is it all ancillary or can.
Greg Anderson: Can you speak just.
Generally about what sort of fear uplift that you're seeing on those 36 seats relative to the rest of the cabin.
Yes, sorry about that yes.
Yes that will all hit the ancillary bucket, we continue to have kind of one one fair at the beginning of the booking flow with the options as you go through but that would not hit.
Greg Anderson: And the airlines.
Greg Anderson: Okay.
And then maybe just on.
Greg Anderson: Sunseeker can you comment if you've been able to pick up any.
Our recovery business I mean, I don't really know the state of the.
Situation, there, but sometimes you pick up FEMA business or contractor business.
After a big event like this and we had actually heard that some local because we're trying to ride out the storm your asset, but you actually didn't allow that and had it I guess shut down so I guess any.
Any line of sight into recovery business and maybe are you in the right channels to even pick that up.
Speaker Change: Okay, it's going to take it's going to take a bit of time for it to get back to kind of full steam in.
And that was six 7% of our seats for the fourth quarter.
Speaker Change: So we.
Greg Anderson: We feel it there.
Okay, Okay that makes sense and then.
Just at a high level.
Directional thoughts on.
Capacity growth next year, what that should mean for CASM.
Greg Anderson: Could mean for <unk>.
<unk> mix, we're seeing outsized growth next year in ASM.
Yes, maybe I'll tee it up quickly.
For items.
Greg Anderson: We're we're on sale through mid May what you see in kind.
Greg Anderson: Kind of the public.
<unk> or similar.
The sub.
Kind of low double digits I think over the four full months.
Greg Anderson: We should maintain some of the.
Utilization increases through summer likes us not yet on sale, but I think it's a fair read through what we're able to do in March should carry onto the into the summer months, and then likely will curtail a little bit into the back half of the year. Obviously December we recaptured some of that utilization here in 'twenty four as we won't have that comp going into 'twenty five.
But yes, there is some some modest runway there that's almost entirely driven as we see it today through the infrastructure, we have in place and that required significant capex too.
Greg Anderson: To get to.
Greg Anderson: Obviously any sort of growth will put some pressure on the unit revenue now.
Greg Anderson: <unk> the back half of the year thing I would anticipate pulling that forward, but as we put more extra.
Out there we've got the.
Normal options, there's some tailwind middle that'll help on that front, maybe Robert for Kevin.
I'm kind of expand the bundle offering that we had ahead of the first implementation that will show benefits through the entirety of the year.
And we will continue to work to find upside in the meantime.
But I believe the vast majority of what we will uncover will happen towards the end of next year.
Speaker Change: I might just add on that Tom just at a high level with our tech stack with <unk> being a big step in strengthening that foundation.
So we want to make sure that we get the commercial tech stack right for the long term.
Speaker Change: So drew in the ITT team have really gone through to set that up properly.
We're encouraged by not only will we get some some of these wins that we talked about in the past from <unk> at that full cutover.
Our system should enable us to be much more nimble in the future introduce new features dynamically adjust pricing things like that that we're encouraged by as well.
Okay. That's really helpful. And then just if I might.
Speaker Change: We've taken on.
Max now would you mind, just refreshing us on kind of the concept of the airlines within the Airlines and then how you manage the different segments of the fleet. Thanks. Thanks again for the time.
Yes, I am happy to kick that off and we have I think the concept. There is like 24 basis throughout our network Thomas in within those bases, we have infrastructure such as we have our crews domicile their maintenance technicians, we have aircraft base their parts tools.
Speaker Change: So in terms of operating a split fleet time, which we've done in the past by the way at one point, we operated three different bleed types. The emptied the 70 fives in the $300000, but that you can isolate differ.
Different fleet types by base. So you can have it I'll say Airbus base in an all Boeing base, and we think that isolation and those airlines within an airline could really help mitigate some of the complexity of operating a split fleet type.
Speaker Change: Yes.
Speaker Change: I think the ceiling is probably been a little higher candidly lately than we saw early on in our.
In our testing, which probably lends credibility to what youre, saying there.
But we'll keep testing hopefully there's more to go.
Speaker Change: Thank you.
Our next question comes from the line of Brandon <unk> with Barclays. Please go ahead.
Speaker Change: Hey, good afternoon, Greg.
Speaker Change: Greg I guess can we come back to the idea that you want to get back to full aircraft utilization.
Speaker Change: Maybe this is just nuance, but is it truly during just the peak periods. So we should be thinking in aggregate you won't see the type of utilization did prepayment pandemic or is the idea over time, you're flexing network up to full utilization throughout the week or am I missing something.
Let me hit it and Joe can add.
Speaker Change: Some color on that Brandon.
In 2019, I think we on average over the year fully our utilization was about eight hours per aircraft per day.
Fuel was at a different point I think it was a $2 12 to 15 in 2019. So generally in those off peak periods fuel is going to be the constraining factor when you're going to want to take up utilization.
If it's lower or if its higher pullback utilization.
Speaker Change: In a higher fuel environment to drive up perish.
In terms of the peak periods, where kind of where we've been framing. This message around that's where we're focused on the demand can be maintained for our network.
The leisure demand remains very robust and strong in those peak periods and so that's why we're kind of isolating it more to the peak periods.
Speaker Change: When we talk about restoring utilization to 2019 levels that fair drew anything you want to get the thought process moving forward is no different than it looked in 2019 to Greg's point your peak periods.
Speaker Change: If.
You did indicate that the hurricane Milton impact is still being assessed then you'll provide an update in the December quarter is that is that like an insurance impact for damages or is it just all in as it relates to overall bookings and how that performed in the fourth quarter.
Hey, Mike Mike, It's a good day.
No I think what I would take damages I put that aside I think what we're putting in the $25 million to $30 million would be more around the revenue loss side of the house and kind of going back to that without the hurricane we were going to we thought would be close to that guide.
Speaker Change: But some of that that damage from the.
The hurricane damage from Milton pushed some of the bookings into 'twenty five, but then we have some FEMA bookings coming in now and they are still trying to iron that out and so that's where we once we had a little bit more color. We felt we could come back and.
And provide an updated guide on the EBITDA side of the house and then in terms of damage to the lower areas of the property I don't think we are still assessing the damage. There now that would be for both hurricanes are going through to get it repaired, but that that would be excluded.
From that $25 million to $30 million $25 million to $30 million EBITDA loss.
Speaker Change: That's super helpful. And then just my second question just the B J.
You talked about owning 86% of your fleet and that's always been one of the.
Speaker Change: You know one of the positive attribute them, where the aircrafts are high for you versus some of your other U S. OCC counterparts, if I were to sort of translate that into you know unencumbered asset value I suspect that maybe some of those airplanes. They may have debt on them. They may not they may be completely free and clear how can I think about.
Speaker Change: What your unencumbered.
Availability is whether you know its fleet and non fleet just to kind of get a sense of where things sit today. Thanks. Thanks for taking my questions.
In terms of gauge right for every Max we bring on it at 190 there'll be offsetting a retirement of 177. So there is maybe a small amount of gauge lift there, but I wouldn't necessarily run away with it.
Anything else on that before I talk to market pieces, yes.
Yes, and I would just say like as the Max has come in just due to some of the uncertainty of the delivery timing and drew I won't speak for you and your team but.
Particularly in the beginning of the year I would assume at some point they are just.
Taking over some <unk> hundred 20 lines as well that would have been scheduled at.
The lower capacity alright, that's if they deliver earlier than we had planned that will happen yet from market mix.
I would expect.
Speaker Change: The majority of the added frequencies to be on existing routes.
Speaker Change: Something in probably the 75% to 80% of the growth coming on existing routes and existing frequency going back to Greg you made a great point earlier.
Around how much of.
Speaker Change: Our network is actually operating less than it did in 2019 or another prior years, providing kind of a solid floor as we add that back in.
Speaker Change: There will be some some component of new markets that I know the network team is excited about getting back in that game in a more meaningful way.
So maybe maybe 70% 80% of that same store restoration before getting to the new market.
Speaker Change: Okay.
Speaker Change: Yeah. Thank you and then on the Sunseeker, So I think I heard you say.
Positive adjusted EBITDA in <unk> and group is up double digits year on year. Just if you could give me those numbers and also on the positive side the mix of ADR versus occupancy.
I just wanted to kind of better understand where you see edr going and how occupancy might be tracking.
Yes, I can hit that real quick.
Speaker Change: Thats.
Occupancy in the high 50% so call it between 57 and 59% ADR is north of 300 in yes. The expectation is the EBITDA positive in the first quarter and the strength of group business is really.
It is helping to drive that.
Okay. Thank you.
Speaker Change: Okay.
That concludes our Q&A session I will now turn the call back over to Sherry Wilson for closing remarks.
Thank you all for joining today's call. Please feel free to reach out if you have any questions otherwise we will chat with you next year.
Speaker Change: This concludes today's call you may now disconnect.
Speaker Change: Okay.
Thank you.
Speaker Change: Okay.
Speaker Change: Yes.
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