Conor Cunningham: Appreciate, thank you.
Ben Minicucci: Thanks. Thanks so much, Conor.
Operator: Our next question will come from Ravi Shanker with Morgan Stanley.
Ravi Shanker: Thanks, everyone. So I know we’re all chasing what normal seasonality is, and they’re already on a couple of questions on the call. But I’m wondering to what extent do you think it’s return to office that’s kind of impacted shoulder season compared to the last couple of years? And kind of maybe that’s restricting the ability of the so-called leisure travel, if you will, and that actually sets up for peak year peaks in the next couple of go-arounds.
Andrew Harrison: Ravi, so I just – you mentioned returned to office. And I think we all see the public statistics sort of think sort of slowly climbing its way back, but still a long way off. What I would share is that we have seen between September and October, especially in high tech, where we’ve started to see in some places for some accounts, a decent uptick in travel, albeit overall general yields and not where we have seen them historically. So I think this is still a moving subject. But I think if you just look at the macro size of our network and traditional business versus leisure, I think for us, specifically, I think it’s just beyond more – some of these bleeder traveler type conversation. But what we are seeing is beginning to see a little more strength come in on the corporate side.
And again, we just have a lot of opportunity on our core high-frequency rates, getting those to a place where they can support the current demand as well as the new unit cost of production that the industry now faces.
Ravi Shanker: Got it. And maybe as a follow-up, kind of you kind of – you spoke about how you’re being more rational than many of your peers and capacity growth for next year. But you also kind of mentioned a few headwinds. So if you were to rank the current softness in the domestic demand environment, extreme capacity growth plans by our competitors or fuel headwinds? Like what’s the order of those three headwinds that would make you kind of question your capacity growth plans next year relative to what you currently have in mind?
Ben Minicucci: I think fuel for us is a big one, Ravi, especially with like we talked about, the LA refining margins on the West Coast, we’re paying $0.30 a gallon more than everyone else across the country. So that is a huge headwind for us. In terms of capacity, we can’t control what our competitors do. What I can say is we’re confident with our business model. Andrew talked about it in the prepared remarks, we have a remarkable premium product. We are not we may be low cost, but we’re a premium brand airline. And I believe that we can always extract the higher revenues because of the brand we have, our premium offerings, lounges and global access. So I would say fuel is the biggest headwind. The other thing I would say, when we cost up, we have cost discipline in our DNA.
And we’ve shown this year that we brought unit costs down. This is something that we’re wired for. We’re wired for high productivity of resources and assets. And so I feel confident we’re going to get back to the place that we’ve been in single fleet, I am just ecstatic starting October 1st that we’re now back to an all-Boeing fleet, and I think you’re really going to start seeing those synergy fees come in. So those are the things, I think, for us, that we can control. And I think we have the right setup in the business model to go execute
Ravi Shanker: Excellent. Thanks, guys.
Ben Minicucci: Thanks, Ravi.
Operator: We will move next to Michael Linenberg with Deutsche Bank.
Michael Linenberg: Hey, good morning, everyone. Andrew, you talked about – as you look out towards holiday travel, you mentioned that loads are up a couple of points, yields are up double digits. So obviously, that looks very good for the latter part of the year. Does that hold or do you think some of that also reflects the shifting of the booking curve or maybe in the past, we saw people booking closer in and maybe this holiday season? As you have said before, seasonality is returning, booking curves are becoming more elongated. How much of that is possibly going to shift or change because of those factors?
Andrew Harrison: Yes. Thanks Mike. Just for clarity, the comments that you just shared that I had made was versus 2019. I think yes, because last year, obviously, was very different, very different fare environment capacity set up. So, we just wanted to anchor back in on 2019, which is a very stable, normalized year. And so we have been very encouraged by what we have seen. And I think as we have seen, I think when you look at the industry right now, when you look at 2019, our unit revenues sequentially flat Q3 to Q4, where the industry is down anywhere from 1 point to 5 points. And then if you look at ‘23, as we said, we are up 3 points where the industry is sort of flat to up 1 point. So, we feel like, number one, I would say that what we are seeing at least in our network is outside of this business travel matter, back to sort of normal booking curves, normal demand environment.
And I think some of the reduced capacity and reallocation of capacity is serving us very well.
Michael Linenberg: Okay. Great. And then just a quick second one. I don’t know if you mentioned this or it was Shane, who said, look, the goal next year is to return back to 2019 levels on a productivity basis, a little bit different than sort of a network optimization. But if we get back to 2019 productivity, help me translate that into like a CASM benefit. Is that like a point or 2 points of CASM tailwind? And how long does it take to actually get to 2019 productivity? Is that through the year, or is that a ‘25-type objective? Any color on that would be great. Thanks.
Shane Tackett: Hey Mike, it’s Shane. Yes.
Michael Linenberg: Hey Shane.
Shane Tackett: One thing, let me – yes. Hi. I will clarify. I think it’s going to take us a couple of years to 2019. We are going to work it methodically. And like I said a couple of answers ago, we are not going to overly stress the operation now that we have got it working really well. It’s worth at least a couple of points, all else equal, of unit costs. If there were no other puts and takes, I mean I would say, minimally, it’s worth that. I think we saw single fleet alone at $75 million of benefit, and then we have less productivity in many areas, whether it’s aircraft utilization or other work groups. And all of those are opportunities to get better from where we are. I think we are doing better than the rest of our competitors generally. And I think our focus has been, will continue to be to come out of all of this with the best relative change in cost structure. And I think we are well on our way to doing that.
