Operator: Thank you. [Operator Instructions] And our next question comes from Scott Group of Wolfe.
Scott Group: Hey, thanks. Good morning. So I wanted to just go back to the fourth quarter for a second, just on the cost side. So if you look at just cost ex-fuel, third quarter was $645 million, fourth quarter dropped to $590 million, and then the Q1 guide that goes right back to $650 million. So any help on what happened in Q4?
Mark Mitchell: Yes. So yes, Scott, to give you the broad strokes on Q4, right? So that $590 million as I highlighted in the prepared remarks, includes the $36 million benefit from the four A320ceo lease extensions that we executed. If you adjust for that, right, you’re at $626 million. And from there, looking at that number to what we’re guiding in the first quarter, that takes into consideration the seasonality that comes to play in Q1, right? So payroll tax-related seasonality, de-icing. I mean you’ve got a growing fleet as well, right? And so those additional costs. So at the end of the day, I think that’s the walk from Q4 and then Q1.
Scott Group: Okay. That’s helpful. And then can you just talk about — I know you said you’re assuming improving RASM throughout the year. Just what maybe — what your overall sort of RASM growth expectation is and just how to think about, right, the cadence of margins from down 4% to 7% in Q1 to down — to up 3% to 6% for the year. I just want to understand like where you think you’re ending the year on a margin run rate?
Barry Biffle: Yes. We don’t actually guide RASM, but look, I think you can look at the initiatives that we’ve talked about and kind of play those out. They continue to roll out as we move through the year. So you would obviously expect the cadence of that is that you will continue to see more accretive RASM improvement as you move through the year as the initiatives mature and go out. I mean you take the Biz fare, for example, that we just talked about a moment ago, we just launched it last week. I mean it’s — we’re starting to discuss with certain corporations, getting it on their shelf and getting there. But there’s just a lot of different paths to revenue diversification that we’re focused on, but they all have slightly different timings as we move through the year.
Scott Group: And then I guess, ultimately, what I’m trying to get at is where are we going from a margin perspective, the rest of this year? Because I’m trying to get to 10% to 14% next year with labor. So just anything you could do just like to sort of help on the bridge?
Barry Biffle: Well, we’ve given you the first quarter and we’ve given you our year. So you can kind of — well, we didn’t break out quarters two through four, you can kind of do the algebra to figure out what that takes to hit that number. And I think if you take that into the second-half of the year, you will see that the run rate of that delivers well against 2025.
Mark Mitchell: And then keep in mind, as you look at ’24 and as we deliver on the network simplification plan and the revenue initiatives and cost initiatives that are there and you move into ’25, you’re getting the full year benefit, right, of all of those items that are being put in place in ’24. So I mean I think that’s important to note as you consider ’25 versus ’24.
Scott Group : Got it. Okay, thank you.
Operator: Thank you. [Operator Instructions] And our next question comes from Stephen Trent of Citi.
Stephen Trent: Good morning, gentlemen and thanks for taking my time. Excuse me, taking the time to answer my questions. I was wondering just on — from a clarification perspective. Could you refresh my memory, maybe this is a question for Mark, if you guys will be including any sale leaseback gains in OpEx? Thank you.
Mark Mitchell: Yes. I mean we have consistently consistent practice in the past. And as we go forward, sale-leaseback gains are a credit to operating expenses.
Stephen Trent: And any sort of high-level view sort of a ballpark on where that could end up for this year, for example?
Barry Biffle: We don’t call that out. But I think the best thing to think about, Stephen, is that the reason why it’s there is because had we debt financed, it’s the most fair way to compare it. So they get the benefit on the debt financing side, we get it through the sale leaseback. but we don’t actually call that specifically out, but it would be similar to people that have yet. I mean the P&L impact will be similar to those who debt finance.
Stephen Trent: Yes. No, it makes sense. Makes sense. I appreciate that. And just one last question. I know there’s — in the sort of cross-border you have one of your competitors having its code share with the Mexican carrier potentially getting not renewed by the Department of Transportation. How are you guys thinking about your relationship with Volaris in that regard?
Barry Biffle: We’re really excited about our partnership with Volaris. It’s been disappointing, obviously, that given the challenges over the last few years in their category that we haven’t been able to exploit that partnership, but we’re excited to get that back turned on this year and we expect to do great things with it. We’re larger now. We have a greater brand presence. We have more distribution power coming. But we’re seeing them growing as well in their position. But we never had ATI with Volaris. It’s just a true partnership where we have a co-share and overall marketing partnership. So we’re excited to get it turned on. And I guess, if you think about it, I guess we’ll have a little bit more of a level playing field if what they’re saying comes through.
