American Airlines Group Inc. (AAL) Earnings Call Transcript & Summary

Good afternoon, everyone, and thanks for joining us at the Goldman Sachs Industrials and Basic Materials Virtual Conference. This afternoon, I have the pleasure of introducing Vasu Raja, Chief Revenue Officer, at American Airlines. Vasu is in American for 16 years in various revenue strategy and network roles, so it should be a really fun discussion. Going to pass over to Vasu here. I believe you have a few opening remarks. Thanks so much for being here today.

Yes. Thanks, Catie. Thanks for having me, and good afternoon, everyone. I'll start by saying that we're incredibly proud of everything that the American Airlines team has accomplished over the past year. In the midst of the pandemic, we flew more customers than any other airline, produced the highest passenger unit revenue of any global U.S. carrier and completed the largest financing in airline history, a $10 billion transaction backed by the Advantage program. As vaccinations have increased across the U.S., demand for air travel has also increased. Leisure bookings remain very strong, both in the U.S. and the destinations in Mexico, the Caribbean and Latin America. Business travel and long-haul international travel will take longer to recover, but we're seeing encouraging signs. A number of our large corporate customers are returning to the office and indicating they plan to get back to traveling in the third quarter. And we're seeing travel restrictions being lifted in certain parts of Europe. So we're starting to see light at the end of a very dark tunnel, and we're on a path that has us well positioned as demand for air travel returns. As customers return to the skies, they'll be met by an even better American Airlines. We are the broadest and best global network, enhanced by new partnerships, and one, with a revamped experience that makes travel more convenient for our customers and ensure they feel safe and comfortable as they return to flying. We are very encouraged by everything we're seeing, and we believe American is very well positioned for the recovery in the months and the years ahead. So with that, Catie, I'm happy to take any questions you have. And thanks, again, for having me.

Great. We'll dive right in. So everyone's probably favorite topic, current revenue trends, how we're looking here with the recovery really starting to pick up. I think on the last earnings call, you noted that for some of your peak summer bookings, you were booking those at yields at about 90% of 2019 levels. And even on some of the most popular routes at 95% or even 100% 2019 levels, and that's on significant capacity growth. So I guess, first question on that, can you help us dig inside a little bit more, when you say peak summer, does that mean for the 4th of July? Or does that mean the whole period between Memorial Day to Labor Day?

Yes. Hey, great question, and we mean the whole period, Memorial Day to Labor Day. Indeed, across American Airlines, we've sort of outlined talking about bookings because we indeed see bookings across our system as being comparable to what they were in 2019. The biggest issue for us is really getting yields back to a level that are equal to or greater than where they were in 2019. And of course, the very big first step to that is having enough demand to fill the airplanes. And we're seeing that more and more in the post Memorial Day and pre Labor Day period. Following Labor Day, we're seeing yields return to more favorable levels, but it's -- like I mentioned on the earnings call on an admittedly small base of demand.

Got it. And I had one of your peers here at the conference yesterday. We spent a lot of time talking about the month of June that, that was looking really strong. I guess is that -- how is June shaping up? Would you say similarly strong trend you're seeing in American? And I know the booking curve has elongated a bit, and it's only been a month since we heard from you, but would just kind of love to get a sense of how that acceleration into June has changed or not changed from when we last heard from you about a month ago?

Look, there's probably not been a lot of material change since a month ago. But that's also -- I think we find it to be encouraging because a month ago, we were seeing -- though the slope of the recovery was uncertain, we are seeing an upward slope, whereas a year ago, we were seeing a downward slope. And so that alone is an encouraging thing. And we haven't seen that slope change, which actually gives us a little more encouragement because the more stability there is in being able to forecast demand and the more stability there is in being able to plan the business. And so we're encouraged by that. We continue to see, of course, leisure demand that's easily resuming and surpassing 2019 levels and a continued and steady improvement in business demand across really all of our channels. So we're encouraged at the pace of the recovery and the consistency in its [ state, ] but we're also very cautious that there's still a lot of things that can go and either knock it off track. And so we're trying to be as wise as we can be with it.

Got it. And maybe just since you touched on it, a couple of questions on corporate revenue. Good that we're starting to see some momentum. It sounds like people are heading back to the office. I know here at Goldman, mid-June, we'll be back, at least that's the plan. But I guess, how should we think about the next couple of quarters, the impact of that mix shift on corporate revenue. Of course, great to hear strength on the leisure yield side. But how do we think through that impact from the lack of that corporate demand?

Yes. Look, the reality is it -- there's unpredictability on when and how corporate returns. And look, we know that there is a significant amount of pent-up demand for it because we hear it from travel managers. We hear it from travel surveys. We hear it from industry publications. And so we know it's there. And so as we are closing the first quarter, if business revenues were roughly 25% to 30% of where they were in 2019, we continue to see that rebound, but we are very conscious that, that's a fraction of what true demand is. And that true demand is going to take some time to get realized; first, because as you rightfully point out, it's unlikely that a business customer takes to the road before they go back to the office, so their own companies have to come back to work. But then very importantly, for so many business travelers who are traveling for client-facing purposes, the client has to be back in the office and willing to indeed accept visitors. And then add to that, as you think about long-haul end markets that are really, really dependent on business demand, there's also the very important factor of when and how can people enter and exit so many of the big business capitals around the world. So that creates a lot of -- we know there's demand. It creates a lot of uncertainty about how that demand gets materialized into revenue over the next 3 to 6 months. For us at American, we -- like there's one thing forecasting demand, the real important thing is how we manage revenue. And the way -- and that uncertainty is realistically going to be with us, not just for 3 to 6 months, but arguably for a year beyond that. And so for us, the first thing is how we go about orienting our own network because at least for us, when we can orient the network and the market's strength, our marginal yields, even our marginal -- leisure yields in those markets can often be comparable to business yields in markets where we're relatively weak. So that's the first thing you see us do a lot, where 60% of our capacity is flying in Phoenix, Dallas, Fort Worth, Miami and Charlotte, and roughly 85% of our seats -- almost 75% of our ASM capacity is in domestic and even more in domestic and short haul. So it's the first big thing that we're doing. And the second big thing is, of course, as I described earlier, we're being really judicious and cautious in how we go and forward sell travel. But we want to be really wise that we don't sell-out the 4th of July too soon and things like that. And so -- because we know that there's a lot of demand out there. And we know that even though it's maybe more leisure in nature, there are customers who are going to be keen to travel and keen to travel later, and we want to make sure we have seats for them.

Right. That makes sense. And maybe following on to the capacity discussion. American's probably been the most aggressive of network carriers in adding capacity back into the system. Although revenue performance is a little bit tighter, why has that capacity plan been the right decision for American? Is it we don't want to miss that surge when it comes? Or what's the logic there?

Well, actually, if you look at it, though we have consistently flown more capacity than our similarly sized competitors for something like 3, 4 quarters now, we've also consistently produced more in passenger revenue per ASM than anyone in the domestic system and arguably globally for that matter. So for a unit of capacity we're putting out that is generating more in revenues, and you're seeing that in our competitive results. So indeed, putting that capacity out there has been a very good cash generating thing for the airline, comparatively speaking. And for us, look, every carrier has a different set of strengths. And for us, we don't have -- we don't have a big coastal international network. We used the pandemic to take out 150 jets, more than 1/3 of which were wide-body enabled airplanes -- wide-body airplanes, international people planes. So we don't have the ability to go and fly 20 wide-bodies a day to China or something like that and go live off of what we can through cargo. For us, the best thing that we can go and do is really orient the airline to markets where we can win in. And that's what we've done. And so -- and you see that in our relative passenger RASM results. And so it's been an encouraging thing, but very importantly for us, a key for how we recover because like I mentioned, we can spend all of our time trying to prognosticate what a recovery looks like and we can do something about it. And we've endeavored to do something about it, which is both cash generation in the near term. And there's -- and we see some validation of that in our competitive revenue results, but also make real down payments on what the airline is going to be in the future. And you see that too, where we're structurally taking out not just all of these wide-bodies, but all the cost that goes with it and then consciously reorienting the airline into markets where we can produce outsized returns over the next business cycle.

All right. Speaking of business cycles, when we think about the last [indiscernible] for this industry to see, so following the great financial crisis, there was a pretty large wave of consolidation, present company included. As we exit COVID, we have all the same players plus a couple of new entrants. So I guess, how are you guys thinking about the recovery just in the context of the evolving competitive landscape? Or that just the new entrants too small, not in your radar. Would love to hear your thoughts.

Yes. Well, look, the first thing I'll say is that this big network system that we're -- we're frankly very blessed to have. It has been a major enabler of us being able to go and endure this crisis, that the airline was a lot smaller and any one of its predecessor companies, we wouldn't have been able to do things like, for example, taking all of our wide-bodies out of East Coast gateways and putting them into Miami to any number of markets, right? If we had a big 330 fleet, it would have been really difficult because the 330s could never leave Philadelphia. So the change -- both the scale of the airline and the changes that we've made have enabled us to go and endure the pandemic. But what we've -- in so doing, it's made us realize just how much value we can create on the other end of the pandemic for our customers and for our investors. Because for us, the more ways we create unique origin and destination markets, the more ways we deliver unique value to customers. And the more -- unsurprisingly, when you deliver a unique product, people pay you for it. That's an altogether really pro consumer thing, and we see that more and more. So we envision a world where we're really concentrating a lot of our flying in markets where we can go make more and more origin and destination markets. And certainly one where we envision emerging from here really with a lot of the contours you're starting to see this summer, where a material amount of our capacity, call it 60%, 65%, are in our core connecting hubs and the mid cons, that we have an international orientation, much more around what we call MCLA, Mexico, Caribbean, Latin America. And then in the places where we've struggled the most, which has been in the Northeast and the West Coast, we have partnerships where we can go and sell market and deliver value to customers, which is greater than what we could do organically and greater than what our partners could do plugged to their own devices. And last but not least, the international network, we -- the long-haul of that work we bring back, we envision bringing back slowly and cautiously and in such a way where it can deliver the same kinds of returns that we've been able to generate in the domestic system. So we don't see necessarily on the other end of the pandemic the kind of cataclysmic changes that were there after the great financial crisis, but we do -- and we have actively been making big and structural changes that will enable us to really go and produce on the other end of this.

That's great. And that actually leads in well to my next couple of other questions here, just on -- touching on network and fleet. So pre COVID, you guys were just starting year 2 or 3 of your opportunity to add growth to Americans, most profitable of DFW, Charlotte, DCA and then COVID hit. Have you captured any of that benefit already? Or should we really think about that tailwind being on the other side of COVID, whatever that means. How do we think about that opportunity from here? Was it we hit pause or...

So first of all, we -- you are correct, Catie. We never saw the run rate benefit, like the full annualized benefit of Dallas/Fort Worth, Charlotte [indiscernible] things like that. And we do see that as a massive accelerant for us as we come out of COVID. And indeed, furthermore, we've seen -- in our relative results there are probably a lot of validation for that in COVID, even though the airline as its revenues are a mere fraction of what it was in 2019. But a big part of our relative performance versus other airlines, if you look through almost any month, any day, any week through COVID, our Charlotte and Dallas hubs were almost at full. They operated between 75% and 90% of what they were in 2019. And indeed, we preserved the connecting integrity, what we call the DNA of those hubs. Indeed, through what we -- what -- sometimes in these crisis, you really realize just the magnitude of what you have and indeed for us, across our system, including Phoenix and Miami and Chicago through our web of mid-continental hubs, we have ways of creating markets and reaching customers that really no one else can do. And so what that means for us is, yes, on the other end of it, you will see an airline that's a lot more concentrated around Dallas/Fort Worth and Charlotte, but also one that's really much more concentrated around doing the thing we do best, which is connecting all the small cities of the Americas to the global marketplace. We've seen the validation for that in our competitive results. And I think you'll see a lot more in the world ahead, and we anticipate the financial results to validate that.

Got it. And then kind of thinking about whenever we reach this new normal, we all use 2019 as our reference point for normal, but Americans spent that year short on aircraft/capacity production negatively impacted by labor issues. How should we be thinking about what the new normal American network looks like. I'm sure, obviously, you already had some changes that were ongoing, speaking of the 3 airports we just talked about. But what does the new normal look like for American? And I guess what parts of 2019 are not a good [indiscernible]

Catie, that's -- no, you're absolutely right. That is an excellent question. And frankly, one for us -- we think that's completely apt. In the early days of the pandemic, Doug and Robert would often talk about this being the opportunity to do a big reset. And so for us, we do not -- though we comp a lot of our statistics and business performance and a lot of our indicators are relative to 2019, there's not 1 senior leader in this company that is using 2019 as its benchmark for anything. Our benchmark is a future in which we consistently outperform our competition in P&L generation where we can deliver our product more reliably than we can at any point in our history and in which we produce the highest likelihood to recommend scores from our customers at any point in our history. And that's true north for us. And doing all of those things is true north, which is something we didn't do in 2019 or '18 or '17 or in any of the times before it. And so that's where we have been very sober and really quite stern how we've gone and managed the airline through this, and that we quickly -- it was a year ago at this time when we were making decisions to take out 50 and 60 wide-bodies at a time. But with it, we've retired the fixed costs that go with it, that's maybe airline leaner and more able and so that when we come back, the marginal cost of adding back an ASM in the fourth quarter of this year, the first quarter of next year is a fraction of what have otherwise been because so much of that fixed cost is out. But we've also -- we've done huge changes where we've simplified the management team. We have 35% fewer people, which has made us more efficient. And of course, we've gotten a lot more focus commercially in the network, as we've talked about, where we've consolidated more of our flying in the markets we can win. We've built partnerships in places where we can really now outperform for our customers. And so as we see it, this is delivery time for us. And we do not comp to 2019, we comp to a future in which we outperform. And that's what we're targeting, no excuses, no exceptions.

That's great. And so maybe just kind of combining 2 of the things you've been talking about. As you mentioned, a decent chunk of those aircraft you retired in 2020 were historically in medium or long-haul service. I guess should we read into that as a shift in thinking of capacity being more of a domestic and South America game versus long haul? Is that just temporary as we see what happens to long-haul traffic? And then how do your international partners play into all this? Is there more reliance on them after this? And if I can squeeze in 1 more in a multi-part question. How will international partnership get...

Yes. No, no, it's an excellent question, Catie, and one that I know is on a lot of people's minds. And no, look, we don't have some long-term plan that we're going to go take a bunch of wide-bodies and fly them on 4 and 6-hour stage length flight, whatever, Dallas, Fort Worth, the Las Vegas or things like that. So there is some opportunism in that undeniably. But maybe the larger ordering principle here is this is that our airline has always been able to go outperform financially and in the eyes of our customers in flying the domestic system, especially the mid-con, the high-connecting domestic system that's there. We've been able to do the same thing across Latin America. We have struggled in New York and the West Coast. We've talked about that a lot. And through our partnerships, that comes to end. But for long-haul international, even in our best years, on a pretax margin basis, we were -- we barely had our noses above water. Maybe there's a few margin points at a time when the domestic system could be multiples of that. And so for us, it's something as simple as this, that when we bring back international, we're bringing back an international that can produce margins in line with domestic. We aren't doing strategic flying. We aren't going to have -- we're 50 to 60 long-haul airplanes lighter than what we went into this with. And those airplanes we have need to be able to go and produce returns and earn more than their cost of capital. So we're going to be really cautious in how we build back international. Now for us because -- international isn't just relatively smaller for us than our competitors, because of the fleet changes we made into your earlier and very excellent question, the international that will be there is going to be way different than the international that went away in 2019. And as we see things like London coming back online when so many of the developing markets such as India and South America come back online, then those are going to very quickly absorb a lot of the wide-bodies that are otherwise flying in Dallas/Fort Worth, Chicago or what have you right now. But they're going to absorb it at a time and a place where it makes financial sense for the airline and very critically, when it's important to our customers to do it. And so how we go and meter from this world that we're in today to one where the wides are indeed being used for that purpose remains to be seen. And last but not least, I'll mention, Catie, that if we are in a world where international takes longer to come back, we have immense fleet flexibility in our long-haul fleet. Now that we've simplified to a largely -- to an older owned 777 fleet and a younger vibrant 787 fleet, that gives a lot of flexibility to go manage capacity, no matter how long-haul demand might come back.

Got it. Really interesting. And maybe we touched on this a little bit in terms of the New York and West Coast strategy, but over the course of COVID, you launched a new codeshare with JetBlue, and you also began your enhanced codeshare with Alaska, again on the West Coast. How do you frame the revenue opportunities on those 2 partnerships? And then I have more of a speculative question on JetBlue as well. Alaska has talked a lot about the benefits of connecting their passengers into the American International, out in New York and Boston, JetBlue is going to have its own international services coming soon, TBD, how do you see that JetBlue international service potentially working its way into or not into the American codeshare. So I guess, a 2-parter, what's the revenue opportunity on those new enhanced partnerships? And what does it look like for JetBlue with the international launch?

Yes. I'll do them in reverse order. Look, for JetBlue's plans, we really -- you probably have to talk with them about that because we don't coordinate with them on their international services. We are really encouraged by the kind of connections and feed we're getting into some of the new routes that American Airlines is starting out of JFK. I mean so much so we announced JFK Deli just on the strength of the bookings performance we were seeing in Tel Aviv and Athens and things like that, where the Kennedy-Tel Aviv flight during the time, which long-haul demand is very tenuous at best is proving to be one of our most reliably booking, and frankly, relatively strong booking markets. And so much of it is through what this partnership is enabling. And indeed, all across the New York and the Boston portfolio, we're seeing just a lot of new customers coming into the system that American Airlines wasn't selling before, and coming in on flights that would have otherwise gone empty. So that has really outperformed not just in the minds of American Airlines, but I think also in the minds of the customer because clearly, they're voting with their wallet, so to speak. And then to your first question, look, the simple way in which I describe it to people, and I think I've done it in different earnings calls is for American Airlines, we've devoted between 25% and 30% of our ASM capacity to flying in the West Coast at large and New York and Boston. And that has produced revenues that were 90% of industry average revenues. And that's been a material -- that -- so describe -- I can't even begin to describe how strange that's been for American. So when we were doing the big DFW growth in 2019, we were finding the marginal flights we were bringing in the DFW were performing equal to our average flights in DFW, which means, clearly, like there's just a huge case to be able to grow it. But at the same time, when you looked at our financial results, you wouldn't necessarily see it because our network deficiencies in the West Coast and the Northeast were such that our unit revenues relative to the industry were falling. And DFW is roughly the same size as what those marketplaces were. And so there was like an offsetting effect that was there. So with this, certainly, we're encouraged by what we see with JetBlue where -- we anticipate we'll see more with Alaska as we indeed add flights into that marketplace. And certainly, if we can start producing unit revenues at roughly 100% of the industry on capacity that's, let's call it, 20% to 25% of our system capacity, then that can be a real material benefit to our results. But more critically, a really material benefit to the customers in all of these markets who will now have a legitimate third network alternative at some really attractive price points.

That's great. Maybe I'm pivoting some non airline revenue streams. It's interesting, I don't think we -- there's a lot of unfortunate things that happened during COVID, of course, but perhaps one of the silver linings is that airline management teams and all the investment bankers out there got really creative and found a way to unlock the value of some of these airline loyalty programs. Do you think now that, that value is perhaps better understood by the market, that's going to drive more innovation and perhaps more recognition from your co-brand partners on the value of these programs and perhaps increasing future loyalty revenue generation down the line?

Yes. Look, it's certainly opened a lot of eyes. You're right. I mean the creativity that went into it has been very profound. But I think what's often actually still misunderstood about it is how much of the value this program hangs on the value of the airline itself. That is what -- so many of our third parties who purchased miles are really doing is what they want to have is -- for many of their customers, the most aspirational thing that they can do is to offer them travel, especially for their more affluent customers. And one of the hardest ways in which to do it is through access of airplane seats, right? Because the cost of owning and operating airplanes is what it is. And so it's really hard to divorce the value of the program from the core of the business of the airline because for our partners, the thing that they don't have is access to the airplane seat. And what they want to be able to do is that I can attract an affluent customer into my network or my merchant network. And if they go -- if they produce more spend, they get access to this thing, which is really important aspiration for them, which is global travel and the thing that most enables that is the airlines. So without the airline itself, it's hard to unlock that value. And look -- and the proof of that is what's out there that at this point, there is no stand-alone airline loyalty program that's out there. So I think you're absolutely right. There's a lot of value in -- there's a lot more value in how we monetize the thing known as the airline than simply yield managing ticket prices, absolutely true. But probably the further extreme, which is that there's multiple different stand-alone businesses that exist in 1 airline is also probably a bridge too far.

In the past life, I actually covered the Brazilian loyalty programs. And even with all of their...

Was that right?

I did, yes, Smiles and Multiplus. And with all of their pushing, I think Max non-airline redemptions got to 20%, people want those airline tickets. So I hear you.

Yes. That's right. That's exactly right.

Yes. And so Vasu, I guess just kind of touching on, you mentioned products' going to look different. You're not sitting idly by, you're flexing what you can to manage revenue today. I guess just not -- maybe on the airline/product innovation side, are there any new revenue streams or optimized revenue streams that you're just particularly excited about over the next couple of years?

Yes. We are in large part because in so many ways, if you think about our airline, and maybe the industry at large, there have been so many problems which we've sought to solve commercially in the years past, but the technology hadn't caught up to the problem, right? And so we have a number of relatively archaic manual workarounds, arcane systems, ways of doing business that don't need to exist in the world going forward. And indeed, we can go deliver a lot more value to our customers a lot sooner than what we ever could have before. And that can take a lot of different things, right? Whether it is -- we're now in a place where we use like the tools of today, like machine learning models and artificial intelligence to be able to go and do things as simple as route planning and forecasting or how many flights we can schedule into a 2-hour window in the Dallas/Fort Worth peak. That would have -- the amount of time and people that consumed in times past was really pretty meaningful. But similarly, as we think about what it means for customers, and we look forward, there's going to be -- we don't know how the world changes. But now all of a sudden, we can both simplify the kinds of fare products we offer, deliver it more ubiquitously to customers on whatever device, whatever channel you might otherwise want, but we can also go and value it differently, right? We can -- we're now in a place where technologically based on where you shop and who you are, we can go deliver prices to you that we couldn't have ever done before, like the technology is there, and figuring out how we go and really use that in a way that creates value to the customer and more transparency and what we do is something that's really exciting. Of course, the -- though it sounds way distant from this sort of technological utopia I'm kind of describing, but like the first major thing is that the loss of change fees, and at least at American Airlines, what we call it is the clarification of what base economy is, is really the first big step in that, right? But now in times past and pre pandemic, we had this really difficult customer proposition where if you were an executive [indiscernible] and if you were one of our highest status customers, and you happen to buy a base economy fare with your family you were the same Catie O'Brien, but we didn't treat you as an elite. All of the elite services that you had gotten used to would not be there when you were flying on vacation with your family just because you bought a base economy ticket. And now we've started to reverse that, which is that the product should be clear, it's our entry-level price point. And so if you're an EP and you buy the product, get all of your elite benefits. However, you don't get to keep earning miles. So that does 2 things. That one, for you, it's a much cleaner customer proposition. But two, we're actually giving customers a reason to go and sell up into another price point. And we're making that really clear to them in a way that's not punitive, but -- if basic is a product that customers desire, it's there. But for a small sell up, you get refundability, you get the ability to earn miles and all of those things. And so that's a step towards a reality where we have more cogent, more customer -- more understandable products for our customers that can be delivered through much more superior technology solutions than what we've had in the past.

Got it. And maybe just -- we're 1 minute overtime already, but I just want to sneak 1 more in. As the recovery starts to occur, let's just in a Utopian world, like it all comes back much faster than we're thinking, and we're sitting here at this conference next year, well over 100% than 2019 levels of demand and business back, et cetera. If you were to go to Doug and say, "Hey, I need to place an order for more planes or I need dollars to invest in our product," like how would that conversation go today?

Well, look, it's funny. We actually think about this a lot. And for us, so much of what's coming out of here is delivering the best customer product we can efficiently. And so as we look at it -- so it's funny, with these things -- it's easy to design your offering and what happens if it doesn't work out, the harder thing is to actually think about the problem that you just laid out, which is what happens if it actually works out and defies your expectations? Have you cut your upside in how you participate? And for us, what we have consciously built, even though we took out 150 airplanes, what we've also been doing is becoming more efficient about how we deliver airplanes. So though there's 150 fewer airplanes in the operating fleet, whereas we can schedule -- we're only scheduling 85 fewer airplanes. So we've gotten more efficient in how we design the operating structures of the airline; two, our gauge is up, call it, 4% to 6%, too. So we have -- we're more efficient in the capacity that's out there. So by the time we get to July of this year, we can produce 85% to 90% of 2019's capacity with 150 fewer airplanes. And we think there's ways to get more efficient and -- so that we can get that number to something close to 94% or 95% with really, really low marginal cost. So we actually think that should that come to pass, we can go participate in the upside in a way that is -- that produces really high return on our invested capital. And also, we're not doing things where we're bringing old and junkie 767s out of the desert to go and try to fly something for customers, even though they're going to hate it and hold their nose the whole time they're on it. So we have built an airline that has an off ramp if things go bad, but also can participate when things go well.

That's great. Well, Vasu, always interesting chatting with you, and thank you so much for participating this year.

Thanks, Catie. It was a pleasure.