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

All right. We're going to get going with our next session. We're in the home stretch here, last few sessions of the conference. Really happy to have Devon May, CFO for American Airlines back with us this year. Devon, thanks for being here. And maybe I'll pass it to you just for some opening thoughts and lots to discuss.

Yes. No, absolutely, a lot to discuss. I'll just start by saying probably you're hearing throughout the day. Like this year has not unfolded like we would have expected back in January. But like we said last month, we feel we are really well positioned in any demand environment, in any economic environment. And it's -- look, it's really across the board. I think we have the network and the product that people want. We've done an incredible job with the fleet over the past several years. We're in this spot right now, where our CapEx is pretty modest, but still have the fleet coming in that we can grow the airline pretty meaningfully over the next handful of years, if we choose to do so. We think we're better than anybody in terms of the efficiency of our business and how we manage cost right now. And we've done a ton of great work on the balance sheet. When you compare our balance sheet today versus where it was back in mid-2021, we've made a ton of progress, reduced total debt by $16 billion, and we continue to progress on that front. So not the year we expected to start, but still really pleased with the outlook. And we spend a lot of time, fortunately, given where we're at today, thinking about the future. It's also exciting for us that in this environment, with all the uncertainty here about, we're still able to make the statement that if demand trends just stabilize, we'll be profitable for the full year, we'll produce free cash flow for the full year. And as you come out of 2025 and look longer term, that's what we're excited about. We talked over a year ago on our Investor Day about the potential for really meaningful free cash. We still expect that. We talked about the potential for margin expansion. We still expect that. We love the demand trends that are starting to work in our favor as well. So not the year we expected, but still really excited about the longer-term outlook.

Okay. Great. So I'll start. If people have questions, raise your hand, we'll get you involved. You said a couple of times sort of not the year you expected, I think back to the beginning of the year, and I think people were getting pretty excited about an environment of demand outpacing capacity and really strong pricing environment, which led to margin and earnings growth and free cash flow and all that. And now we're sort of back in an environment where RASM is down for the industry. And I've been -- I've asked this everyone. I'm just going to ask it to you just to get your perspective, is this a demand issue that is creeped up on us? Or is this still an oversupply, overcapacity issue.

Yes. And then maybe I'll just go back a little bit because you're probably asking similar questions a year ago, like as people are planning 2024, I think there was an expectation that industry revenue would continue to grow and would continue to regain its share of GDP, so going from '23 to '24, that was the expectation. So you saw a lot of capacity come online throughout 2024. We look at our second quarter 2024, I think we grew the airline by about 8%, and that was less than some of our larger competitors. What happened though is industry revenue was a little flatter than that. And maybe it was a mix of the supply and demand environment, but interest revenue did stay flatter. And so you started to see some softer performance last year. The industry did react pretty quickly. Like for us, we made capacity decisions. We flew less capacity in the fourth quarter last year than what we would have initially expected, and we ended up having a really nice fourth quarter. This year, like you said, as we started the year, we looked at our capacity growth, pretty modest capacity growth, effectively at low single digits. We saw the industry and we thought the industry was going to come out at around 2.5% as well. So we did think capacity was largely in line with real economic growth, and that felt like a good spot to be in. We had a demand issue. Like I think what you've seen with this uncertainty over the past handful of months here is demand has come down fairly materially relative to the supply that's in the marketplace. So I don't think the supply that was in the market was out of bounds in any way. I actually thought it was very much in line with economic growth. But just the uncertainty that really started in March, it's probably eased over the past month or so, has resulted in demand coming down versus initial expectations.

Okay. That makes sense. I've been -- a follow-up I've been asking everyone is sort of a lot of people are saying took a step down and it's stabilizing. Some people are saying, it took a step down and now it's recovering, right? And then some maybe somewhere in the middle, right? How would you sort of -- no one is saying, by the way, it's getting worse. But how would you characterize environment?

I would say like everybody is probably right. Maybe a different day. And I feel that even internally. Some days, you run a nice bookings week, you're feeling better about things. I think in general, though, it absolutely is stabilized. We are seeing some nice booking trends, but for the most part, they're largely in line with the conversations we were having on our earnings call in late April, we have guided to our total revenue to be down 2% to up 1% for the quarter. That's still where we expect things to come out. But I think it's all this perspective. I think everybody is right, it's just kind of a matter of timing and when they're looking at bookings.

And then maybe just take us a look around the globe and what parts of the world are doing best versus what you thought? What's doing versus what you thought? And then maybe also we can weave in premium versus main cabin and any differences you're seeing there?

Yes. No, sure. I'll say again, pretty consistent with where we were a month ago. International trends continue to be strong. We're -- long-haul international is doing well. Transatlantic continues to perform well. We'd expect positive unit revenues there in the second quarter. You go around the rest of the entities. We talk a lot about Latin America. It's just such a big part of our network. We serve it so well out of hub [indiscernible] Zinc Miami, of course, but also Charlotte, Dallas, even Phoenix, all of these hubs serve short-haul land incredibly well. We saw a nice performance there in the first quarter. We don't have a whole lot of capacity growth, I think we might be down a bit of capacity in the second quarter. And we think we're going to see some nice trends there. Deep South, we have some markets that are just doing really, really well for us. But overall, it's a really important entity to us, and it continues to hold up pretty well. Pacific smaller part of our network overall. But again, like the rest of the long haul, it continues to do well for us also. It's truly a domestic marketplace. And when you talk about premium versus leisure, it's more on the leisure end. That's what we've been talking about for the past couple of months. That's where we are seeing softness. Your point earlier, has it stabilized? Yes, it's stabilized, but stabilized at a lower level than what we'd expect at the start of the year.

And one of the things we heard from one of the other airlines about this premium versus main cabin phenomenon domestically as maybe it's -- we're now seeing something similar transatlantic where premium transatlantic still holding up really well, but main cabin transatlantic showing some weakness. I don't know if you would echo those comments or no?

Yes. I don't know if I'd go into that much detail on it right now. At this point, we feel really good about the transatlantic market.

Okay. Great. And when you look back at Q1, right, your RASM outperformed peers. I think that was sort of the message heading into this year that, hey, we've got some catch-up opportunities on RASM as we regain some of the corporate share, not like we saw some signs of that in Q1. Is that something sort of -- you started beginning saying, hey, irrespective of the environment, we've got some things that we feel good about -- is that part of that? Do you think that's something that should continue?

Yes, absolutely. And that was how we talked about this year unfolding. We actually started to see it in the fourth quarter of 2024, where we did outperform on unit revenue and you add it all up. I think we outperformed on unit revenue in almost every year. There may have been 1 entity that somebody outperformed us on on a year-over-year basis. But our unit revenue performance in the fourth quarter was stronger than our network peers. It continued into the first quarter, and that's in an environment where we are seeing this international -- long-haul international strength, and that's just not as big a part of our portfolio as it is for other carriers. So that's actually a bit of a relative headwind for us in the first quarter, but we still outperformed. So on a relative basis, we are pretty pleased with the performance we've had in the past couple of quarters. To your point, I do expect that to continue. That's our objective at this point anyway. We think we have some pretty unique tailwinds in the near term, part of it is sales and distribution recovery. Part of it is just the build back of our network. It's been a little bit slower to come back in certain areas, and we think that's going to be a positive thing for revenue and for earnings. Longer term, obviously, we think a lot about our co-brand credit card deal with Citi. We're doing a lot of planning for 2026 and beyond on that, and we think that's another area both for earnings and revenue where we think we have a nice tailwind.

Okay. few things I just want to follow up there. You mentioned, hey, we're smaller in transatlantic and that's been a headwind to us. Is there an opportunity to catch up on transatlantic?

Yes, we're bullish on international. And you see it in our fleet plan. So right now, we took a couple of 787-9s in April. It's high premium 787 product, it's going to be a fantastic product for our customers. But when you think longer term, we still have another 28 787s on order. We have 40 A321 XLRs. We have options behind both of those. So today, we have a fleet of long-haul aircraft that's probably 125 aircraft or so. So we've got about another 70 on order to grow that over the next 5 years with options as well. So yes, we think it's an opportunity to expand, and we've got a fleet to support it.

Okay. And then you mentioned sales and distribution as part of the RASM outperformance, just give us an update where we stand there.

Yes. It's something that we're now reporting on quarterly when we first talked about it about a year ago right now. We were down about 11% in market share from where we were in the quarters prior to launching the sales and distribution strategy. Since we reversed that strategy, we said, you know what we're going to report on it every quarter and just talk about the progress we're making. So went from down 11% to down 10% in the third quarter last year, down 9% in the fourth quarter. A lot of work was being done at that point in time, but not a lot of progress in share recovery. We did see some nice share recovery in the first quarter. So first quarter share was still down about 7% from historical levels. We've guided to it being down 5% here in the second quarter. And our objective here is at the end of the year, we're not talking about this anymore that we've effectively regained our share, and it's not something that we're having to worry about as we head into 2026.

What are we doing to get back for 6 and now the full 11 points a share like what are we having to give back.

Well, a lot of it is just getting back in the market, getting the right content, certainly have the right contracts.

Your point are -- like you're just saying this is just natural share.

Absolutely natural share. When we stepped into the other sales and distribution strategy, obviously, it was -- it didn't work for a lot of our customers. But there's a reason they were our customers. We had a better network or a better loyalty program, whatever it might have been, we had a lot of customers that want to fly American. And we had a lot of corporate customers and agencies that wanted to have the third big network carrier delivering in this channel. And so a lot of that, yes, it just comes back, it's natural share. It's not without a ton of work. It's not without organizational changes. So we've seen really material changes in our commercial group. It's led by Steve Johnson who's doing a fantastic job with it. He's also hired a new set of Head of Sales, who is doing a really nice work building back his staff. He's got a fantastic plan going forward. So lot of structure, a lot of process, a lot of work to get here, but we feel really good about our ability to get the rest of the share back.

Okay. And then the other thing that you said was one of the drivers of RASM outperformance was building back the network. So maybe take a couple of minutes and talk about that.

Yes. Maybe I'll start by talking about it just from a fleet perspective. On the regional side of our business, I think everybody knows, regional is maybe not a huge component of the business when it comes to ASM capacity, but when you talk about filling out the hubs and being able to offer really deep schedules into a lot of these small and medium-sized communities, it is a really important part of the business, and that was slow to come back because of the pilot shortage that we had for the past several years. By the time we got to the fourth quarter last year, we were effectively back to full utilization across the regional fleet. We don't produce as many ASMs as we used to on the regional side of the business. We definitely don't have as many departures. We've up-gauged some of these departures into mainline, even within the regional fleet, we've up-gauged from 50 seaters to large RJs, but we're fully utilizing the fleet again. And as we roll into 2025, you saw a lot of regional capacity growth in the first quarter of this year. That's effectively just getting that utilization back to run rate. It came back throughout last year. So we feel really good on that front. That's allowing us to fill in some of these hubs where we've been a little slower to build back. So last year, we had a lot of growth in Philadelphia. It did really well for us from a revenue perspective, from an earnings perspective. We expect we're going to continue to grow that market back. This year, you've seen a lot of comments around it, but we're growing back to Chicago. It's long been a huge hub for us. It's our third largest hub in terms of departures. We used to operate somewhere around 500 departures a day. Last summer, we were only operating about 400 departures a day. So this year, we're building it back. We're not quite at 500, but I want to say we'll be around 480 departures as we head into that this summer. So we feel good about the progress that we're making there. And then I think you know the rest of the network pretty well. We're slot-constrained here in the Northeast, but still have a really nice presence in JFK and LaGuardia. Our Southern tier hubs in Charlotte, Miami, Phoenix, Dallas continue to do really well for us. And then once we get through construction in Los Angeles, we think there's a real opportunity to grow there as well.

You mentioned, just very quick near-term question, you talked about JFK, LaGuardia, Obviously, there's a lot of issues at Newark. Like is there a book away benefit that you're seeing right now that we should be thinking about? Or is it too small to really matter?

Yes. Well, may be -- I'll just start by saying we are really appreciative of all the focus that Secretary Duffy, the Department of Transportation, the FAA have had on modernizing ATC and hiring up with air traffic controllers. It's something that needs to happen, and we look forward to getting the funding for it so we can move forward on it. What's happening right now in Newark, though, yes, there probably is some amount of book away from Newark flights over into LaGuardia, JFK, maybe Philadelphia to a lesser extent. I'll just say, given the breadth of our network and -- on the other side, probably the breadth to United's network, you may not see it a whole lot at a macro level. There's something happening there, but I think it's relatively modest when you think of the broader network.

I want to talk about capacity a little bit. You entered the year talking about low single-digit capacity. So we shouldn't be sort of blaming you for sort of anything, right? But as Q1 earnings happen, right? You generally heard from airlines, hey, we're revisiting some capacity plans, particularly in the back half of the year, we didn't really hear you say sort of anything about back half of the year -- what as we're getting closer to the back half, what should we know about back half capacity plans? Have you changed those in any way.

Well, right now, we're probably not quite there yet with our schedules. Right now, I think the team is effectively working on an August schedule. And August, I just think of the third quarter and especially relative to history, August is probably a bit of a softer month than it used to be. So they're lining up capacity with the expected demand that they're seeing based on current trends for the month of August. We've got a little bit of time for the rest of the back half. But to your point, we started the year with a pretty conservative capacity plan. We are a company though that stays really close to demand trends. Like we did last year, we acted pretty quickly with our fourth quarter capacity. So we'll continue to stay really close to demand trends and make sure we're adjusting capacity accordingly.

Do you feel like as you look at the capacity in the market, you're saying you're closer to [indiscernible] mantras. Do you feel like the pieces are there to get back to a positive RASM environment in the back half of the year?

I like some of the statements that are coming out. I do think some carriers that are growing at some multiple of GDP, they've probably had decisions to make earlier on capacity. It's just it's a bigger adjustment if you're growing at a much higher rate in a softer demand environment. So some of the commentary, I think, has been helpful. And I think if people are making public comments, I think we can bet on that, right? So you're starting to see some capacity come out of the market. Like I said, we're working on August schedules. When you look beyond, I guess, it's hard to really tell what's going to happen. But the commentary is good. I like the fact that as an industry, we're starting from a spot where you're only looking at low single-digit capacity growth to start with. But to get to positive unit revenue, 1 or 2 things have to happen. Either demand needs to do better than just stabilize, it needs to start to return. And I think there is potential for that or capacity has to come out of the market. And based on the comments that we've heard publicly over the past couple of months, I expect that's going to happen.

By the way, if there's questions in the audience, raise your hand, we'll get you involved. You mentioned Chicago. Obviously, that gets a lot of focus from people and the competitive capacity dynamics going on. Give us sort of your perspective on what the strategy is in Chicago right now? How big of a deal should we be making about this?

I'd say nobody should be surprised by it. It's a huge part of our network. It's our third largest hub. As I mentioned earlier, we used to have something north of 500 departures a day at peak times in Chicago. So the fact that we're growing back to something close to that shouldn't be a surprise to anyone. It just -- it came later than we would have liked given some of the constraints I mentioned earlier. So we have a huge customer base there. We've been serve in Chicago for probably something close to 100 years. We feel really good about the growth opportunities. It's one of the benefits you see of the economics of the hub that as you grow it back and develop better patterns of service, you're able to have really nice unit revenue performance, you're able to get the scale economies you would expect when you fully utilize the infrastructure. So we feel really good about Chicago growth. And like I said, it shouldn't be a surprise to anyone that we're growing it back.

And is the reallocation process in Chicago such that like this becomes like a perpetual, we want to grow and then we want to grow them, we want to grow, then we want to grow setup. And is there a better outcome that...

I don't, yes, without going into too much detail on reallocation because I think there's still just more to be decided on that front. Our goal there, though, is to fully utilize our airport assets. And we're doing a really nice job of that this year. I think there's still more opportunity ahead for us. But we're happy to be growing it back pretty materially this year.

Let's go back just for a minute to premium versus main cabin. And how different is this than prior cycles in terms of this outperformance? And how -- what's -- is this durable? And maybe just if it is, like what's your premium mix today? Where do you want to take it to?

Yes. Well, we think it is durable. And we've set plans around this to go back several years. Like this isn't a really new trend for sure, prem has done really well for us, and it's outperformed Main Cabin. We saw that in the first quarter numbers. We've talked to you about that. But it isn't something new. Like we started building fleet plans around this and configurations around this years ago. 787-9 is a great example. It's an airplane that in the earlier configurations, we've had about 30 [indiscernible] lie-flat seats in the new configuration, we're going to have over 50 [indiscernible] seats. We're looking at XLRs coming in and have a fantastic premium product. We're reconfiguring our 777-300 fleet to have more premium seats. We're doing the same type of thing on some of our narrow bodies as well. So reconfiguring A319s and A320s to have more premium. So today, we think our mix is in a pretty good spot and premiums more than just seats, obviously. We have an incredible network, incredible hub network. But the seating configurations, we feel we're in a good spot, but we are excited about where we're going to be 4 or 5 years from now once we take delivery of all these airplanes.

Okay. You and most of the airlines didn't really give any full year guidance with 1Q. You said, hey, if things stabilize, we'll be profitable, we'll generate cash. But any -- what do you want us to know about second half and the pieces there? Any kind of framework to be thinking about?

Well, I'll start with that statement. It was pretty straightforward. If demand trends stabilize, we expect to be profitable for the year. We expect to have positive free cash flow for the year. And we feel great to be in that kind of position. We're able to make that call still fairly in the year. Even during that month, it was probably peak uncertainty in the month of April. Let the next couple of months play out, and we'll have a better feel for -- is it getting easier and easier to forecast the back half. So I think as we get to our July call, we'll have a pretty good understanding, at least where capacity is going to be probably through October at that point in time. And maybe there'll be some indications of where it's going to be for the full year. For sure, we'll have some near-term demand trends that we may be able to extrapolate out through the rest of the year as well. So no commitment quite yet on when we bring back our full year guide, but we'll definitely have more insights as we get out to July here.

Let's talk about cost. You said 3% to 5% CASMx for Q2, mid-single digit for the year. Anything changing here? Is it just getting harder, easier?

Yes. I'd say for full year, our guidance of mid-single digits was based on a certain level of capacity production. We've guided to low single digits at the time. So if we do anything material on the capacity side, maybe there's a little more cost pressure in the back half of the year. I'll just start by saying, in general, I think we've done an incredible job managing costs over the past several years. Just line it up us versus our network competitors, go back to 2019. I think the numbers kind of speak for themselves. But that's not a short-term effort, and it's not necessarily a cost-cutting exercise. This is an efficiency effort, requires dedication from Robert and the entire leadership team. And it's across the board. It's finding process improvements with every step from new hires to training to day of decision-making with the front line. We invested in a procurement team where we brought in one of the best guys in the world of procurement and asked them to build the team to go and drive savings across the enterprise, and he's done that. Within a quarter, there's going to be some variability, but it's not because we've done some incredible job within that 30- or 60-day period of managing expenses, it's because you run a great operation or you had some cost slide from one quarter to the next. But longer-term costs and the costs we're looking at for the full year, I think we're doing a really, really nice job with it. I feel great about the second quarter. If there's much movement, it's probably going to be timing or just because we run a fantastic operation. As we look out through the back half of the year, I feel good about the exit rate. It will be at least somewhat dependent on capacity production, but I feel really good about the work that the finance team and the broader organization does around driving an efficient business.

Your point is, hey, we said low single-digit run rate exiting the year. But if there's a little less capacity, maybe it's something a little bit higher than that.

Yes. We'll see where it all comes out. But I still feel just in general, something we manage incredibly well. I think there's more opportunities ahead as we lean more into technology. We'll continue to find process improvement. We'll continue to find savings through procurement, but it's something I think we're really good at.

And is there something unique about Q4? Or is this -- that we're starting to lap big step-up in labor deals and that becomes sort of the new run rate as we think about '26. This is basically me asking you for '26 [ half year ] guidance.

I don't have anything for '26 for you quite yet. But you're right that like we had some pretty material step-ups with some collective bargaining agreements that were reached over the past year. Flight attendants kind of later in the year. We got to new agreements with our maintenance and fleet service team members, a 2-year extension that hit at the beginning of this year. And so you do start to lap some of that cost pressure is hitting us right now. And we are proud to have collective bargaining agreements in place with all of our large work groups. We have a few smaller work groups that we're working on right now, but our large work groups all have collective bargaining agreements in place that run through a good part of 2027 at this point.

We had a labor panel earlier. Your unions were -- union was represented. And we asked how is the relationship? And I think it was a very sort of constructive comment of, hey, we're collaborating and everything is really good, but we don't like being #3, right, was what we heard. And what is sort of the path to go from #3 to #1 or #2 or just narrow the gap or close the gap?

Sure. Well, I'm going to talk about the margin gap to start with.

I think that's probably what that was in reference.

That's fair. And I think as you know, like for our -- for American, we do have a different capital structure than our big network peers right now. And that's something we're working on. We've made a ton of progress on that over the past several years, and we expect to continue to make progress on that. But because we have a different capital structure, and we made different financing decisions over the years, the way to look at relative performance is EBITDA margin, takes capital structure out of it. So if you look at 2024, we had about a 2-point EBITDA margin gap to both United and Delta. That is inclusive of Delta's third-party business, which is pretty meaningful. But about a 2-point margin gap. It's not where we want to be. Like we think we have the opportunity to close it, and we're focused on the right things. So sales and distribution, we've talked about. We think that's a meaningful component of the margin gap that existed last year. If you go back another year, we had about the same margins, at least as one of our network peers. So '24, 2-point margin gap. Sales and distribution is a chunk of it. Network restoration is another component of it. That's coming back right now, and we're excited about the opportunities. We've talked in a lot of detail about our agreement with Citi. We think we're at a disadvantage relative to our peers, and that's a nice tailwind for us going forward. And the last thing maybe I'll just mention right now is that we are at market rates for all of our labor groups. We've got new collective bargaining agreements. At least for one of our competitors, it's not in place yet. So okay, there may be a near-term margin advantage for them because of that. But one, we don't think it's sustainable. And the other side of it is we feel we're really proud of the agreements that we have in place. So yes, a couple of point margin gap last year. We think we're focused on the right things. There's other things that are just part of our business that we're really excited about. We talked a lot about the fleet plan and the CapEx requirements we have going forward. We think we're just going to be in a different spot to produce really meaningful free cash flow for the next 5 or 6 years relative to our competitors as well. So not pleased with where we're at, but I think we're really focused on the right things.

I think back to the Analyst Day a couple of years ago now, and you said, hey, if we get credit card deal that -- I don't know if you said it closes the margin gap or -- something along those lines. Do we need to wait to 2030 when we get the full impact of the credit card deal for that comment to apply or...

No. Like we're going to start to see earnings improvement from that in 2026. It kicks off in '26. We expect to continue to grow remuneration from that program each year. We said the expected rate of growth is about 10% a year. Not every year is going to be 10%. Some years it will be a little higher. Some years it will be a little bit lower, but that's going to flow through to EBIT fairly quickly. So to get the full benefit of this program, yes, 2030 is a number we threw out there. And by that point, if you just take 10% compound growth, we think we're going to be at around $10 billion remuneration. And we think the incremental remuneration was going to drive another $1.5 billion of EBIT, but it's going to come in pretty linearly. It's not something you have to wait for.

Just last couple of minutes. If we get or as we get a sort of NEA-like announcement at some point, what does that mean for you and New York and the strategy?

Yes. Look, I don't know what's to come from competitors. I'll just say our position in New York is pretty meaningful. We have 250 departures a day in New York. We have a fantastic customer base in New York. You need to continue to adjust for demand trends and just the economic reality of operating at a place like LaGuardia that have really high employment costs. It probably doesn't work as well on regional jets as it used to. So you want more mainline operations there. It probably doesn't work as well on some of the short stage lengths. You want some longer stage lengths. You want to adjust to where demand is going. But I think the network team that we have is doing a fantastic job with it. We have a really nice presence still in New York, and we'll continue to make the most out of it.

And maybe just update on the balance sheet and debt reduction targets.

Yes. So really proud -- our initial target was to reduce total debt by $15 billion from peak levels in mid-2021 and to do that by the end of 2025. We hit that goal at the end of 2024. So we brought it in by a year. We're proud to make that happen. And that brought us down to just under $39 billion of total debt. The next target we've put out there is that by the end of 2027, we'd have total debt inside of $35 billion. So that's the relatively near-term target. We feel great about going out and hitting it. We think that would put net debt inside of $30 billion and put us on this path. Obviously, we have to expand earnings, but put us on this path to our stated goal of a BB flat credit rating.

And then just as we wrap up, anything that -- I know we touched on a lot, but anything we missed that you just want to make sure me and everyone in the room hear some...

Years. I don't think there's much. I'll just reiterate that this year, yes, not the year we expected, but still a year we expect to be profitable. And we are really focused on longer term. We feel great about the network, great about the product we're offering. I think there's a ton of customer enhancements that are coming for us that we're also excited about. And as we look out, we have this fleet plan that only requires $3.5 billion of capital a year. But with that fleet plan, we can grow the airline materially. We can grow something north of 5% a year if we choose to do so or if we have the flexibility with this fleet plan to keep it something closer to flat if that's what demand warrants. So we feel we're in a really great spot to produce positive free cash flow and drive real value for our shareholders.

Awesome. That was great. Thank you, Devin.

Appreciate it.