Frontier Group Holdings, Inc. (ULCC) Earnings Call Transcript & Summary

All right, folks. Moving right along. Let's grab a seat. Pleased to welcome Frontier Airlines back to our stage. This is about your third or fourth time joining us at the conference.

I think so, something like that.

Something like that.

So let's kick it off. So I do have to start with some demand questions because today has been a mixed bag of demand messaging from the various airlines. Southwest cited some close-in weakness when they guided down. And my first interpretation of that headline was well, this might not be good for Frontier. This might not be good for Spirit, if they're seeing something. Since that time, they've acknowledged that they think they just kind of overshot with their guide. Airlines that do skew a little bit more premium, have had very good things to say about demand in the first quarter. You did not issue an update unless it just came out, and I missed it, which would be embarrassing, but not the end of the world. How should we think about how the quarter is progressing from a demand standpoint?

We did not do an update. You're correct. Maybe we're just got lucky and guessed about...

Not everybody did.

No, I think we maybe guessed better and get -- we got a better forecast out and guide. But no, we continue to see actually a really good demand. And again, I think it's oftentimes versus -- sometimes versus what your internal expectations were, but in our case, no, we've continued to see really great demand. And in fact, with the changes we've made in our network, April is looking really good, so -- which is surprising given the Easter shift. But no, we feel pretty good about the world.

Okay. We gave you props in the last quarter's write-up for the operational integrity. Run through some of the ingredients that allowed you to really -- I don't want to say turn operations around because I wouldn't accuse you of running a bad operation, but all of the metrics really seem to crush it. And I, for one, was pleasantly surprised by how you and the team pulled it off.

Yes. So we improved a lot. I think if you just go to third quarter to fourth quarter last year, but even this year, Frontier for the first 2 months year-to-date through February is #1 in completion. So not a place we've been for a while. So what has caused that? And I think it's -- we've talked about this a lot, but it's the out and back nature of what we've done to scheduling the airline. So we were, call it, 37%, 38% last summer out and back and then said another way, 62% multi-day trips. With today's ATC, that was just became impossible and so -- especially with high utilization. And so we have moved now we are roughly -- I'm not quite 70% this month, and we'll be over 85% by summer. And so what that's done is it's enabled us just to run much more reliably. Having said that, this last Saturday, we had a very difficult situation across the industry. I know there's a lot of talk today. I think there's going to be a conversation tomorrow. Folks are demanding a meeting with the FAA. So hopefully, we see some improvement there. I think we need to understand what their staffing is. Are they staffing up on the weekends? I know they're short-handed, but are they -- how many are they staffed on a Tuesday versus how many do you have on a Saturday, right? When you know that Saturdays with spring break are going to be higher demand. And then we've still got to figure out this general aviation issue. I think that it's just not right for somebody to cancel a 200-person flight, so that 3 people can go [ Petersburg ] to Palm Beach. For those of you in the audience that are flying that, sorry, but we shouldn't have to cancel a flight for that. And so they need to figure out a fair way to use the aerospace. But no, we're really proud of what Frontier has done. And I think we've kind of unlocked the best you can do from a high utilization and good reliability.

So you and I had dinner, I guess, 2 years ago, and the top -- well, yes, we've had a fair number of meals together, but one of the things that we discussed, the pilot shortage was front and center at the time. The regionals were just getting decimated. They was still at the point that they were bearing the brunt.

Yes, two years ago, that was really tough, yes.

And one of the things that I think you and I agreed on was that possibly Southwest would benefit from that. And trust me, the question gets back to Frontier. I haven't seen that play out given some of the Southwest other challenges. But the reason I wanted to talk to you about this, if you saw American's Investor Day deck from last week, there were aspects of it that reminded me of the Frontier plan. They can see that some of the major markets are significantly over served. They're trying to make a pivot more into the heartland, more into smaller communities. Now in many cases, they're going to use regional jets, so they wouldn't come up against you. But I'm left wondering, if their plan in any way influences how you've been thinking about redeploying Frontier capacity into smaller, underserved markets.

So look, there's -- let's back up. But I wouldn't say that it's smaller, but underserved is probably the right category because there are some that are big, that are underserved. Look, I think it's funny now because there was this whole narrative last year that the legacies have figured out how to beat low cost, and I'm laughing, I'm sorry, because it's just the facts just didn't support it. What happened is that the low cost beat the low cost, right? We opened Sam's Club, a Target, a Costco and a Walmart, all on the same block in Florida. And at the end of the day, you want to know where you don't make money. Well, you don't make money where Frontier, Spirit, JetBlue and Southwest are all on the route and the capacity is up 100% versus 2019. That's where you don't make money. It's not when you're flying between Philadelphia and Indianapolis. That's us and one legacy carrier. Those things go well. So I think that is really misunderstood. And I think, if you think about when we say underserved and overpriced, we're looking at the rest of the United States, which is 2/3 of the United States is not Florida and Vegas, right, maybe 70%. And so, if you look at the capacity, it's up over -- well over 20% in those places in the oversupplied and in some cases, even down. Now they are small, some are small. But the main thing they have in common is they're just not Florida and Vegas. And so there are small, medium, large markets all over the United States and even some near international that fall in that category. We happen to have chosen to grow in Cleveland, Cincinnati, a little bit of Philadelphia, a little bit of Chicago and San Juan. But we did not touch the Seattles, the Nashvilles, the Indies, the Baltimore. So I think -- yes, I think American is probably right. They're seeing the same things with us, but I don't know that we're chasing the same thing. It's a big market, and we're tiny. So I don't think that we're overlapping with them in terms of specific places, overlapping strategy, yes, overlapping specific routes, no.

I won't push back on your view that much of the discounter pain was self-inflicted from a capacity standpoint. But you still lack the loyalty heft, the premium heft, the international heft. So what are the levers that you intend to pull on? I mean you've got a guide out there for next year that is consistent with the best of the best and franchises that are already profitable, which you are not. So what are the levers...

No, we made a profit last year.

I was thinking about the quarter. But yes, duly noted, yes. So what are the levers that you pull in the absence of that business model diversification that gives you the confidence of producing mid-teen type margins?

Well, first of all, pre-COVID, we were the industry leaders, depending upon the year, but we were always 1, 2 or 3 in margins. And what's changed? Well, for a while, our costs actually were higher on a relative -- well, they had -- we had lost some of our advantage on a relative basis. That was almost entirely due to low utilization. We had taken a bunch of aircraft and we weren't flying them. So that has reversed. We talked about one of the first things, talking about utilization and reliability. We have addressed that. And that is why, if you look at 2023, our cost advantage has now widened versus 2019. And if you look at our guide this year versus the industry, looks like another 5% to 7% potential widening, which, by the way, you didn't ask about it, but more than covers any potential new labor deals. So just their inflation this year.

I was getting into it, but...

But even that alone would cover like people say, "Oh, you're god for next year and include labor". So, yes, but I'm going to get on a relative basis, even more advantage than that this year versus the industry. So that's the cost. So the cost advantage is coming back and it's widening. And so now the revenue is not performing. So on a relative basis, our RASM is down, so along with the rest of the low cost, and it is that simple. I mean we all chased -- we don't collude. I mean this is the best example of we don't collude, because if we had colluded, we wouldn't have all chase the same markets. But we did pile on top of each other. And at the end of the day, capacity in my markets was up -- industry capacity was up over 20%. Cite any of your margin leaders and tell me what their industry capacity was up last year. It was flat to down. So if those reversed, tell me what you think the margins would have been. That alone would fix it. But we're not stopping there. So we're making the pivots, but we also have more diversification and probably more tailwinds than anybody else in the space. We have made major changes to our frequent flyer. We've now seen the penetration go up over 30% in terms of people on board year-over-year in February. So huge -- by the way, we made those changes in November. So huge benefit in frequent flyer penetration. Also with the credit card, we've made major changes to the credit card as well, giving you elite status once you spend $3,000, which gives you free bags, free seats, free change fees. And so we've seen spend on the credit card jump double digit as well. So huge things on the frequent flyer side. I know we're still not I can't get you to Dubai, but we have our own space and loyalty is jumping. We've also introduced and started pushing our premium economy as well as today we will launched our Upfront Plus.

Tell us about that.

Yes. So Upfront Plus, it's -- if you're familiar with European business class like Lufthansa, where effectively, they block the middle seat. It's a European style. We actually tried this. We've been wanting to do this for a long time, and we tried it during COVID. We got a lot of pushback. I don't know if you remember, that little incident people thought we were profiting on COVID even though...

Now that you've mentioned it.

Even though you could go buy a first-class seat on other people that we're giving the same space, but we got accused. So we pulled it back. So we thought it had been enough time. So we are reintroducing it. I'll let you know in a few hours, if we made some sales. But we just launched that a few hours ago. So we got the Upfront, and we have clear delineation now. So we have Upfront Plus, we have a premium economy and so forth. And so you have a lot of different options. So I think that's going to give a good revenue boost. And then we launched our Biz Fare just a couple of weeks ago, which gives you a low price that includes a bag, a seat and free change, free cancel, and it's all available through third-party and GDS systems. So no, so we probably have more revenue diversification tailwinds on top of probably the most aggressive pivot on the capacity side. So look, I think the whole industry is going to do well. And I think this whole paradigm that legacies, if they do well, that low-cost can't or vice versa, I think that's actually -- I think that's just wrong. I think you're headed to everyone, we're going to finally get the capacity kind of normalize back out. And so that unevenness was causing unevenness in margins, so I think everybody can make money. But I do think on a relative basis because of all the tailwinds and the aggressive steps we've taken on a relative basis, we're going to probably crush everybody else on margin.

So on the capacity topic, some of us in the room were at the ISTAT conference last week, and John Himlock of the A4A did a presentation and drew some gasps from the audience. It's a really good presentation. By the way, John, if you're listening, otherwise folks, you should go to the A4A website. But one of the slides that he put up that drew some gasps from the audience was each U.S. airlines capacity plant. And you had year-on-year JetBlue and Spirit downsizing a little bit. You had kind of low mid-single digits. Southwest, much lower than the bar that you would have thought. And then bam, there was the Frontier number that dwarfed every other capacity year-on-year measure on that slide. Walk me through why that is the right profit maximizing amount of growth for building on what you were just saying about margins, why is that the number that allows you to maximize profits for shareholders?

Well, mid-teens growth is what we were doing and had been doing for 7 years prior to COVID and been producing industry-leading margins. We obviously had a shrink during COVID, and we kept taking airplanes. What was bad was when we were growing 25% to 35%, it was just a lot of capacity. And so we're -- I'm talking about the oversupply in Florida, but we're kind of leaving out the probably 3- to 5-point drag of just really high growth for a couple of years back to back. But what I would say is I think we often get hung up, and it's not your fault, but across the industry, we'll show percentages growth and not look at the total seats. I mean there are carriers that grow more than my entire size each year. And it doesn't look like much. But 12% to 15% on top of only 2%, right? I mean this is less than 0.5% on the industry. So you've got -- but if you're 20% growing 10% and that's 2% on the industry. That is massive. And so I think that gets -- I think people get hung up on these percentages. When you're small, these are not big nominal impacts on the system.

That's a fair point. When United came out with its United Next Plan, which was a growth-oriented plan, I think the calculation we did was that every 17 months, they were adding the equivalent of an additional Spirit or something like maybe it was every 24 months, but it was -- when you put it in those terms, it was still just single-digit percentage growth, but it was quite a bit of capacity. So on the topic of M&A for a moment, when JetBlue's ambitions became known and that merger was pursued. One of the things that I said at the time was that Frontier stood to inherit the keys to the low-cost carrier Kingdom, which I then heard you repeat here and there, quote and reference JPMorgan.

I think I gave you credit.

Oh no, you absolutely did, Barry. But I'm wondering if you still envision yourself doing so, even without M&A, given some of the structural challenges that your largest discount competitor is facing? And I'm not asking you to try to spear it onto the bus, but I mean the situation there is, tense.

Okay, sure. Look, I get it. I wish them well. I was there a long time. I was when you asked how many times I've been on the state. I think I was actually the first time I was on stage was actually in Spirit. I agree. Actually, but no, I mean full disclosure, I think about those folks a lot on a personal level.

It will architected in the big front seat.

I guess so. A couple of things, I guess. But no, I wish them well. And so I think that I think they've got a problem, and we have a problem. I think some other low-cost carriers have some problems. And look, I think the best way to stop losing money and stop doing [ c*** ] that loses money, right? And when we look at our business, the places that we were losing money were the places that there were 3 or 4 discount carriers all on the same route and where the capacity was up 50% to 150% versus 2019. And by the way, markets that were already stimulated. Philly Orlando was already stimulated. We've been there damn near 10 years, right? It didn't need another I don't know, 50% more capacity or whatever the number ended up being. So look, I think we've been doing our self-help. They're doing theirs, right? I mean the -- I've seen them maybe not at the scale that we have. they have been in their defense been a little busy until recently. And so I think they're doing the same thing we're doing. I don't know where they're going to go or what they're going to redeploy to. But I think it is a fair statement that by fall, I would be shocked if you don't see the low-cost overlap shrink by massive amounts because I know we're doing it, and I know -- I've seen other people doing it. And I think that will probably be good for them. And I think it will probably be really good for the whole industry.

Do you have a contingency plan to pick up assets potentially on the cheap, if they become available at some future point? And I'm not saying a deal, a merger per se, but...

Yes. So look, I don't -- I keep hearing the same -- many of the same rumors. I don't know and pretend to know what their situation is. I mean you're talking a little more dire. I was in the speaking a moment ago, just we're all managing our own businesses. Yes, if there's something more structural that were to take place, I mean, obviously, we would look at it at that time. But I mean, I'm under the assumption there -- it's not as dire as many people. I think it may be challenging, but I don't think it's -- things are as imminent as people may.

So there's room for 2.

Oh, I think -- well, look, it's a big market. I think there's room for 2 or 3, but you can't all be in the same markets at the same time. It's a big country. We need to explore the other 70% of it.

So help me think through the sale-leaseback phenomenon because I'm clearly aware of what's permissible under GAAP and I think...

Well, there's what's permissible, but there's what's required.

Okay, fair. And unlike a discount airline in India, which books sale leaseback premiums as revenue, which really strikes me as kind of funky. I still don't really have my arms around that. Taking those gains and...

I think some of those do have flexibility. We don't have. I think ours is just...

Philosophically, it doesn't really make -- I just think of the top line is reflective of demand, not aircraft financing decisions.

Yes, it's a cost. And it's the last place I would think it would be some revenue.

Right. Right. But in your case, it's a contra expense, which adds pretty significant margin benefit at the end of the day. So walk us through how that's a sustainable strategy because it seems that the moment you would stop engaging in sale leaseback activity, you'd have a year-on-year CASM problem or escalation with the magnitude...

Let's back up. Let's back up for a second. Philosophically, if you buy planes arguably, in some cases, better than others, maybe at a little price. If you have an ownership advantage, it delivers higher margins, okay? I will give you an example of an airline that I've been following for close to 30 years that -- it doesn't show up as a sale leaseback, just shows up as cheaper ownership, that Southwest Airlines. I don't know what they pay for a Boeing 737, but I suspect it's one of the cheapest on the planet.

Ryanair as well.

Ryanair as well. And there's a rumor of another one here in the U.S. that has an MF into them, but who knows, just rumors. But these carriers have enjoyed margin benefit for decades, decades, because they paid less for something than some of their peers. Just as the way the accounting, it was changed a few years ago. So what we were doing before the accounting was you took the sale-leaseback gain, which we buy well, if you take that. And we spread over life of the lease. That changed a few years ago, and the accounting requires us, requires us, if it is regular and recurring and I have an accountant right here, who can explain this to you. If it's regular and recurring, which it is in our case, that you must take it the way that we're taking it. So it is a gain and yes, you see that it's material. But we have studied this over and over and over, and it is economically about the same as if we had debt finance. So we would have the same margins because we would have lower ownership cost. And so this bogeyman approach that everybody, all the earnings aren't real, oh, it's sale leaseback. No, they're real, they're very real. And in fact, you're just seeing the transparent breakout of it. And in fact, you can then take our order book and figure out that we have a major cost advantage and we have a major asset that's in the area code of our market cap. And so everybody needs to take a deep breath and I don't know who started that whole thing of the bogeyman this is not real profits. It's absolutely real profit. It's real profits, it's real cash, and that is the accounting. And to your last point, is it sustainable? Oh, yes, I mean, we're going to continue to grow at our pace and can continue to grow at our pace for a long, long time just as Southwest did.

But doesn't the sale leaseback market need to be there, not that we're modeling for it to go away, but changes in that regard. I mean, are you confident that you're always going to be able to sell a plane back to a lessor at a significant premium.

In the last 3 weeks, I've been in Singapore, Japan, i-STAT, and I can assure you the market is there.

Okay. Well, probably a topic that will come up tomorrow when we have all the aircraft lessors here.

Yes. No, look, they -- there's a lot of demand out there. Especially, look, if you're the lowest cost in your territory and you have Airbus, you're in pretty good demand these days.

All right. GTF update?

Sure. You have one.

You want one from me?

That's good. So look, we started taking the GTF about 1.5 years ago. We don't have any of the powder metal inspections yet. I think they come up later this summer -- in the summer. And so we don't see any impact of this coming to us. I can't get into commercial details, but we don't expect a financial impact of this.

Yes. All right. Any questions from the audience? I got a few minutes left. Mark, do you want to kick us off? Mark Streeter, JPMorgan. Please identify yourself into the microphone.

Barry, 2 years ago, you were willing to do a Spirit deal at economics that were aggressive, not as aggressive as what JetBlue ultimately did, but you were willing to do a deal. There's a lot of speculation in this room about what might happen to them. What are the conditions that would -- given where Frontier is right now, given your guidance so forth, what are the conditions that would allow you to sort of think about reengaging, if you will, in the tenets of that? Because I still think getting bigger and so forth, being more relevant, et cetera, having access to more aircraft, and under the right conditions might still be an attractive proposition for you. So how should we think about it because everyone is asking me, well, the Spirit files or hits the wall is Frontier going to show up?

Look, conditions change, and we are focused on ourselves right now. And I'm not saying that it's not a stock answer. We're spending 0 energy on this. I mean we have -- we were disappointed last year in what happened. I mean, we were knocking on double-digit right at 10% Q2. This capacity on select kind of came in and kind of ruined things for us and others. And so we're focused on fixing that. We are, I would say, 80% done with doing that. It's not all deployed yet, but in terms of the planning and the execution we're almost there. We really don't have time to even spend energy thinking about it. So our focus right now is come hell or high water, get back to double-digit margins, and then we'll talk about if there's something out there, but I wish them luck, and I think I said earlier, I think we've recognized and maybe we're just -- I know we say things and people are like, "Oh, it's shocking" and then people quietly admit it over the months and quarters later, the same things. But yes, we all flew too much to Florida. News flash. And so we got to unravel that and they do too. And -- or they don't have to. I guess they could continue doing the same thing, but it's probably not a good recipe. And there's other carriers too. So I think you kind of need to see how that unfolds in the U.S. and see what that does to everyone's margins and their businesses and then you understand the landscape. And I think that's the last step, if you will, to kind of get past kind of the COVID explosion because you had the COVID, you had the demand hit and then you had people taking aircraft like us. And then when we all redeployed, it got uneven. And so that needs to even back out now. And so I think until you see that, it's hard to say what anybody's business is worth.

Is it fair to say, we just had JetBlue up here, and they were talking about how we didn't talk about directly, but when they were trying to buy Spirit, they were doing it because they wanted to book up, become bigger and become more relevant. Now that they're not buying Spirit, they're still trying to figure out a way to become bigger and more relevant. When you look at your deal that you were trying to do with them, do the same tenets of the deal hold like, again, having access to the airplanes, the pilots, the real estate, becoming more relevant, having a bigger loyalty program, et cetera? Is that still -- it might not be your focus right now, but is that still your focus longer term?

Well, look, it is a true fact. And for those of you who know, I worked in the legacy space for 10 years, American U.S. Airways. So I'm well aware of how the S-curve influences revenue production and how that drives -- I mean, Jamie mentioned frequent flyer program earlier. That's how you get to frequent flyer programs. You've got to have to reach a tipping point an inflection that you're relative enough for the consumer, both in where they can earn as well as what they can burn. And so we are very conscious of the benefits of scale. We are, however, going down a different path in order to get there. I mean, I'll give you Cincinnati, right? I mean no one really cares about Cincinnati. We've put a base there. We fly to like 3 times in many places, nonstop is #2. And it's small, but we're getting scale there. So no, I don't know...

No one's cared about Cincinnati.

Well, okay. I mean -- but the same thing in Cleveland, right? I mean we're 2, 3x #2 in terms of places. The mayor loves me. I mean I love him. I'm going to see their opening baseball day in a couple of weeks. But we figured out how to get there in a different way, which is in some of these more small to midsized cities, we can get to a point of scale. And guess what happens? All of a sudden now your frequent flyer penetration goes up. Now they get your credit card. And so we're kind of manufacturing it in the places we can be scalable, and we're seeing that be beneficial. JetBlue is in a different place where look, they got one of the largest market in the world, New York, and it's a tougher place, right? I think, you've got United at Newark, you got Delta and American and all those players. But it's harder to be relevant against all those -- that major heft. And so I don't envy the situation they have in trying to get more scale in some of the biggest markets in the world.

And one last thing for me. We don't have your finance team here up on stage, but my understanding is in the fourth quarter, you were feeling people out about maybe doing a brand loyalty, gates deal, something like that, raising some capital. You didn't do the deal. But given your guide now for 2024, where are you standing in terms of your liquidity and capital raising? Should we expect you to raise some incremental liquidity? Or are you now feeling more bullish about the market given your guide?

Yes. Look, I think there was some concerns about our liquidity. I think it was possibly misplaced. We had over $600 million in cash at the end of the year. We're going to actually net positive against debt. I think if you look around the space, that's not necessarily true with most folks. We don't have really material debt. We do look in the marketplace. We did actually test the market, if you will. And looked at what financing would give. But we, at this time, don't -- obviously don't need it, but we stay pretty close to the market.

All right. Sounds good. Any other questions before we turn the room over to our keynote speaker. Yes, got one in the back there.

Let's say, I wanted to ask you about any cities that you might need slots for? Are there any cities you might be looking to do slot deals, maybe you are constrained in some way as you grow?

Well, look, in the United States, the 2 airports that are material are LaGuardia and DCA. And we are in both, not a huge presence in either. But you don't -- you can pretty much grow. I mean you can get into Newark, for example, maybe not in the prime times of the day, but you can get into Newark. You can even get into JFK most of the day. So -- in the United States, those are really the only two. And they're a tiny amount of the overall business. We were able -- we were fortunate to get a couple of slot pairs this summer to increase our service at LaGuardia, but I mean, it's not material. But I think I'll never forget, I was -- when I was back at Spirit a long time ago, this is 15 years ago, probably, maybe more. I'll never forget, we were trying to figure out how to fix Spirit. And Spirit at the time, it was like 15%, 20% of the airline was at LaGuardia. And the previous owners were so excited about LaGuardia and I was like, yes, but we lose money. And they're like, "Well, how are we -- how are we going to be an airline without flying LaGuardia? And I remember at the time, I was like Southwest has 400 aircraft, and they don't even fly to LaGuardia. For God's sake, why do you think you need to be there. And so I'll tell you, I'll go where we can make money. And I wouldn't worry about slots in this country, not for folks like us.

We'll squeeze one, John, because you're a friend. One more upfront.

So you've done a great job [indiscernible . If you go back to 2019, the spread between if you go back to 2019, the spread that Frontier was paying for an A320 captain versus United or Delta was perceived to be a competitive cost advantage for you, COVID-hit pilot salaries escalated. But today, we were told United is pausing their pilot training. Southwest is pausing some of their pilot training. Is it possible that the spread that you had in 2019 could come back and you'd actually be paying pilots less to fly A320 Frontier than Delta or United?

Well, so we do not have -- our deal just became open actually 2 months ago. But what the market has suggested, don't talk about us, let's talk about the -- what the market has suggested I know there was this idea that pilot wages were going to converge. The market really hasn't done that. There's been a huge convergence at the bottom. The regionals have come way up. And quite honestly, it's pretty ridiculous how low, to be clear, FOs we're making at regional. The fact that someone could qualify for food stamps just 10 or 15 years ago, it was kind of ridiculous, right? So it needed to come up. But you haven't seen the compression between the low cost and the top that I think was suggested. Having said that, yes, the pilot shortage appears to have screeched to a halt. You saw this about 6 months ago, when the regional started being able to fill their openings. That was kind of the canary in the coal mine. We actually -- we've had to slow down our hiring as well because we had planned -- we've had our own attrition for years. And unfortunately, we hired 2 pilots or a pilot that we're going to have, and it's about a 8- to 10-month kind of lead time through the process. So what happened to us over the last couple of months is we're like, "Oh my gosh, if we don't change this now, we're going to have a major cost problem because I'm going to end up with way too many pilots". So we have slowed it down. We're not stopping, but we slowed it down, but yes, I think with what you've seen, there's not really -- I think Southwest is stop, I think United is paused. I think Delta has slowed down. So it's yes...

It's not a constraint that it once was.

Yes. I don't think it's as dire as we thought. And I think it's actually -- I think this is actually healthy. You don't really want that kind of disruption that we had, had. I think this is good.

But still top end Spirit rates are a lot closer to Delta rates than what they were before this latest round of labor cost.

Yes, but they're still over 20-some-odd percent discount, I mean. It's a discount.

[indiscernible].

Yes, sure.

You're probably never going to get rid of that. We have to see the room to our next speaker. Barry, thank you so much for joining us.

Thanks for having us.