Southwest Airlines Co. (LUV) Earnings Call Transcript & Summary

Good morning, everyone. Thanks so much for joining us for another presentation here at the Goldman Sachs Industrials and Materials Conference. I have the pleasure of introducing Mr. Bob Jordan, the CEO of Southwest Airlines. Thanks for coming, Bob.

Thanks for having me. Catie, I appreciate it.

Of course. So you front ran my first question a little bit here with the 8-K out this morning, raising revenue guidance, talking about a new ASR to fall on the ASR you previously announced. We've had a couple of your peers here at this conference. Sounds like everyone is feeling a little bit better about the fourth quarter and how that's trickling into the first quarter. People are cautiously optimistic. Would love to hear a little bit more on what went well, what drove the update? It sounds like it's a little bit industry, a little bit Southwest specific. Would love to hear some more.

Yes. So yes, we had an 8-K guide out this morning, basically raised the midpoint about 1.75 points from up 3.5% to 5.5% year-over-year to up 5.5% to 7%. So really happy about that. It's really a combination of a couple of things. The backdrop is strong. The demand is strong. Close-in demand is coming in. The holidays are coming in very strong, and the strength looks like it's continuing into the first quarter. So the consumer is there. And then the second thing specific to Southwest, we had some tactical things we've been working on for a while. You had network improvements that are embedded. We have some marketing distribution things that we're doing. We added metasearch, which are driving demand. But the real -- the big thing are changes to maturing a revenue management system. And we had about a 2-point drag there in the second quarter. That improved in the third quarter, maybe less than 2, close to 1. And then we're seeing a lot of momentum in terms of those revenue management improvements. And then the backdrop generally is helpful because you -- all airlines, the industry capacity has come down in the fourth from the third quarter, and then we're doing our port, our capacity is down in the fourth quarter, 4. Trips and seats are actually down 8. So that's helpful. So the backdrop is constructive. But no, I think the main thing is the tactical initiatives that we put into place to work the network really work on the things that we are doing to mature the revenue management system. They're taking hold. it's working, and that strength appears to be continuing into the first quarter and into 2025.

That's great. And maybe just one follow-up. So a couple of your peers yesterday, and this was in a couple of the other 8-Ks, talking about both peak and off-peak being stronger than expected. Obviously, last summer, off-peak was the real problem for the industry. And any comments on peak versus off-peak?

We're seeing strength broadly. A lot of what I think is very beneficial there is we have tweaked the network to deal with that. So there's a lot more variability between strong and weaker days of the week, strong and weaker times of the day. You take the election period, we really drew demand -- we drew the network capacity down in that period because we knew demand is typically a little weaker. So we really worked hard to match the network design to the demand. So that's very, very helpful. And then again, the -- so we're seeing strength across all periods. But again, really, the majority of this are the initiatives. So the network changes are taking hold. And on revenue management, that's really focused on yields. So our flights that are very full. So they go out 90% or more full. You have to make sure you leave enough seats because demand is going to come in late. And you -- if you don't know the curve, the booking curve, then you can fill up those seats too quickly and not have enough to sell at the tail end here. So there's been a lot of work to rework and refine the booking curves. So that we have basically a lot of really good seats left to sell late, for example, in the holiday period on those flights that are going to go out 90% full. So that really helps the yield. The network changes really helps the load factor. So we're seeing a boost both in yield and a boost in load factor here.

That's great. And you kind of referenced this already but industry a lot more capacity discipline. The backdrop still looks good as far as you can see into next year. No one's cheating around the edges.

Well, I can't comment on anybody else but the industry -- the capacity has decelerated third quarter into fourth. And so I think that's very constructive. You have the -- just outsized influences around manufacturers, both airframe and engine. So obviously, you know the issues with Boeing and their ability to deliver. You've got the geared turbofan on the Airbus. And those issues are -- they really are constraining the industry. We were going to get 85 aircraft this year, and we're ultimately -- we've taken 20. Now we planned for that. And next year, of course, will be impacted. The question is how long does that constraining factor last? And right now, it appears that it's going to be 5, 6 years. It's a long time. So that will be an unusual but long-tailed constraint to the industry period. And then again, you're right, I think the whole -- the industry as a whole has a dose of capacity discipline right now. Of course, we're doing our part. Capacity will be down 4% -- down here at 4% in the fourth quarter, and then capacity will be down roughly 1% to 3% in the first quarter.

Okay. Great. Let's talk about the revenue initiatives.

I would love to.

Let's do it. So you provided a path to $4 billion in incremental run rate EBIT in 2027, $3 billion of that is tied to revenue. Can you walk us through the ramp to get to that $3 billion run rate? What do we see in 2025? And I think there have been some investor questions on how to bridge to that $3 billion, it's an EBIT number. I understand that there's some expenses that you're netting against the revenue initiatives. So it would be really helpful maybe just high level, understand what the revenue underlying that...

Sure. You bet. It is a revenue number. So you have costs associated with the initiatives. If you look at the assigned seating and move extra leg room, there are costs to -- not significant cost but it is hundreds of millions of dollars to retrofit, change the cabins. Obviously, things we're building like Getaways by Southwest, the new partnership capabilities, redeye capabilities, there's technology that goes along with that. There's technology that goes along with the assigned seating and extra legroom moves. But I think the way I would just generally break it down is 2025, the benefits really come from the tactical changes. So the network changes that are already in place or that you will see, you've got network changes in place that are coming in the first quarter, the second quarter, the third quarter. Things like the reduction in Atlanta, the reduction in O'Hare, the reduction in Oakland. And we're still providing plenty of service into those airports. Atlanta will still have service to over 20 markets, over 50 flights a day. But the revenue production in '25 really is the initiatives. It's the network changes. It's the continuing maturation of the revenue management changes. And then we put a lot into marketing distribution. We've added metasearch partners that like Google, FlightSearch, Skyscanner. And apparently, you have to be like under 25 to use Skyscanner. I'm not sure. I've never used it. But those are really helping on the demand side as well. So that's really 2025. You have some of the initiatives that come online in 2025, like Getaways by Southwest, partnerships, redeyes but the majority of the initiative revenue begins to come online in '26. And that's really -- that's the assigned seating and extra leg room, that $1.5 billion. And then those hit run rate in 2027. So that's how I would think about the stack of the revenue component of the EBIT number. And then on top of that, you have the cost plan and then ultimately on top of that, you have the contribution from the fleet initiative that we really have been -- we've worked really hard to separate that from the base business contribution to be clear about what makes up the $4 billion in total.

Right. Makes a lot of sense. There's a lot going on there.

So there's a lot there.

There's a lot there. A lot of tech to get in place, installing things on planes. Can you walk us through the execution checklist on delivering on these initiatives? What are the biggest risks to delivering the initiatives on time? I hosted our aircraft leasing conference here just a couple of days ago, a lot of concern around MRO slots, how that's going to work. Should we be concerned about that in terms of getting the new seats on the planes?

No. And just to back up, the plan, we've sort of talked about all that's in the plan from getaways to assigned seating. The plan is really exciting. The ability to finally get all that out at Investor Day to me was a lot of fun. And it's -- I've been in Southwest for a long time, 36 years. And it is absolutely a comprehensive transformational plan for the airline. It's not going to change who we are or the values that we stand for but it changes the product that we can offer our customers that they want significantly. There'll be a boost to efficiency, the ability to do things like redeyes and a boost to the overall ecosystem of what we can offer customers because we can now offer you partnerships as an example, and the best vacations product in the industry, which will really work well with Rapid Rewards. So I'm just really proud of the comprehensive nature of the plan in totality. So the good news is everything that I just talked about is on track. And we're committed to transparency. We debuted a scorecard at third quarter earnings, and we'll have that. We'll show you an update again at the fourth quarter here in January. Everything is on track. The technology is on track for everything that I described. Obviously, the big project is assigned seating extra leg room. Technology is -- there's a lot of technology, 60-plus systems. That is all on track. And then the other large component is retrofitting the aircraft, which really is changing some of the seats but it's really changing the LOPA or the layout. We are working with the regulator to get that certified where we need to have a certification. That's on track as well. And we have the capacity, both internally and at our MROs to retrofit those aircraft. So that is not the long pole in terms of implementation. And I think what we said about implementation is selling the new products back half of '25 and operating the new products first half of '26, and all that is on track.

Exciting. I'm looking forward to the scorecard. That would be great. So just drilling into the $1.5 billion, the seats, that's a big transformational part of the business. It's a big piece. It's $1.5 billion of the EBIT target. We did some math. We think it sounds a little conservative. We attempted to forecast a per seat buyout. And when we got to that number, it was much lower than your competitors. Would love to hear if you think there's some conservatism based in? It would be great to hear a little more on that.

Well, it sounds like I like your math, you're higher. But no, I think that we were very intentional in how we -- there were tens of thousands of surveys and a lot of science behind how we not only understood what do customers want. They want assigned seating. They want the extra leg room product and what are they willing to pay for in bundles or a loan and seat buyout, all those things. And so that included coming up with distribution models around what customers are willing to pay for those products, which, again, is a little unrelated to maybe what another airline might be charging. But no, we were very, very careful in how we modeled, maybe a little conservative. And -- so there is upside. What we did not -- what I'm certain we will see but we didn't model. We did not model share shift to Southwest Airlines because of the new products. We didn't model generally in all of this. We didn't model any value for the constructive backdrop as an example. We modeled sort of normal competitive environment, normal GDP. So to the extent that those show up, you see the share shift, which I would expect, you see some value out of the constructive backdrop, those would be an uplift to the numbers that we've provided.

Okay. Great.

And again, I hope whatever your numbers are, I hope they show up.

Yes. That would be good. Maybe moving to capacity. You introduced conservative capacity outlook at Investor Day. We've spoken to it a bit here today, 1% to 2% until you get back to the 15% ROIC. I still remember the last time we did this, and it worked very well for the company. So given the struggles at Boeing of late, do you think there's any downside risk to conservative plan? Like I know that you kind of have your own internal metrics to get back to upside but is there a risk of the downside?

Yes. And maybe separating just for a second. There's a lot going on at Boeing. In fact, I'll be up there in 4 or 5 weeks again to visit. And I'm glad they got the strike behind them. They're working hard to get the lines back up and running and all that, but there is a lot of work to do. But we need Boeing. We support Boeing. We need Boeing to hit their rates and deliver for Southwest Airlines and for their other customers. Now that said, we have been planning accordingly because you've got to control what you can control. And we were -- I think, the original number for last year -- for this year was 85 deliveries from Boeing. Ultimately, we planned to 20 because of all that happened in January and February. And we -- I believe we are sitting right on 20 deliveries sitting here today, so managed to plan correctly. And you've got to do that because otherwise, if you don't, if you shoot high, and then Boeing does not deliver, it means you have to reoptimize, republish your future schedules. And if you probably had that happen to you where you had a flight and all of a sudden, you get an updated flight and it may not be what you wanted. So it's a lot of gyration for our customers. So we don't want to do that to you. So we planned appropriately, and we've not had to republish the schedules. So we are doing the same thing for 2025. I believe our order book delivery number is 90, if I remember correctly. We're not going to get 90. And so we're working with Boeing on the right number, and we're planning to a number that is significantly more conservative than the 90. So we'll do the same thing here in '25 so that we don't have to gyrate the schedules around. It's inefficient. It's not good for our customers. Now back to your question on capacity, and risk, we've guided across the whole plan a lower number, 1% to 2%. We need to earn the right to grow. We need to get our financial returns back to what I expect, what our investors expect, and we will do that. And once we get there, we'll reexamine our growth rate. The good news is across the time horizon of '25 to '27, all of that 1% to 2% comes from initiatives. So the addition of redeye flying and aircraft that are created by compressing the turn, that generates the incremental flying. So we don't really need those incremental deliveries from Boeing to generate that capacity. So that helps derisk. So the combination of planning appropriately and the fact that the modest capacity we are planning on is coming from initiatives not related to Boeing, I think, is very helpful. And sorry to go on so long, but on that, the -- just as a report, any time you compress turn times, especially when you're really efficient like Southwest Airlines, that's a risk. And we've tried it before. The good news this time, we are doing it through technology. If you've flown us recently, you may not see what's happening but we've gone paperless all through the aircraft. So the dispatch releases, everything a pilot has to do is on the iPad. Everything the flight attendant has to work with now as of 2 weeks ago now is on the iPad. You pull into a gate, these great big ramp information displays that control the turn, control the ramp and upstairs and downstairs and bag movement. So it helps orchestrate all that has to happen to turn an aircraft. So the turn compression, 5 minutes a turn is coming out through technology, not through hope. And we put the first batch in, in November, and I'm very happy to report that it's working. So we saw no operational impact. The 5 minutes came out and the stations are operating really well. And the combination of that and flying red eyes generates 34 free aircraft to the airline, which funds the capacity. And I know I'm going on a long time but I just have to brag because the -- again, we put the compressed turn time into, I think, 14 -- I think it was 14 stations in November and really saw no blip in our performance. So if you look at Thanksgiving, I just got to brag on our people. We were #1 in on-time performance. We were #1 in completion factor, so the lowest cancels. I think we canceled 6 flights out of 28,000 in Thanksgiving week. We had the lowest number of long delays, and we had the highest Thanksgiving week revenue we've ever had in our history. So I mean, just stunning operational results at a time when we actually took time out of the turn and made it harder for our people to operate, and they just did a fantastic job.

That's great. I'm sure they're all excited.

They're excited.

And new customers...

And they love the technology. They're not resisting the change. They actually love the technology. I mean, who...

No more pages.

Who wants 60 million pieces of paper in the cockpit every year. They don't want it. They want to work off the iPad. So the changes are both really good for the operation, and they are what our people want in terms of how we manage ourselves.

Right. And so I guess what I'm hearing from you is you control of your own destiny apart from Boeing over the next couple of years on capacity growth. It's interesting. It's the first time I've ever seen in 10-Qs and Ks that there's -- we now have contractual deliveries and expected deliveries for everyone. So that's a new one. So it's nice that you guys are...

It's a little confusing. Yes, you've got contractual expected actual backlog...

Hope number.

But yes, at the end of the day, all you can do is control what you can control. And what we can control is planning to a number that we believe and planning to a number that allows us to operate and not have to gyrate our customers around with schedule changes. And that's exactly what we're committed to doing.

That's great. It helps on the cost side as well and not having to hire ahead for planes that don't show up. Makes a lot of sense. Maybe just digging in on the 2025 capacity picture a little bit. You've guided to 1Q 2025 being down 1% to 3% year-over-year. We're going to end the year up 1% to 2%. That implies some back half growth. We just talked about this is in your control. Is that all redeyes, that's the turn feathering in across the system, stage gauge departure growth?

It is. I think it's pretty simple, which is the -- yes, the first quarter, we're down 4% in the fourth. First quarter will be down 1% to 3%, full year, up 1% to 2%. So it obviously implies you're going to ramp capacity up modestly across the rest of the year. And it really is those 34 aircraft generated from redeyes and turn coming online, generating that incremental capacity. The other impact of that, we haven't talked about costs but at our natural growth rate here for a while of 1% to 2%, it would imply sort of mid-single-digit unit costs, especially with the annualization of the labor contracts that we've been able to get done in the last 1.5 years. And the first quarter on top of that, with capacity actually being down 1% to 3% and you have costs associated with the new initiatives, it just means that there is some abnormal cost pressure, especially in the first quarter. Now as the incremental flying kicks in, as you lap some of these costs, you'll catch tailwinds in terms of our unit cost across the rest of the year. Also, we've got a significant cost plan and that cost plan, which is we're deep in the work right now, that cost plan will kick in as we move across '25. So that benefit will come online. I'm just admitting that the first quarter will be the toughest compare of '25 for a number of reasons, especially the capacity, and then we'll catch tailwinds, and that will moderate across the year.

Got it. That makes sense. And so I guess as we just -- I know you're not going to give us '25 guidance here on the stage. We're very happy to take that.

As normal, we'll do that at fourth quarter earnings here in January.

Yes. It makes a lot of sense. But I guess just since we're talking about kind of the high-level sequential how that works year-over-year. Should I guess, do we start to flip to growth like in the second quarter? Is that more back half weighted? And then I guess, on the other side of that, to your point on unit cost, should we just think about there being a pretty direct relationship between the capacity growth going up and CASMx going down over the course of the year? Or anything lumpy we should be aware of as we go through the year?

I think it's going to be pretty -- it's not an exact straight line never but it's going to be a fairly normal progression across the quarters in the year on both of those fronts.

And I guess you said the natural cost inflation here on low single-digit growth would be mid-single digit. You've got cost initiatives that ramp over the next couple of years of your plan. In 2025, there's obviously some front-loading of cost to get technology and running for all the great stuff you've got coming on the revenue side in the later years of the plan. How do we think about how the offsets to kind of the natural cost inflation come in? Is 2025 a year where maybe there's a little bit of front-loading for later years, '26, '27, we could see you do better than that?

That is exactly the way to think of it. You'll have a -- I think we'll catch tailwinds across '25 as we move across quarter-to-quarter in '25, and then you will catch tailwinds as you move across the plan, '25 to 6 to 7. And on the cost initiative, we -- threw a $500 million cost initiative out there, we weren't specific about the contribution '25, '26, '27. I'll just admit, I mean, we're a low-cost airline. We're a high-efficiency airline. Just we talk -- as we talked about the turn time coming out. We have -- we've made investments in things like the ramp, making sure that we can turn aircraft that we can deice properly. And -- but we have got to become more efficient. We have got to have a manic focus on cost and cost takeout, and we will. And while we haven't been specific on how that $500 million comes online, the goal, of course, would be to move through that as quickly as we can. Now I'm not going to give you an exact number but we would love to achieve -- the focus will be on achieving that rate at a pace because we are absolutely committed to the cost work, absolutely committed to the efficiency work. A lot of that is traditional costs, it's things like supply chain and efficiency but a lot of it is corporate overhead. And if you look at our numbers, I'm just going to be honest, some of the corporate overhead has grown at a faster rate than the rest of the airline, lots of good reasons. We've added initiatives but it's an area where we have got to be the leader in terms of efficiency. And so there's a strong focus on that; and you'll see us being aggressive and the desire would be to move through that as quickly as possible without giving you a number.

Nothing from my model.

I don't know the model yet. I'm just telling you the desire would be to move through that expeditiously.

That makes a lot of sense. Let's talk about fleet strategy. I think it'd be great to dig on this a bit more. I understand you're actively in negotiations in the 8-K this morning kind of teased we should expect something in the first quarter. So I won't press you too hard. But I've been fielding some investor questions on this. So I think it would be great to clarify to the extent you're possible. Can you speak just philosophically about the opportunity on what would influence the pacing, covering lessors, I know a lot of times like getting these actual T's crossed, I's dotted on the legal back end can take some time. Yes, I would just love to hear how we should kind of think about this. We've got the 1Q teaser but the subsequent information after that.

Yes. And if you just sort of back up maybe 50,000 feet and then some of this, obviously, the pacing is dependent on Boeing and the aircraft that we are -- that are delivered from Boeing. But ultimately, across the horizon of the plan, we'll hit the numbers that we talked to you about, the $500 million a year contribution from the fleet strategy. But way up here, 50,000 feet, there are 2 components. One is fleet modernization. So just basically flipping an older 700-800 for a newer MAX. And you have -- obviously, you have operating improvements, OpEx improvements. So just the value for flipping the older aircraft to the new aircraft. That's one component, and that's in there. The fleet monetization strategy really is a couple of things. We -- the market for used aircraft is very strong. So you have -- we just have the unique opportunity here where the market value of our used aircraft in most cases, is ahead of the book value of the aircraft. And we don't need as many of them given the lower growth rate. And so you just have the ability to monetize that short-term sale leasebacks. We're not going to do anything that's not NPV positive. And that will be helpful to, obviously, our cost on the modernization front. It will be helpful to the balance sheet cash flow on the other side. On fleet monetization of the order book, which may be a little different. I think we have a unique Southwest-only opportunity because we have a large order book with Boeing. We don't technically need all of those aircraft to grow at the rate that we've talked to you about. Those aircraft have an embedded value between the market value of the aircraft and the pricing that we have with Boeing, which I can't tell you, obviously, what that is. I'll just tell you that there's value there. And we're going to -- and that value came from a number of things but primarily, that differential came from the fact that as we had issues with Boeing, those damages, so to speak, were resolved through credits on new aircraft. And so one way that I think of it is you had earnings that would have fallen in a period to the left because aircraft would have been delivered and they weren't, and those earnings are simply in the order book through the credits. And we're going to work to extract every dime of that and work to return that -- use that as a significant vehicle to return cash to shareholders and boost shareholder returns. So you've got a number of things going on. You've got fleet modernization, which is helpful. You've got monetization of the existing fleet and then you have monetization of the order book itself. And all those will work together to make us a better airline, better cost profile, help CapEx, lower aircraft CapEx but also improve the ability to return cash to shareholders.

Right. And I guess would it be on the embedded value in that order book. Would it be fair to say, number one, you've got a lot of value there as one of the largest 77 customers in the world?

We just have a big order book.

And number two, I mean, it's been a couple of black swan events in the airline industry since then. But rolling back to '19, you were one of the most impacted carriers by the MAX grounding. I remember at the time you talking about the value that was rolled forward. So I'm assuming -- now you're not going to tell the number but I'm assuming you got a significant benefit to the future price of aircraft on that.

We do. So yes, you've had a lot of different things that have happened from the MAX grounding to just the inability to deliver for like 2023, 2024, 2025, as an example. And we do have a -- if I got my numbers right, I think we have 693 aircraft that are still in the order book. And so you just have a very large number through 2031. And so the combination of that differential to market value and the fact that we have a lot of aircraft that we can monetize provides a lot of opportunity to realize a lot of benefit and again, use portions of that benefit to generate returns to shareholders.

Right. I don't want to get too in the weeds on the margin differential and all this. But in 2025, you've got a 2-point differential with and without the fleet strategy. In 2026, it's 3 points. I attempted to do the math. In 2026, that 3-point gap drives a larger than $500 million gap between the 2 margin guidance. Totally understand $500 million a year in fleet is an average number. You're saying average for a reason. But I guess, does that give us any hints about the timing of capitalizing on the current strong market? Like is that what we should be interpreting from that?

I don't think so. I think I'd really look at that and say it's an average. And the -- there's uncertainty in the -- you've got to get the aircraft to be able -- Boeing has got to get back to rates and then beat those rates to be able to generate the aircraft to then deliver the aircraft. Again, it's going to happen. It's just what period of time. So you've got some uncertainty around the timing of when the aircraft are available. And then the transactions themselves, you said it, the transactions are complex and they take time. So it's really more -- it's just the inability to be specific because you have to work every transaction to do that. So that's why we gave you an average. So I wouldn't read any -- I really wouldn't read any more into it than that.

Okay. Fair enough. Maybe just in our last couple of minutes here, I'd love to talk about the fortress balance sheet. So you guys are still running in a net cash position today. You have -- you're going to have a lot of cash generation out of this fleet plan plus the improving backdrop of the business. Would you ever consider running some low leverage over the next couple of years as you're making some big investments as well and looking to return cash to shareholders, but still within a healthy IG rating? Like how do we think about where you might go on the balance sheet?

I think all -- a really great question because all that has to sing together. We have been incredibly rewarded for the discipline that we have had for 5 decades to have balance sheet discipline, fortress balance sheet, very strong credit ratings, the only airline with all 3 investment-grade credit ratings, and that has served us very well. Look at the pandemic, served us very, very well. Now coming out of the pandemic, I can't believe we're still saying coming out of the pandemic, we do have excess cash. We held excess cash in the pandemic. Some of that sort of for emergency reasons. We held on to that over time because we knew we had labor contracts that we were working our way through. We had obligations there. We had debt obligations. So we'll be working both to work that excess cash down to something more reasonable. At the same time, we'll be working these fleet monetization initiatives and transactions, as you talked about, to return capital to shareholders. You saw us boost or actually add the next accelerated share repurchase announced that this morning. We have one out there for $250 million. That will close. We'll come right behind that with another $750 million. The total authorization and the share repurchase is $2.5 billion. The intent would be to complete that in 2025. So we'll continue to be methodical in turning and returning cash to shareholders. And if you think about where we're headed, our leverage today is kind of mid-40s and the intent is to get that back down to something that is more pre-pandemic like, which would be maybe low to mid-30s. So we're not going to break the philosophy of strong balance sheet, strong discipline, strong credit ratings. But at the same time, there's always an interaction between all of those choices, your leverage choice, your investment-grade rating, your -- so I'm sure we'll take a look at all that as we continue to think about returns to our shareholders. But no, we're not going to do anything out of character for Southwest Airlines, which would be wing our balance sheet or excessive leverage or any of those things.

Maybe just one last quick one. You started with a $250 million ASR. Now we're talking about $750 million. Should we read this as like the pace is picking up because the backdrop looks better or you're excited about some of the fleet strategy? I know you just said you're going to complete the $2.5 billion by the end of 2025.

That would be 2025.

Right. Okay. And so I guess, like should we expect to see kind of the tempo here continue to accelerate on the share repurchase front?

Well, the #1 thing to boost the ASR, you need to be confident about the business. And so the -- seeing the revenue management and other tactical initiatives take hold, really show up on the revenue line is really positive. It gives us confidence for the fourth quarter but it gives us confidence into 2025. So that's why we came out and through the next ASR into the mix. Obviously, typically, when you do that, it implies what the next would look like and the pace. There's no guarantee there. But again, the intent would be to close out that $2.5 billion in 2025. And if you just do the math, that leads you, I think, to where you're going. It leads you to a sequence of something of that order.

That's great. Well, Bob, thank you so much.

Catie, thank you.

Always a pleasure. Thank you for coming.

Thank you so much. Appreciate the time.

Thank you so much.

Thank you all.