Allegiant Travel Co (ALGT) 2011 Q4 法說會逐字稿

Welcome to the Allegiant Travel Company's Fourth Quarter Full Year 2011 Financial Results Conference Call. We have on the call today Maury Gallagher, the Company's Chief Executive Officer and Chairman, Andrew Levy, the Company's President, and Scott Sheldon, the Company's Chief Financial Officer. Today's comments will begin with Maury Gallagher, followed by Andrew Levy, then Scott Sheldon. After their prepared remarks, we will hold a short question-and-answer session.

We wish to remind listeners to this webcast that the Company's comments today will contain forward-looking statements that are only predictions, and involve risks and uncertainties. Forward-looking statements made today may include, among others, references to future performance and any comments about our strategic plan.

There are many risk factors that could prevent us from achieving our goals and cause the underlying assumptions of these forward-looking statements, and our actual results could differ materially from those expressed in or implied by our forward-looking statements. These risk factors and others are more fully discussed in our filings with the Securities and Exchange Commission. Any forward-looking statements are based on information available to us today, and we undertake no obligation to update publicly any forward-looking statements whether as a result of future events, new information, or otherwise.

The Company cautions users of this presentation not to place undue reliance on forward-looking statements which may be based on assumptions and anticipated events that do not materialize. The earnings release, as well as a rebroadcast of the call, are available at the Company's investor relations site, IR.Allegiant.com.

At this time, I would like to turn the call over to Maury Gallagher for opening remarks.

Thank you, Operator. Good afternoon, everyone. Pleasure to be with you again this quarter. Joining me today, as the operator indicated, are Andrew and Scott.

We had another profitable quarter, our 36th consecutive profitable quarter. We had net income of $10.8 million, or $0.56 per share, compared to last year's $12.4 million, or $0.64 per share for the quarter. Overall in 2011, we generated just short of $800 million of revenue, 17% increase from 2010. Our operating profits were $85.4 million this year, net profits $49.4 million, and we earned $2.57 a share.

Our 17% increase in revenues was accomplished with ASM increases of just 2% system-wide, and only 1% in our scheduled service. Clearly, we had an excellent year in growing our unit revenues, but we needed this increase as fuel was uncooperative for most of the year. Our total fuel expense for 2011 was up 35.7%, and virtually all of that increase was because of pressures from unit cost.

For a bigger picture, 2011 was a very successful year for us. It was our fifth consecutive year of 11% or greater operating income results, and as we have indicated in previous calls, 2011 was a continuing year in investment for us, but it was also the beginning of returns on these investments as well.

We began service with our 757 mid-year. We currently own four aircraft and operate one. The other three are on lease, generating a nice return while we work towards deploying more 757s flying.

We are pleased with the results from the 75, I might add. We have validated our belief that having a larger aircraft on peak days would be advantageous. Not only do we generate more peak day seats, thereby enhancing revenue opportunities, but the unit cost for delivering these seats is substantially less.

Regarding Hawaii flying, we are progressing nicely on our ETOPS certification. We should have more definitive information about our timing at our next call, or sooner if available.

We also invested quite a bit during the year in our engines. In 2011, 23% of our maintenance expense was for engine activity versus just 8% in the previous year 2010. Indeed, in the last five months of the year, 34% of our maintenance costs were devoted to engine overhauls, a big number. However, because of this investment, we now have 60 of our engines with 1,000 or less cycles for our fleet of 100-plus operational MD-80 engines. This investment will pay dividends on the reliability front not only this year, but in years to come.

We are well on our way with our seat conversion for our MD-80s. We should have as many as 11 aircraft in service within the next week. We expect to have 16 by the end of March. Our strategy is to convert each base as soon as possible to optimize the selling effort in that particular base.

In Bellingham, we began our 166-seat activity selling as early as last October-November, but we ran a full base of 166 seats during January. While January is one of our slower months, the results were promising. We exceeded more than 150 passengers on two-thirds of our 270 flights during the month. Overall in January, we flew at 91% load factor on 19% more seats on just 7% more flights than we operated in the Bellingham market the year before in 2011. On these additional seats, we had 16% more passengers than 2011.

On the unit revenue front, what caught my eye was the revenue per block hour increased 18%, or almost $750 per hour. All in all, this was a very good outcome for our first effort with the larger airplane. Andrew will have some additional comments shortly.

Another area of significant investment has been our automation. As those of you who attended our investor conference heard and saw, we are well along the path to upgrading our new internal systems. Additionally, we have engaged third-party developers who, at our direction, are developing powerful applications, mobile and otherwise, to deliver products and promotions to our customers particularly while they are visiting our leisure destinations.

Furthermore, we are applying this application technology to improving our operations, including streamlining processes and procedures in our stations and in-flight sales.

We plan on introducing our new website gradually over the next 60 to 90 days. Included in our enhancements is the ability to offer what is known as an A or B site, or as they say in the industry, AB Testing. We will be able to direct small percentages of our web traffic to our new site to gauge the impact of customer acceptance and associated revenues. Remember, almost 90% of our revenues are generated through our website. This ability to test our changes incrementally is a terrific feature.

Lastly, we launched our DOT-compliant website according to schedule last week. As most of you are aware, we are actively engaged with Spirit in a lawsuit with the DOT on a number of their [PAR] issuances here in the past year. The government's new rules are nothing more than a blatant attempt, in my opinion, to re-regulate our industry. They have turned the standard of what is supposed to be, quote unfair and deceptive; into, quote, we feel like, or at the moment, or it's our common sense standard.

Indeed, a number of DOT's proposed regulations on certain post-purchase price increases were so bad that even they, DOT, admitted to it and admitted they were unworkable and withdrew them before last week's implementation date. We continue to work closely with our customers, offering them inexpensive, low-cost air travel to and from small cities to world class leisure destinations. This is a trusting relationship between us and our customer. We have created this trust during the past 10 years. Every market we have entered has had a meaningful increase in traffic because of our low fares and non-stop service. This is new traffic that historically was not flying. Namely more people are entering the national transportation system because of our offerings.

DOT's intrusion into this relationship, suggesting we are not pro-consumer, or rather they are protecting our customer against the evil airline because we are in some way deceiving our customers, is offensive. We will fight each and every time we are so challenged. Andrew?

Thanks, Maury. We had another strong revenue performance during the quarter. Schedule revenue increased 21% versus fourth quarter of 2010 on an 8% increase in scheduled ASMs. For the full year 2011, schedule revenue grew 20% on only 1% growth in scheduled ASMs, and we had record total fares in both the fourth quarter and full year 2011 of $128 and $126, respectively.

Air-related ancillaries increased 9.3%, or $3.7 million, due to a 7.4 increase in passengers and a 1.8 increase in air-related ancillaries per passenger during this fourth quarter. Throughout 2011, we continued to optimize revenue from the current products we offer our customers, but expect to begin to add new products in 2012 once some of our automation projects are completed and the team can focus on this part of the business.

Third-party ancillary revenue increased by $1.3 million, or 23%, on a year-over-year basis, and was $4.88 on a per-passenger basis. For full-year 2011, third-party ancillary revenue per passenger was $5.18, up over 19% from 2010, and we do expect to see continued strong growth in this area during all of 2012.

Our fixed-fee business was up 20% year-over-year, mainly due to having a [track] charter program in place out of Wendover, Nevada, that started during the first quarter of 2011, and other revenue was up substantially due primarily to the lease of three 757 aircraft to two different European carriers. These leases were entered into during 2011.

So, 2011 was clearly a transition year for us as we reshaped our business for a substantially higher-priced fuel environment. In the first half of the year, we held scheduled ASMs flat as we modified our network and improved our pricing. While fuel expense per passenger increased $13 in the first half of 2011 as compared to the first half of '10, we increased our average total fare by about $15. For the full year 2011, we offset a $12 increase in fuel expense per passenger with a $15 increase in the total average fare per passenger.

Having successfully navigated through the challenging fuel environment in 2008 gave us confidence we could once again manage our way to ensure we sustain high levels of profitability, and we believe we have met this challenge again successfully.

Looking into 2012, we are very excited, think it's going to be a very exciting year, and we're starting out the year very pleased with what we're seeing in the revenue environment. Our January 2012 passenger RASM is expected to be up between 9% and 11% compared with January 2011, and we expect the first quarter 2012 passenger RASM will be up between 1% and 3% on a year-over-year basis.

Year-over-year comps for passenger RASM will continue to be more difficult due to the outsize improvements we saw during 2011, compared with 2010, and in addition due to a 19% to 23% increase in scheduled ASMs projected for the first quarter and slightly more growth in the second quarter of 2012.

The increase in capacity will be due to more 757s flying, more MD-80 aircraft, higher fleet utilization, and the contribution of larger-gauge MD-80 aircraft. We today are operating nine 166-seat aircraft and as Maury mentioned, expect to be at 11 within days and have at least 16 in operation by the end of the quarter. We are disappointed with the continued delays that we've experienced in managing this extremely complicated project, but we will continue to press forward and try our best to accelerate the pace wherever possible.

That being said, the early returns as Maury mentioned are outstanding. We have operated four 166-seat aircraft in Bellingham for the entire month of January, and despite having a less-than-optimal selling window for those incremental seats, we filled almost 75% of the seats and our incremental operating costs are coming in at the forecasted levels that we've shared with you in many of our presentations. But, what we're very excited about is how strong the revenue is from these additional seats. We're seeing a lesser decline in total RASM than what we had forecast and we're especially encouraged to see this result during January, which is one of the seasonally weakest travel months of the year for us.

For the month of January, we estimate the operating margin from these incremental seats to be in excess of 60%. With such results, we're obviously more excited than ever about the potential earnings power that we can drive from having these additional seats in our MD-80 fleet. And now, I'll turn it over to Scott to talk about our financial results in more detail.

Thanks, Andrew. Let me first comment on our balance sheet, before turning to our cost performance for the quarter. We ended the year with unrestricted cash which comprises all cash and investment securities, of nearly $320 million, up $16 million from the end of the third quarter and $169 million from the end of 2010. This represents 41% of trailing 12-month operating revenue.

CapEx for the quarter totaled $18 million, primarily related to secondary market engine purchases and the continuation of our 166 reconfiguration project. On a full-year basis, CapEx totaled $87 million versus $98 million spent in 2010. The acquisition of our third and fourth 757 aircraft, secondary engine purchases and the 166-seat project contributed to the bulk of our CapEx in 2011.

Looking forward into 2012, we are projecting total CapEx of $105 million to $115 million. Although we anticipated closing on our fifth and sixth 757 aircraft in 2011, these acquisitions are now expected to close in the first quarter of 2012.

While there are no issuances of debt in the fourth quarter, 2011 was a very active year for the Company. During the year, the Company executed its first capital market debt transaction in addition to securing financing on two 757 aircraft. Issuances offset by $21 million in debt repayments were all reflected in our total 2011 ending debt balance of $146 million.

At year-end, our debt-to-equity ratio was 41.6%, and our debt-to-EBITDA ratio is 1.1. Consistent with the theme throughout 2011, our fourth quarter cost performance was heavily impacted by fuel and engine overhaul expenses. These two components were the largest drivers in the reduction in our operating margin during the fourth quarter.

Our cost per passenger ex fuel increased 6.3% to just over $62 while our fuel cost per passenger increased 19.7% to just over $54. Increased crude refining and transportation costs year-over-year drove a $0.57 or 22.7% increase in cost per gallon in the fourth quarter, to $3.08. On a full-year basis, our cost per gallon increased $0.77, or 33.5%, which on a 1.4% increase in gallons drove an additional $87 million in fuel expense.

Maintenance and repairs expense continue to come under pressure as we near the completion of our major engine overhaul and repair effort. Our fourth quarter 2011 marked the high point in terms of units overhauled and in absolute overhaul expense. This, coupled with a slight increase in rotable parts usage, drove an increase in maintenance expense per passenger of 32.5%, to $15.90 as compared to $12 in the prior year.

2011 was a significant investment year for the Company, where we invested heavily into engine overhauls in an effort to increase reliability and to reduce the overall age of our engine portfolio. For the quarter, engine overhaul and repairs totaled $9 million and nearly $19 million on a full-year basis, substantially higher than the $5 million expense in 2010.

We enter 2012 with approximately 50% of our engine pool having fewer than 1,000 cycles since overhaul as compared to just 11% in January 2011. This will increase operational reliability and translate into reduced and more normalized OpEx run rates for engines in the future.

At this point, we reiterate our investor day guidance, and expect total maintenance expense per aircraft per month to be in the range of $105,000 to $115,000 for 2012. Excluding engine overhauls and depreciation expense related to three leased 757 aircraft which are not producing passengers and ASMs, all of our other non-fuel costs decreased by 2.2% per passenger, which was in line with our expectations.

Depreciation expense per passenger increased $0.88 or 12.1%, to $7.52 during the quarter. Excluding depreciation related to our three leased aircraft, the increase in depreciation expense would have been consistent with the 6.5% growth in our average revenue service fleet.

And finally, let me comment on income taxes. Our effective income tax rate for the fourth quarter 2011 was 41.4%, which was up from 39.7% in the same quarter a year ago. Our effective tax rate for the full year was 37.9%, slightly higher than what we've guided to in the past. The rate change is directly attributable to the filing of state income tax returns, some changes in apportionments, and changes to laws and regulations in jurisdictions in which we operate.

Moving forward for 2012, we continue to estimate that our effective tax rate will be approximately 37%.

With that Operator, we're ready for some questions.

(Operator Instructions) Our first question comes from Hunter Keay of Wolfe Trahan, your line is open.

Thank you, hi, everybody.

Hi, Hunter.

So, a question for you on the fixed-fee and other revenue in the first quarter, looks a little bit light to me. At least what I was looking for, particularly considering the capacity additions which I would think would offset any kind of seasonal softness. So, maybe a little more color on what's causing the sequential drop and how you sort of expect that to spool up throughout the year would be great.

Well, I think that you know, our assumptions on fixed-fee, just like all of our other assumptions, we try to be pretty conservative. We're uncertain about typically in the first quarter, we do a lot of flying for the men's NCAA basketball tournament, and at this point we're not certain as to the amount of capacity we're going to have in order to pursue that business. Not as much of an airplane capacity issue, as much as the flight crew issue. And so, we're trying to be very conservative about our expectations this particular first quarter, as a result of that.

But, the contracts are in place. Harrah's, Wendover, that's the bulk of the business and that should continue steadily, and then it's the other kind of ad-hoc charter activity which I described in one of those such opportunities. You have opportunities like that throughout the year. So, we're just trying to give you the best guess as to what we see at the moment, and make sure we're being conservative about that.

Okay Andrew, thank you, and I don't think you mentioned this, Scott, but if you did I apologize. Did you guys update your 2012 full year CASM ex fuel guidance? I think last time you spoke, you were telling us it's going to be down 5% to 10%. Did you mention that again in the prepared remarks?

I didn't, but that's still the appropriate range. We're not moving off that from investor day.

Great. All right, thank you very much.

Thank you. Our next question comes from Bill Greene of Morgan Stanley, your line is open.

Yes, hi there, good evening. Andrew, can you provide a little more color just around the RASM commentary? I guess given how strong January is, it's going to be a pretty big deceleration. Is that a comp with Easter, or something in the numbers that just -- it just feels a lot like a big, big deceleration, that I don't fully appreciate why.

Well sure, Bill. There's a couple reasons I mentioned in the comments. We really started to see significant increases in passenger RASM throughout the year last year, and it really actually mostly started in February. And so, January -- that was really the first full month where our new pricing team and some of the approaches they were taking, really had the ability to have its full impact, and so some of it is just simply much tougher comps that begin in February and continue throughout the year.

The other part of it is that in flying around bigger airplanes or airplanes with more seats, obviously that's going to put pressure on unit revenue, but it also helps on the unit cost side of the equation. So, a lot of it is just that.

So, this year is going to be because of the increase in the fleet, as far as seats in the fleet, more of the 757 contributions, and some additional airplanes. You're just not going to see RASM increases like we saw last year. I just don't think that's likely at all. And so, we will see a deceleration as we get into the quarter, but that being said, we feel really good about where the numbers are coming out.

Okay, and given the success you've actually had with the 75s in the lower 48, do you think you should actually be looking to take more of those? I mean, we've got sort of American in bankruptcy, so maybe there's a big opportunity on both your fleet types here. I don't know, how do you think about maybe changing that and adjusting it given that when you put them in Hawaii, eventually, you'll have sort of a hole in some of these markets, I suppose?

I wouldn't say that, Bill. I wouldn't say it's a hole, but I get your point. Are we looking at adding more 75s? Yes, we're certainly keeping close tabs on the market. Asset values across the board for aircraft have gotten punished, just all types, some more than others. Perhaps a 75 maybe more than others, but we're very intrigued. We'll just have to wait and see. We're very active in the market, and we'll make whatever we think is the right decision, at the right time.

Yes. And given the size and the gauge that we're adding, is it realistic that we should have at least in our mind there's a possibility of a RASM decline, just given the gauge changes?

Well, that's exactly what I was trying to express before.

Yes, that's what I thought.

[Absolutely], I mean, flying a 220-seat airplane around is going to drive RASM lower. It just is, and obviously, it's (technical difficulty) CASM lower also. Then of course, flying 16 more seats, we certainly don't believe we're going to maintain RASM as high as it would have been with 150 seats.

Sure.

So, that's what I was really trying to do.

Bill, it's Maury. Just as a comparison, in March of last year, our RASM for just the scheduled service piece was up 40% from January.

Okay.

So, we went from $0.072 to $0.1028. So, I mean, that's just, you can see why we get a little more conservative on the RASM increases as we get to the back half of the quarter.

Of course, but you can keep the ancillary piece per passenger, I would think? Right? That wouldn't change, given the size?

That's our belief, yes, at this point.

Obviously we'll see how that plays out, but I think the most important thing is that we think that the larger-gauge equipment is substantially more profitable.

Exactly.

I mean, you guys like to talk RASM-CASM all this other stuff. We like to talk about profits, and what we're doing is driving earnings.

That's great. No, thank you so much for all the time.

[Give 'em hell.]

Thank you. Our next question comes from Duane Pfennigwerth of Evercore Partners, your line is open.

Hey, good afternoon.

Hey, Duane.

Just looking back on 4Q, can you give us any sense maybe by your primary destinations which markets are relatively stronger versus which markets are relatively weaker?

Duane, I don't think we want to get into that kind of detail. The business is doing well across the board.

Okay, fair enough. On your first quarter capacity guidance, I guess scheduled up 19% to 23%, what would drive the variance in that range? I guess we're here in February, so what would make it 19% versus 23%?

We pretty much have a pretty good idea of what our capacity is going to be in the quarter, but the one thing -- as far as what's on the books -- but the one thing we don't know about is fixed-fee. I mentioned the NCAA flying, that typically is something that we do a lot of, and then of course there's weather. It tends to be bad weather in the first quarter, and oftentimes you end up having to cancel flights, so we're giving you a pretty wide range. I'm sure we'll tighten that up as we get closer to the end of the quarter, but yes, we don't expect to make any real changes to our scheduled service offerings that are out there today versus what we expect to fly at this point in time for the first quarter. Obviously for the second quarter, we're still tweaking things, but I think you're right. I think we could probably pin that down a little better, but right now we're just prepared to give you the range we've given you.

Fair enough. Are there any markets that you're actually reducing capacity on in the first quarter, Andrew?

Yes, there's always a mix of routes where there is more capacity, flat, and then less. So yes, there are, but I think that if you looked at all of our routes that we operated a year earlier, I think that -- I haven't looked at this, but I'm fairly confident that there would be more routes that have more capacity added than routes that have less capacity this year. Some of it's due to gauge on aircraft and things of that nature, but also just we see a lot of strength out of there, and fuel's been steady for a long time, and we feel that growth is very appropriate for us in the current environment. So, that's why we're being a little more aggressive now that fuel is stabilized and we feel we can plan.

Okay, thanks for that detail, and then just lastly on 166, you gave us some good metrics, appreciate that. Can you just talk about sort of the incremental profit per departure on those flights in January?

We haven't gotten into that level.

Yes, I think, Duane--

Or I guess maybe what the fares look like on those last 12 seats, if we can even figure that out?

Duane, I think I gave you, I almost -- I think I might even have given you enough to solve for that. We're telling you the costs came in as we put in our presentation, which you've seen that slide, and we're also telling you that we generated north of a 60% margin, so you can kind of circle up a range that's going to be reasonable. It's highly profitable, as we expected it would be, and we're just excited to have more of these airplanes out there, and we're just excited about the revenue right now that we're seeing on those seats.

Okay great, thanks.

Thank you. Our next question comes from Ray Neidl of Maxim Group, your line is open.

Okay, just some general questions. I'll make things easy on you guys, it's been a long day. New government regulations, you mentioned briefly. I can tell that you don't like them from the tone of your voice.

Ray, you are an astute guy. (laughter)

That wasn't hard to decipher. But, the thing is, what can you do about it? Spirit has gone public, and they've aroused the wrath of Senator Boxer from California, and some of the government regulators. It's not good to fight with your regulators in public, I guess. What else can you do? From what I've been deciphering from the news media, is that there is a heavy pushback and some politicians are coming to the aid of the airlines regarding this.

You know, Ray, as much as anything it's a PR campaign. I think that we, the airline industry, have been pretty silent over the past 24 to 36 months as we've been pummeled by all of the do-gooders who want to improve the processes, and we have some flaws. I'm not going to sit here and say that isn't the case, but they de-regulated this industry under the law and left a basic standard out there -- unfair and deceptive. When you're told that you have to give somebody a refund outside of seven days, otherwise it's unfair and deceptive, what is unfair and deceptive about a fare that's non-refundable when you buy it?

So, we're taking the recourse that's open to us administratively, which is through the courts, and I personally, and this company's philosophy is, that we're going to fight back. We're just not going to sit here. If we do, it's just a license for these folks to think that they can just do whatever they want, and they're kind of like the third person in the relationship that's kind of just clawed and pushing -- we want in there somehow, and they want to remain relevant, and this idea that the industry, there's no transparency? There's never been more transparency in this (expletive) industry, than exists today. And yet, we're being told all of these anecdotal things that people don't know information, and can't shop, and all that. I mean, we all have been around long enough to know what it was like to try and get information in the 90s and before the Internet.

So, it's just a blatant attempt to get power and control in a place they shouldn't be. So anyway, I could go on, but I'll stop there.

Okay, no, you got your point across. Just as a very general type of subject, you did talk about already adding the 16 seats to the MD-80s. What is the probability, what is the risk, of a slowdown of you not meeting the schedule of getting the seats on board? Not having enough aircraft to meet your growth targets? What's your backup plan in that case?

Well, a couple of things. We will have the airplanes. We may not have the absolute seats that we've talked about. We basically have a four-line production shop that's sitting there with our 57 airplanes. We have 53 available for service at any given time, and that's the plan until we finish the program. But, these are very involved changes and configuration changes, and engineering and the process to put new stuff into an airplane is very involved.

Candidly, it's a little more -- a lot more -- complex than we probably gave it credit for back a year-and-a-half ago when we started talking about it. Having said that, we're making progress, and we're very much endorsing the project. It'll be a little more painful than we thought, but we'll get 'er done.

Okay, good, and then just finally, I think somebody brought it up before. Could you get more 757s if you needed them? Conversely, a lot of people now are going to Hawaii again, including some of the big carriers. I think United announced they're going to do nonstops from the East Coast. Is there a backup use if you can't make full utilization of the 757s? I know you had the charter market, is there anything else you can do with those aircraft?

The East Coast really doesn't concern us. That's a different market completely, so no. I've read Hawaiian is opening up JFK, and you've got Continental, United, all that stuff from the East Coast, so that's separate and away from us. Clearly, we can move these airplanes into domestic service here. We always like to start with a small amount of capacity, test the waters, and we'll do it the same way, but we typically have a Plan B if Plan A has a problem.

Okay great, thank you very much.

Thanks, Ray.

Thank you. Our next question comes from Gary Chase of Barclays Capital. Your line is open.

Hey, good afternoon, everybody. Wanted to ask a few, first on the 166-seat economics as you've seen them thus far. I think most people would agree that the January revenue environment has been a little bit more robust than you would have thought. How are you controlling for that in the analysis? In other words, how are you deciphering between the fact that the fares are a little bit higher than what you would expect, but I don't know, potentially they were around the network. How are you controlling for that, and when you kind of strip away the revenue environment, does it look as good as you thought?

And then, I wondered as well since you commented, and I know you talked about the overall economics, but I wonder if you could segregate and tell us, are you actually keeping the ancillary on those passengers as you analyze this?

Gary, this is Andrew. I would say number one would be yes, obviously we see, we can certainly control how we look at the data, look at RASM on those routes versus [the system] and things of that nature. The bottom line, though, is that as we've always said, we thought that the cost per incremental passenger would be around $40 a head, and that we may not get the same total fare that we get for the first 150 seats, but it won't be too far away from that and we're basically finding that to be the case. So, it's as highly profitable as we expect it to be, and we're encouraged that yes, even though January has been pretty strong, but January still in our business is still a very weak month, seasonally. It's just not a good travel month for leisure travel, so we're encouraged by it.

As far as the ancillaries, I think at this point it's just too early to tell. I don't feel like I have really good data. Even if -- I don't know if we want to share that anyway, but right now I don't think we have very good data to be able to give you an answer to that question.

Okay, and then can you -- I obviously understand it's only been a few days, but we think about a carrier like a Spirit, they operate in a lot of competitive markets. The DOT rules are going to sort of affect everybody in the marketplace. Your competitive profile is obviously quite different. Are you seeing any change in booking behavior, or is there anything discernible that's happened since the 25th or the 26th, whatever the implementation date was, of the new rules?

Gary, it's Maury. It's really very early to tell what the long-term effects, if any, are going to be. We're six days, five days into it. Some of the features opt-in, opt-out, are changes to our customers. We're doing different things as well to offset some of those changes, as far as advertising and notifying our customers differently while they're in the process of buying something to make sure they understand that now's the time to buy a seat assignment, where before we may have told you that you -- opt you into a seat assignment, and in particular, bags.

We initially didn't opt people into bags, but we found a lot of people were upset that we didn't tell them they should buy a bag early on, because when they got to the airport we typically charge more for a bag if we have to handle it at the airport than if you let us know ahead of time on the website. So, we'll work through those things. There's this and that change. One component actually is up a little bit, and a couple are down, but nothing material by any means.

And then just going back to a question that was asked earlier, is there a thought process that the implementation will affect some of the revenue? So, in other words, as you look at that deceleration in RASM, I obviously understand there's a lot more to it, I get the comps and so on that you've articulated. Is there a component of that, however, in your thought process that's related to this?

No, I don't think so, Gary. I think we believe that we will manage our way through this. As far as the fare, on the front-end fare, that's just more of a -- that's a communication and a messaging challenge that I think we'll meet. Not to say it'll be perfect on day one, but no, that was not -- we didn't try to estimate what we thought the effect of these new rules would have on our passenger RASM. There's just no way for us to forecast it, so we haven't bothered to even try.

But so far, like Maury said, we're encouraged by what we're seeing. We haven't really seen anything on the base fare, even though it displays on the front end of the transaction at a higher rate. Hopefully we're doing a good enough job educating customers to know that it's just simply, they're seeing those costs at the front of the transaction instead of before they pay later in the transaction, so effectively there really is no change in that area. So far, so good.

At the conclusion, just kind of a generalization from a few of our folks after looking at the data, is that the customer knows what they want to spend going into the transaction, and that really hasn't changed. You just rearrange some of the pieces on the checkerboard to a certain degree, and it cost us money and time and overhead to implement it, but that's our government for us, protecting us.

Okay, thanks guys.

Thank you. Our next question comes from Jim Parker of Raymond James, your line is open.

Good afternoon, guys. Just a couple things. Andrew, did you say something about crew issues, or imply that you might not have enough crews to do this charter flying? Are there any crews, crew issues that you're seeing?

Well, I mean, no. Look, we try not to have a surplus of anything, airplanes or crews, and crews are expensive. So, we try to have as few as we can to meet our mission, and sometimes you have to make some choices about how to utilize your crews. And so, really, I think that's more a function of the efficiency that we have as opposed to any kind of a problem. I don't view it as any kind of a problem there, but yes, I did say that we need to determine if, to what extent, we will participate this year in March Madness due to number one would be aircraft availability, but also having sufficient numbers of crews to be able to go after that business this year.

Right. Okay, and regarding the adding the 16 seats to the MD-80s, what's your best guess currently as to when you might get all 57 refurbished and in service again?

Jim, this is Andrew. I mean, we're hoping for at the end of the year, but as you know we've had to push our dates. So, it's a little too early to give up on that at this point, but obviously it's -- these airplanes are, they've been around a long time, and you open everyone up and it's not what you expect to see, and it just adds a lot of time and issues and it's just very complicated. So, hopefully we can start to accelerate as time goes on, but for now each one is its own individual project, and it's just been a struggle, but we're getting through it. Hopefully, we can get it done by the end of this year. At this point, if anything moves into 2013, it would be a very small number of units, but we're going to try and make sure that doesn't happen and try to get it all done this year.

Okay, and then it appears that there's no way to accurately forecast when one would get ETOPS, but can you give us a bit of a timeline when you get the ETOPS authority, then when do you -- do you immediately begin marketing Hawaii, and then how much time before you actually begin flying?

That's a good statement, Jim, of what we're going to do. It's a Catch 22. You don't want to start flying five, six hour segments without enough time to sell properly, and so we're targeting June 1 which is good, high season over there. If it happens as we hope it will and think it will, we'll have reasonable time to sell. Not ideal, but reasonable, and we think that we need 60 to 75 days minimum, if not 90 to 110, 120. So, that means we've got to have a good indication in the next month to six weeks that we're going to be in good shape.

(multiple speakers) Okay, and Maury, in that context, what kind of startup or pre-flight costs are you anticipating?

You know, Jim, we've spent most of that money already. You've got some proving runs to do, so it'll cost you a couple hundred grand, probably, to do all that. But, I wouldn't expect a lot more. You know, some pilot training, but that's ordinary course of business.

Right, so no substantial promotional costs?

Oh, advertising and marketing for Hawaii, Andrew?

Yes, I mean Jim, I couldn't even answer that right now. We haven't given a lot of thought to what that's going to look like. Our marketing spend is really low. It'll remain low. Whenever we open up a new route we do spend money, but again, we're going to be going into at least initially, markets that we currently serve where we have a known brand name and a database of customers. So, that'll keep that spending down.

It's just another market. It's a different destination, but it's just another destination. It's just like Oakland, it's the same thing. So, it shouldn't be anything out of the ordinary.

Okay, all right, thank you.

Thanks, Jim.

Thank you. Our next question comes from Michael Linenberg of Deutsche Bank, your line is open.

Hey, good afternoon, guys. A couple questions, here. Did you guys, Scott, did you give us what you were paying for fuel in the March quarter, or maybe what you're paying currently all-in?

It's right around $3.08, $3.10 per gallon.

Okay, $3.08, $3.10. And then, with respect to your guidance on PRASM for the March quarter, should we when we think about your total RASM, or TRASM for the March quarter, should that be running at a slightly higher rate? I'm sort of alluding back to some of the comments you made, Andrew, about the ancillary piece. You should see good growth in 2012, should that be up more, or is there a year-over-year comp issue that we have to worry about?

No, what I was really alluding to, Mike, was the fact that we've kind of been frozen on introducing new products that we would like to introduce because of just the resources in our IT group have been so focused on other, more important issues, including meeting this DOT deadline. As a result, and then we have a new website that's in tests right now, internally. It's going to start to get some traffic on it very soon, and so once we get past these very large, important projects, then the resources we hope will be available to start working on allowing us to bring on some new products that we've been wanting to roll out there. That'll happen at some point this year. We're not going to predict as to when we're going to see that. It certainly won't be in the first quarter, that's for sure.

Is it reasonable then maybe for your total RASM to be up sort of at a similar rate, is that a fair --?

Well, I don't know -- you know what, we haven't even tried to forecast it, Mike. I hope so, that would be great. That would be great if it was, or if it was at a faster pace. But, for now, I think that the relationship that's been there on TRASM and passenger RASM, I would suspect that you'll continue to see that relationship remain kind of consistent for the next several months.

Okay, good. And then just my last question, with the FAA Reauthorization Bill finally in place, I guess it's been a long time coming. What, four-and-a-half years, or so? The piece of it that includes eight long-haul slot pairs at DCA, and I'm not sure if those are conversions of current slots or if they represent incremental slots. If they are incremental, as a new entrant, is that something DCA to Phoenix-Mesa or Vegas with the 75, is that something that would look interesting to you?

I don't think so, Mike. I mean, we'll continue to look at it, but when we looked at the recent slot auction we did not -- we really didn't think DCA was anything of great interest to us. Obviously I know what you're describing is a little bit different, but that's something we'll look at, but that doesn't get me all that excited at first glance.

Okay. All right, very good, then.

Thanks, Mike.

Thanks, Michael.

Thank you. Our next question comes from Helane Becker of Dahlman Rose, your line is open.

Thanks very much, Operator. Hi, everybody. Most of my questions have been asked and answered. I just had one second quarter '12 question on the guidance that you're giving us, in terms of I guess 20 some-odd percent growth rate in capacity. How much of that is the addition of the couple of 757s that are coming in the first quarter, and how much would be the seats, and can you parse out how much is sort of same-store growth, if you will?

Helane, I don't think we want to parse out the same-store right now. I don't feel confident we have a good answer, and the second quarter schedule, while it's selling, it's probably not -- it'll change, to some degree. The contribution from additional 757s is extremely small in these assumptions, and then of course there is a contribution from the additional, more of the larger-gauge MD-80s, and then there's also more utilization of the aircraft. We're flying the airplanes more. Then, there's more airplanes. So, as far as same-store, I don't have a number to give you right now. Maybe we could address that at some point down the road, but there will be definitely be same-store growth, that's fact. There's no question. We think that -- we believe that with the revenue environment that we're in, and fuel prices steady, we believe we had a lot of cost pressures last year that are receding, primarily the engine maintenance expenses we've spoken about, and we think it sets us up extremely well to grow, and grow aggressively, and drive earnings.

Well, actually, that kind of brings up another question, which is with -- I guess when I look at your route map, and all the dots, you fly to a fair amount of cities now. And yet, as the legacy airlines or the other airlines bring fares up with fuel costs going up, that must create more opportunities for you to be able to expand into, over the foreseeable future. So, I know you're talking about Hawaii for June 1, but have you given any thought to other cities that you could expand into, to take advantage of exactly that opportunity? And, what limitations would you face?

Well, Helane, I think that we've already seen opportunities that we've jumped on with Southwest eliminating service in the AirTran network from a few routes. We've already actually backfilled several of those routes. They recently announced additional cities they're going to exit from, and so that creates some new, interesting opportunities to consider.

Apart from that, we just have a very long list of other markets that have been out there on our radar and remain on our radar, but you're right. I think that as fuel costs go higher and people go higher, go larger-gauge, fewer RJs, less flying into hubs, it just continues to create more and more, and better opportunities for us to continue to do what we've been doing.

Of course, at some point we will venture outside of the borders, and we haven't done that yet but that's definitely a very high priority for us in terms of future, long-term, future growth. Growth is certainly something that is not hard for us to find. We just continue to find great opportunities out there. Obviously, going into Oakland, we're very excited about that. We believe that Oakland can be far larger than the two airplanes that are going to be there on day one.

So, it's an evolving market, and the way it's evolved these past few years has been very much in our favor, and we'll see if that continues. But, for now, it certainly looks like it will.

Okay, all right, well that sounds great, actually. So, thank you very much.

Thanks, Helane.

Thank you. Our next question comes from Steve O'Hara of Sidoti & Company. Your line is open.

Hi, good evening. (multiple speakers) Can you just talk about the ancillary piece for Hawaii? I mean, what types of agreements, is that kind of process already started? Do you have agreements in place, or is this something where you start June 1 and then it'll take time to spool up in terms of the ancillary, let's say per passenger basis?

This is Andrew, Steve. I think there's no question that it's going to spool up in a sense that it is a different market for us, in terms of just the length of haul, and so we're going to learn a lot in time as to okay, what can we charge for bags, what can we charge for onboard items, what can we charge for seat assignment. That's going to be something we're just going to learn about as we just get experience in the market.

As far as the sale of third-party products and services, like hotels and rental cars, maybe that'll spool up over time as well, but we'll be ready on day one. When we announce service, we'll have a full suite of product to sell and we will hit that as hard as we can on day one. So yeah, we've been working a lot over the last year-and-a-half, talking to all the different key players in the market, and we haven't executed agreements just yet because it's just simply not -- until we're ready to sell something, it's a bit premature, but we're obviously picking up the pace on those discussions as we speak to be positioned so that when we're ready to go, we've got everything we want to sell out there and we're going to hit it hard.

And then, in terms of your plans for which cities you fly out of, do you still kind of plan on adding with the non-connecting service, so you wouldn't offer any connections out of let's say Oakland or something, to Honolulu, or you kind of let people maybe make those connections on their own, if they're at all possible?

Yes, no I mean, I think never say never, I guess, but at this point we have absolutely no intention of changing the structure of our network. It's 100% point-to-point. You get on at one place, you get off at the other. Very simple, we like it that way, and so at this point I don't anticipate that we'll offer anything like what you just described. You know, over time who knows, you never know. Certainly people can make their own connections, and people do that today. They're free to do that, but we do not offer that as a product.

Okay, and then lastly, one of the pushbacks generally we get on Allegiant is the older aircraft, and obviously they've worked very well for you. But, the question is, will there be a supply of older-generation, cheap older generation aircraft out there? Does the pending deliveries of Airbus and Boeing, and next generation aircraft, does that give you greater confidence that that cheap, let's say older or previous generation aircraft will be there?

Steve, it's Maury. We're continually in the marketplace talking to Boeings, Airbuses, Bombardier, Embry Air, all the suppliers at that level as well as the leasing companies, to see what the market's doing. Clearly, the MD-80 is going to be around for us for a while, regardless if we were to announce an airplane deal tomorrow. I'm not saying we are, by any means, but it'd take us a number of years to move in and out of this fleet type.

So, are there going to be less expensive, or less-expensive-than-new, airplanes out there? We think so. The market appears to be soft at certain levels for some of the airplanes in the seven, eight, nine, ten year old vintage. But, at this point, will there be supply? We think so, when we need it, but we're very patient and we're going to wait until if we make a change, we wait until it's right for what we want to do and how we want to do it.

Okay, thanks a lot.

Sure.

Thank you. Our next question comes from Jeff Kauffman of Sterne, Agee. Your line is open.

Hi, good afternoon. Sal Vitale on for Jeff Kauffman, thanks for taking my question. I think I may have missed some of your maintenance expense commentary earlier. Can you just refresh what you said? When should we expect, looking at it on an ASM basis, when should we expect the maintenance expense to start to taper off in terms of I think it was up something like 30%, 33%, in 4Q? When should we expect that to start to taper off?

Yes, hi, this is Scott. I think you'd start to see it really significantly decrease after the first quarter. There are a couple engines that now push over year-end, which will fall into the first quarter. In addition, the first quarter of this 2012 is actually a little bit higher of a check quarter for us, so look to second quarter 2012 and further.

Okay, so, in that second half of the year, should we expect increases on the magnitude of say below 10%, up year-over-year?

I mean, I did give maintenance per aircraft per month on a full year range of $105,000 to $115,000.

Okay.

If you just look at the first half, or first quarter, maybe being a bit heavy, you can kind of back into what the back half of the year will look like.

Okay, thank you very much.

Thank you. Our next question comes from Glenn Engel of Bank of America, your line is open.

Good afternoon. A couple questions. One quickly, on capacity, can you talk about how it ramps up during the first quarter?

Glenn, we're going to actually provide, with our traffic release, we're going to give you I think February expectation and then you'll see March from there. It certainly accelerates as the quarter progresses. There's no question about that.

Too, I see you're turning San Francisco-Oakland into a destination, similar it seems like to Phoenix and Los Angeles. I was surprised in November when you just talked about how strong the originating demand was out of Phoenix and Los Angeles. Has that continued, and can San Francisco be similar in that regard?

Well, we certainly think it can be. We today have been flying for quite some time, two different routes into Oakland. We're very pleased with the results of those routes. We've recently announced another eight routes, one of which has started, which is Phoenix to Oakland, and then the others we just announced the other day and they'll start up in April. So, we think Oakland is going to look a lot like, in terms of the traffic flows, we think it'll look a lot like the two markets you just described. So, we're very optimistic about the prospects we have up in that part of the world.

And lastly, by year-end, how many aircraft will you actually be operating?

At this point in time, we expect to have all six 757s in operation. The last two return off the lease in the early fourth quarter. We do think those will be in service by year-end. As far as MD-80s, [at the moment] we expect to have I believe it's 58 or 59 MD-80s in place and in service by the end of the year. If the modification project is completed, then all those will be flying and producing revenue, and if the modification program slips then there'll be, obviously four of those airplanes will be tied up [getting] reconfigured. So, that's a best guess at this point in time, Glenn. That certainly can change up or down, based on how we view the world between now and then. But, [here and] now that's our expectation.

Thank you very much.

Thank you. Our next question comes from Dan McKenzie of Rodman and Renshaw. Your line is open.

Oh hey, good afternoon, guys. I know Allegiant doesn't tend to follow industry fare hikes, but given the success of one in early January, I'm wondering what you can share or what you can tell us about any before and after effect on this latest increase. Did you notice an uptick in bookings, or no change? Wonder what you can share, here?

I don't think we noticed anything, I'll be honest with you. I mean, we're in our own little universe. I'll be honest with you, Dan, we don't pay any attention to what people do on price. We just go, we look at what we do, and we look backwards, and if we see results that we don't understand, we'll certainly then really focus on, okay, what's going on in the market. But yes, to be honest with you, I have no idea. But, I can tell you, though, that January's been just a really strong month for us, and we were obviously a little bit worried about what might happen when we had a bundled fare including all the fees on the front end of the transaction. At this point in time, that has been pretty much a non-event, so maybe that's why. Maybe it's because of the strong demand, and maybe it isn't that people understand that it's a fully-bundled fare.

Maybe it's just a reflection of strong demand. It's hard to say, but we feel good about revenue, though, just like it sounds like the rest of the industry does.

The other thing, Dan, now this is the fourth year we're going into where we target 90% load factors. So, that's a bit of a kind of a different approach, where you're not maximizing revenue so much as you want to fill the airplane up to as more of a first priority. I might add that we may fall underneath that, just because we won't use the 16 seats very well, if you will, in the first parts of their introduction because of we need more, a complete base to sell the whole airplane prior to that. But, all in all, to Andrew's point, we like to fill the airplane, cover our fuel cost and some of our operating expenses, and as well optimize revenues at the same time.

I appreciate it. I guess what I was really getting at is, if there was perhaps as the industry raises fares, if that creates a bigger pricing umbrella for you, and in turn drives a shift in passenger traffic, but I guess that's something at least -- go ahead.

Well Dan, I mean, I think that there's no question that that's exactly what happens. It's just we don't sit around and try to measure it. That, obviously, allows us to add either more capacity or to take the fare up ourselves, and we're constantly trying to maximize. We definitely want to fill up the airplanes, but at the same time we want to try and get as much revenue from our customers as we can, and obviously we've been really successful with pushing fare increases.

This past year, our passenger RASM year-over-year increases has outpaced the industry for many, many, many, many months in a row. So, we've been very successful at taking price. I think it's great, everybody's taking prices up. It's fantastic. It certainly helps us.

Okay. I guess my second question here is, I wonder if you talk about your staffing plans for 2012. I'm seeing capacity up obviously for all of the reasons you've articulated, but head count was down 1% in the fourth quarter, and it's kind of following the trend of being down. I'm just wondering where do we go from here?

We'd like it to keep going down, that would be great, but--

We're going to single-cockpit, Dan. (laughter) (multiple speakers)

We're constantly trying to become more and more efficient, and so we're going to continue to try and do that. I think obviously it's not always going to go down. We do need to hire more crews to not only to support the additional aircraft, but we certainly have to hire a lot more flight attendants to -- because now, every 166-seat airplane needs another flight attendant on there. So, that's going to drive growth higher in that employee segment. So, as a result, yes, I think as we sit here a year from now, we won't be showing only a flat employee growth. It'll definitely be higher, but we haven't tried to forecast what that's going to look like.

Dan, we certainly need more employees to fly more airplanes, no doubt about it, but we focus on the ratio of around 30 per airplane is what we are intent on maintaining, and the like. If we push utilization, we may need to push that up a little bit with the flight crews in particular, and maybe some maintenance support. But, we're re-adjusting some of our infrastructure as well, and continually looking at the cost side in conjunction with the growth, too.

And Dan, let me add too, that's part of the reason we're so excited about the third party business and what the web can allow us to do with e-commerce tools, because that growth doesn't require hardly any capital, and it's not very labor-intensive either, and it's highly profitable. And so, that's why we're so focused in that area.

With the automation tools we're developing, it's going to really enable us to do some cool things and again, you know, stop talking about airplanes and routes and really having airline analysts on our call, and hopefully we can get some e-commerce analysts on our call. You know, it's nothing personal. (laughter) But that's part of why we want to go there, is it's extremely low capital, intense, highly profitable business line that we think we're extremely well-positioned to be able to go after.

Okay, I appreciate the time. Thanks, guys.

Sure.

Thank you. Our next question comes from Kevin Crissey of UBS. Your line is open.

Thanks, guys. Well, you can't say you don't have Wall Street coverage anyway, and I guess I'm the transfer to the telecom type stuff, right? (multiple speakers) But, I don't have any questions left, you guys have exhausted about everything here, thanks.

Thanks, Kevin.

Thank you. Our next question comes from Bob McAdoo of Avondale Partners, your line is open.

Hi, I got cut off kind of in the middle of the call, so if you've already covered this I'll cover it afterwards. Could you just kind of go back through the 757s? I know you said you operate one, you own four. The question is, when do those kind of come into the fleet to actually be operated for you, and then they obviously, you've got the other two that you're talking about bringing on, that you're going to bring onto your ownership. So, I'm trying to think about when are those things going to start being able to be flown, and if Hawaii doesn't work obviously you've talked about the profitability to some extent, and generalities about how some of the routes, or McAllen or whatever, were working quite well.

I'm just trying to understand what that might be for you, even if Hawaii doesn't work. Is there a way to talk about when those planes would become useable, or when you'd plan on using them domestically, if there is no Hawaii? And, how to think about kind of the profitability of those markets, or those flights, kind of like you talked about the profitability of the 166-seat airplanes?

Bob, I get to answer your first question. Put aside the two airplanes that we're still trying to close on. We're in a bit of a dispute on that, and we'll see where it goes. Quite honestly, we think we'll get there, but initially they were supposed to be closed on in the fourth quarter, and that obviously hasn't happened. There's a lot of 75s out there, though, so we're not losing any sleep over it, to be honest with you. But, we do think we will close that deal and it'll happen in the next 30 to 60 days.

If that happens, then those airplanes will be ready to fly, in service certainly by the end of the second quarter, and the first of the three airplanes on lease returns in April. We expect that'll be ready to fly at the end of the second quarter, very early part of the third quarter. And then, the remaining two that are on lease come back in the fall, and those airplanes will be ready to fly either right at the end of the year, or right at the beginning of 2013.

As far as what do we do with the airplane, first of all, we're going to fly to Hawaii. There's no question about that, we are going to fly to Hawaii, and we believe we're going to make it work and it's going to work really well. If, for some reason down the road, we decide that that isn't such a good idea, then yes, we're certainly not concerned about opportunities to deploy those assets elsewhere. We think there's a lot of different routes in our system where it can handle that level of capacity, and apart from that as you know, there's a lot of other longer-term planning ideas we have where the 757 is an extremely attractive asset to use for that. So, what we know for sure is, we're going to fly to Hawaii. We hope it's going to be starting this summer, and then we'll kind of take it from there.

I assumed that, but I guess as I think Maury said -- maybe it wasn't Maury -- earlier said that you know, like anything else you're going to start out slow, and you've got a batch of airplanes here, and starting out slow I assume means you're not going to go from five or six round-trips a day on day one. You're going to put a couple out there, and take a look at it, and adjust, and work with it, and then continue to add as bookings build, or whatever. I'm just trying to figure out how --?

That's correct Bob, you're absolutely right, so I mean, we have one airplane right now doing domestic scheduled service. We wouldn't hesitate at all to put another one or two doing the exact same thing, and we may end up doing that. It really just depends on a lot of different factors, but certainly if we had to put all four airplanes -- if we don't get the authority until later in the year, if we had to put all four airplanes in domestic scheduled service, we're perfectly happy to do that and feel very good about doing that.

Right, that's what I'm trying to -- I'm just trying to get a sense of the economics of those airplanes that are in domestic service, so we can have them, be comfortable that that's at least a minimum of what you're going to do kind of thing, I guess, is what I'm trying to get to. It's not that I question your ability to get to Hawaii, but more try to understand that you've kind of given us the economics of 16 extra seats. I'm trying to get a sense of the economics of [upward of 50] extra seats.

Maybe we could talk offline about it, or we could maybe try and address that at a subsequent call.

Okay.

I don't think we're prepared to get into that kind of detail right now, but you know, we believe it's been very -- we think it's been very accretive on the routes that it has operated as of for the last six months, and that's McAllen and Rockford. We think it's definitely driven an increase in profitability in those two routes, so that's why we're pretty encouraged by it.

Practically, Bob, we will have two airplanes this summer at a minimum. We think four, and the last two won't be here until practically first of next year. They might be in here for December or something like that, so. If we start with two airplanes in Hawaii, one-and-a-half to two, that means we put one more into a domestic route which we're very comfortable with, and/or we've got spare capacity, too. If we're going to Hawaii, we may want to keep an airplane for a while as a spare. So, that's a pattern that probably will be available to us starting June 1 to July 1, as far as having four available with that kind of pattern.

Okay, thanks.

Thank you. This concludes our Q&A session. I would now like to turn the call back over to Maury Gallagher for final comments.

Thank you all very much. Enjoyed the conversation, we'll talk to you again in about 90 days. Thank you again, have a good day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time, and have a wonderful day.