西南航空 (LUV) 2002 Q2 法說會逐字稿

Please stand by, we're about to begin.

Good day everyone, and welcome to today's AirTran Holdings Incorporated second quarter 2002 earnings release conference call.

Just a reminder, today's conference is being recorded.

At this time, for opening remarks and introduction, I'd like to turn the conference over to Mr.

, director of investor relations.

Please go ahead, sir.

Good morning everyone, my name is

, and as director of investor relations, I want to thank you for joining us today for AirTran Holdings' second quarter 2002 earnings call.

Joining us today is Joe Leonard, our Chairman and CEO, Bob Fornaro, our president and chief operating officer, and Stan Gadek, our chief financial officer.

Before we begin, I'd like to remind you that many of our comments today are related to AirTran's outlook for future earnings, revenues, capacity, growth, cost estimates, load factors,

plans, and our expectations about future profitability.

These comments are not historical facts, and as such should be considered as time-sensitive forward-looking statements that are accurate only as July 23, 2002.

These statements are subject to a number of risks that could cause future results to vary materially from our expectations.

These risks include but are not limited to general economic conditions, commodity prices, regulatory matters, and the competitive environment.

Additional information - concerning factors that could cause actual results to vary from those in our forward-looking statement are contained in our Form 10K filing for the year-ended December 31, 2001.

Finally, I'd like to remind you that this conference call is the property of AirTran Airways.

Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of the company is strictly prohibited.

At this point, I would now like to turn the call over to Stan Gadek, our Chief Financial Officer.

Thank you and good morning, everyone.

Today, AirTran Holdings is pleased to announce that the company was profitable during the second quarter of 2002 on both an operating and a net basis.

While the rest of the airline industry has been in retreat, AirTran continues to grow by adding new airplanes and entering new markets.

During the second quarter, AirTran commenced new service to Wichita and Milwaukee, bringing low fares to millions of travelers who previously paid higher fares or didn't use air transportation at all.

Our success in adding new service and achieving profitability in what may be the toughest competitive environment airlines have ever faced was achieved as a result of the distinct value that we bring to the marketplace.

Our low fares stimulate demand and our customers tell us that they appreciate having a choice in receiving a fair price.

AirTran is a team of dedicated individuals who provide caring customer service every day.

Our employees know that they have to work harder to ensure that we will survive these challenging times.

To know that we have not only survived, but have actually prospered and generated profits for our shareholders, is truly satisfying and a testament to the spirit of teamwork at AirTran.

As we look ahead into the second half of 2002, we see additional challenges that we will have to deal with.

But this is nothing new for AirTran.

Competition has always been tough and it will only get tougher.

However, we will continue doing what we have always done and that is offering our customers the lowest prices and the best value while returning a profit to our shareholders.

Now, I'd like to talk about some of our key metrics.

During the second quarter, AirTran set an all-time quarterly record for traffic as measured in revenue passenger miles, recording an 18.6 percent increase over the second quarter of 2001.

Capacity increased 23.2 percent as a result of the increased numbers of Boeing 717's in the fleet, as well as a 6.9 percent increase in the weighted average number of aircraft year-over-year.

Passenger load factor declinled 2.7 percentage points, to 71.3 percent.

During the second quarter, AirTran also served an all-time record number of customers, up 10.8 percent on a year-over-year basis.

Consistent with the weak revenue environment in the industry, passenger yields declined over 22 percent to 12.4 cents.

Unit revenue, or passenger revenue per seat mile, declined over 25 percent compared to the second quarter of 2001.

Unit costs, or costs per available seat mile, continue to improve in the second quarter and is currently at its lowest level since the fourth quarter of 1999.

On a year-over-year basis, unit costs improved over 12.3 percent on an operating basis, and 10.8 percent excluding fuel.

These substantial reductions in costs reflect the efficiencies of the new Boeing 717 aircraft, as well as the results of a company-wide campaign to reduce costs in all areas.

Reflecting the greater efficiencies of our new fleet, the average daily aircraft utilization in the second quarter of 2002 increased 8.9 percent to 11 hours, compared to 10.1 hours in the second quarter of 2001.

AirTran is achieving higher levels of utilization, primarily because of the greater numbers of 717 qualified flight crews, which allows us to schedule the aircraft on longer segments.

Consistent with this factor, our average stage length was 565 miles in the second quarter, compared to 542 miles in the year earlier period.

And now I'd like to talk about our financial performance.

For the quarter, AirTran earned $5.1 million, or $0.07 per diluted share, compared to 13.2 million or $0.18 per diluted share in 2001.

Last year's results included an impairment charge of 18.1 million, related to the early retirement of four Boeing 737 aircraft.

Our operating margin in the second quarter of 2002 was 6.4 percent, compared to 19.7 percent excluding the impairment charge in the second quarter of last year.

Passenger operating revenue was 185.7 million, compared to 201.1 million in the second quarter of 2001, or a reduction of 7.7 percent.

The reduction in passenger revenue resulted from a lower average fare, partially offset by a 10.8 percent increase in the total number of passengers year over year.

Looking at the individual line item operating expenses, salaries, wages and benefits increased 21.7 percent to 50.9 million compared to 41.8 million in the year earlier period.

The increase in the dollars of expense results from the greater numbers of employees hired to operate additional aircraft and staff new stations.

On a unit cost basis, salaries, wages and benefits declined slightly from 2.46 cents, to 2.43 cents.

On a year to date basis, salaries and wages increased 18.9 percent while unit costs remained flat at 2.47 cents.

Aircraft fuel expense increased 1.9 percent over the second quarter of 2001, due to an increase in total fuel usage of 13.8 percent, partially offset by a reduction in the price per gallon

of 88.7 cents, compared to 99.1 cents in 2001.

Fuel burn in the second quarter of 2002 was 729 gallons per block hour, compared to 779 per block hour in 2001.

The improvement in fuel burn reflects the greater efficiency and greater numbers of Boeing 717 aircraft in our fleet.

On a year to date basis, fuel expense declined 2.3 percent, reflecting a 10.7 percent reduction in price, more than offsetting the increased amount of fuel used.

As in the quarterly comparison, fuel burn per block hour also improved 6 percent for the first half of 2002 compared to 2001.

The improvement in fuel burn resulted in a $4.4 million savings in fuel expense for the six months of 2002.

Maintenance, materials and repairs declined 27.3 percent quarter over quarter, and 37.8 percent for the first six months.

Primary causes for the reductions in maintenance expense are the reduced maintenance associated with the Boeing 717 aircraft compared to the DC-9s, and fewer heavy maintenance checks associated with a decreasing number of DC-9 aircraft in the fleet.

At June 30, 2002, AirTran operated 38 Boeing 717s and 26 DC-9s, compared to 22 Boeing 717s and 33 DC-9s at June 30, 2001.

Maintenance cost per block hour in the current quarter was approximately $250 per block hour.

Distribution expense in the second quarter of 2002 declined 9.5 percent compared to 2001, primarily due to an increase in total Internet bookings to 55 percent, and a reduction in travel agency sales.

Of the Internet bookings, 46 percent came from AirTran.com.

On a year to date basis, distribution expense decreased 11.8 percent.

As a footnote, the company revised its commission policy on June 11th to eliminate the 5 percent base commission to travel agencies booking through Global Distribution Systems.

Aircraft rent increased 96.6 percent during the second quarter of 2002 compared to the year earlier period.

The increase was driven entirely by the delivery of 16 Boeing 717 aircrafts in the June of 2001, all of which are financed with operating leases.

Year to date aircraft rent expense increased 114.1 percent compared to the first six months of 2001, again, as a result of the additional 717 aircraft deliveries.

Aircraft insurance and security services increased 128.6 percent for the quarter, and 153.5 percent year to date.

The increases reflect the higher haul rates associated with the new aircraft, the increased liability and

risk rates, and the additional security costs required under the current environment.

Depreciation expense declined 48.2 percent for the quarter and 47 percent year to date, reflecting the retirement of seven DC-9 aircrafts since June 30, 2001.

Depreciation expense also declined due to the reduction in the net book value of the remaining DC-9s, which were adjusted in the third quarter of 2001.

Other operating expenses increased 2 percent during the second quarter of 2002, and 12.5 percent for the first six months of the year.

However, on a cost per ASM basis, other operating expenses actually declined 17.2 percent to $0.84 during the second quarter, and declined 4.8 percent to .97 cents for the first half of 2002 compared to the year earlier period.

The increases in the dollar amount of other operating expense resulted primarily from costs associated with a greater number of passengers and contractual expenses related to the company's automation systems.

Looking at the balance sheet, as of June 30, 2002, AirTran had total cash of $109.4 million, compared to $121.8 million at March 31, 2002.

Now, the first quarter 2002 ending cash balance included regularly scheduled debt service payments of 22.9 million, which were due and paid in April.

Total long term debt, at June 30, 2002, was 245 million, and total shareholders' equity was 40.4 million.

I would now like to provide some guidance for the current quarter and the remainder of the year.

Available seat miles will continue to grow 25 to 30 percent for the third quarter, and 30 to 35 percent during the fourth quarter.

The capacity increases will result from the deliveries of 12 additional Boeing 717 aircraft, partially offset by the retirement of up to 10 additional DC-9s.

At year end AirTran's fleet will consist of 50 Boeing 717s and 16 DC-9s.

On the revenue side, we continue to operate in a weak revenue environment, characterized by low fares and excess capacity in the industry.

Offsetting this somewhat will be continued improvements in our unit costs of approximately 2 to 3 percent.

While we are currently projecting profitability for July and August, it is difficult to forecast September with any accuracy.

September is a seasonally slow booking period, and this year includes a reduced level of economic activity, as well as the anniversary of 9/11.

We are more optimistic about the fourth quarter as it seasonally outperforms the third.

However, the rate of economic recovery and the level of customer demand will ultimately determine our financial performance for the fourth quarter.

Regarding fuel, AirTran is currently

for approximately 35 percent of its needs in the third quarter, with

forward purchase agreements.

We are projecting an average fuel price between 85 cents and 90 cents per gallon during the second half

.

And, finally, we are projecting that our effective tax rate will be zero for the remaining of the year, based on our projection of full year pre-tax income and taxes accrued to-date.

In summary, I would like to say that AirTran's business model of offering low fares and value to our customers is sound.

We are proud of the profitability that we achieved in the second quarter, but recognize that to maintain profitability going forward, we have to continue reducing our costs.

Low costs are AirTran's competitive advantage.

With low costs we can weather the weak revenue environment, continue to grow into new markets and, most importantly, generate a return for our shareholders.

At this time, operator, I would like to open the call for questions.

Thank you, sir.

Today's question and answer session will be held electronically.

If you'd like to signal to ask a question, please press star one on your touch-tone phone.

Once again, that's star one for questions and we'll pause for a moment to assemble our roster.

We'll take our first question today from Glen

with Goldman Sachs.

Good morning.

Good morning, Glen.

A couple of questions.

One, can you share with us the business mix this year versus last year second quarter?

Yeah, Glen, the - it's always hard to tell these days but it looks - a year ago I would have said the business revenue, which took a

in the last 7 days would have been about 60 percent of the revenue and this year that number is about 50 percent -- 48 to 50 percent.

I'm sorry, I forgot to congratulate you.

You did make money in the quarter and I don't think anybody else really has done that.

So congratulations.

Thank you.

My second question is can you go over just how you're doing on the service basis?

On time, lost bags, stuff like that.

Yeah, we've made dramatic improvement across the board in all of our metrics.

Maintenance performance is consistently running at 98.5 to 99. 717 is up very consistently, running at 99.

Our completion factor is consistently above 99.

On average, we're running around 99 percent.

That's made up of a lot of 99.8 and 100 percent days and one or two 90 percent days when we get blown out of Atlanta, but averaging 99 plus.

Bag numbers are, if not number one in the industry, certainly in the top three, which is our goal.

Arrival performance is up considerably, although still a bit below our goal.

Our goal is to have arrivals within 15 minutes of 78 percent.

We're running around 75 percent.

We're pretty pleased with the kind of airline we're running right now.

Was your rise in performance during the quarter fairly consistent month-to-month?

Well, obviously, April was a little better because we still had a fairly strong Florida traffic mix.

I think probably what was surprising is that June didn't provide the kick that it normally does.

And finally, if you looked at the famed other expense, that one dropped about 10 percent from first to second, while you picked up capacity.

What was behind that?

Well, I think it, you know, reflects the fact that we have been improving our costs internally, here.

We had some items last year that didn't occur this year in the second quarter.

We had sub service, for instance, last year that didn't appear this year.

So all in all, we've continued to focus on driving out those costs.

We just keep squeezing it down.

We've gone back -- I think we're on our fourth iteration since the beginning of the year right now to drive out some additional cost, and I've got to give the management team a lot of credit here.

They've really stepped up to the plate and there hasn't been any of his I can't do it type stuff.

It's looking, looking again, looking again.

And each time you look you find something else that you missed the first time around.

Thank you very much.

Thank you,

.

We'll take our next question from

of Boston American Management.

Yes, you mentioned that September season might be bad.

Is there any specifics of that?

I mean, I don't know if you get a bunch of mass bookings out that far or not.

Well, you know -- AirTran's system -- again, it's -- again, it's mostly a North/South system, number one, and so we don't have any international traffic or any East/West traffic.

So historically, the weakest month of the year.

And so -- and so that's no different.

But, you know, the booking is very, very hard to tell because the kind of month that most of the bookings tend to come very, very close in.

But, you know, we just -- we don't -- every year for AirTran, whether it's a strong year or a year like this year, September is always a wildcard, and this year is no different.

Well, it's different in that you've had 9/11 impact, which is going to make it worse.

What we have done in regard to that is we have pulled down about 2.5 airplanes worth of flying in the month of September to try to pay our -- get our system more in line with what we believe the demand will be.

And that'll give us a chance to catch up on some maintenance and things like that as well during the weak period.

And then have those airplanes back available in October.

Finally, I know that you've been increasing traffic ever so slightly, but still increasing traffic in Philadelphia and in Pittsburgh, and now you've extended out to Milwaukee.

Is there any thought of creating, you know, mini-hubs in any one of those two locations to augment your Atlanta traffic?

And then flying more, you know, East/West instead of North/South.

The -- I'd just say this.

One of the goals of our company over the next 12 to 15 months is to do a little bit more East/West flying as a proportion of our total flying.

So not specifically from our Milwaukee or Wichita, but in the system in general, we think that some more East/West flying will strengthen our first quarter numbers going forward.

So that's something that we're focusing on now.

And could you see -- envision flights, you know, a little bit more around Pittsburgh as a hub given your competitive cost factor here, or is it just a lack of gates available in there, you know, to intersect without having to go to Atlanta and then going back up North again?

We're not going to be specific about where we're going to grow.

I think Bob's answered the question, that we clearly have a focus to get a more balance to our system and where we do that, we'll obviously keep that confidential until the very last minute.

Thank you.

Operator?

Yes, sir, we'll take our next question ...

Operator, could we establish that we ask two questions and then come back for more at the end, that way everybody gets a chance.

Absolutely, sir, thank you.

Thank you.

And we'll take our next question from

of

.

Good morning, guys.

Just -- Bob, I want to ask you a question, just kind of your thinking.

It looks like US Airways is going to get its loan.

How do you see that impacting AirTran and just the competitive environment in general?

Yes,

, obviously it's anybody's opinion.

But, you know, recently, I mean US Airways has been as big a discounter as any low-cost carrier out there.

They're very, very aggressive.

In fact, them getting a loan, it could very well settle down the marketplace.

And there may be a -- perhaps a focus more on returning to profitability rather than just maintaining a cash balance.

So -- they're still an aggressive competitor.

They've got things to sort out, but I think it could stabilize the marketplace a little bit.

Bob, would you elaborate on that, on how it might stabilize things?

Well, again, it's just that there's a lot of discounting, that they do a lot more fare sales, and they have been very, very aggressive on the Internet.

And at fares which I think -- got to be well below their cost.

So what it might do is again reduce the overall level of discounting or low fares that we're seeing in the marketplace.

Right.

OK.

Now, with regard to the low-fare sector of the industry, I guess the only company that appears to be realizing substantial profits is

in that sector.

And Southwest of course making a little money, but not a lot, an you guys are making some money, but not a lot.

Is there -- are we likely to see consolidation amongst low-fare airlines?

I mean, I don't know,

.

That's a -- that's a real guess, I'd probably rather not comment on that other than, you know, I think we've gone through the worst.

You know, again, AirTran, one of the things that has impacted us perhaps a little more is that we have a very short haul and I think like other carriers have mentioned, some of the short haul markets are -- the traffic is weaker.

In 2 to 300 mile segments that are local segments, either customers aren't flying or they may be driving.

And I think that creates an impact on us, and it's one that we actually can fix going forward by diversifying our root portfolio.

Regarding a deal, I think at this point in time, you know, our goal is to really strengthen our position and make sure our costs stay low.

And, you know, we can worry about those kind of things once we begin to gain some strength and momentum.

OK, guys, thanks.

Thank you, Jim.

Once again, we do ask that you limit yourself to two questions.

And we'll take our next question from

of Morgan Stanley.

Yes, good morning.

I just had a quick question on

.

You folks were able to beat your

guidance for the first half, and in the second half you're talking about 2 to 3 percent improvement in

year over year.

And I'm just wondering, is there anything specific to the second half that would cause you not to do the same kind of performance you had in the first half?

Well, I think the factors that led to the reduction in unit cost in the first quarter are going to continue, and that is, we are going to continue to get improvements in maintenance from the additional airplanes coming in.

As well as fuel with the improved fuel burn.

So I don't expect any surprises on the cost side to the upside.

O.K.

And if I could just ask a question about cap ex, as well.

What is the budget for this year?

Well, we're actually going through a mid-year review of our cap ex requirements for the second half and we're looking at probably about - maybe another 5 to 7 million for the second half of the year.

Obviously, in this environment, cash is very important and our cash flow predominantly comes from earnings and so we have to be very judicious in the application of that cash and we're going to spend the money where we need to spend it, but where we have the opportunity to delay some capital expenditures, we'll do that, too.

So another 5 to 7 million in the second half would bring you to what for the full year?

Probably about 15 million.

O.K., great.

Thank you.

You bet.

Thanks, Bill.

We'll take our next question from Dan McKenzie of Salomon Smith Barney.

Yeah, thanks, operator.

I wonder if you could provide some more color and update on the Southwest and Delta competitive dynamic in your system?

Well, I, you know, Delta is applying all the pressures that they know how and that's been pretty consistent and we expect that our planning going forward is that won't change, it will remain immensely competitive.

As far as Southwest goes, we compete with Southwest in almost all of our markets but, generally, not directly.

We go to Boston, they go to Providence.

But they are around us there, you know, in south of Atlanta, they're in Birmingham, they're north of Atlanta.

So we compete for the same flows but, typically, not head-to-head in the same markets and we anticipate that that situation will remain the same as well.

O.K.

Just a follow-up.

I wonder if you had some more color on the Florida and the Baltimore markets?

Well, we're very pleased with Baltimore.

It's working very well, exceeding our expectations.

In fact, a number of the new routes that we've put in are doing quite well and that is why we are continuing on a very aggressive growth path because we've been satisfied with how the new markets are developing.

O.K.

Thanks very much.

Thank you.

Once again, if you'd like to signal to ask a question, please press star one on your touch-tone telephone.

And we'll take our next question from Dan Morton of Daniel Morton and Company.

Good morning, guys.

Good morning, Dan.

Do I understand you correctly that you would expect your unit cost would drop something in the area of 2 to 3 percent in the third quarter, for example?

Well, for the second half of the year.

Reason I asked that, if my calculation's correct, that would imply a number of around 8.7 which, in turn, would be somewhat of an increase from the 8.53 you'd just done and the capacity levels were roughly the same.

So, am I right in that calculation and, if so, why would it go up?

No, it shouldn't go up, Dan.

The chasm should be going down about 2 to 3 percent.

Maybe what you're ending up with is an approximation of a full year number first and second half.

Do I understand you to say, then, that the third quarter chasm could be down more than the 2 to 3 percent, but may not be so in the fourth quarter?

But you would average that for the full second half?

I think we'll actually have better chasm in the fourth quarter than the third.

We'll have more airplanes operating, obviously, more ASM's.

But, I think, you know, your initial assumption is probably in the neighborhood.

I can give you more guidance later, if you want.

OK.

Stan, one thing I would point out.

Again, our costs started coming down a lot in the second half of last year, so the year over year declines were only down a few percent, but the second half will be below the second quarter we're reporting today.

That's correct.

Yes, my only question was why it seemed to appear by that calculation that your third quarter would be 2 percent higher than the second quarter this year, sequentially, that's all.

Normally, I don't look at sequential comparisons, but in the second and the third, it seemed like it made a little sense to compare it this time.

That's all.

I'll get back to you later.

Yes, the third quarter should not be higher than the second quarter,

.

OK, fine.

We believe that the third will be lower than the second and the fourth will be lower than the third.

That's fine, thank you.

They're going to make progress each quarter this year.

Good.

Thank you.

OK.

And we'll take our next question from

with Credit Suisse First Boston.

Thank you, Operator.

Good morning.

Just a follow up to

question.

Do you have the monthly break out of

.

What we have historically -- given out the monthly numbers and we really stick with the quarterly numbers.

OK, and is there any way to kind of parse out, kind of spillover strength from Delta in last year's

?

You know, I mean, it is hard to spillover, because I think, you know, we did get a benefit from Delta last April, and it was an exceptionally strong April, and then probably some benefit from

as well.

And that is a piece, but I think the biggest reason for the year over year decline is just generally speaking, you know, less business travel and also much more weakness in the short haul markets than in the mid haul or longer haul roots.

So again, I would say there's a couple of things that are going on.

We're probably carrying more low-cost, low-fare connections across the hub this year than we were last year as well.

It's a series of things.

OK, great.

Thank you.

And we'll take our next question from

of Veritas.

Good morning, gentlemen.

Can you hear me?

Yes, yes we can.

I just wondered about your insurance and security costs.

It looks like they're down sequentially.

Just wondering what happened and how they look going forward.

No, actually up.

Oh, I'm sorry.

Yes, they're up significantly.

But what's going on are two things.

One is that our base fleet value, our insured fleet value, is increasing as we take new 717 aircrafts compared to the old DC-9s, which were essentially fully depreciated.

So that results in an increase in our basic insurance of I'd say about, oh, maybe about $3 to $5 million.

In addition, we're carrying more passengers, so that drives a higher liability, as well.

But by far, the bulk of the increase is coming from the $1.25 per passenger surcharge that the underwriters have imposed for war risk insurance.

As well as the FAA top-off coverage that we have to take in order to operate.

I think that, you know, looking forward that's going to sort itself out.

The FAA may back out of that top off coverage and allow the market to write the coverage, but it's still unclear.

I think suffice to say we've got to expect that our insurance and security costs will be at these levels going forward.

Or higher.

Or higher, yes.

Thank you.

Thank you.

Once again, if you'd like to signal to ask a question or have a follow up question, please press star, one, on your touch tone phone.

And we'll take our next question from Dr.

of

Academy.

Yes, good morning.

First of all I was wondering whether you plan any new destinations, not specifically the names, but besides which you're talking Milwaukee for the 2002 year.

For the most part, the fleet is pretty well spoken for for the rest of this year, although we'll probably add one or maybe two additional cities between now and the end of the year, and it'll be -- come toward the end of the year.

How do you see fares?

Do you see fares going down with all the airlines slashing, do you see fares maintaining themselves at the present level?

I think we'll see the fares very slowly increase ...

Increase.

There've been a number of attempts by the majors to get the fares up.

Those generally haven't stuck.

Sooner or later, they're going to have to get them up or they're going to all go out of business.

But I see a gradual increase in fares over the next 15 month.

And finally, did you mention the amount of cash you presently have on hand?

Yes, we did.

Yes, we did.

At the end of the quarter we had 109.6 million.

Mr. Leonard, at this time, there are no further questions.

I'd like to turn the call back over to you for any additional or closing remarks.

OK, thank you, Operator.

And just summarize by saying, you know,

put it pretty well, we're making money, but certainly not the kind of money that we expect around here.

We are somewhat satisfied with the quarter in that relative to the rest of the industry we're doing better than the rest.

We've done a very good job, I think, on cost control.

The maintenance guys have done an excellent job of making sure that when a DC-9 is ready for

, and we retire it, that we've also run the engines, landing gears, cargo doors, EPUs, and everything else down to zero.

We've been very aggressive at managing that and I think they've done a very good job.

We'll continue to do that through the year.

We finally got 717 utilization up where it needed to be.

We'll continue to work on that and try to squeeze some more time out of those airplanes, and get the benefit of their fuel efficiency.

But all in all, we're back in the black, hopefully we'll be in the black in the third quarter.

But as we said earlier, it's pretty difficult to predict that.

We're very confident that we'll be in the black in the fourth quarter, and hopefully beyond at that point.

So good position on cost control.

Revenue is -- remains weak.

We're going to continue to focus on cost as we move through the second half of the year, and we're going to continue a pretty aggressive growth rate with the addition of the 717s and the retirement of the DC-9s.

Our current plan would be to be out of the DC-9s by the end of 2003 and have an all 717 fleet at that time.

So with that, thanks very much for your attention and your support, and look forward to seeing you back at the third quarter.

This does conclude today's conference call.

Thank you for your participation.

You may disconnect at this time.