Frontier Group Holdings Inc (ULCC) 2023 Q2 法說會逐字稿

Thank you for standing by, and welcome to the Frontier Group Holdings second quarter earnings call. (Operator Instructions). Please be advised that today's call is being recorded. I would now like to turn the call over to your host, Mr. David Erdman, Senior Director of Investor Relations. Please go ahead.

Good afternoon, everyone, and welcome to our second quarter 2023 earnings call. Today's speakers will be Barry Biffle, President and CEO; Jimmy Dempsey, EVP and CFO; Daniel Shurz, Senior Vice President, Commercial. Each will deliver brief prepared remarks, and then we'll get to your questions.

But first, let me quickly review the customary safe harbor provisions. During this call, we will be making forward-looking statements which are subject to risks and uncertainties. Actual results may differ materially from those predicted in these forward-looking statements.

Additional information concerning risk factors which could cause such differences are outlined in the announcement we published earlier, along with reports we filed with the SEC. We will also discuss non-GAAP financial measures which are reconciled to the nearest comparable GAAP measure in the appendix of the earnings announcement.

So I'll give the floor to Barry to begin his prepared remarks. Barry?

Thank you, David, and good afternoon, everyone. Despite challenging operational conditions, we generated strong second quarter results with a pretax margin of 9.1%, our highest post-pandemic margin on industry-leading capacity growth of 23% compared to the prior-year quarter. Our continued focus on cost management helped drive a beat on our nonfuel operating expense. Our total cost structure is significantly lower than the industry average, generating an advantage of more than $70 per passenger today. Our cost structure is a key element in underpinning our growth strategy, and I'm proud the organization has continued to ensure we remain the leader among our peers.

Ancillary revenue continued its strong performance during the second quarter, achieving $80 per passenger, $5 higher than the comparable quarter last year. We expect our industry-leading ancillary platform to continue to provide us with pricing flexibility to tailor our suite of products and services to our customers' needs. It also enables us to maintain low fares and enhance engagement and loyalty with our brand.

Our GoWild! All-You-Can-Fly Pass is a great example. Since the substantial number of our pass holders do not have prior travel history with Frontier, we've had the opportunity to expand brand awareness and preference, along with driving incremental revenues as these customers engage with our other loyalty platforms such as Discount Den, our co-branding credit card, as well. It's a key part of our strategy to increase the contribution from loyalty and subscription-related products.

As we look to the third quarter, we expect the moderation in fares largely due to an increase in competing long-haul international travel flows. To better understand this phenomenon, we've recently surveyed our Frontier customers. The survey found that 5% or more of our customers have traveled or planned to travel to Europe versus last year. We estimate this environment to be a 3-point temporary headwind on a pretax margin basis. Encouragingly, our survey also revealed over 90% planned to travel the same or more, with over half planning to travel more on a go-forward basis, giving us the confidence that once the balance shifts back to domestic, we believe RASM will normalize.

Turning to the operational environment. The challenging conditions experienced in June continue to cause a historically elevated level of cancellations. Weather across the United States, in particular, in Florida, has produced record air traffic control delay programs, resulting in the cancellation of over 3% of our flights in July. We are incorporating ATC constraints into our network design going forward, and we expect this environment to impact our third quarter pretax margin by approximately 3 points.

Accordingly, we anticipate our third quarter adjusted pretax margin to be 4% to 7%. With the lowest cost structure of any carrier in the United States, and we are focused on sustaining that advantage with ongoing induction of the high-gauge, fuel-efficient A321neo aircraft and by leveraging our high-utilization capabilities to drive low fares and stimulate demand.

With that, I'll hand the call over to Daniel for a commercial update.

Thank you, Barry, and good afternoon, everyone. Total operating revenue for the second quarter of 2023 was $967 million, more than 6% higher than the prior-year quarter. RASM was down 14%, 10% on a stage-adjusted basis, from a strong prior-year quarter, on capacity growth of 23% over the same period and an 8% increase in stage loans. Revenue per passenger was $127, 9% lower than the 2022 quarter, during which time, fuel prices were 40% higher and post-COVID domestic travel demand surged.

In May, we launched promotional another GoWild! seasonal product, the Fall & Winter Pass, for travel from September through February. The pass includes access to more than 85 U.S. and international destinations. Furthermore, last week, we put the new GoWild! Monthly Pass on sale, giving even more customers the opportunity to enjoy the best value in air travel.

Turning to a brief network update. In the second quarter, we launched 26 new routes originating from Atlanta, Baltimore, Chicago Midway, Cleveland, Detroit, Houston, Orlando, San Juan, St. Thomas and Tampa. These new routes were all added to existing Frontier Airports, which increases our customer appeal in key markets.

That concludes my remarks, and I'll now yield the call to Jimmy.

Thank you, Daniel. Second quarter results reflect a pretax margin of 9.1%, a post-COVID record. The results reflect strong demand throughout the quarter and diligent management of our cost base. Revenue increased 6% on a 23% increase in capacity, while fuel expense was in line with guidance at average cost per gallon of $2.69. Adjusted nonfuel operating expenses were $644 million, beating guidance or $0.069 on a unit basis, 5% lower than the 2022 quarter. We ended the quarter with $780 million of unrestricted cash and cash equivalents or $350 million net of total debt. In addition to our cash balance, we also have access to substantial liquidity through our unencumbered loyalty and brand-related assets.

We had 126 aircraft in our fleet at June 30 after taking delivery of 3 A321neo aircraft during the quarter, 2 of which were financed with direct leases. Having already experienced significant aircraft delivery delays across the first half of the year, Airbus has informed us that any further delays should be modest. As such, we expect to end the year with 136 aircraft.

Turning to guidance. Third quarter capacity growth is anticipated to be in the range of 21% to 23% over the 2022 quarter, while full year 2023 capacity is expected to reflect growth of between 19% to 21% over the prior year. Fuel costs are expected to be between $2.80 and $2.90 per gallon in the third quarter and $2.90 to $3 per gallon for full year 2023 based on the blended fuel curve on July 24. Adjusted nonfuel operating expenses in the third quarter are expected to be between $650 million to $665 million and $2.535 billion to $2.585 billion for the full year.

This range incorporates the costs related to our challenging operating conditions. Finally, reflecting Barry's earlier comments on the operating environment, adjusted pretax margin in the third quarter is expected in the range of 4% to 7% and 4% to 6% for the full year.

With that, I'll turn the call back to Barry for his closing remarks.

Thanks, Jimmy. I want to personally thank team Frontier for their dedicated service during the quarter in the difficult operating environment and for delivering Low Fares Done Right. We remain focused on controlling the things we can control to run a sound operation despite challenges posed by extraneous factors. Our competitive edge lies in sustaining our cost advantage over the industry, and we intend to utilize this advantage to simulate leisure travel demand and maximize shareholder value.

I want to be clear, while we're disappointed in our projected results, I strongly believe the company will return to double-digit margins, given that most of the headwinds are temporary. I want to thank everyone again for joining this afternoon, and we're ready to begin the Q&A portion of the call.

(Operator Instructions) Our first question comes from Brandon Oglenski of Barclays.

So Barry, I guess, can you expand on that a little bit? Because you had been guiding, I think, for like 10% to 12% or 10% to 13% pretax margin in the back half of the year. This seems like you're pulling that back somewhere around 4% to 6% at the midpoint. And I think you did mention 3 points from restructuring operations around Florida and ATC. So can you maybe dive deeper into that, please?

Yes, sure. It's pretty simple math we laid out. We've put out a 10% to 13% expectation for the second half, and we are seeing roughly 3 points in the operational challenges, as we discussed. ATC ground delay programs and so forth. And we're seeing additional 3 points in the revenue environment, which is primarily driven by the shift to European travel. So that pretty much explains the 6 points. I think there might be a little bit more fuel in there as well, but that explains it all.

I guess, Barry, can you talk about the changes around those operational challenges? Because it looks like your capacity guidance maybe didn't move all that much. So does this go beyond just capacity?

No, no. This is just simply -- it started a little bit in May, but really took effect in kind of your mid-June time frame, and it's continued for the last 6 weeks pretty heavily. We see maybe even a similar storm event. We'll see ground delay programs start hours and hours before with significantly longer with lots more minutes. And so we planned our airline in the past, we had roughly 3 hours of buffer built in, and we're seeing consistently, with these kind of ground delay programs, we need around 4 hours.

So we've made some tweaks to it, but there's no real immediate fixes that will fix this in the near term until -- but when we look forward to next year and beyond, we will start factoring this into our plans. The reality is that ATC is just issuing more ground delay programs, and they're lasting considerably longer than we had seen in the past. And so we've got to plan for that. But in the meantime, it's a drag until we can kind of schedule around it, if you will.

Okay. Appreciate that, Barry. And then Daniel, maybe can you expand on the European comment, overseas travel because it's not the first time we've heard it this quarter? Should we be thinking that folks have more propensity to travel internationally this year than they will next year?

Look, what we know, Brandon, is that as Barry said, our customers -- we surveyed our customers, they're traveling to Europe more. But this comment, obviously, from others, there seems to be this clearly pent-up demand for long-haul international travel. And from a U.S. point of origin perspective, that skews very, very heavily to Europe. We don't know what -- we don't obviously know exactly what's going to happen in the future. But what we've seen in pent-up demand generally is the first time you see that pent-up demand, that's when it's strongest and it tends to ease off as you go forward.

(Operator Instructions) Our next question comes from the line of Duane Pfennigwerth of Evercore ISI.

Just on network development, a couple of questions. On your planning horizon and how that relates to the booking curve, we're a little surprised to see large changes to October, here in early August or late July. Granted, they were capacity-adds, they're not deletes. But can you just talk a little bit about how your network planning process has changed and how you see it evolving over time?

What prevents you from planning with stability kind of further out? Were you waiting to see aircraft availability, et cetera? And I guess, most importantly, do you think this costs you at all from a sort of long-term bookings curve perspective? Or is all the action kind of close in?

Okay, Duane, I'll unpack that. Look, I think part -- we have made tweaks to our schedule and some of our scheduled rules and -- scheduled design rules to try and address some of what we've seen in the operational environment we're going through at the moment. We made those changes as close in as we could. That did cause us to be somewhat -- to get somewhat behind on actually loading all of our schedules. That particularly affected us -- actually September, that had the most significant effect.

We're expecting that to be sort of a relatively one-off. We're actually moving forward to adding the capacity we want to add earlier, but we did want to make sure that we did make adjustments that we needed to make. We need to see improvements, obviously in this, and we made some improvements. We think -- we made some changes that we think will improve operations.

From the booking curve perspective, it's a very minor impact. We are seeing -- we see most of our volume much closer in than that. There's a small impact, but it truly is small. And going forward, as we get schedules on sale further out -- we've just extended our schedule through New Year, and that impact will go away altogether.

And then just with respect to the booking curve, at least one carrier in the U.S. talked about kind of the surprising strength close in, but that they basically didn't assume that going forward for the rest of the quarter. Does that ring true to you? And what assumptions have you made with respect to kind of close-in bookings for the balance of the quarter?

We have a value proposition that works very well from a close-in perspective. And we've seen continued environmental -- we've seen a continued trend since the pandemic or since pandemic recovery in 2022 of strong close-in demand. Our anticipation, broadly speaking, is that, that will maintain relatively similar to the way we've seen it over the last number of months.

Our next question comes from the line of Michael Linenberg of Deutsche Bank.

I guess one part -- one question here, but sort of two parts. When we think about your network and we sort of think about what percent is under development, I'm trying to get a sense of what percent can we look at a same-store basis and then what would be new. There's obviously -- I know you're in a lot of seasonal markets, and so they go away and they come back.

How should we think about -- like if I were to look at your market today, take a snapshot, like what percentages under development are relatively new markets, maybe something that's been added in the last 12 months and something that's not seasonal, that comes in and out every -- 6 months out of the year it's in, 6 months out? Can you give us a better sense on that? I guess that would be to you, Daniel. And then I have sort of a follow-up tied to that.

So -- well, first thing I want to mention with regard to this is we are obviously growing at the moment faster than our intended medium-term trend line growth. We've committed to mid-teens growth being our standard medium-term trend line. And as we come out of COVID, we're continuing to recover capacity, and we're continuing to grow -- we'll continue to grow this year at a rate in the 20s percent.

So that tended to push this up, I'm rapidly scrambling to get you an actual number, because I don't have this one ready. But we are -- but look, we're always going to have -- we're going to have -- we're going to tend to have a higher sense of the networking development broadly because we are growing. And we are always looking to add new capacity. And the key thing at the moment is we're not adding new airports to the network. We're adding join-the-dot service around the country. I'll get back to you on the exact current percentage in development.

This is Barry. One thing that I would say is, look, if you're in the 20s on growth, that just tells you right there, that is all new. And then at every given moment, you've got anywhere from 15% to 35% of your flying that you did the year before that didn't work, so you redeploy it. That's kind of how growth airlines work. And so that's going to push you -- I'm just -- say, 20% or 25% from last year, 30% actually. So your in the over 30% is immature. And so yes, we have a significant amount. And I think this is an underappreciated part of Frontier.

I mean we've -- people have picked on us about underperforming our historical margins. But I think what people don't grasp is that when you're growing at 10-plus points higher than your target rate and you take a 20% to 30% discount on that, that's just a flat-out 3-point drag on margin, and it could likely be even more just simply because you're also still coming out of COVID. So -- but that's a long way of telling you, yes, it is over 30% in the immature stage, and that will come down as our growth moderates into 2024, where we're now expected to be in the mid-teens -- mid- to upper-teens.

Okay. And the reason I was asking, Barry and Daniel, is that, look, you've done a nice job on ancillary, right? I mean you're up year-over-year, $5, moving -- you're at $80 now. But when I look at the base fares, you're down almost $20. And so the question is, what you're making up on ancillary, you're losing on base and presumably, you're a growth carrier and demand stimulation, but we're also in a pretty high inflationary environment.

And we are seeing average fares for a lot of carriers, they're flat to up, and now they're moderating as we move forward. But to see that down as much as it is in the June quarter, presumably, that's because they're -- like you said, you're in a lot of relatively new markets, call it a third, and so you're engaging in demand stimulation, which is your model, I guess. And maybe I'm answering your question or maybe I'm missing it, if there's anything you can add on that because that's a pretty meaningful drop on the base fare.

We're very aware, Mike, and that is why we're extremely focused on getting back to double-digit margins. And a big part of that is getting our growth rate normalized, and we're largely back to a normal growth rate once we get to 2024. Yes, we have swallowed a lot of capacity to get the utilization back, and we're finally almost through that. And yes, it has a corresponding impact to fares and we need that to stimulate.

The good news is, we're growing everything, whether it be your e-mails, your frequent flyers, your Discount Den membership, your GoWild!, so the good news is that those things are keeping up with our growth. And so as that moderates, we expect to see the benefit of that as we move into 2024.

Our next question comes from the line of Jamie Baker of JPMorgan.

So appreciate the Airbus commentary before. Just wondering if you have any specific GTF-related assumptions embedded in the forward 6-month guide or if it's just business as usual?

So thanks, Jamie. We don't have any of the engines. In fact, the ones that were impacted were manufactured through September of 2021. We did not take an aircraft -- we didn't take a GTF until actually a year later, and that actual engine was manufactured -- though both of those engines were manufactured in May of '22. So we are about 6 to 8 months past the risk profile of those.

And looking forward later this year, when you give us some color on 2024 costs, any updated thoughts on whether you may choose to accrue for new pilot economics? Or are you still debating this internally? And I suppose, more importantly, when you think about your earnings profile once pilot costs are mark-to-market, do you think about the network any differently? I mean, basically, do you envision flying any differently? Or is it just as simple as hopefully raising fares in hopes of preserving margins?

Yes, look, so I think there's a couple of things. One, we're very early. I know there's a group of you asking another airline about whether they should include it in their contract, I think, has been open for several years. We're not in that situation. So it's very early. We just had our first meeting, so I don't think -- I think we're a little premature on that.

But let's just talk about, yes, we are going to pay our pilots more at some point. We're going to pay all of our work groups more at some point. And so that's why we're constantly innovating and looking for ways to improve our situation.

So I'll go back to the previous question about moderating growth. That's going to be worth several points right there just in RASM to help pay for it. We can get past the current operational environment or at least -- I don't know that we'll get past the operational environment because I believe the forecast is that ATC staffing stays low for a few years. But we can plan around it much better.

And so I expect that by 2024, we made some close-in tweaks. But when you -- like any plan and you're an airline geek, so I know you know how the network works. The more -- the sooner you know the inputs to putting together a plan, the better and the more optimized it is. So as we think about 2024 and probably really our spring and beyond, which is most impacted just simply because of the weather-related impacts, we are going to build from the ground up completely different fire break assumptions and buffers.

So you would expect that we would get the majority of this benefit back by planning around the operational impact. And then as you well know, and I think we've probably been the leaders in ancillary and revenue-related pipeline. So we've got kind of a robust pipeline there. So I believe that we will have -- by the time we get new labor contracts, we will have ample capacity to pay for it with all the things that we have in the tank to expand our margins.

(Operator Instructions) Our next question comes from the line of Savi Syth of Raymond James.

Can I ask -- so it's getting to kind of mid to upper teens in 2024 in terms of capacity growth and making some of these changes to ATC. I'm guessing you'll have some improvements in kind of IROP costs and things like that. But like putting all that together, what's your revised view on what CASM -- what you can get CASM ex to be in 2024? I know it's really early stages, but generally kind of what's your revised view on CASM ex next year?

Look, Savi, it's Jimmy here. We haven't published a view on CASM going into next year. I mean at the moment, we're just putting together our capacity plans so that we can get an idea over the next couple of months on where we think directionally CASM is going, given some of the changes that we have. What we're really focused on is sustaining the differential we have to all of our competitors.

In the last quarter, we're comfortably $70 per passenger lower cost than all of our competitors across the average of the aviation space here in the States. And we would anticipate that we sustain that going through next year. This year, our CASM is probably slightly above $0.065. We would anticipate that going into next year, it will be in that area code. And one of the things that's benefiting us going into next year is the more normalization profile of Airbus deliveries that we expect across 2024 in comparison to 2023. So that will help us.

And then last quarter, you talked about kind of reshaping capacity. I was wondering if you can provide an update on if -- how that's playing out. I realize kind of the overall pricing environment is a bit softer. But generally, how has the capacity reshaping been playing out?

Well, so the first month where we see an actual significant amount of that capacity shaping, Savi, is actually going to be the month of September. That's the first month with the more significant discussion. We're continuing to see the same travel demand pattern. And we continue as we look at what's happening with September bookings. We do absolutely see the day of week pattern that we described when we announced these changes. And so we're confident that we are -- that this is the right approach to take. And we're continuing to roll it out as we roll out schedules into 2024.

Our next question comes from the line of Ravi Shanker from Morgan Stanley.

This is Katherine Kallergis on for Ravi. I wanted to just quickly follow up on a previous question asked about international travel pressure in the shorter haul that you are guiding towards in 3Q. Just curious, your thoughts around whether or not this might reverse in Q4 as the holidays are typically more favored towards visiting friends and family and whether or not that's something you're baking in for the full year assumptions.

Sure. We don't know. We surveyed customers, and we know that many of them continue to plan travel this fall. What it appears to us is that the summer did get very expensive relative to some people's expectations. And so we actually believe a lot of the demand is going to spill into the fall. And therefore, we have not made an assumption that this environment changes before we get into the heart of winter. Although I do know that once we get to January, February, it's a heck of a lot better to be in Florida than it is in most parts of Europe.

Our next question comes from the line of Stephen Trent of Citi.

Just one or two for me. So the first one is, I definitely appreciate what you guys have mentioned about weather. Did you see sort of any episodes in July where, let's say, extreme heat in places like Vegas maybe led you to bump some daytime capacity into the evening, for example? Or is it kind of -- we're primarily talking about thunderstorms were the main headache.

The biggest challenge is simply that we are seeing more ground delay programs and we're seeing them put on much sooner and for much longer duration than we've seen in the past. I mean we've seen upwards of 5x to 10x the amount of ground delay program minutes that we've seen in the system versus years past. So that's the big challenge.

As far as heat goes, yes, I've seen some of those, and I know there was a plane stuck with another carrier. It was stuck and it really got hot. The only specific thing that we've had is there have been the normal challenges with more tires that are damaged as a result of heat. And in particular, we did have one day where the temperatures were so high in Las Vegas that it caused temperature warnings to cause the fuel in the aircraft to exceed a temperature warning, which actually had made us cancel flights.

We've actually been tankering fuel now in there to mitigate this. But we've had -- I think it's probably less than a dozen or two just related specifically to heat. Everything is mainly aircraft control, ground delay programs.

Okay. Definitely appreciate that. And one other quick thing. I appreciate what you've mentioned about long-haul demand and what have you. When we think about Florida, over the last kind of 2 to 3 years, for a lot of the time, that was kind of the only place that was open. Are you seeing any specific sort of nuances in demand trend aside from more people flying long haul? You're hearing one or two organizations want to boycott the state, et cetera, et cetera. But I'm not sure if you're seeing anything like that in your data.

No. We have not seen anything quite like that. There is some theories around temperature, like when it's really hot, you don't necessarily want to go to Phoenix right now and some other places. And it doesn't help when those destinations are actually in the news for being very, very hot. And when you talk to certain hotels, I think they have actually experienced it. But in our data, we haven't really seen anything in particular that points to a state or a specific destination outperforming or underperforming.

In fact, I think if you go back, the COVID recovery and the pent-up demand was very uneven, really benefited the Florida, as you mentioned. It benefited even some of the kind of secondary destinations in their off seasons. And then it's taken a little longer for the coasts, the New Yorks, the Californias to come back. But in our business, we now see California, it bounced back as an example. And so we see a pretty even recovery forming this, the big shift to go to Europe this summer and into the fall is -- look, it takes money.

I mean there's so many consumer dollars. When we look at just our customers, we surveyed our customers, not the whole traveling public. And when we lose 5% of our people to go to Europe, that's a lot of customers. And so -- and they're spending a lot of money to go on those trips.

So that is a pretty big dip. But we think that it will normalize, just like we saw huge spikes to Florida and other places when the pent-up demand hit. I think that we're going to see this moderate. The question is, is it 3 more months or is it 6 more months? But it will moderate at some point.

Our next question comes from the line of Conor Cunningham of Melius Research.

Just on this network reshaping debate, you guys had actually started it last quarter, and now it seems like there's been a bunch following you. As their adjustments are made to Tuesdays and Wednesdays and the capacity is added to the peak days, there's some fear around just potential impacts to fares there. I know you don't want to talk about forward fares, but if you could just provide any expectation around -- how much are you spilling during peak days? Or how much do you think you should be getting from a fair share standpoint on the peak days that you're not right now?

Conor, thanks for the question. It's Daniel. I'm not sure there's a huge amount of change coming on peak days. We are -- we were a low-fare demand-stimulating airline, right? But what you're seeing -- what you're hearing mainly and certainly what I've heard mainly as other airlines have talked about, this is really -- they're taking capacity out of the days where the revenue isn't strong enough to justify the flying.

We're all generally speaking, as an industry flying our capacity intensely on peak days because that's why the revenue is highest, that's why the demand is highest. So we think -- the general trend and certainly the one thing that helps, the more capacity comes out to midweek, the more it stabilizes midweek fares and the more it helps the demand level on peak days. But that's all we can really say from -- looking from here.

I would just add too, look, [dayality] and how revenue is spread across the days of the week is not a new phenomena. What we were just the first ones to point out, maybe controversial at the time. And yes, as you point out, it seems like just about everyone has followed us once we've laid the groundwork for them.

But what you see even pre today and go back 10 years, 20 years, is that the mid-week capacity -- as an example, your Tuesday, Wednesday, that's when your lowest fares exist traditionally. And so what it does actually pulls people from the peak days over to those days because there's a lower fare option. What's going to happen, not only with our changes and now that somebody have followed us, there's just going to be a lot less Tuesday, Wednesday seats. So there's going to be a lot less discounting.

So it generally benefits those days, but you also find that it makes your peak days even better as well. You typically will see a RASM benefit when you make those trims across every day of week, just simply because you remove the most marginal capacity.

That's helpful. And then you actually faced a fair bit of weather this quarter, and I know you made the adjustments to the modular network. I'm just curious on -- I realize a lot of the stuff is out of your control from ATC, but just how you held up from a recoverability standpoint, given the changes in that modular network?

Well, I think there's two things I'd say. One, we often see it as a positive that we're diversified and actually very spread across the United States with multiple bases in multiple jurisdictions, and we pretty much follow all the major travel flows in the United States. Said another way, there's really no way that we're not impacted by weather. Some airlines maybe operate in the West or Northwest United States, they've escaped this weather this year. But if you're in -- if you like us are in Denver, Central time zones, Florida, Northeast capacity, and we've gotten hit by that. So we are exposed.

In terms of the modularity, what we're learning is we don't have -- we typically don't have the 3, 4, 5, up to 7-day rolling event because we only -- we mainly only have 1- and 2-day crew pairings. But what we have found is that we're likely to be more impacted on the day of. So if an airplane goes out and back and has to go through the same weather system twice or in some cases 3 times, if you catch a 2-hour delay every time you go through, by the third leg, that aircraft, I can just guarantee you, there's not a crew planning world that, that crew hasn't timed out.

So while it makes us easy to not have these like catastrophic multi-day, week-long events, we are more susceptible on the day that you do have a weather event, if that makes sense.

(Operator Instructions) I'm showing no further questions at this time. I'd like to turn the call back over to Barry Biffle for any closing remarks.

I want to thank everyone for joining our call today. I appreciate all the questions, and we look forward to talking to you next quarter. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.