Spirit Airlines Inc
NYSE:SAVE
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Spirit Airlines Inc
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Welcome to the Second Quarter 2022 Earnings Conference Call. My name is Erica, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. [Operator Instructions]
I will now turn the call over to DeAnne Gabel, Senior Director, Investor Relations.
Thank you, Erica, and welcome, everyone, to Spirit Airlines' second quarter earnings call. This call is being recorded and simultaneously webcast. A replay of this call will be archived on our website for 60 days. Presenting on today's call are Ted Christie, Spirit's Chief Executive Officer; Matt Klein, our Chief Commercial Officer; and Scott Haralson, our Chief Financial Officer. Also joining us are other members of our senior leadership team. Following our prepared remarks, there will be a question-and-answer session for analysts.
Today's discussion contains forward-looking statements that are based on the company's current expectations and are not a guarantee of future performance. There could be significant risks and uncertainties that cause actual results to differ materially from those reflected by the forward-looking statements, including the risk factors discussed in our reports on file with the SEC. We undertake no duty to update any forward-looking statements. In comparing results today, we will be adjusting all periods to exclude special items. Please refer to our second quarter 2022 earnings release, which is available on our website for the reconciliation of all non-GAAP measures.
With that, I turn the call over to Ted.
Thanks, DeAnne. Good morning. Thanks to everyone for joining us today. It's been a very busy summer with robust demand for leisure travel, resulting in crowded airports and full planes. In addition, we at Spirit have had a few other things on our plate, and I want to offer my sincere gratitude to our team members being focused on supporting each other and delivering high-quality service to our guests.
Before discussing our second quarter results, on July 28, we entered into a definitive merger agreement, under which JetBlue will acquire Spirit for $33.50 per share in cash, including a prepayment of $2.50 per share in cash upon Spirit's stockholders' approval of the transaction and a ticking fee of $0.10 per month starting in January 2023 up to a maximum amount of $34.15 per share.
As you know, we previously signed a merger agreement with Frontier Airlines, which we terminated on July 27. Thanks to our Board's robust and diligent process, shortly following that termination, we were able to enter into a very favorable deal with JetBlue that delivers significant immediate value to our stockholders.
The merger agreement with JetBlue provides meaningful protection for our stockholders against an adverse regulatory outcome and a significant cash premium upon closing the deal. Until then, though, it's business as usual. So with that, let's move on to our second quarter results.
For the second quarter of 2022, we reported an adjusted net loss of $32.2 million or a loss of $0.30 per share. Our adjusted pretax margin was negative 2.8%, which exceeded the better end of our guidance. Demand was strong and our revenue production was robust with total revenue increasing 34.9% compared to the second quarter of 2019 on 9.9% more capacity. Our operational improvements drove a much more reliable airline and, therefore, more predictable costs, excluding fuel.
As we've discussed before, we are still operating at suboptimal productivity levels with total fleet utilization around 2 hours per airplane less than our 2019 levels. We've built an efficiency-based franchise that maximizes earnings with optimized utilization of assets and labor. The carrying cost of underutilized assets, human capital and lack of capacity production are delaying our return to run rate profitability levels. However, once we reach a more traditional utilization level, we're confident in our ability to deliver normal operating margins. The expected time line to achieve that goal will, in part, depend on the infrastructure that supports the aviation industry, most notably the ability to fully deploy our schedule to and from Florida.
Operationally, by June, we had our first glimpse as to how the changes we've made to date are improving operational reliability. These changes include adding new crew bases, changing how we flow aircraft and how we approach crew scheduling. We finished the quarter on a strong note with a 98.8% completion factor for June. July's completion factor rose to 99.7%, including 15 days with 100% completion, an excellent result from the investments made.
And now I'll hand it over to Matt and Scott to share some additional details about our second quarter performance as well as some color around our third quarter outlook.
Matt, over to you.
Thanks, Ted. I also want to thank the Spirit team. Travel demand has been strong. Load factors and passenger counts are back to pre-COVID levels in most locations, and we've seen packed airports with lots of guests excited to resume their summer travel plans. I thank our team for maintaining their dedication and professionalism during these busy times and for providing a high-value travel experience for our guests.
Turning now to our second quarter 2022 revenue performance. For the second quarter, our revenue was $1.37 billion up 34.9% compared to the second quarter 2019. Total RASM for the quarter was $0.1154 up 22.8% versus 2019. This is quite a remarkable achievement considering we saw capacity increase by nearly 10% while also lengthening stage by 2%. Additionally, this is the first quarter since prior to the pandemic where we achieved double-digit absolute total unit revenue results in all 3 months of the quarter.
On a per segment basis, again, compared to the second quarter 2019, total revenue per passenger increased 24.3% to $140.61. Passenger revenue per segment increased 25.7% to over $72 and non-ticket per segment increased 22.8% to a record $68.20. This is another new record for non-ticket per segment production and was 5.7% higher than the prior quarterly record of $64.53 that we just achieved in the first quarter 2022. Bag and seat revenue continued to improve from an already record level, and we also are continuing to recognize impressive per-segment revenue increases from our bundled services offerings.
One more note about Q2 before we talk about guidance for Q3. We saw a year-over-3-year improvement in TRASM every month in Q2, including a peak result of 30% TRASM growth in June 2022 versus June 2019 driven by large increases in both fair and non-ticket metrics. Our strategy is to continue to drive increases in both metrics, and we are pleased to see that we are not trading between the 2 revenue buckets.
Now moving to third quarter 2022 total unit revenue guidance. The first half of the quarter has already seen flown TRASM achieve better than 20% growth versus 2019. And as we head into the back half of the third quarter, demand continues to remain strong. On an absolute basis, we are seeing what we hope to see, which is normal average fare seasonality for the off-peak period relative to peak summer results, and this is good news as it sets us up to see strong unit revenue growth results versus 2019. Given these inputs, we estimate our third quarter revenue will range between $1.33 billion to $1.37 billion with TRASM up 18% to 21% versus third quarter 2019, and we expect to achieve these results on approximately 14% more capacity than we produced in third quarter 2019 while also growing stage by around 1.5%.
Regarding the network changes Ted referenced, while we are seeing good revenue results from the network changes we've made, we are still constrained on the number of flights we can operate to the Jacksonville Air Traffic Control Center. To put this in context, Florida to the Continental U.S. accounts for about 40% of our network. If this constraint did not exist, Florida to the Continental U.S. would likely be closer to 50% of our network. Additionally and importantly, to help maintain operational reliability and recoverability, we will continue to take a pragmatic approach towards capacity deployment from now through the first half of 2023. Given that, we now estimate fourth quarter capacity will increase approximately 25% versus 2019.
For full year 2023, even with capacity moderated in the first half of next year, we are still targeting our previously stated range of 62 billion to 65 billion available seat miles. However, if the industry infrastructure doesn't improve enough to support a higher growth rate as the year progresses, we will likely be towards the lower end of the range for the full year.
In closing, we are pleased with our second quarter revenue results. We are excited about the continued prospects of nonticket production development. Load factors and yields continue to be strong as we grow capacity and stage length, and the third quarter continues to build nicely even as we head into the off-peak period. This is a total team and company effort, and the revenue results really do speak for themselves.
And now here's Scott.
Thanks, Matt. I'll provide a few additional details about our second quarter results and share when we are planning to get back to full utilization. Good cost management and benefits from improved reliability resulted in better-than-expected nonfuel costs for the second quarter, mitigating the majority of the impact from higher-than-expected fuel prices. On a unit cost basis, lower utilization remains a headwind. Fleet utilization for the quarter was about 15% lower than our desired levels. We built a business that is capable of producing a much higher level of capacity.
To help put this in perspective, since the start of the pandemic in the spring of 2020, we've added about 20% more aircraft, 30% more pilots and 17% more flight attendance yet are only producing 8.5% more capacity. The industry infrastructure is still unstable, but we are not yet comfortable that it can reliably support higher levels of utilization. By industry infrastructure, I'm primarily referring to the labor challenges across various support functions of the industry, including suppliers, business partners and the ATC and TSA, an issue impacting all U.S. airlines. We are seeing progress. It's just not happening as rapidly as we had anticipated.
In addition, higher crew attrition is also limiting our ability to ramp up utilization as fast as we would like. We will continue to balance our desire to get back to full utilization with our commitment to run a reliable operation. From a liquidity perspective, we remain in a strong position. We ended the second quarter with $1.5 billion in liquidity, which includes unrestricted cash and cash equivalents, short-term investments and our $240 million of available capacity from our revolving credit facility. Year-to-date through June 30, we made debt payments, including principal, interest and fees of $135 million and had capital expenditures, including net purchase deposits, of around $114 million. For the full year 2022, we estimate our capital expenditures, again, including net purchase deposits, will be approximately $270 million.
Regarding the fleet, during the second quarter, we took delivery of 4 A320neo aircraft, ending the quarter with 180 aircraft. We expect to take an additional 17 aircraft throughout the remainder of the year, ending the year with 197 aircraft. Our 2022 deliveries are fully financed, and we are in the process of finalizing documents for the sale leaseback financing for our 2023 deliveries from Airbus.
Looking ahead to the third quarter of 2022, we estimate our pretax margin will range between negative 1% to positive 1%. This assumes total operating expenses of $1.32 billion to $1.33 billion or a CASM ex fuel of $0.069 to $0.07 and the fuel price per gallon assumption of $3.55 and to $3.60. When our capacity constraints ease and we are back to optimal utilization levels, we anticipate a baseline run rate CASM ex fuel in the low $0.06 range. This does not take into account any new labor deals with our unionized work groups.
As we begin to frame our 2023 plan, we are assuming we can achieve normalized utilization levels by midyear 2023 and net fuel price per gallon will be about $3.40. Together with a reasonably strong demand backdrop, this should produce a mid-single-digit op margin for 2023.
Before I turn it back to Ted, I do want to thank the Spirit team for their incredible efforts during what has been an ever-changing environment over the past couple of years. Kudos to the entire team.
With that, I'll hand it back to Ted.
Thanks, Scott. Last quarter, I outlined our objectives for the next year or 2. Here they are, again, along with an update. Number one, network reliability enhancements and growth. In June, we delivered very strong operational results, and we had one of our best operational July's on record, 3 new crew bases, crew services automation and optimized buffer in and out of Florida were the big wins. .
Network growth achievements were capped with fantastic news of the DOT's decision to grant Spirit all 16 available takeoff and landing allocations at Newark Airport, which when fully utilized, gives us up to 45 departures from the New York Metropolitan area. Two, return to peak utilization and profitability. For utilization, our expectation was to deliver this by year-end 2022. But after experiencing how the ATC has operated this summer, coupled with our new crew planning strategies, it seems more prudent to target the summer of 2023. Full restoration of profit margins will, as we indicated, return once this target is achieved.
Three, record non-ticket performance. Current quarter non-ticket of $68 is another all-time record. And as we continue to refine our pricing and product mix, we expect this number will continue to climb over time; and four, widening the unit cost gap. We have maintained a wide gap to the industry, which we believe will widen over time. However, until we get back to full utilization and optimize our network, this is a work in progress.
There is much to do throughout 2023. With the distraction and uncertainty of the past 6 months behind us now, I'm excited to see this group of talented and motivated aviation professionals show the industry what a fantastic company we have become.
And with that, back to DeAnne.
Thank you, Ted. We are now ready to take questions from the analysts. [Operator Instructions]
Erica, we are ready to begin.
[Operator Instructions] Your first question comes from Duane Pfennigwerth with Evercore ISI.
This is Jay Gunning on for Duane. Could you mark-to-market how caught up on pilot hiring and training you are? And then given your flight plan through the end of 2023, how many more pilots will you need?
This is Ted. So I think as Scott indicated, we've been actively hiring pilots and adding them to our baseline. If you look back at the pre-pandemic levels, we have about 30% more pilots today than we had at the time. However, attrition is significantly higher than it was then, too. So we're going through a little bit of that right now. We are -- we've been ramping up our school house over the past 6 months, 6 or 8 months to the point where we're nearly doubling the size of that school house and still very successful in getting the necessary powers we need to fill each individual class and have a good backlog of resumes in place for additional pilots.
So we're on target to hit what we need from a staffing perspective. That includes pilots and flight attendants and technicians across the board as well as supporting our business partners at all the airports to make sure that we have appropriate staffing at all the airports. We're on target to get back to full utilization as we indicated in the middle part of next year.
And then just as a follow-up, do you have any estimate on how much it would cost and how long it would take to reconfigure your planes to the JetBlue configuration?
No, we don't. I think that's probably a better question for JetBlue.
Your next question comes from the line of Michael Linenberg with Deutsche Bank.
This is actually Shannon Doherty on for Mike. So the first one, can you guys dig a bit deeper into the efforts that you made on the cost management side in the June quarter?
Yes. Look, this is Scott. I think the majority of the benefit comes from efficient production. Running a good airline, as we've mentioned before, has ripple effects through the P&L and then that production of ASMs on the unit cost side. And so we're continuing to build back the airline, so building the infrastructure for us to continue to hire and train pilots to make sure we have the real estate in place to run a fully utilized airline. There are going to be headwinds, but on the unit cost side, it's primarily going to be fisher production of ASMs.
And my second question, aside from the overall industry infrastructure issues that we're facing, what would you guys say is the biggest risk to your return to sustained and meaningful profitability? And should we expect to see this happen by summer of 2023?
Sure. So as we've stated in our comments, I just answered some questions. Obviously, the bigger inputs to return profitability are full utilization of the assets, and the inputs to getting there require labor and infrastructure support from our team members, our business partners as well as the various government and nongovernment entities that support the airline business. And so I would view those as the primary things that would drive one way or the other.
What I can tell you is those things that we control, which is our staffing, our hiring, our training, are on track and on target in some respects ahead. And we feel good about our ability to get there. There are some things beyond our control as well that have inputs, but we have received comfort from various support entities, business partners as well as the FAA that they are also making the necessary adjustments to get us already to have much bigger airline business as we head into 2023. So I would say those are the inputs, the puts and takes.
Obviously, input costs matter a lot to this business. Fuel has moved dramatically since the beginning of the pandemic and throughout the course of the pandemic. I think Scott mentioned that we're looking at somewhere in the neighborhood of 340 or 350 a gallon next year, which is historically amongst the highest fuel prices we've ever seen in this business. So that will have an input into kind of short-term profitability, but the long-term view is still that capacity will necessarily adjust to those input costs, and we'll have the appropriate level of production to drive the margins we want to get.
So I feel like we're making the necessary changes to our network and doing the things we need to do to get ourselves back. We're not there yet. And we are collectively, I think, frustrated with the progress to date but still feeling optimistic about our targets for next year.
Your next question comes from the line of Scott Group with Wolfe Research.
So how does the JetBlue merger and the regulatory uncertainty impact your capacity plans in terms of how much? And then also where? And then if you get to the low end of that ASM guidance for next year, that's about 27% capacity growth. What would you think CASM ex does with that much capacity growth?
Scott, this is Ted. I'll take the first half. Scott can jump in after that. So as to what does the process, the merger process with JetBlue have an impact, the answer is none. We are active competitors today, and that will remain true until there is final approval on the deal from the regulatory authorities, which is down the road quite a bit. So we're continuing to deploy the same way we would without a deal. And our expectation is that JetBlue is doing the same. So no impact there.
Scott, how would you?
Yes. On the capacity guide of 62 billion to 65 billion ASMs, we talked about a sort of CASM ex view in the low 6s. I think even with the low end of that guide or around 62%, we would still be in the low 6 range. So I think that's where we would target at this point.
And then as you think about next year, I think you talked about mid-single-digit operating margins. I guess 2 questions. What are you assuming in terms of unit revenue? And then with all the capacity growth, are you comfortable or confident that you can take on all these new planes and also get the utilization back to where you want? Is it difficult to get both in the same year?
Well, so there's a lot there. I'll give some thoughts. I'd let Matt as well to jump in on unit revenue. We are confident that with our delivery schedule that we've got the right trajectory to get ourselves back to full utilization, as I indicated before. It doesn't come without effort. And we're in the midst of that right now. We're doing quite a bit of hiring and training for crew, as we indicated with some of our numbers, and that will continue. And so there's a lot of work to do. But as I said before, I think we're confident in our ability to execute to it.
I can tell you one thought before I turn it over to Matt. As it relates to unit revenue production, we're assuming that the demand environment that we see today continues. But if we had a lot more flying today, I'm not sure the unit revenue number would be anything different. In fact, it might be higher because of the way we've throttled the network and where we throttled it. So there's still a lot of ULCC Spirit opportunities in our network. We just haven't hit them.
So Matt, what -- would you dig in further on that?
Yes, that's right. And so Scott, when we think about the network and some of the network changes we've made this summer, we are expecting them to roll through the fall into -- probably into spring break next year as well. So we will have a little bit of a network sort of impact there to revenue. But the way we view that is that's opportunity coming for the future that we're not capturing today. So your question is a good one about capacity and deployment. But as Ted mentioned, right now, anyway, we feel like more capacity would have actually led to the same unit revenue, possibly even better unit revenues because we'd be flying more to where we really would like the network to be lining up right now.
One more thing to note on that, though, as we look for other places in the network to continue to grow, these are all opportunities that we knew we'd be going after here as we move into the future. So maybe a couple of being pulled forward a little bit early. Not that big a deal from our perspective, we were going to be there anyway. But the bigger thing is where we see -- where we already are strong and want to continue to grow. We're just going to continue to be smart and thoughtful about how much we grow in any given month or period in some of those stations. So just making sure that we're setting ourselves up for success and making sure we set the operation up for success. Ultimately, that will help revenue production as well.
Your next question comes from Andrew Didora with Bank of America.
So Ted, Matt, can you speak a bit more about what you're seeing in demand as we head into the fall here? It does seem like the real pent-up demand from early in the summer is gone and the industry seems to be normalizing a bit here. Can you maybe talk a little bit more about what you're seeing? And I guess kind of a follow-up to that question. some other airlines earlier in earnings season spoke about seeing maybe some peak pricing around leisure fares. Just curious if you feel like you're seeing the same thing.
Sure, Andrew. So as we move from summer to September and into October, we are seeing what we would call normal seasonality, which, as I said in my scripted remarks, we view as very good news. So for us, the question was going to be where the summer -- was the summer demand unusual to the extent that it would just fall off a cliff after we hit Labor Day and beyond. And we're not seeing that right now. So in fact, we're continuing to be pretty impressed with the volumes that are coming through. We're happy with the way that we have a revenue management plan set up, and we're continuing to see the volume flow through there.
Now what I would say is we definitely saw a little bit of pricing movement coming out of the summer into the fall. But what's different this year compared to prior years is that we're continuing to see longer advanced purchase restrictions on fares that are published in the marketplace. So some of the levels are a little bit lower than we saw over the summer, but we're continuing to see pretty good, for lack of a better term, yield fences on the fair rules in place. So that should be good news moving through the off-peak period and then as we head towards the peaker part of Q4 as well. So that's the way that we're seeing things right now. Obviously, that can change. But as of right now, we're pretty confident and we feel pretty good about the setup.
Your next question comes from the line of Chris Stathoulopoulos with Susquehanna.
Just want to dig into this, Matt, your comments on normal average fare seasonality. How much of your inventory for 3Q and 4Q is currently sold? And how does that compare to pre-pandemic levels?
Chris, thanks for the question. So we're not going to get into the exact details of how much is already booked versus what we expect to come. I would tell you that sort of echoing what I just said on Andrew's question is as we move out of the summer into the fall, the pricing is a little bit lower, but that would be normal as we move from the summer into the fall. And what I mean about how it's acting normal is we're still seeing and we expect to see unit revenue improvements in every month here in the quarter and moving into the fall, and it's staying at relatively consistent unit revenue growth numbers in each month.
So is it different by month? Yes. Are we expecting it to be a little bit different by month? Yes. The peaker periods definitely, we expect will continue to outperform even better than the off-peak periods, but the all-period are continuing to book well. And I don't want anyone to over-rotate on this and think that it's stronger than it is. It's definitely seasonal. But the good news for us is that we're continuing to see our leisure routes and our leisure network continue to take volume that we would hope to see coming out of the summer into the fall. Hope that helps.
And a follow-up here, Ted or Matt, you just -- can you help us think about or at least how you view the stickiness of your non-ticket fare revenue into a cyclical slowdown?
Sure. I'll take that one as well. So as we move cyclically through the seasons, through the year and into next year, we are very happy with what we've seen, what we continue to see book. It gives us confidence that the stickiness is there and will be there I think the question will be what ultimately happens to ticket yields will likely have more of an impact than what happens on non-ticket yields. And as we just sort of got done saying, we're pretty confident that what we're seeing on the ticket side is holding its own relatively well. So if that holds, that gives us a lot more ability to do things on the non-ticket side as well. It gives us more confidence on the nonticket side to continue to do more things and invest in how we think about the products we offer and especially the way that we offer our bundled services offering continues to develop, how we think about depending on the destination that guests are traveling to. We may have different offerings in place now than we had in the past. And all of that is because dooring COVID, we continue to invest properly in what we knew was going to be opportunity coming out of COVID. And we're pleased with what we've seen, and there's definitely more opportunity to come.
Your next question comes from the line of Savi Syth with Raymond James.
If I might just quickly return to the utilization question. I was kind of curious, it sounds like you're getting confidence that the training capacity is going to be large enough to kind of address the current attrition levels so that you can get there. I think the other component of that -- let me know if that's correct. And the other component of that is these buffers that you've built, and you need those to kind of come off to reach that utilization. So could you talk about like what you need to see to kind of remove those buffers? So what gives you the confidence that those buffers can come off in mid-2022? Or maybe you don't need the buffers to come off? Maybe you'd get it all through training. Just kind of curious if you could address that a little bit more.
Sure, Savi. The training issue, you are correct. We have adjusted -- we started adjusting it in the latter part of last year as a result of the attrition change attrition has kind of like stabilized at this point. It's still elevated from what we like and what we want to see, but we have adjusted to it. So absent there being some other sort of step change one way or the other, we feel like we've made the necessary adjustments, and we have seen enough history here over the last 6 or 7 operating months, so we have at least some idea. So I feel like we've made the necessary adjustments there.
As to the second half of your question, I think it's a sure point, we have put in place a lot of buffer in the system to run well because we have the time, but also to adjust to the practical realities of the operating system, the North American aerospace. So you heard us talk about Florida a lot, well – pre-pandemic and into the early parts of -- and in the part of last year, we were 50%, 60% of our flying in Florida. And so it does have an impact when things aren't running well down here.
And being able to analyze those changes, be it buffer or block performance or the way we crew schedule, the way we base our crews, what we call the pairing mix, which means how long are our crews away from base before they come back and refresh, all of that are under -- the analysis of all of it is underway and trying to isolate as best you can, which of those things is having the greater impact and which isn't.
We've already made some conclusions about that, by the way, and have some early returns on the things that we can start to, to your point, either remove the buffer or layer in more flying as a result of the change. And those experiments will start in the coming quarters, which is why we're being a little bit more prudent about the build back into next year. And so nothing is perfect ever in this business. We still have to adapt quite a bit to changing environment. But I think taking this approach is going to put Spirit in a better position for the long term and, for that reason, gives us confidence that we can do it because we're learning as we go.
And then if I might follow up on the ancillary question. Clearly, ancillary has been stronger than I think even what you envisioned pre-pandemic. And just curious, I know you mentioned, Matt, that you're going to try and you invested in things and you'll be experimenting different things. Do you have a sense of how much more that you can push the ancillary fare here?
Savi, you're right. We definitely thought that we would get to these ancillary numbers but not just quickly coming out of COVID. So it's hard to know exactly where the top end of this is. One thing that I think is worth also mentioning is that we have started to see -- we're not -- it's not all the way where we want it to be yet, but we're starting to see the take rates push up well on our loyalty program as well as our credit card partner program, and that's moving well. It actually was a little slower than we would have liked to have seen, which we kind of just think COVID had a big impact on that overall for us. But the good news with this is that the trajectory has now not only caught up, but the slope of the line steeper than where we had initially thought it would be. So we're at the place we want to be with a better trajectory moving forward. .
So we're pleased about that. We don't talk about it that often, but I think that's something, for example that will continue to add to our non-ticket production that really isn't there and hasn't been where we wanted it to be the last few years.
Your next question comes from the line of Jamie Baker with JPMorgan.
This is James on for Jamie. I guess since the town hall is an employee interaction since the JetBlue announcement. I'm just wondering what feedback has been? Has there any key topics that employees have bought up? And just any general feedback there?
Sure. So look, this is a pretty stout and resilient group that has been put through much like every airline over the past 2 years quite a bit but specifically for us a lot over the last 6 to 8 months, and they were looking for an answer. They were looking for a little bit of clarity, and we were able to deliver that. And I think now they've begun to turn their attention back to what's critical for us, which is continuing to build a really nice franchise. And they're always going to be specific .
Yes, sorry. That's where I thought you were continuing. Just on the same question. Airbus came out with the announcement, I think, 2 weeks ago that is delaying its ramp to 8 320. Just wondering, do they send your revised schedule? Or is that really up to Airbus to just determine in your kind of that well there? And does that impact 2023 scheduling at all if it gets delayed?
James, this is Scott. Yes, we're in constant communication with Airbus around delivery dates, and there have been some delays. That doesn't impact our capacity deployment at this point primarily because we're not fully optimized at this point so we can manage through some temporary delays in terms of a month or 2, not dramatic at this point. But we continue to monitor and talk to all of our vendors, including Pratt and Airbus, around the number of products that impact our ability to deploy that capacity. So we are carefully watching it, but at this point, no real impact.
At this time, there are no further questions.
Great. Well, thanks all for joining us today, and we'll catch you soon.
This concludes today's conference. You may disconnect at this time.