The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Jamie Baker - JPMorgan Chase & Co - Analyst
: First question is, and I'll try to ask this delicately, it's related to the first quarter guide. So you mentioned, obviously, the pressure points in the
quarter but you have a lot of overlap with American Airlines, obviously. They went dark after 5342, much as you did after 1380 and I don't quibble
with that decision. I think that's the right thing to do. But was there any pickup in your business associated with one of your largest competitors
going dark for a three week period?
Question: Jamie Baker - JPMorgan Chase & Co - Analyst
: Yes. All right. Appreciate that. And then so today's announcements, I mean, I guess I was of the view that bag fees might come at some point in
my lifetime. I was actually more interested by the basic offering. So what's the calculus behind that? Is it defensive in nature given that you had a
significant overlap with our low-cost carriers? Admittedly, in Spirit's case, they pulled down a lot of capacity. But is it more a defensive
acknowledgment?
Is it more about selling more credit cards and getting people younger, more frugal travellers into the ecosystem early and then keeping them
there? Just what were the underlying assumptions as to why you needed basic math?
Question: Jamie Baker - JPMorgan Chase & Co - Analyst
: Bob, I've covered Southwest on the sell side for 26 years. And if anyone asked me name a company that has a definable culture and views culture
as a competitive advantage, I would say it's Southwest. And that culture right now is undergoing the most upheaval it's ever undergone. You wear
your heart on your lapel and so forth. How are you managing that shock and awe with the employee base? And can culture continue to be a
competitive advantage for Southwest given all the changes going on right now?
Question: Jamie Baker - JPMorgan Chase & Co - Analyst
: And Tom, I wanted to ask you my second question, which is especially as a new guy on the block here, you have a toolkit that you never had before
in terms of the Southwest balance sheet, right? (technical difficulty) So when you think about sort of balancing the balance sheet strategy and
shareholder returns, you obviously have a very large shareholder who's pushing for more buybacks and so forth, you are levering up relative to
prior targets. How do you think about that interplay in managing that as the airline undergoes this transition?
Question: Jamie Baker - JPMorgan Chase & Co - Analyst
: Can we just put some guardrails around that last comment? I mean at the Investor Day previously, the comment was made solidly investment
grade. Is that still the guidepost for what you're looking at? Or are you looking broader?
Question: Jamie Baker - JPMorgan Chase & Co - Analyst
: Okay. Back to me. So one thing that I'm not able to do after -- well, a lot of things I'm not able to do, but one of them, in particular, that I can't answer
for clients having looked at today's slides is how conservative or aggressive some of the revenue assumptions might be.
So can you help me understand that? Because obviously, conservative is better. But for example, do you think you do spill some demand charging
for bags? Do you think turn-times are effective? Because you know some number of your passengers are now going to bring oversized. They're
going to try to monopolize the overhead bins and that slows.
I mean what are some of the puts and takes that go into this? And probably the best place to start is what percentage of your flown passengers
do you think will be subjected to bag fees, incremental bag fees as opposed to bundled or credit card, actually paying up at the ticket counter?
Question: Jamie Baker - JPMorgan Chase & Co - Analyst
: All right. Got you. And then just quickly because Mark has another question. You mentioned unwinding fuel hedges. Do you actually mean unwind?
Or was that shorthand for you'll just let them burn off? I wasn't clear.
Question: Jamie Baker - JPMorgan Chase & Co - Analyst
: We love hearing -- we look forward to hearing more about the future when you're ready to talk about it. Thanks, Bob, and team. We appreciate it.
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