Allegiant Travel (ALGT) Maurice J. Gallagher on Q1 2016 Results - Earnings Call Transcript

| About: Allegiant Travel (ALGT)

Allegiant Travel Co. (NASDAQ:ALGT)

Q1 2016 Earnings Call

April 27, 2016 4:30 pm ET

Executives

Christopher Allen - Director-Investor Relations

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

D. Scott Sheldon - Chief Financial Officer & Senior Vice President

Maurice J. Gallagher - Chairman & Chief Executive Officer

Analysts

Savanthi N. Syth - Raymond James & Associates, Inc.

Hunter K. Keay - Wolfe Research LLC

Duane Pfennigwerth - Evercore Group LLC

Helane Becker - Cowen & Co. LLC

Joseph DeNardi - Stifel, Nicolaus & Co., Inc.

Mike J. Linenberg - Deutsche Bank Securities, Inc.

Rajeev Lalwani - Morgan Stanley & Co. LLC

Dan J. McKenzie - The Buckingham Research Group, Inc.

Steve M. O'Hara - Sidoti & Co. LLC

David Fintzen - Barclays Capital, Inc.

Operator

Good day, ladies and gentlemen, and welcome to the Allegiant Travel Company First Quarter 2016 Earnings Conference Call.

At this time, all participant lines are in a listen-only mode to reduce background noise, but later we will be conducting a question-and-answer session and instructions will follow at that time.

I would now like to introduce your first speaker for today, Chris Allen of Investor Relations. You have the floor, sir.

Christopher Allen - Director-Investor Relations

Thank you. Welcome to the Allegiant Travel Company's first quarter 2016 earnings call. With me today are Maury Gallagher, the company's Chairman and Chief Executive Officer; Scott Sheldon, the company's Chief Financial Officer; and Jude Bricker, the company's Chief Operating Officer and SVP of Planning. We are making a very slight change to the Maury format as both Scott and Jude will briefly touch on some of the highlights of the quarter and our guidance. After that, we will open it up for questions.

Before we begin, I'd like to remind listeners that the company's comments today will contain forward-looking statements and they are only predictions and involve risks and uncertainties. Forward-looking statements made today may include, among others, references to the future performance and any other comments about our strategic plan. There are many risk factors that could prevent us from achieving our goals and causing the underlining assumptions of these forward-looking statements and our actual results to differ materially from those expressed or implied by our forward-looking statements.

These risk factors and others are more fully disclosed in our filings with the Securities and Exchange Commission. Any forward-looking statements are based on information available to us today, and we are undertaking no obligation to update publicly or any forward-looking statements, whether as a result of our future events or new information, or otherwise.

The company cautions users of this presentation not to place undue reliance on forward-looking statements, which may be based on assumptions and events that do not materialize. This earnings release as well as the rebroadcast of the call are available on the company's Investor Relations site at ir.allegiantair.com.

With that, I'd like to turn it over to Jude.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Thanks, Chris. Maury didn't give me a whole lot of time here, but I wanted to touch on just a few highlights. They'll probably come up in the call anyway. Let's start with the revenue.

We're pretty excited about our report today of 10.5% down in unit revenue, which is above where we thought we'd be this time. And that's pretty good considering an 18% scheduled ASM growth. The surprises to the positive included better than expected close-in bookings and also some of our midsized markets are maturing a bit more rapidly than we had expected.

We still face some of the same challenges we've talked about in the past earnings calls, namely growth overall, but specifically, into new markets. Today, we're selling 75 markets that we weren't selling at the same time last year.

We continue to de-peak somewhat the schedule, which is a logical response to the low fuel price environment. And notably, we lapped as of the end of the first quarter the effect of the change from debit card discount to credit card surcharge, which contributed negatively about 1 percentage point to 1Q TRASM.

We're also guiding second quarter unit revenue of down 8% to 10%, which is really good considering a negative 2 percentage point effect of the Easter shift into the second quarter. We continue to see – I believe we're going to see sequential year-over-year improvement in unit revenues as we move on through the end of the year, and I'm making that statement based on the schedule that we have loaded, which has some declining growth rates relative to where we are today and where we were on those quarters in the prior year, and also allows us the opportunity to optimize some of the capacity into our new markets.

Couple of operational updates. First is we talked about pilot staffing levels the past earning calls. I think where we are today, we don't need to talk about that anymore, namely pilot staffing levels allow us to run the airline without consideration of a top end cap on capacity growth for pilots. And you can see that in increased capacity guides for second and third quarters, also in the increase at our charter activity that shows up in our revenue lines with our first quarter results, and our Hawaiian extension which will now run through Labor Day of 2017 relative to the prior plan, which was to end it in August of this year.

Today, we're announcing 11 new aircraft that we're acquiring, new to us that is, which brings our total Airbus commitments to 61 aircraft. And while we'd like to see a little more deliveries in the near term, we're certainly confident in our ability to go out and get quality aircraft at the price points that allow us to execute our business plan.

Couple of balance sheet highlights. We're ending the first quarter with $650 million of debt outstanding. I want to highlight that a $110 million roughly of that is pledged to leased aircraft, the leases of which service the debt. So, our leverage is a little less than it appears.

And we ended the quarter with $411 million of unrestricted cash. Keep in mind that that doesn't include a $56 million undrawn revolving credit facility. And we also have available for financing eight unencumbered aircraft, A319s and A320s available to raise liquidity if we have a use of proceeds.

And with that, I'll turn it over to Scott.

D. Scott Sheldon - Chief Financial Officer & Senior Vice President

Thanks, Jude. Just a couple of comments on the cost side. Q1 came in within the guidance range of down 2% to down 4%, so really nothing unexpected to highlight. A couple of things. As we move through 2Q, we guided a range of up 4% to up 6% off a base of $0.559. Two areas in particular, one being labor, we continue to be challenged by labor headwinds specifically as it relates to flight crew and productivity.

We've been in this pattern of kind of degradation of productivity around 55% and 70%, respectively, on a block to pay ratio for those respective groups, which is definitely below historical norms. Some of the contributing factors being that the continued transition from the 80 to the Airbus, the opening of small and mid-town bases where it's difficult to optimize productivity. So, we should expect to see those types of trends as we move for the future.

On the maintenance side, 1Q of 2016 was relatively in line. Engine overhauls basically offset the decrease in heavy checks. Although we did reiterate our full year maintenance per aircraft per month guidance, I want to provide a little more color into the timing of maintenance events as we move through the back half of the year.

We do expect 2Q and 4Q to be the high-level watermark as it relates to maintenance. That's assuming events don't slip as they're currently modeled. 2Q pressure both on the airframe and engine side will be substantially higher than it was in 2Q of 2015. So, on an M&E per aircraft per month basis, it would be north of our full year range of 125. So, 2Q and 4Q should be fairly heavy this year.

And so, with that, we could open it up for questions.

Question-and-Answer Session

Operator

Our first question comes from the line of Savi Syth from Raymond James. Your line is open.

Savanthi N. Syth - Raymond James & Associates, Inc.

Hey. Good afternoon. Just, hey, Jude, maybe this is for you. I just wanted to touch on the (7:57) that you provided. It was great color on the release. I appreciate it. But it is kind of a weakening of the trend that we saw the latter part of last year and I guess I was surprised given that you did have maybe the Easter benefit pull-forward to 1Q. I wonder if you could talk about that. And maybe the off-peak flying, the mix that's increasing versus last year and then maybe the new market mix increasing versus last year, when does that turn rate lower this year versus last year?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

So, I had trouble hearing the first part of your question. Which negative decline are you talking about?

Savanthi N. Syth - Raymond James & Associates, Inc.

The same-store sales decline. I think it was down 6% in the 1Q and I think the last couple of quarters you've mentioned it was down maybe a couple of points.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Right. So in the past quarters, the reference there would have been a scenario where we operate at the exact same network as we did in the prior year's quarter. So, 6% decline does include the negative impacts of growth. That's just the same-store sales which would have been subject to de-peaking and overall growth that we did in those markets in the first quarter this year.

And so we've talked about de-peaking a lot over the last several calls. In the first quarter, we grew March capacity by only 13%, far below our scheduled service capacity growth of 18% and a lot of that trend starts reversing really in the second and third quarters as we're able to – as we guided up capacity, that's a result of our ability to extend some of the seasonality in some of our markets, which is reflected in our schedule today. We're showing June growth at about 21%, roughly as what's in the schedule today. So we're seeing more proportional growth going forward, and that's just the natural process of us optimizing the schedule in response to lower fuel prices.

Savanthi N. Syth - Raymond James & Associates, Inc.

And what was the equivalent to that kind of two points that you talked about before then in 1Q?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

That'd be a scenario where we would have the same markets operated with the same capacity as we would have in the prior year's comp.

Savanthi N. Syth - Raymond James & Associates, Inc.

And so is it consistent with the 1 to 2?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yeah. That's about overall how we would judge the revenue environment absence of all the things we're doing. Yeah.

Savanthi N. Syth - Raymond James & Associates, Inc.

Got it. And just if I may ask one last question on the aircraft side. When do we need to see the purchases of any new aircraft to support – I think the whole is in for 2017. Is that kind of early part of 2017? Is that right?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Well, we have MD-80s that we can extend, so I don't think there's an urgency to that. But, yeah, we would like to take a few more aircraft than what we have planned for delivery in 2017 based on today's fleet plan.

Savanthi N. Syth - Raymond James & Associates, Inc.

All right. Thanks, Jude.

Operator

Thank you. Our next question comes from the line of Hunter Keay from Wolfe Research. Your line is open.

Hunter K. Keay - Wolfe Research LLC

Hi. Thank you very much. I appreciate it. How are you doing, guys?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Hey, Hunter.

Hunter K. Keay - Wolfe Research LLC

Hey. So, Jude, it seems like there's been a little bit of a change in the domestic airfare environment about how customers are buying tickets these days in this sort of high-capacity, low-fuel environment. We're hearing about like inverted booking curves, for example. Have you seen any changes to how your customers typically buy your airfares and do you feel like your yield management system is adaptable enough to forecast any changes in behavior?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

I think we're managing the situation quite well. I mean, the characteristics have adjusted in the sense that we had closer end bookings overall. We're certainly seeing web behavior change in the sense that we see more visitation to our website on mobile devices and tablets, which is expected just like all e-commerce platforms today. But there's nothing we need to do.

We're in a pretty good situation with our yield management tools today to manage through the changes. I think it's not a macro change in behavior, more just a lot of capacity out there that is pushing fares down. Certainly in our little microenvironment, we're selling flights into times of year much more frequently than we had in the past, and that's what's driving down our average fare.

Hunter K. Keay - Wolfe Research LLC

Sure. Yeah. No, it's not a criticism of the TRASM or anything like that. I'm just wondering if you've seen, like, your own booking curve sort of inverted. I'm not saying you're not managing through it. I'm just wondering if you've seen a change in the behavior at all.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

It definitely took us a couple of quarters to adjust down initial selling fares so that we didn't get too far behind booking curves going into them. So, we did have a couple of quarters of learning passenger behaviors. But we've run an automated process, and it responds pretty well. I think where we sit today, we've optimized under the current environment and its upside from here.

Hunter K. Keay - Wolfe Research LLC

Got it. Okay. And you guys hosted – I think, you hosted a Media Day a couple of weeks ago. I'm wondering, was that new for you, and why did you do that?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yeah, it's a new thing in the sense that we had never done it before.

Hunter K. Keay - Wolfe Research LLC

Yeah. That's what I meant.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yeah. I mean, we're trying to be a lot more active in generating positive publicity for the company. PR for us in the company's history has always been looked at as just a way to get the word out that we existed in markets that we were new to. And so it was a function of our advertising, really. Now we're responding to an extended negative PR cycle associated – which basically began when our pilots called a strike in April of last year.

And managing through that, part of that is to be more proactive with our media partners. So, we brought them on into the building and showed them our facilities, had them – we made available to them the senior executives to answer their question. A lot of publicity we got out of that was really positive. So, we intend to do things like that more often.

We're also – another initiative is to try to drown out some of the bad with the good, like our $1 million giveaway that we're in the process of doing now for air fares which started with the Tax Day giveaway two weekends ago. So, we're just trying to generate some positive publicity, and media is a little more dear in today's environment being an election year and things like that. So, we're just trying to be tactical and thoughtful about publicity, more so than ever.

Hunter K. Keay - Wolfe Research LLC

Yeah. I guess I was asking the question because I was wondering if you figured that you can deal with bad publicity, but did it get to the point where you felt like it was like really starting to impact your business. We can all deal with criticism, but like if it starts to affect the business, that you guys felt like, all right, like this is actually starting to affect bookings. We actually need to kind of take this thing, take the bull by the horns here a little bit and get ahead of this.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

We haven't been able to show empirically any correlation between negative publicity and bookings activity.

Hunter K. Keay - Wolfe Research LLC

Okay. All right.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

But it is impacting the business. Our team members have to deal with it every day, and we'd like the cycle to stop. So trying to get more accurate.

Maurice J. Gallagher - Chairman & Chief Executive Officer

Yeah, Hunter. It's Maury. We need to just kind of mature into that aspect of growing up, if you will, as a young company. And so we've been more proactive trying to make sure the message gets out. If somebody just says something negative with pieces of a story, we certainly want to be ahead of that even and do it the proper thing. So, it's just part of our maturation process, too.

Hunter K. Keay - Wolfe Research LLC

The short pants. Okay. Thank you, Maury.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yes, exactly.

Hunter K. Keay - Wolfe Research LLC

Thank you.

Maurice J. Gallagher - Chairman & Chief Executive Officer

That's right.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Thanks, Hunter.

Operator

Thank you. Our next question comes from the line of Duane Pfennigwerth from Evercore ISI. Your line is open.

Duane Pfennigwerth - Evercore Group LLC

Hey, guys. Thank you.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Hi, Duane.

Duane Pfennigwerth - Evercore Group LLC

So, I think you were the only U.S. carrier where revenue guidance actually improved over the course of the quarter. There's only one other carrier I cover where RASM estimates went up this quarter and that was Volaris in Mexico. So just to temper some of that. You'll have to forgive us for asking such cautious questions about revenue. I think you guys actually delivered what you said you're going to deliver. But anyway, with respect to the Airbus fleet, is there any way to segment margins on that fleet type, how much higher they might be and if we could sort of hypothetically think about this fleet transition being over, how much money are we leaving on the table today with the mixed fleet type?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

It's difficult to ascribe margins across the fleets because as we have a mixed fleet right now, we're dispatching the A320s on the longest lines every day typically. So, they get much higher utilization and also some of those flights tend to be our best flights. So just looking at it from a cost basis, it's about 25% per seat, more fuel efficient and the dispatch reliability on the Airbus relative to the MD-80 is about 2 percentage points better.

Now, so I think those had material improvements into our finances. We're going – this is a long-term march towards an all-Airbus fleet, and getting there has cost benefits because of reduced complexity and more efficient crews and things like that. But it's very difficult to ascribe margin difference across the fleets.

One more comment. I mean the MD-80 is a great airplane in today's fuel price environment, so our EBITDA production is so high and the tear-down value of that airplane, which is basically how we would dispose of them is under $1 million. So return on asset value on that aircraft is through the roof in today's environment. So we're trying to be deliberate in marching towards the single fleet type, but every MD-80 we retire, I'll miss it. So I think that there's not a whole lot of near-term A320s probably in the short term helps our financials.

Duane Pfennigwerth - Evercore Group LLC

Okay. Can you talk about how long we should be thinking about this transition and how you might envision more aircraft deals, maybe chunkier deals becoming available? And then, have you seen anything in maybe the more distressed parts of the world, South America, Brazil, I guess there were some 737-800s you probably could've taken a crack at, but are you seeing any enhanced availability on the Airbus platform?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Not much that we can comment on right now. I mean we're certainly aware of all the fleets who owns them and operates them that work well in our operation, and we're talking to those folks right now. But there's not a whole lot of guidance I can give you on that as we sit today. We'd like to be out of the MD-80 before Delta, and we would like that to happen by the end of this decade.

Duane Pfennigwerth - Evercore Group LLC

Thanks so much.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yeah.

Operator

Thank you. Our next question comes from the line of Helane Becker from Cowen & Company. Your line is open.

Helane Becker - Cowen & Co. LLC

Thanks very much, operator. Hi. Thank you very much for the time. Just a couple of questions. I think the first one probably for Scott. There's no aircraft rent expense, I think, on the P&L, and I feel like you have that in prior quarters. Is there a new characterization for that?

D. Scott Sheldon - Chief Financial Officer & Senior Vice President

You're referencing 1Q of 2015 when we were crew constrained, so we sub-served a lot of our list (20:25) to accommodate our schedule. We don't lease any planes currently. So absent any subservice activity moving forward, you shouldn't see anything in that line item.

Helane Becker - Cowen & Co. LLC

Got you. Thank you. And then can you say how many aircraft you'll have in the fleet at year-end 2017 and 2018 with this new aircraft order? Whatever or however – I know it's not an order, however you want to call it.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yes. So we revised 2016 fleet plan in the release. We can't give any details as we sit today on 2017 and beyond.

Helane Becker - Cowen & Co. LLC

Okay. So you can't say how many aircrafts you're going to have in the fleet at year-end 2016 and year-end 2017?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

No. We're out trying to acquire 2017 deliveries today, and we also haven't solidified retirement plans on some MD-80s. So I can't give you the response, sorry Helane.

Helane Becker - Cowen & Co. LLC

No. That's okay. We'll try another question. As oil prices have gone up – actually I have two other questions, if it's okay. One is, as oil prices have gone up in the past, you guys have adjusted your capacity growth. And how should we – with oil prices up 50% off their lows, how should we think about capacity going forward?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Well, I think the main point is that as we responded to fuel price drops over the last 18 months, we've been under capacity allocation just because of practical constraints around our ability to grow capacity quick enough, and that shows up in our really high margins for the first quarter. We're reporting 35% operating margin with 18% growth. There's probably an EPS scenario, a scenario where we produced higher earnings per share with more growth even if it had put pressure on OpEx margins. So, even if – that's a long way of saying, even if fuel goes up $10, $15 a barrel, we're still going to be having the same network basically.

Helane Becker - Cowen & Co. LLC

Okay.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Now, if it goes up $100 or something like that, then, of course, there's marginal flying that'll be dropped from the network and probably markets that would also be affected.

Helane Becker - Cowen & Co. LLC

Okay. And then my last question, I think, is, as these A320s come into the fleet, do you have the capacity to train pilots off the MD-80s to go into the A320s? I mean, what happens – how are you staffing that?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

It's a lot easier to replace an airplane than to have incremental growth. So, you're right. I think where you're getting at is, yeah, we do have this ladder system to create an A320 captain off if we transition an MD-80 captain, and then two FOs, and finally, we hire an FO into the MD-80 fleet. That does happen. But as we work towards a replacement strategy, that's somewhat simplified because we already have the crews on property. But we're much better at training pilots today than we had been when 117 went into effect. And that's in facilities, so we're going to be up to three sim trainers by the end of this year. We're increasing the number of check airman, which was a major constrain on our ability to train pilots at the beginning of the – really more in the fourth quarter.

So we're addressing each of the bottlenecks in our pilot training pipeline. And then, we're slowing growth down somewhat in the fourth quarter. So, our needs are going to be less. So I think we're going to be fine on pilots for the rest of the year.

Helane Becker - Cowen & Co. LLC

Okay. And then I promise, last one. Maury, I think, had a quote in the press release that said he is bullish about reaching a first contract agreement, et cetera. And that's new language for you guys, I feel like. Has something changed in the discussions that you're having with your team members that leads you to be that much more bullish than you've been in the past, say, one year?

Maurice J. Gallagher - Chairman & Chief Executive Officer

Helane, I'm not sure I agree with your comment that we weren't bullish. I think we were talking positive in January. Certainly, we've made progress in the last few months and maybe the bullish factor is up some work to do. But I think both sides, in particular the pilots, can see the end, if you will. As Mr. Churchill said, the beginning of the end. But there'll be work to do and there is work to do, but we want to get it done.

Helane Becker - Cowen & Co. LLC

And apparently...

Maurice J. Gallagher - Chairman & Chief Executive Officer

I think the pilots do, too. That's their sentiment back to us, and we take them at their word. Same thing with the flight attendants.

Helane Becker - Cowen & Co. LLC

Great. Okay. Thank you very much. I appreciate your indulgence.

Maurice J. Gallagher - Chairman & Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from the line of Joseph DeNardi from Stifel. Your line is open.

Joseph DeNardi - Stifel, Nicolaus & Co., Inc.

Hey. Thanks. A couple questions for Scott. Just on your commentary around the productivity headwinds you're seeing right now. When you think about maybe getting a new contract with the pilots and the FAs, obviously there's going to be some cost pressure from pay raise. But can you maybe help us think about what would the offset be on the productivity side? Are there some pretty significant opportunities there?

D. Scott Sheldon - Chief Financial Officer & Senior Vice President

I think the productivity gains will come from simplifying the reallocations. So once we go back to single fleet type, we'll dramatically improve. Right now, it's taking about four months to get a pilot through new hire, so we should be able to compress that. Jude alluded to Helane's question about our capabilities to train. We're opening an East Coast training center. It will be similar in size and footprint of what we have out here in Las Vegas. And so, if you look at just the single fleet type, trying to expand the funnel, which we can push pilots through, get AQP which allows us to utilize FTDs as opposed to full-motion sims. I think that's where you're going to start to see the productivity come from.

Joseph DeNardi - Stifel, Nicolaus & Co., Inc.

Okay. And then...

Maurice J. Gallagher - Chairman & Chief Executive Officer

Joe, it's Maury. Well, understand, though, there's a lot of training to do as we move from 50 MD-80s to a like-kind Airbus, moving those guys over. And it'll take us, what Jude said, to the end of the decade to do it. So the activity is going to be more robust than it has been historically. So we'll have to pay for that transition, but it's certainly worth the investment.

Joseph DeNardi - Stifel, Nicolaus & Co., Inc.

Okay. And then, Scott, I think on the last call you spoke about maybe looking into a deferral method for your maintenance events. What's the latest update there?

D. Scott Sheldon - Chief Financial Officer & Senior Vice President

Yeah. We're still working through it. Nothing really new to report. If you look at the maintenance expenses related to the Airbus fleet are all going to be, call it, the back half of the year before you're going to see any impact in the P&L. But we stand by the fact that there are acceptable methods similar to our peers out there and it's just the process we're working through. So as we get some more clarity here within this quarter, you'll likely see something come out.

Joseph DeNardi - Stifel, Nicolaus & Co., Inc.

Okay. And then, Jude, just absent any new A320s coming in, how much can you grow next year just by flexing up the MD-80s?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Well, if we maintain – we've already committed to retiring a couple of 757s, so we could probably safely could depend on about six to eight aircraft net growth for full year 2017 based on where we are today. But that's not – we'd like that to be happening at the same time as we're transitioning over. So, that would require a couple more transactions out there that we're working on today.

Joseph DeNardi - Stifel, Nicolaus & Co., Inc.

Okay. Thanks a lot.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yeah.

Operator

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

Mike J. Linenberg - Deutsche Bank Securities, Inc.

Oh, yeah. Hey, good afternoon, gentlemen. Just a couple here, I guess, if I could start with just a couple of route questions. I was curious, if there was a – with the slot controls coming off at Newark, curious if there was any interest on your part to serve that market. And the reason I ask is, I think in the last week, week-and-a-half, United did put in some new service out of Newark in the schedule. It looks like markets like Fort Wayne, Chattanooga, Flint. And those markets seem to be very Allegiant-esque. It would seem as if they had gotten a hold of an Allegiant internal memo about opportunities out of Newark. So, I'm just curious, is that potentially in the cards or am I just on a wild goose chase here?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

It's in the cards. We're studying it. I think that the models that we have in BWI where we're flying noncompetitive markets with the theory that would include both originating traffic out of the – in the case of BWI, the Baltimore/Washington area and also providing leisure opportunities for inbound traffic. That's basically what we're testing that would also be applicable to Newark. I think, importantly, we're not really interested in flying New York area to Florida. But yeah, I think you're on the right track there.

Mike J. Linenberg - Deutsche Bank Securities, Inc.

Okay, good to hear. And then just another route. And , I guess, Jude, this is probably for you, as well. I saw that you started to serve, or maybe you're going to fly later this year, some intrastate markets, like Las Vegas, Reno, and then within Florida. And those seem to be really unique. Is that just moving aircraft around? I mean, what is that just additional utilization, which would seem something that you typically wouldn't engage in? What's driving those types of services? Maybe it's just experimental, nothing more.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

It is experimental. Those are a very small part of what we do. And you're right. Those two markets that you highlighted, there's a couple of others in that category that don't really fit into our traditional model of highly directional service to leisure destinations. And in some cases, it does allow routings and utilization, but we've been really successful in Reno, Vegas for a long time now. Not really successful, but we've been successful. And by the way, Destin and Lauderdale is selling really well. So there doesn't exist any service on it today. Providing service between midsized cities is something we've talked about for a long time. If there's enough PDUs on a whole week, we feel like we can aggregate them on twice-weekly service at low fares and stimulate and make that a business. So, that kind of service isn't too different from some of our other experimentation in places like Austin-Tennessee or Austin-Memphis.

Mike J. Linenberg - Deutsche Bank Securities, Inc.

Okay. Great. And then just one last one, with respect to re-upping the $100 million share repurchase, this is for Scott, when you re-up, I think you've already finished half of the prior one, do you finish the previous one or do you just go from this point forward and it's another $100 million? It's not clear from the press release if you complete each one and then go on to the next one. I'm just trying to accumulate the total here.

D. Scott Sheldon - Chief Financial Officer & Senior Vice President

Yeah. We were authorized $100 million back in 4Q of last year. We exhausted a little bit of that in the fourth quarter and the rest of it in the first quarter. So, this would be a net new $100 million as we move forward from this point.

Mike J. Linenberg - Deutsche Bank Securities, Inc.

Perfect. Perfect. Thanks for the clarification. Thank you, everyone.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Thank you.

D. Scott Sheldon - Chief Financial Officer & Senior Vice President

Thanks, Mike.

Operator

Thank you. Our next question comes from the line of Rajeev Lalwani from Morgan Stanley. Your line is open.

Rajeev Lalwani - Morgan Stanley & Co. LLC

Hi, gentlemen. Thanks for the time. Jude, I wanted to come back to a comment you made. You talked about wanting to get out of the MDs by decade end or so, and ahead of Delta. To the extent that Delta goes ahead and accelerates retiring that aircraft, just given some of the headlines that are out there, how does that impact you guys?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

One of the main challenges we're having with that airplane is lack of OEM support. So, Boeing and also importantly Pratt & Whitney, but some smaller component manufacturers like wing heater blankets or some components in the E/E bay, all of which are difficult for us to find support there. We depend on the OEM, in many cases, as a sole provider of parts. So retiring the – a deliberate plan to retire the airplane will allow us to support ourselves in some ways with parts off retired aircraft. So I think give or take a year from when Delta moves out of the fleet, we'd be comfortable with, but we have to be marching along that path now because we don't what to shrink, and so we're going to be growing the airline. We want to stay with our strategy of buying used aircraft in the spot market, so that's going to be inherently a little bit unpredictable.

So I think it's just prudent for us as we sit here today, in spite of our growth opportunities and margins, to go ahead and continue to push out MD-80s in a very planned and deliberate method.

Rajeev Lalwani - Morgan Stanley & Co. LLC

Thanks. And then just another question for you, I guess, similarly kind of high level. But it seems like other ULCCs are talking about servicing mid-sized cities and smaller cities a bit more. And I was wondering how you view that in terms of a competitive threat or not, especially just given that the fleets, over time, seem to be becoming more similar. So I wonder how you approach that or think about it.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

It's not a great thing. And in spite of our success, we're always going have a good deal of paranoia as a management team, as you'd expect. But I want to highlight the structural advantages that our business has over a Spirit or Frontier. Namely, we have a closed distribution system, which allows us to have a direct relationship with our customers. We have ancillary revenues that are trending in the right way as opposed to what Spirit is experiencing today, which is largely due to our launch of the loyalty program, which will happen in the third quarter of this year. And most importantly, we can schedule to peaks without affecting our unit cost. So in the case of Spirit and Frontier, they depend on high utilization to achieve their unit cost objectives, and that requires them to put a lot of flying into unproductive times of day and days of week and seasons. So I think that structural advantage remains, and so long as we maintain our really low fixed cost base, we're going to have that advantage and we're going to be successful.

Another point on that is that I'm not so concerned about encroachment into our existing markets because of those strengths that I listed there already. Really the concern is about overlapping growth opportunities between us and them. And so that's why we've been exploring growth in new ways, not the least of which has been the expansion in some of our smaller destination markets, which is something I would have predicted a year ago, like growth into Destin and Savannah and making destinations out of New Orleans and Austin and Jacksonville, all of which had been really successful. So we continue to find ways to grow in markets that just aren't that inviting to those two guys. I mean, Cincinnati to Vegas and Orlando, definitely that's on their radar, but I don't think Cincinnati to Destin is anything they would intend to do anytime soon.

As far as risks go, as a management team, we're much more focused on internal risks today like operational excellence, systems and process optimization, labor provisions and cost discipline. And I think risks that we get asked about often but that we don't worry as much about really are fuel price, availability of aircraft for growth, and encroachment into our existing markets.

Rajeev Lalwani - Morgan Stanley & Co. LLC

Very helpful. Thank you, Jude.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yeah.

Operator

Thank you. Our next question comes from the line of Dan McKenzie from Buckingham Research. Your line is open.

Dan J. McKenzie - The Buckingham Research Group, Inc.

Yeah. Hey. Good afternoon. Thanks, guys. I guess, Jude, I just wanted to follow up on some of Duane's questioning. If I adjust for Easter, it looks like there is some sequential revenue weakness versus what we saw a year ago. And I appreciate the messaging here that it's temporary, not permanent. And I, of course, recognize the sequential performances is better versus your peers. But I'm wondering if you can help us peel back the onion here somewhat. Is the TRASM weakness coming from a few markets? Is it perhaps more widespread? And I'm wondering, to what extent, if any, the pricing might be impacted by incremental exposure to ultra-low cost carrier pricing?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

There's a lot there. So, I mean, first of all, we're revising up capacity growth which is going to have a negative influence on unit revenue, and that's absolutely logical and earnings accretive. And so, we have a lot of the same characteristics of revenue – causing revenue weakness that we've talked about in past quarters like weakness in mineral economies, which make up about 5% of our ASMs. Those economies still remain challenged.

We have had some challenges with markets that depend on Canadian travelers crossing the border and Mexican travelers crossing the border. Both of those markets – markets with those characteristics are struggling because of the currency issues. And then for us, we're flying more often when last year at the same time, we would have sat aircraft. And that's just because we're adjusting to availability of pilots and availability to make money at today's low fuel prices. So, most of the revenue weakness we have is generated by our own actions. Now, as we've talked about in the past, we still have some catchment area issues. So Philadelphia has really low fares right now. We have markets like Allentown, for example, which is under a little bit of pressure to Florida because it's drive distance from really low fare environment in Philadelphia. But that's not getting worse, so I think that's kind of a constant.

And then growth, particularly ULCC growth, into Vegas and Orlando and increasingly so into L.A, puts pressure – that's mainly hub-to-hub fare pressure. But, for example, on the West Coast, if we see severe discounting to Salt Lake City and Seattle from Vegas, that's going to put pressure on flow itineraries coming out of Montana, they compete with that. They compete to sell some of those seats that are in a little bit of distress.

But we've remain kind of in our own little world over here finding new market opportunities for the most part that are not affected by the competitive environment and our response to competition is what has always been, there's a capacity change that we can do to maintain our success. So I'm very positive on where we are today. I think it took us a little while to adjust to the environment certainly over the last several quarters. We got where we were revising down outside of our initial expectations for unit revenue but we're on the right path now. And certainly through the end of this year, I would expect us to move closer and closer to flat year-over-year unit revenues.

Dan J. McKenzie - The Buckingham Research Group, Inc.

And I think you just preempted my next question and that was just that. I was just curious as how you are thinking sequentially about improving trends throughout the year. So the thought is you can get back to flat TRASM in the fourth quarter?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yeah. I mean, don't hold me to that. But I think that we'd be certainly be certainly in a low-single-digit range by then and that's based solely – that doesn't include anything that can't be predicted like changes to the external environment. But based on the schedule that we have loaded today, which slows growth a bit and optimizes around our experience and our new markets, then yeah, I would expect us to be able to produce low-single-digit TRASM declines by the fourth quarter.

Dan J. McKenzie - The Buckingham Research Group, Inc.

Very good. And I'm wondering if I can just squeeze in one more question here. Potentially an opportunity for you guys, I don't know. But what are the trends in air fares, of course, it's been on bundle. You guys have led that and we're seeing some airlines turn around and then rebundle some of the ancillary opportunities and having a lot of success at that. And I'm just wondering if you could remind us of where you're at? Is it still an à la carte purchase with Allegiant or have you experimented with rebundling and is that a potential opportunity for you guys?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yeah. Dan, I think it is. I think it's a long way off for us though. It's probably way down the list of other ancillary initiatives that we'd like to do in the short term and a lot of our resources today are focused on the operations. So, I think experimenting with rebundling with ancillary products is a long way off for us. But, yeah, I think there's an opportunity there. I think it's relatively small though.

Dan J. McKenzie - The Buckingham Research Group, Inc.

Okay. Thanks for the time, you guys.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yeah.

Operator

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

Steve M. O'Hara - Sidoti & Co. LLC

Hi. Good afternoon. I was just wondering if you could talk briefly about Hawaii and just what the – maybe a term – the plan is there in the medium term and is it more about when the aircraft come up for heavy maintenance events or something like that given where the fuel environment is, or is this potentially something you're looking to revisit on a more broad base? Thank you.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Hey, Steve. It's Jude. So, that's an easy one. I mean, the end of Hawaii was dictated to us by retirements of the 757 versus the only aircraft that we have in its current configuration that can serve the island. And so, the original plan was to end Hawaiian service with the end of our Hawaiian-based aircraft in Labor Day of this year. And Hawaii has since overperformed our expectation. And therefore we've decided to continue to run Hawaii out of Las Vegas with the Las Vegas-based airplane on Wednesday's and Saturday's. It's just the best thing we could do with that airplane on Wednesday's and Saturday's based on current fuel prices and the yield environment in Hawaii.

Hawaii is really one of the only U.S. domestic markets that has yields that are holding up really well in a low fuel environment. So, we intend to be there so long as we keep the airplanes around. But the fleet plan dictates us leaving Hawaii, and that hasn't changed. And the reason we're getting out of the airplane as we are, as you said, is because of the really significant maintenance that we would have to invest in that airplane over the next 18 months.

Steve M. O'Hara - Sidoti & Co. LLC

Okay. Thank you. And then just on the – maybe the growth profile now versus several years ago. I think it was dictated more by the capabilities of the MD-80 and where it could fly and how far, and was focused around small cities to, let's say, non-NFL cities. And I guess, I'm wondering, the growth in the future, how much of that growth have you already tapped and where is that maybe in terms of what you thought it would be and maybe what you thought it could be eventually. And then the medium-size cities growth that seems to be a little more prevalent now. So, maybe where does the growth come from percentage-wise maybe in the future and where are the better opportunities for you as well?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

So, first on aircraft side, we're really not constrained by the MD-80 because we're committed for the most part to schedule aircraft in such a way that they come home to base every night. And that's on about 8 hour and 15 minutes block hour round trip based on the current 117 rules and that prevents scheduling Transcontinental flights and things like that, and we'll revisit that from time to time. But right now, there's plenty of opportunity.

So, on the growth question, I would basically just look at Cincinnati as an example of where we can take growth over the next several years. Today, we have 14 destination markets served out of Cincinnati. We continue to expand that with relationship with Apple and growth into other markets. I think internationally, we could certainly look at that as well. So, if you take Cincinnati network and put that into a bunch of other mid-sized cities into which we're building our presence today. That's the growth thesis for Allegiant for the next several years.

Steve M. O'Hara - Sidoti & Co. LLC

Okay. All right. And then, just on the small city to major leisure destinations, maybe the pure MD-80 model from several years ago, how much of that have you tapped maybe and would you be less willing to do that with the Airbus fleet going forward than you would have on the MD-80? Thank you.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Sure. We continue to have a mix of markets that are new to our network that include some small cities and some mid-sized cities and some rather large cities as well. So, I don't look at it as we've tapped out all the small city opportunities. We continue to find new ones. As they present themselves to us either because other people leave them like what happened in Flint and Dayton or because we finally get the right contract from the airport or because there's structural change in the airport that allow us to serve it today where it wasn't possible operationally in the past, that would be Santa Rosa.

So you are going to continue to see a mix from us, I wouldn't consider the small city opportunities to be exhausted. I think we're going to continue to find other small cities. It's just when – we're targeting a 10% growth rate annually. And as the airline gets bigger a twice-a-week market is just difficult to provide. It's difficult to find enough twice-a-week markets that can provide that 10% growth rate. So, inevitably, we will have some larger markets in our network over time.

Steve M. O'Hara - Sidoti & Co. LLC

Okay. Thank you very much.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yep.

Operator

Thank you. Our next question comes from the line of David Fintzen from Barclays. Your line is open.

David Fintzen - Barclays Capital, Inc.

Hey. Good afternoon, everyone. Jude, I guess, just to follow a little bit on your last comment although it was more of a fleet angle. Do you get to a point in the medium term here where you're big enough, maybe have enough density and enough lines of flying where new 320s start to make sense? Does that the economics ever really work?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

There's certainly a price point where we would consider it but Airbus is nowhere near that price point.

David Fintzen - Barclays Capital, Inc.

Okay. Obviously, if they give you free aircraft, I'm sure you'd be more than happy to take them. But is it just something that you would not see happening for many years?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

What? I mean, they don't have any problems selling airplanes today, and...

David Fintzen - Barclays Capital, Inc.

Okay.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

...I think that's probably the scenario we'd need to be in for us to push forward with a new aircraft deal.

David Fintzen - Barclays Capital, Inc.

And in terms of the used fleet, I mean, we always think about sort of low utilization, peak scheduling. But how much further do you feel like you can push utilization on the Airbus side when you need to versus say the MD-80s of the past?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yeah. Could you come again? (49:40)

David Fintzen - Barclays Capital, Inc.

Could you run certain hours on the Airbus fleet that you're buying?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

So utilization constraints come in two forms. One is the revenue opportunities of off-peak flying. And then the second one is the operational reliability of the airplane type. So, on that last point, with our used Airbus and getting them to where we think they should be, I think that there's really very little constraint on where we can take utilization. Certainly with some of the newer equipment that we're getting in, I think we can fly 9 to 10 hours a day if necessary, and we do that in our peak periods today.

On the revenue environment, I think we're always going to be at – not always, but for the foreseeable future we're going to be an airline that focuses on volatile demand patterns associated with leisure travel and therefore, there's no opportunity to add a third frequency into some of our markets. So, our Tuesdays, Wednesdays and Saturdays will always be lower utilization than what we have today. So that puts a more practical cap on fleet utilization. I'd put long-term fleet utilization goals with a single fleet type at more like 7 hours a day.

David Fintzen - Barclays Capital, Inc.

Okay. That's fair. I think...

Maurice J. Gallagher - Chairman & Chief Executive Officer

David, it's Maury. Even if we wanted to push up the utilization, that's such a structural change because you have to hire pilots, flight attendants that now become fixed cost. And so...

David Fintzen - Barclays Capital, Inc.

Right.

Maurice J. Gallagher - Chairman & Chief Executive Officer

...once you commit to that, you are in for a penny in for a pound at that point. It's going to be – you've made a very fundamental change to the way our model works.

David Fintzen - Barclays Capital, Inc.

Okay.

Maurice J. Gallagher - Chairman & Chief Executive Officer

Flying 200 hours in September is one thing, but flying them consistently more would be a big structural change.

David Fintzen - Barclays Capital, Inc.

Where you layered in (51:27). Okay. That's helpful. I've just been thinking of some of your experimentation. On separately, a question for Scott, just in terms of the CASM pacing in 3Q, 4Q to get to the guidance, does it broadly follow the maintenance pressures you talked about in 4Q? Or is there something else on how we should be thinking about the split between the back of the year?

D. Scott Sheldon - Chief Financial Officer & Senior Vice President

No, the maintenance trend is the one that's most volatile. The other thing that we've already guided on a full-year basis being D&A is relatively flat. There should be – sales and marketing continues to be a relatively good guide as it relates to the surcharge on a full-year basis. Stations, there are some pressure, but we're working through that. There's some new agreements that were in place, but we're managing – aggressively managing our providers. But short of maintenance, you shouldn't see any of the line item with that severe volatility.

David Fintzen - Barclays Capital, Inc.

Okay. Great. That's all very helpful. Appreciate all the comments.

D. Scott Sheldon - Chief Financial Officer & Senior Vice President

Sure.

Operator

Thank you. Our next question comes from the line of Savi Syth from Raymond James. Your line is open. Please check your mute button. We're not getting any audio.

Savanthi N. Syth - Raymond James & Associates, Inc.

Sorry about that. Thank you.

Maurice J. Gallagher - Chairman & Chief Executive Officer

Hey, Savi.

Savanthi N. Syth - Raymond James & Associates, Inc.

Hey. Just a couple of quick questions, follow-up questions. On the cost side and the capacity side, I know capacity has been tweaked up, maybe coming in at the higher end of the original guidance on the cost side. Any reason for maybe not getting a little bit more optimistic on the cost side?

D. Scott Sheldon - Chief Financial Officer & Senior Vice President

No. Flat to up for a full year is we think is still a decent range despite the incremental capacity that you put in the schedule.

Savanthi N. Syth - Raymond James & Associates, Inc.

Okay. All right. Great. And then just on the fixed fee, I recognize the pilot issue being resolved is maybe providing some good opportunities there. What's driving that? I'm just trying to get a sense of this international charter that you're doing. What kind of an opportunity can that be and how big can that be?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

A lot of carriers are leaving the charter space, and we're thinking that there's an opportunity for us to come in and backfill some of those opportunities. And it also gives us a good way to launch a new base in the Midcontinent where we can provide and schedule service usage on the airplane with charter commitments and get really good utilization on the airplane allowing us to test markets essentially risk-free.

So, we're working with Apple and some other charters to try to expand those relationships, and hopefully, you'll see more on that, but the expense in fixed-fee flying has to do with Apple replacing our prior Peppermill commitment which is Apple's more productive and then also particularly in the first quarter, we just had a lot of opportunities with March Madness that we didn't predict having as pilots matriculated through training and were available so that we could take those ad hoc opportunities.

We continue to see a lot of traction in the ad hoc business into the second quarter and we're investing a lot in that direction. We think it's a good opportunity for us. So, I think fixed-fee will always be a pretty small part of what we do but it's a great way to use surplus aircraft and crews, and we intend to do it for a long time.

Savanthi N. Syth - Raymond James & Associates, Inc.

All right. Great. And just a final follow-up on the credit card. You did mention (55:08) for third quarter, any more kind of thoughts on the timing of once that's released and when we might start to see a contribution, Jude?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

I mean, we're not trying to be coy there. We really don't know. I mean, it depends on how quickly we're able to get adoption from our customers, and what we know is that it will launch in the third quarter. The technology is on track and the marketing plan is in place. We're working with our flight attendants to help market the card on our aircraft so – but there's still going to be a little bit uncertainty about when the revenue shows up, and we won't know that until it's out there and we're selling it.

Savanthi N. Syth - Raymond James & Associates, Inc.

Got it. Understood. All right. Great. Thank you.

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Thanks, Savi.

Operator

Thank you. Our next question is a follow-up from Hunter Keay from Wolfe Research. Your line is open.

Hunter K. Keay - Wolfe Research LLC

Thanks again. So, as you guys ramp up charter non-scheduled ASMs, if we were to call it, last time you guys had that as a pretty big portion of your flying you were able to pass through fuel effectively for free, so you had this gap between scheduled fuel and system fuel. As charter ramps up again, is it fair to assume that sort of like free fuel and a little bit of a tailwind what you might see in the spot market like you had last time? And then the second question that relates to fuel is, given the changes in the fleet plans, is it fair to assume maybe like a low-single digit improvement in ASMs per gallon next year?

Jude I. Bricker - Chief Operating Officer and Senior Vice President of Planning

Yes. Let me comment on the structure of the charter contracts, and then I'll turn it over to Scott. Just like all our charter agreements. We don't take risk on the fuel price. So that will cause some reporting challenges because there's an ex-post settlement on the actual fuel price paid, but as you point out, very important to us because of that risk transfer on to whoever is chartering the airplane, so you're right there.

D. Scott Sheldon - Chief Financial Officer & Senior Vice President

Yeah. Hunter, on the ASMs per gallon, first quarter, you saw 3% increase year-over-year. I think as you move through the year, it's likely you'll see kind of a 2% to 3% increase year-over-year for Q2, Q3, and Q4. 2017 is a little more convoluted with the retirement of the 75 fleet and getting out of Hawaii, so it's going to negatively impact ASM per gallon metric, not to mention some Airbus units that we'd like to put in if they are available.

Hunter K. Keay - Wolfe Research LLC

Got it. All right. Thanks a lot.

Operator

And that's all the time that we have for questions for today. So, I'd like to turn the call back over to management for closing remarks.

Maurice J. Gallagher - Chairman & Chief Executive Officer

Thank you all very much. I appreciate your time. If you have any follow-up calls, please talk to Chris. We'll talk to you in 90 days. Thank you again.

Operator

Ladies and gentlemen, thank you again for your participation in today's conference. This now concludes the program, and you may all disconnect your telephone lines at this time. Everyone, have a great day.

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