Spirit Airlines, Inc. (NYSE:SAVE) Q1 2019 Earnings Conference Call April 25, 2019 9:30 AM ET
DeAnne Gabel - Investor Relations
Edward Christie - Chief Executive Officer
Matthew Klein - Chief Commercial Officer
Scott Haralson - Chief Financial Officer
Thomas Canfield - General Counsel
John Bendoraitis - Chief Operating Officer
Conference Call Participants
Savanthi Syth - Raymond James & Associates
Jose Caiado - Credit Suisse Securities (NYSE:USA) LLC
Jack Atkins - Stephens Inc.
Duane Pfennigwerth - Evercore ISI
Kevin Crissey - Citigroup
Michael Linenberg - Deutsche Bank
Hunter Keay - Wolfe Trahan & Co.
Brandon Oglenski - Barclays PLC
Helane Becker - Cowen Securities LLC
Darryl Genovesi - Vertical Research Partners
James Baker - JPMorgan Chase & Co.
Daniel McKenzie - Buckingham Research Group
Joseph DeNardi - Stifel, Nicolaus & Co., Inc.
Welcome to the First Quarter 2019 Earnings Conference Call. My name is Christine, 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. You may begin.
Thank you, Christine, and welcome everyone to Spirit Airlines first quarter 2019 earnings call. This call is being recorded, and simultaneously webcast. A replay of this call will be archived on our website for 60 days.
Today's discussion contains forward-looking statements that represent the Company's current expectations or beliefs concerning future events and financial performance. Forward-looking statements are based on management's current expectations are not a guarantee of future performance or results.
There could be significant risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements, including the risk factors discussed in our Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q.
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 first quarter 2019 earnings release, which is available on our website, for the reconciliation of our non-GAAP measures.
Presenting on the today's call are Ted Christie, our Chief Executive Officer; Matt Klein, our Chief Commercial Officer; and Scott Haralson, our Chief Financial Officer. We will have a Q&A session for sell-side analysts following our prepared remarks.
Also joining us in the room today are Thomas Canfield, our General Counsel; John Bendoraitis, our Chief Operating Officer; and other members of our senior leadership team.
With that, I will turn the call over to Ted.
Thanks, DeAnne. And thanks to everyone for joining us today. I also want to thank our entire Spirit team for their contributions to our first quarter 2019 results. We executed well on our revenue initiatives and maintained our focus on controlling costs. Together, with strong underlying demand trends, we were able to grow earnings per share by over 90% year-over-year to $0.84 per diluted share.
On the operational front, in the first quarter, we improved our completion factor by 70 basis points achieving a 98.9% completion factor for the March quarter, and our on-time performance for the quarter was among the best in the industry at 82.6%. Based on preliminary results, we ranked among the top three carriers for on-time performance in January, February and March.
With that, here's Matt and Scott to discuss our results for the first quarter of 2019 and our outlook for the second quarter and the full-year 2019 in more detail.
Thanks, Ted. For the first quarter 2019, total revenue increased 21.5% year-over-year to $856 million. Total revenue per available seat mile increased 4.1% year-over-year on 16.9% capacity growth, with gains in both load factor and yields.
On a per passenger segment basis, non-ticket revenue performed in line with our expectations. And for the first quarter was $56.20, up 1.6% or $0.91 year-over-year, primarily due to our dynamic pricing initiatives and our bundled services offering.
Both of these initiatives are continuing to mature and we remain confident we can grow non-ticket revenue per segment each quarter this year and produce non-ticket revenue per passenger segment between $56 and $57 for the full-year 2019.
We are pleased to say our new website is now launched and in full production. This new platform provides better analytics that over time will help drive ancillary revenue via improved merchandising, which we expect will lead to better conversion rates of ancillary products. The new look and feel of the website is aligned with our goal to modernize our product and showcase the high value our product provides the leader customers.
Over the last 18 months, we have also made good progress in improving our brand reputation. Our complaint ratios have declined to an all-time low. We remain among the best in the industry in terms of baggage handling and, as Ted mentioned, in on-time performance.
We have recently ranked number four in both The Wall Street Journal and Money Magazine for 2018 overall performance. And just last month, we received the ATW Value Airline of the Year Award, beating our competitors from all across the globe. We still have a lot of work to do, but the hard work from our entire Spirit team is creating a powerful foundation from which we'll build on for many years to come.
Turning now to our capacity guidance, we estimate that on a year-over-year basis, capacity will be up approximately 13% for the second quarter, up approximately 14% for the third quarter, and up 14% to 16% for the fourth quarter, for a full-year capacity growth of approximately 15%.
Much like we did last year, we are in the process of evaluating the mix of off-peak and peak volumes for the fall and winter of this year. And based on that, we will likely make further adjustments that could include some reductions to our fall schedule.
In addition, we are seeing fuel prices escalate. Fuel price in and of itself doesn't change our thoughts about how much we should be growing, but it does impact where we deploy our capacity. This process is dynamic and will take into account our view of marginal performance during those more off-peak periods. We don't have any formal update today, but we will keep you updated as we lock in our schedules.
Now, turning to our revenue outlook. In the latter half of March, passenger yields in our markets softened a little more than we had modeled out. This trend continued through the first half of April. However, it's important to note that Easter bookings were strong and yields firmed over that period as we expected.
Additionally, based on the trends we are seeing for May, we believe the pricing softness we experienced in the second half of March through early April was largely transitory.
May is shaping up much like we expect it to, based on this part of the booking curve and June trends look encouraging as well. Given this, for the second quarter 2019, we estimate TRASM will increase approximately 5% year-over-year. This includes an estimated 200 basis points benefit due to the shift of Easter.
Overall, macro trends look strong and we like how we are set up as we head closer to the summer peak travel period. While we are always focused on the travel period directly in front of us, the work we are doing now in evaluating third quarter trends and post summer is also top of mind.
And with that, I'll turn it over to Scott.
Thanks, Matt. And thanks to everyone for joining us today. The team did an excellent job of managing several cost pressures during the quarter. Efficiency and productivity gains helped to offset higher-than-expected pressures from various airport rent escalations and ground service rates, such that our first quarter 2019 CASM ex-fuel was $0.0546, an increase of 2.4% year-over-year, which was in line with our guidance.
The year-over-year increase was primarily due to higher salaries, wages and benefits for ASM, driven by higher pilot rates. This increase was partially offset by lower aircraft rent per ASM and better operational performance.
Regarding fleet, in the first quarter, we took delivery of five new aircraft, ending the quarter with 133 aircraft in our fleet. As we've mentioned previously, in order to meet our targeted 15% capacity growth rate in 2020, we are looking to add a few additional aircraft beyond our scheduled deliveries.
We sourced two used A320 aircraft that we expect to be in scheduled service sometime late fall. Additionally, we have had our back half of 2019 deliveries delayed a bit with one of our 2019 deliveries now expected to deliver in early 2020. Net-net, our capacity profile for 2019 remains about the same.
We ended the March quarter with $1.2 billion in cash, cash equivalents and short-term investment. We had operating cash flow of $205.2 million and we generated adjusted free cash flow of $163.8 million.
Looking ahead to our second quarter cost guidance. This summer, the Ft. Lauderdale Airport will begin doing construction on the north runway, limiting the throughput. Following our review of the airport's operational plan, we decided to increase the number of crew members and effective aircraft spares in Fort Lauderdale Airport during the construction, adding approximately 100 basis points to the CASM ex-fuel year-over-year percentage change for the second quarter 2019.
Separately, last weekend, a severe storm system impacted a large majority of flights to and from Florida. We canceled 318 flights and incurred costs of about $6 million of passenger reaccommodation and disrupted crew expenses. The additional expense and loss of ASMs related to the storm adds approximately 150 basis points to CASM ex-fuel.
Taking this into account, we estimated our CASM ex-fuel for the second quarter 2019 will be up approximately 4.6% year-over-year and our full-year 2019 CASM ex-fuel guide is now up 2% to 3% year-over-year, which includes 50 basis points related to carrying the extra crew during the Fort Lauderdale runway construction and 50 basis points related to the Easter storm.
Our cost advantage is one of our most important assets. Despite some near-term pressures going into 2019, going forward, we expect to continue to expand our relative cost advantage by further improving our operational reliability, gaining scale benefits, using technology to enhance efficiencies and leveraging opportunities to increase utilization.
With that, back to Ted.
Thanks, Scott. Before I close, I want to address a question we often get asked about how we make our decision as to where we add service. We believe our total addressable market remains very large, larger than we can possibly absorb over the next five-plus years growing capacity in the mid-teens range.
Over the last two years, we've been very consistent about executing to our plan of broadening and diversifying our network by targeting large leisure destinations, near-field international markets, as well as large origination markets which may include growth in gate-constrained metros when we are able to secure the necessary access and real estate to support it.
For example, in the last 12 months, we have added quite a few new destinations to our network, including Burbank, Sacramento, Charlotte, Raleigh-Durham, Austin, Indianapolis, Asheville, Jacksonville, Greensboro, Richmond and Columbus, as well as Saint Croix in the U.S. Virgin Islands, Cali, Colombia and Guayaquil, Ecuador.
We further grew our international footprint with 13 flights from Orlando to international destinations we also serve from Fort Lauderdale, and we've also added some new service connecting existing Spirit destinations that weren't previously connected. This strategy has been working well for us over the last several years and we plan to continue with it.
We routinely evaluate the impact of our service in new markets. The data supports that our entry does stimulate more traffic than the seats we add and that the total revenue carried in our growth markets goes up commensurate with our entry. This Spirit FX has proven true in nearly every instance, which we believe validates our model and shows the benefit low cost service can bring to existing markets, no matter how large or small or the level of their current service.
In conclusion, we are pleased with our strong first quarter results and the overall momentum in the business. We are well-positioned to leverage our strengths as we head into the peak summer travel period in mid-June.
With that, back to DeAnne.
Thanks, Ted. Christine, we are now ready to take questions from the analysts. We do ask that you limit yourself to one question with one related follow-up.
Thank you. [Operator Instructions] Our first question is from Savi Syth. Please go ahead.
Good morning, I was just wondering if you could, on the cost side, give us a little bit more color on why this kind of came in so late in terms of – you probably knew that there was a airport construction going on? And just kind of help us understand – get comfortable with the fact that this is kind of related to the airport construction and not something that's ongoing. Thanks.
Great. Hey, Savi. This is Scott. Hey. The plan for the runway construction has been – ongoing discussions with Spirit and the airport and the other airlines for a while. We and the other airlines have been in discussions and have been considering the airport issues and their timeline, our own desires to minimize the impact.
So up until the middle of the quarter, until we review the final plan and decided on a plan of action for Spirit, we really did not have an answer. So we decided that it would be prudent for us to add a few extra crews to think about spares intelligently. And now we're telling you about it. So it's really been sort of an ongoing discussion and how we're going to handle it.
Got it. And, Scott, maybe as you kind of think about costs, what you're seeing today, kind of execution and any progress on kind of the PBS? How are you thinking about second half, into 2020, like, what the underlying kind of core trend is?
Into the second half of 2020, Savi? Is that the question?
Sorry, second half of 2019 and into 2020.
Right. So look, we're confident about the core cost of the business. Outside of the discrete items, with the airport construction and the weather, we're handling what the industry is dealing with, which is increased labor cost, increased airport cost, but we're really satisfied and really encouraged about the ongoing management of the core cost of the business. So our core cost to remain intact. And, look, we're confident in our ability to continue to widen the cost gap versus the industry. So we're managing what we can manage and I think we're in a good spot.
Thank you. Our next question is from Joe Caiado. Please go ahead.
Hey, thanks very much. Good morning, everyone. Matt, question for you. Can you just talk a little bit about how the international expansion out of Orlando has performed relative to your initial expectations?
Hey, Joe. Thanks. Yes, so the big growth there, just to remind everyone, started in fourth quarter of last year. We started off with 11 new routes in October and November of last year and then we added a couple more routes in the end of February, early March of this year. And whenever you add to a franchise like that, you know you are undertaking an investment. And we talked on the last call about how we were pleased with what we saw over the peak holiday period in the fourth quarter. And as we head now out of the first quarter into the second quarter, we like what we see from those routes.
Now, having said that, anytime you add that kind of capacity growth, I believe our capacity growth in the international region was somewhere around 90% year-over-year in the first quarter; and in the second quarter, we're looking at about a 50% ASM growth in that overall franchise this year.
So that's always going to have some bit of a drag simply because there is an investment going on there, something we knew would happen, and something that we're pretty comfortable with. We like the non-ticket production that we're seeing there as well. And overall, we think it's a great idea for us. As we've talked before about, our unique ability to carry VFR traffic – visiting friends and relatives traffic – and our model plays really well in there in terms of an ancillary revenue production on top of the tickets purchase.
And I think Ted has some thoughts on it as well.
Yes. So the only color I might add there to help you think about it is – and what Matt said is 100% correct. We're very excited about building out the international franchise and seeing it blossom here in Orlando is a really good step for us as we think about what happens beyond that as well. But with that kind of capacity growth, you are seeing a drag on system RASM.
So we're putting up these numbers we're talking about in the first quarter and the second quarter. And despite what we think – if you did some math, and it's not perfect, by the way, and you think about how you might otherwise have deployed those airplanes domestically, it's probably around 150 basis points drag on the whole system right now.
With that said, very excited about what we're going to see as it goes into the summer and fall and eventually laps itself by the winter and will be a very positive contributor going forward. So right now, we're putting up pretty good numbers with this franchise and investment being built. And it's something that we don't talk a lot about, but we feel really good about how it's moving forward.
I appreciate all that detail. Thank you. My second question, maybe for John, just the first part is when that runway construction at Fort Lauderdale is expected to be completed. Apologies if you said it and I missed it. But then, John, how does that impact your ability to push utilization higher this summer from an ops perspective? Thanks.
Yes. Thanks for the question. So just as a reminder, construction period starts on or about June 3 and runs for approximately 120 days. So kind of end of September-ish is the plan. There are contingencies on both sides of that and there are incentives to make sure that that gets done on time.
In terms of utilization, that's just something that we work on as a team ongoing. Every year, we push the utilization up in the summer time. That's our busiest period. It's not going to affect the utilization for this summer. The construction won't affect it, in that we've got our plan built. What it does affect is our ability to run an on-time operation potentially. So mitigating delays that are a result of the construction or the weather, but we intend to run the same high utilization that we always have.
Yes. Joe, the only thing I would add there is we've clearly made commentary around, as the operation has improved, we see an opportunity to flex utilization in periods of high RASM. And while that opportunity exists, we were never intending to over rotate on that opportunity, meaning we never intended to pump utilization at any one given point quickly. This was always going to be what lessons are we learning about how the operation is performing.
Heading into this summer with the Ft. Lauderdale construction, that immediately makes us more cautious. And while the airline always has been a high utilization airline, I think we're going to be careful in that regard. And Scott alluded to it in the commentary around costs that we're clearly thinking about crew, so that we're in a better position to recover.
But in addition to that, the positioning of our spares and the amount of spare available time that we have is probably more than we would have otherwise. And so I think that, again, is reflective of what we think will be a challenging operation. But, again, it points to the fact that there is opportunity here over time for us to move utilization, again, not dramatically so, but in a way that we think adds to the RASM trajectory.
Understood. Thanks everyone.
Thank you. Our next question is from Jack Atkins. Please go ahead.
Hey, good morning. Thank you for taking my questions. I guess, first off, here for Matt. Matt, you talked about some challenges in the second half of March and into early April from a yield perspective. Could you maybe just sort of expand on what do you think drove that? And you mentioned that you thought these were transitory issues as you look out into the busier later spring-summer travel months. But just curious what drove that greater-than-expected weakness in late March and early April if you have some ideas around that?
Yes. Sure, Jack. Thanks for the question. So what was interesting along the way, throughout these periods, is we still were able to put really good volume on the aircraft. So it wasn't necessarily a matter of being able to attract demand. And over the spring break period – and you have to remember, as we've talked about a lot, Easter shifted out of March – out of April 1 last year.
So Easter had a big piece in March last year and straddled the beginning of the month into late Easter. In fact, this is one of the latest Easters an Easter can ever fall. When that happens, you do have a trough period that will occur in late March, early April generally speaking. And we knew that. And we knew that heading in.
The issue from what we saw – and this is that our leisure routes, and especially some of the established national routes like Puerto Rico and things of that nature, performed really well. It was some of the, say, non-Florida that, while we were able to put a lot of volume on the aircraft, we were not able to get the yields that we had been seeing, say, in the fourth quarter and third quarter last year.
So there is a little bit of anticipation that, as we get into a more sort of shoulder period, that we would see those yields come through. And again, the demand was strong. We saw the loads, but we just weren't able to get the yields up quite to the level that we had anticipated. And we're not talking about really large impacts here. We're talking about just not getting it over the hump that we were expecting to see.
The reason why we have some confidence here moving forward is that, what we're seeing now out in May and into June is, again, demand looks good. Memorial Day weekend, we like how we're setup from an inventory profile perspective and demand is coming in. So largely, we feel pretty good what we're seeing in May.
Historically, when you see signs like this in May that gives you encouraging trends about what you're going to see in June and the summer. Will it hold this year? We won't know until we get into it, but it looks like it's setting up to be a setup that historically has a pretty decent correlation.
One other thing to add is, we do have some reduced expectations for May as well because when you have an Easter this late, it can have an impact on leisure demand into May. So again, there's a lot of moving parts when you think about PRASM and then the resulting TRASM.
So we're always trying to juggle all of these to come up and model out what we think we're going to see. And a lot of times you rely on history to help you with that and then you mix in the recent trends that you're having in current time.
Okay, great. Thank you for that color, Matt. And then, for my follow-up question, and I guess this one's for either Scott or John, when you think about just the construction at Fort Lauderdale, just to go back to that for a moment, and then you're looking out into the third quarter, as that construction continues, are there levers that you guys can pull within the business, whether it's at Fort Lauderdale or other places within the business to help sort of offset some of those incremental costs that you're going to be incurring? As you plan out – try to plan out for the third quarter, are there some things you can do in the business when you get out 90 to 120 days to help mitigate some of those incremental costs?
Hey, Jack. Yes, and so two points. On the Fort Lauderdale construction, yeah, we're going to carry some crew, but we're going to do some things operationally to help mitigate that in the way that we route crews and the way that we route aircraft and isolate certain things to help mitigate some of the impact. But the other cost in the business, look, we're always trying to find ways to reduce our unit costs.
And we're going to continue to do that and probably even with a little more zealous as we go through Q2 and Q3 and Q4 even. So we're going to find ways to handle that. But, look, it's going to be a challenging summer for us. Lauderdale is a big piece of the network, but we're going to do what we do with managing costs and make sure that gets taken care of.
Okay. That's great to hear. Thanks again for the time.
Thank you. Our next question is from Duane Pfennigwerth. Please go ahead.
Hey, thanks. Wondered if you would talk a little bit about new markets, the profile of markets that are outperforming versus the profile of new markets that are underperforming?
Hey, Duane. It's Ted. I'll take off. We can let Matt fill around the detail. One thing about the network that we've witnessed, and I mentioned it in my prepared commentary, is the diversity of the network becomes ever more apparent as we move through. And the good news about that is the – what we're seeing is that the performance in all of those various segments of the business is consistent with our expectations and performing in line with what we would have seen prior.
So if it's international, clearly, we already discussed that today. With that dramatic an increase in capacity, you would expect to see some drag and we've got that kind of built into our expectations, but we're very excited about what that will do over the long-term.
And then, you talk about our leisure build-up and we've had a pretty large increase in large leisure destination flying over the last two years. And that is all performing very, very well. And so again, that stuff, coupled with mid-sized cities feeding those opportunities, and where we can, we still have opportunity in large constrained metros.
Admittedly, each one of those cities behave a little bit differently. Not each city is the same. So Sacramento, for example, right now has announced into Las Vegas. That's one opportunity in Sacramento. And we're doing four routes out of Charlotte, for example, and we did eight or nine opportunities out of Austin on the launch.
And I think what you're finding is that each city is a little bit different. They're all relatively small components of the network, but they all are producing in line or better than what we thought. And that's very good news from a diversity standpoint and it enhances our overall deployment opportunity. So I guess, that's the color I would give.
Yes, sure. And just to add to that, just some figures for you, is in the last year, we've added 83 new routes to the network. And then, as you hear us talk about, we're always looking to see where we can make optimization changes to the schedule. So 83 new routes and we had 15 exits in the last year. So pretty good hit rate for us. And we're pretty proud of that.
And so overall, we think the way that we're deploying is generally working. And I think, for the most part, as Ted mentioned, a lot of our growth is happening in leisure routes. And when you think of cities like Orlando, Las Vegas, Fort Lauderdale, Tampa, New Orleans, the vast majority of our seat growth, not just last year, but over the last two years, has been just to those five cities alone, building upon what we think is our strength, which is making sure we hit up on leisure destinations.
Thanks. And then, just for my follow-up, I don't know if it's possible, but can you talk a little bit about competitive markets that were MAX markets? Theoretically, when these MAX aircraft were grounded, initially, it was sort of a shock to the system and there is no ability to do any proactive planning on the part of your competitors?
But as you look into May and June, there should be more ability to plan for that. And South Florida, in particular, had a very high degree of MAX capacity for at least one of your competitors. So is there any way for you to weigh in on if you're seeing benefits from MAX coming out of the system?
Yes. Sure, Duane. So the truth of the matter is, we had our deployment ideas already kind of sketched out and, for the most part, announced for the year. So where we are today is where we would plan to go. There obviously, has been an impact on the broader industry as a result of capacity deployment coming out because of the cancellations associated with the delays and getting the MAX going.
That may provide near-term benefit in some markets. Anytime you have a capacity reduction that could help. But I don't think it affects the long-term strategy of our business. I think we're planning – we have really laid out for ourselves over the next five years what we plan to do and have a pretty good idea of how those things are going to move in and out.
Now, the timing of each individual market may move. So some may be done sooner depending on availability of gates, for example, or some may be done later, but, nonetheless, we have a pretty good idea. And so I think that's probably where we sit as it relates to the MAX cancellations, Matt, do you want to that?
Yes. One other thing, Duane, with that is when we think about, say, South Florida, in general, our ASM growth in second, third quarter is right now low-double digits in the second quarter and high-single digits in the third quarter in terms of ASM growth for us in South Florida. The industry is roughly flat. And that includes our growth. So overall, we feel pretty good about what the overall profile looks like in South Florida.
And adding on to what Ted said, irrespective of what's going on with MAX groundings, this is what the environment looked like already and there's been some adjustments. But, generally speaking, that's the kind of seat growth you're seeing in South Florida. So we think it's actually a pretty decent setup for the second and third quarter there.
And, yes, we have seen some routes where we will expect to see some benefit, but it's very limited in terms of where we expect to see large benefit. And, in fact, most of the routes where some of the grounding, some of the pulls have come out due to the MAX are routes where some of our competitors had six, seven, eight, nine, 10 flights a day. So for the most part, it helps, but it's not like there's a large number of markets that are being ceded to us for a short period of time.
Thank you. Our next question is from Kevin Crissey. Please go ahead.
Hi. Thanks for the time. Maybe the first one is for Matt and the second one for Ted. Matt, one of the challenges for your stock, I think, from this point forward is kind of how well you did on RASM in the second half of 2018, creating tough comps. But maybe it's not so tough because, two years ago, were pretty easy comparisons. Can you talk about how you see the overall backdrop for RASM growth? I know you're probably not going to – I doubt you'd be guiding specifically, but, structurally, I'm trying to mitigate this concern for investors, the back-half tough comps.
Yes, sure. So that's right. On the year-over-year basis, the comp is going to look tough year-over-year. What we're doing to offset some of these things is taking place on both the fare side and the non-ticket side. So on the fare side, our fares are still generally really low out there. We have a lot of room to move up on fares. And we're chipping away at that as best as we can, especially as we've been seeing oil tick up a little bit here. We've been taking action.
So some of the things that don't really get widely reported, but, in fact, that we've done is we took a $3 system-wide fare increase a couple of weeks ago. A large part of that fare increase has held reasonably well on what we would call mid-level and higher-yielding fares. Again, remember, higher yielding fares for Spirit.
So those are things that we do that don't necessarily get reported, but we're taking action. We know it's coming not only from the unit revenue comp perspective, but also from an overall earnings perspective. That's our job. We always maximize unit revenue, irrespective of what's going on with fuel. And we've also been adjusting our fuel surcharges and other kinds of peak travel surcharges. So we're taking a lot of action on the fare side to push those fares up as best as we can.
A lot of times inventory control, not just with ourselves, but with the industry in general, will limit some of the improvement we can see on a route-by-route basis. But, generally speaking, we feel pretty good. And we're continuing the trend that we've had the last few quarters of seeing a large majority of our markets continue to see unit revenue improvement on a year-over-year basis. So we're really happy with what we're seeing there. We do not expect that to change.
The amount of growth or the level of the growth may change a little bit, but the overall growth that we're seeing is very encouraging to us. It means what we're doing is working and what we're pushing forward even in a competitive environment is working as well.
And then, sorry for the long answer, Kevin, but then the second side of that is the non-ticket side of the business. And we've talked a lot about our various initiatives that we have out there. We have current products that we're continuing to get better at, revenue management of those products.
I'll just give you a quick example, is our seats product that we have, big front seat as well as selling exit rows and other seats in the aircraft. We're very pleased with our continued yield management there. We don't talk about some of these breakouts a lot, but I'm comfortable telling you that our seats product is up high-single digits on a year-over-year basis.
So the revenue management strategies are working. And some of these things just take a little bit of time. There's a lot of reliance on us deploying some technology out there. The data layer that we're adding to our website, which we talked about in the prepared remarks, is very exciting. And we're already being able to see new things on our new website, and it's only been out there for a couple of weeks.
So these are the kinds of offsets. We're aware of what some of the comp issues are or what's being talked about, and we're working hard to offset all of that. That's course of normal business for us, Kevin.
Thanks so much for the comprehensive answer. And, Ted, for you, maybe a bigger picture structural question. Every company has some area of needs or where they've historically chosen to invest later or, some might argue, under-invest basically an opportunity to look for more investment. Can you talk about what areas you might have, whether that be crew scheduling software or tech ops software or what are the areas that maybe you think that Spirit has an opportunity to make some investments that are really going to pay off?
Sure. Sure, Kevin. Thanks. So this is my seventh year. I just eclipsed my anniversary a few days ago. And I think, over that period of time, we've gone through quite a transformation, most of which has gone unnoticed because, I think, it was fair to say that, in the early stages of my tenure, we were significantly under-invested from a technology standpoint.
I would have answered that question directly at that point. Over that period of time, we've invested significantly in the core infrastructure of the business to make sure that reliability is there from a technology perspective, and then shifted our focus to the deployment of applications that can actually improve performance and reduce costs. Now, that's where we are.
And so in an acknowledgement of the progress that we've made, we also are acknowledging that there is room to continue to improve. And, for example, the storm that we just went through, and it was – use of the word unprecedented is a difficult one to use, but we haven't seen that level of ground stop in the Florida marketplace except for a hurricane before. So it was a very unusual setup.
Where we got frustrated was it took us probably a day longer to recover than we needed to. And some of that comes with technology improvement and our ability to reassign crews faster than you can do manually. We've already made the decision to and are in line to implement that new technology later this year, and that happened prior to this storm and well prior to this year, but it does take some time to get the resources all deployed at the right time.
So yes, the answer to your question is we made significant improvements in that regard, but I still think there is room for us and, as Matt alluded to, on the revenue side as well to continue to improve. I think that's where we spend the most of our time, is on technology. The core business is running very well and we feel like we have made the necessary investments in human capital, so that we've got the right leaders in the right positions to make these decisions.
Thanks so much. Appreciate it.
Thank you. Our next question is from Michael Linenberg. Please go ahead.
Yes. Hey, good morning. Two questions here. Matt, just with respect to the RASM guidance for the June Q, you talked about May and June booking up well. At this point, what percent would you actually have on the books for both May and then June? Rough estimates would be fine.
Well, Mike, we don't usually talk about this in terms of absolutes, but we do have – a vast majority of our bookings are made prior to entering the travel months themselves. So for example, once we get into May, we're generally looking at a minority of bookings yet to come in. June still has a lot to go. We will take a lot of bookings from now until the beginning of June for the month of June. And then, once we get into those travel months, largely, we're just filling in what's left on the aircraft.
So a lot of times, we'll have decent numbers in terms of having great visibility. So right now, for this quarter, we're looking out at June. It is out there and we are expecting to put a lot still on the books between now and the beginning of June. So we'll see how those trends play out.
Okay, great. And then, just my second question, either Matt or Ted, I know this is probably hard to measure as it relates to, call it, the price sensitive business traveler, but you would think that when you look at your operational performance, your metrics, you got us – you must be starting to attract more of that type of crowd, that higher quality crowd. And you may see it with respect to, like, the percent of people who book close in.
And I'm asking this within the context of – we look at some of the recent route additions, like a Sacramento or Burbank to Vegas. I know Vegas is not necessarily a business market, but there is still a decent amount of business travel there. The fact that you went into those markets with three daily flights, which is somewhat atypical, and when you look at the service pattern, it's actually quite attractive to that price-sensitive business traveler. I'm curious. I realize it's probably a multipart question, but are you seeing a pickup in that type of passenger, if you can measure that, number one? And number two, is that driving some of these route additions?
Sure, Mike. It's Ted. So the summary is, as you heard us say before, we didn't build the airline nor do we market the airline towards that type of traffic. We are focused on discretionary traffic that is largely based on leisure, visiting friends and relatives, that type of thing.
There is probably a component of it, especially for small businesses or mid-sized businesses who control their own profit and loss statement and are focused on making sure that they manage their business that way. We no doubt have some of that traffic on our airplane, but the business is largely constructed around the leisure opportunity.
And you mentioned some specific opportunities, for example, in Las Vegas. Those are very, very large markets. Sacramento to Las Vegas, Burbank to Las Vegas are huge markets from a leisure perspective. And they will also help the network from west to east because Las Vegas is now depending on the month, it's number two or number three in our network in size. And so there is a tremendous opportunity for those people to reach other destinations through Las Vegas.
So I think it was not built nor is it our intent necessarily to carry that traffic. We know it exists. And we think it's on the airplane, but the largest opportunity is in that leisure discretionary traveler.
That's right. And, Mike, I would just add to the end of that, is what we're trying to do from a reliability and on-time performance perspective is really to help the cost structure and make sure that we're running a great operation. Along the way, there will be some brand benefits as I kind of mentioned a little bit in my prepared remarks. And our goal is just to make sure we're in the leisure customers leisure customers' consideration set.
Look, in our test, we had some issues that hit our reputation. And we're overcoming all of those now. And what we want to do is make sure people that are, what we call, on-the-fence customers reconsider us as part of their consideration set. So it's not about going after the small business customer, although maybe some of them will end up flying on us. It's about reconnecting with leisure customers who may not have had the best experience with us in the past, and now they are going to have one. It's about getting those people to come back.
Great. Thanks, gentlemen.
Thank you. Our next question is from Hunter Keay. Please go ahead.
Hey, thanks. Good morning. I just want to get back to a comment you made earlier today where you said fuel doesn't dictate your capacity growth, but it may dictate how you deploy it. I don't understand that. If you can do better pricing in those other markets, fuel aside, why wouldn't you just be putting those planes in there to begin with? You understand what I'm asking?
Yes, Hunter. It's Matt. So it's a very fair question. So the way that we think about this is, depending on the fuel environment, there may be different kinds of routes that we would view as bigger investment routes that we know may take lower fares for us to be able to stimulate the kind of traffic that we want to get on to those aircraft. And if fuel is at certain levels, then we're just not going to – we just don't know that that's going to be a prudent decision at that time. So that's largely what we mean about when we think about routes and connecting dots or thinking about new routes, in general.
And then, in terms of how we think about marginal flying in off-peak periods, it's sort of the same thing. Our goal is to maximize unit revenue, but our goal is really to maximize earnings. And there's going to be times when we get to certain levels where it's just not – it just doesn't make as much sense for us to deploy some of those ASMs, especially on off-peak days of the week.
Hunter, it's Ted. I refer you back to last year. We talked specifically. I think fuel was kind of on the move. Roughly right around the same time that it's moving right now and basically the same amount. And we made some decisions to move stage a little bit on average and a little bit of off-peak. And I think that's again, none of this is dramatically changing the entire capacity deployment structure, but it is us optimizing the earnings line. And I think that that's the kind of I think that's what Matt was alluding to.
Yes. That makes sense, Ted and Matt. And I'm just trying to – just as a follow-up, I guess, you've reiterated the full-year capacity guide and I think you're clear about sort of where you're going to deploy it. But are you suggesting here that, given where fuel is, as you look into the fall period, you're just not confident about the off-peak demand being good enough to warrant certain types of capacity? So are you basically suggesting that you have some concerns about off-peak pricing after the summer period sort of regardless of where fuel is?
Yes. So I don't know that I would say that. I think what we would say is that – again, I would focus more on the earnings discussion because the fuel component is a significant component of variable costs, and that's how we think about the most marginal flying. So I think it's more an earnings discussion than it is a pricing discussion. We're going to do all of the things that Matt alluded to earlier and discretely discuss to continue to move yields in the right direction to reflect the fuel environment. We also expect that that will be naturally the case in the industry. So that's why we will remain dynamic in the decision-making as to how we want to look at off-peak flying or stage or anything of that nature.
Okay. Thank you everybody.
Thank you. Our next question is from Brandon Oglenski. Please go ahead.
Hey, good morning, everyone. And thanks for getting me on here. I guess, maybe I'm a little confused, but does that mean that you are rethinking 15% capacity growth for the year? Or am I just interpreting this that, there's certain markets that are going to work and others that won't and you should still be thinking that's the right growth rate?
Yes, I think, for now, Brandon, you should assume we're at 15%. I think what we're implying is that we take into account the marginal input costs, and it's possible that number may move, but it's not going to be material. We will optimize within the earnings band that we want.
And so even if we're flying the same airplane the same number of frequencies every day, if the stage of that airplane is a little bit shorter, you're going to get a little bit less ASMs. That doesn't change the overall throughput of what we're going to do with that aircraft. So I think that's what we're trying to clarify. And it's the same thing we did last year. You could really just look at the way we approached it and said, okay, well, we should all be thinking about it that way going forward.
Okay. And then, I guess, Ted, in light of the higher cost outlook here and I think an earlier question, we're talking about the higher comps on unit revenues into the back half of the year. Should we still be thinking that margin expansion is possible? Or are you happy being in around 15% on an EBIT line and growing the business at this pace?
Well, if you're talking about beyond this year, I think we are – that's a very robust move for us on the margin line and the earnings line this year, which we, obviously, knew the setup was going to be and very excited to be able to continue to deploy into. Beyond this year, we target opportunities at that number. It just so happens we're kind of back to the mean.
And any individual micro marketplace, we're going to try to optimize that number higher. But that does depend on what's happening within the macro environment as well. So if you stretch this beyond 2020, it's tough for me to say exactly what the setup is going to be. But, clearly, our long-term target is still to find market opportunities in that mid-teens level. And it's good to see that that's basically where we hover around right now.
Okay. Thank you.
Thank you. Our next question is from Helane Becker. Please go ahead.
Thanks very much, operator. Hi, team. Thanks for taking the time. Just two questions. One, can you just talk about the experience in Orlando specifically and if there's just been a lot of extra or industry capacity that's gone into the market that overlaps some of your opportunities, is one question.
And the other unrelated question for Ted, can you just talk about capital allocation and how you're thinking about – or maybe Scott, how you're thinking about aircraft ownership, lease versus owned. I don't think it matters from an accounting perspective, but from a financing perspective it might. Thanks.
Sure, Helane. This is Matt. I'll take the first part of that. So in Orlando, with that international expansion, we did have one competitor out of Latin America add two routes actually around the same time that we were announcing and starting service from Orlando, and that competitor is pulling those routes out in May and June of this year. So I think it talks to what we always talk about, is our leverage on the U.S. side of the business and our ability to serve VFR and leisure traffic is a bit unique.
And I think this is probably proof of that. So two routes there that we're looking at now that are going to be ours. And there was also four other routes that we added in Orlando that don't have overlap with us. So there are routes in there that we have to ourselves and there's other routes that are actually heavily competitive as well. So generally speaking, that's how the setup is for Orlando.
And as Ted was mentioning, some of the things that we put in Orlando are also sharing characteristics that we have in Fort Lauderdale. So overall, we really like what we're seeing. And part of the discussion about schedule optimization also involves what we're doing in Orlando. We're going to be taking a look at how can we create a little bit more network connectivity in Orlando. And, again, these are things that we can uniquely take advantage of in Orlando. That will also help that overall production.
Hey, Helane. This is Scott, to either answer the second part of that question. From a capital perspective, we feel good about where we are from a debt and lease perspective. We're in the 60% to 65% range on debt. We're going to be opportunistic, as we've already sort of talked about a little bit about the ongoing 2019 fleet transactions.
As we see an opportunity to buy aircraft off lease or add additional capacity where necessary, we can do that in a flexible way. Look, we think debt financing is an efficient way to finance long-term assets. And our debt capacity and our ability to service that debt is well within levels that we can handle.
In fact, we're going to see leverage decline over the future periods, as we expected, as we started debt financing. So we feel like we're in a good spot. Actually, the real question is about how we're deploying that capital and generating marginal returns. And we feel good about that. So we feel good about the debt levels and we feel good about how we're deploying the capital. So I think we're in a good spot.
Thank you. Our next question is from Darryl Genovesi. Please go ahead.
Hi guys. Thanks for the time. Ted or Matt, I can't prove this, of course, but if I were to go back to your last conference call in January, I think you probably, at the time, would have been looking for more than 4.5% RASM growth in the first half of this year. And I don't know if – your expectation back then would've been 6% or 7%. But I feel fairly confident that at least investors and, I would venture to guess, yourselves were probably expecting the first half to play out a little bit better than this.
That being said, I understand you're also thinking about a big airplane order, probably making some assumptions around what the long-term growth rate of the airline is going to be. And just wondering if there have been any updates to your thought around the right capacity plan and the right level of CapEx to support that plan.
Hey Darryl, how are you? Welcome back.
So I think, look, it goes without saying that we entered into the first quarter expecting our unit revenues to be up 5% and they were up 4.1%. So I think it's fair to say that that was not in line with what we wanted at least for that quarter. With that said, there's been a lot of moving parts since then. And we're still very excited and extremely thrilled to be putting up what we think is amongst the best unit revenue performance in the industry with the highest growth rate.
And our objectives around that is focus on the ancillary production, make sure that we're driving along that in a way that we can feel comfortable, will continue to add to the bottom line and move the fare where we can off of relatively low numbers. And I think that that's still got a nice setup for us, noting that the comps get more challenging in the back half of the year, but the absolute numbers are still low.
With all of that, the growth opportunity still looks great. And, yes, we are in the process of evaluating a fleet order. And in doing so, trying to arrive at what we think the appropriate growth rate is over the longer term. For now, we've been targeting around mid-teens. But we've always said that, over time, that will round as the airline gets bigger.
And I think the right way to think about this fleet opportunity for us is flexibility. What we want to be able to do with the manufacturers and with our financing partners is to design a fleet strategy that gives us ultimate flexibility to grow at rates consistent with the market opportunity. And so in micro flashes of either a recession or a downturn of whatever that might be, we want to be able to adjust.
And in times of more robust growth, we want to be able to deliver. And I think what we've heard based on the preliminary and secondary feedback as we're well into this process is we're going to do that. We're going to get that flexibility in a way that we think helps us going forward, which I think is key. And it allows us to be dynamic in the view of the growth rate over the next five to 10 years.
Thank you. And then, I guess, I'd like to just ask you one on CASMx. And, Matt, feel free to chime in. Your stock is down 10%. And I would say that most of that's probably attributable to the CASMx guide for this year being worse. And, I guess, I'd just – most of the qualitative commentary that you've put around, it would suggest that this is somewhat one-time in nature. But with the stock down 10%, 11%, the market doesn't seem to believe that.
So with that in mind, would you help us understand what some of the puts and takes are for 2020 CASMx and if you have any preliminary thoughts on where that might shake out?
So let me address the core comment, which is the CASMx. Obviously, we had to move the guide by 100 basis points for the full year. Yes, we did describe it in a way that – and quantify in a way that reflects the fact that we believe it's two discrete items related to timing of a construction event at our primary airport and an unfortunately-timed storm in Easter period. And so we don't think that has any impact on the company's go-forward cost structure or strategy heading into next year.
Right now, we're not prepared to give you any detail on 2020. But I think the puts and takes are basically the same thought around the way we looked at 2017, 2018, 2019, which is the company continues to mature its fleet, which is going to act as a headwind on the maintenance side, which shows up in our depreciation and amortization lines. We have pressures on wages and rates at airports.
And then, we offset that with efficiencies. And Scott outlined some of the sound bites around that, but these are real things. Technology deployment at the airport in the form of more sophisticated bag drop facilities and queuing facilities and kiosk technology will actually help us from a unit cost perspective.
And so doing more and more of that, consistent with our growth strategy and finding efficiencies on purchasing and obviously, we're going to have a big fleet order. We expect that that will be a natural CASM tailwind for us going forward. All of those things help offset those pressures, keeping our long-term cost structure intact and widening our advantage against the industry. And that's probably the way you should think about it.
Great. Thank you very much. Really appreciate it.
Thank you. Our next question is from Jamie Baker.
Hey, good morning, everybody. You had 12 minutes of prepared remarks before Q&A. So shoutout on that. By the way, that's very efficient. I mean that.
You're welcome. No, no, it makes better use of everybody's time. So yours included. A similar question to what I asked on the JetBlue call. I think a lot of the industry trends right now are kind of shared between ultra low cost carriers and the big three. Not to mention the tweeners in the middle, stuff like ancillary revenues, segmentation and so forth. Those are kind of big picture type themes.
But I keep coming back to the topic of loyalty, which seems to me to be a theme whose benefits are really skewed towards the big three. I know you offer a differentiated value proposition to your flyers, but have you thought at all about the longer-term competitive ramifications of not being able to participate as aggressively in the loyalty sandbox?
Yes. So Jamie, great question. So we do think about these things. And one thing that we, for example, and in prior years, a lot of our growth – this is like a network answer to some of your question, is a lot of our growth in prior years has been connecting dots in cities where we already exist. And when you think about sort of credit card penetration and our $9 fare club subscription loyalty program, as well as our overall FREE SPIRIT loyalty program, some of that stuff can saturate over time.
So as we've grown this year, we've gone into some cities that we think we probably should have been in for a little while. We just didn't have the deployment capacity available to us until this year. And cities that we've gone into Austin, Indianapolis, Raleigh, and some of the cities we went into last year like Richmond and Columbus, as we continue to grow, it's going to give us better opportunity to compete on some of those products.
And that's in addition – and it's a little bit of an open question overall because, for us, we know that we still need to do more on our loyalty program. And we've been talking about knowing that we're underperforming there and knowing that when we started the program a while ago it was disruptive and new. And, quite frankly, now it's not reflective of our overall model. And we need to make changes to that. That's coming later this year and it'll probably be more of a benefit – not probably, it'll be more of a benefit for 2020 than it is for 2019.
And I think we're going to have a pretty competitive product from our perspective from a leisure product perspective. There's a lot of people out there who fly one or two or three times a year and we want to make sure that they're thinking of us when they think about who they select for an affinity card and thinking about us from creating a program that matches up with our model.
So we'll have details on that later this year. So we are thinking about that. And it is something that we know, moving forward, is a place that we do need to compete a little better on than we are today. So I think it's hard to say whether we won't be able to participate on our own kind of level on that in the future as well. It's hard to say that right now.
Okay. Yes, that's helpful. And just a quick follow-up on the April 11 fare increase. That's whatever 5,000 or 6,000 fares. Your comments earlier made it sound like a portion of that did not stick. I guess I didn't see those fares roll back or was your point that some of the higher fares were sort of competed away or something. I'm just a bit confused on the mechanics there.
Yes, sure. Certainly, Jamie. So there was a lot of fares that were, quite frankly, on the lower end that we were not able to hold some of the increase on. But the mid-level and higher end stuck.
Okay. All right. That’s perfect. Thank you very much everybody. Take care.
Thank you. Our next question is from Dan McKenzie. Please go ahead.
Hey, thanks. Good morning, guys. One housecleaning here. Wanted to make sure I heard correctly on the lost revenue that you're building in from the runway construction challenge. Was it 150 bps from RASM that's from misplaced planes? Or is there some book away that we're going to need to think about as well? So have you baked in something on bad ops making headline news that could cause some book away?
No, Dan. I think there is some confusion. We did not mention any revenue impact associated with runway construction in the summer. We only referenced some cost that the Company plans to incur as a risk management tool to prepare ourselves for that, which – as a 100 basis point CASMx impact in the second quarter and a 50 basis point impact on the full year. That's all we talked about.
There was a mention of a 50 basis point impact to unit revenue, we expect, in the second quarter as a result of the storm. So basically, we lost high RASM ASMs over the Easter period and that probably impacted our view of the second quarter.
I guess I'm just wondering if you've maybe factored in some book away here. Doesn't sound like maybe you did or do we need to or how should we think about that?
Yes. Dan, so it is not necessarily book away that's going to occur. A couple of things we did in Fort Lauderdale to help with the operation as we worked with the airport on an operational plan as we did move some flights around a little bit. So we have some flights now that aren't perfectly timed, the way that we would have otherwise liked them to be timed, and that's really to help the overall airport operation. And that's contemplated in our second quarter revenue guide.
Got it. Okay. Thank you. And then second question here, leave it to me to kick a dead horse. I hear you loud and clear on growth that adds to RASM growth is working. And of course dynamic growth based on the opportunities. But if I can just push back a bit here, if you accept that Spirit's cost advantage is sustainable, what's the rush?
So given where we are today, given end of the cycle worries, given investor worry about off-peak pricing weakness persisting, how do you think about growth at 2x to 3x GDP versus 5x GDP or higher? Would slower growth reduce potential revenue and cost volatility?
Hey, Dan. It's Ted. Yes, so I understand the question. It's hard – all of those numbers and I don't mean this the wrong way, but they are arbitrary looks at what a targeted growth rate should be, right? You're just picking something that doesn't – what we do is we look at the actual opportunities that exist and then try to round out a growth opportunity around that.
So there has been actually a decent amount of thought put into the amount of growth that we're deploying right now and plan to deploy over the next three to five years. I wouldn't characterize it as being in a rush either. I think it's imminently deployable, I think we've figured out the ways to move through from an infrastructure perspective. So I understand the pushback and we hear you on it.
But I think that the growth opportunity that we see is so large that a rush would be a number that's considerably bigger than what we do today. So I think this is a much more thoughtful and methodical growth strategy than you might otherwise do if you were staring at a massive opportunity like this.
Got it. Understood, okay. Thanks for that, Ted.
Hey, Christine, we have time for one more question.
Thank you. Our final question is from Joseph DeNardi. Please go ahead.
Yes. Thanks for squeezing me in DeAnne. Ted, you talked about kind of the opportunity with the loyalty program and the card. Some of peers – your friend at United has kind of quantified what he thinks their opportunity is. Air Canada has done the same thing. So can you just help us with what you think the potential improvement in revenue or margins could be once you get kind of a market rate program and economics? It's tough to kind of to do that math, just given your size and your customer demographics. Thank you.
Yes. I can appreciate that, Joe, and we'll probably – we're not prepared right now to give you where we think it will go. Let's break down the primary components though. Today, we've instituted a little bit of a self-help triage program as it relates specifically to work hard with Bank of America. And we've already seen progress in that regard.
So we were seeing degradation actually in the revenue performance of the card program into last year and we've now reversed that. And so as it exists today, it's starting to perform more in line at least, which gives us some cause for optimism. The next available opportunity to really change the economics [indiscernible] is that your renewal rate – your renewal date and that doesn't happen for another three years for us.
So what we've got to focus on is – and I think it's true that we under indexed even within our peer set today, on revenue associated with both the card platform and the loyalty program. I think that's true. And so what Matt just went through a long discussion on is how do we get ourselves back into – at least in line with where we believe to be. I'm not prepared right now to tell you how big that number is, but we're shooting off of a low base.
Is it points of margin, Ted?
Okay. And then, Matt you mentioned kind of the benefit potentially to 2020 from the loyalty program. Is that just something from, like, a point valuation or accounting standpoint you're changing related to the points that will drive higher revenue or is that an assumption that you revamped the program, it becomes more appealing, you generate stronger loyalty? It seems like one is a little bit more certain than the other. Thank you for the questions.
Yes. So Joe, it is the latter. And you are correct. So we are expecting that the change in the program and the change of how we create that loyalty through the points and formula that we will be putting in place. So we'll drive more usage. And what we're creating is also in an effort – and we'll reveal this at the right time later this year. But it's also revolving more around our overall model. And we think we're going to be a bit unique as well in what we put out there. So it's something that's not out there in the industry today and we think it's going to create some pretty good awareness.
And again, it's sort of what we talked about earlier also, is we do believe there's going to be benefits on the passenger side over time as well, not just from better loyalty of infrequent travelers, but also just entering into the consideration set. Whether someone wants the Spirit credit card or not, the fact that they're going to be hearing about it and understanding that something is new and modern should just overall create more consideration for people that are out there, whether they want the credit card or not.
Thank you. And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.