Delta 2Q17 Earnings Call Notes

Ed Bastian

Opposed to the privatization of air traffic control

“There’s been a lot of work that’s being done in Washington around the ATC reform topic and yes, we at the table. We are working constructively with Chairman Shuster. We’re not philosophically opposed to privatization for privatization sake. What we want to do is make certain that we have the proper governance, transparency and cost efficiency to drive the reforms needed in the next air traffic control system that gets modernized and we’re in full support of the President’s agenda to invest and modernize the systems.”

Glen Hauenstein

Business fares remain below historical levels

“Business Fares, while improving, remain well below historical levels.”

Seeing European business sector picking up

“So we read a lot about European business sector picking up and we’re seeing that in the travel to and from Europe. So we have a couple of things that are developing that are positive for us. The euro is at a multiyear high here. We have business demand and a very, very solid position.”

Delta Air Lines 1Q17 Earnings Call Notes

Ed Bastian – Chief Executive Officer

Glen Hauenstein

Pace of recovery a little slower than anticipated but seeing improvement

” while the pace of the revenue recovery was a bit slower than what we had originally anticipated, we are continuing to see improvement in revenue trends across our network. Quickly recapping our top line performance, we reported total revenues down 1% on slight declines in passenger and cargo revenues. Our passenger revenue declined $74 million, including $20 million of lower hedge gains. Passenger unit revenues for the quarter came in essentially flat and we were better sequentially each month. In March, system PRASM turned positive marking the first year-over-year improvement since November 2015″

British economy has held up better than anticipated post-Brexit

“And as you know, the British economy so far has held up better than anticipated post-Brexit. While we have heard a lot of noise about people moving and we respond to the demand, and I think we have a lot of levers should we actually see that materialize, but given that we haven’t really seen demand declines yet, I think it would be premature for us to announce what we might do if demand declined. And I think what we have seen is, it’s never been a better time to go to the UK or it’s never been a better time to go to Europe for U.S. travelers. And we have seen an offset of UK point of origin, the U.S. point of origin has more than offset the decline in the existing UK weakness.”

Robust US demand to Europe

“we are seeing very robust U.S. point of sale demand to Europe for the peak summer. And we are believing that for at least from our perspective that most of that will be absorbed by that higher demand. I can’t speak for other carriers.”

Robust leisure demand could lead to capacity growth in excess of GDP

“This cycle we have seen really robust leisure demand. So I think what you will see in the industry, this is just a forecast of when you get to third and fourth quarter, you will see that it’s actually probably going a little bit faster than GDP, because the customers are – the customer base has grown and the fares required to now translate that into RASM are very nominal.”

Paul Jacobson

Fuel presenting a challenge

fuel presented us with our greatest challenge in the March quarter as our fuel expense increased by 26% or $325 million from the prior year. Our all-in fuel price of $1.71 per gallon was up almost 30% as crude prices climbed roughly $20 per barrel from the first quarter ‘16 low levels. Our fuel price also includes $0.09 per gallon of losses from our legacy hedge book during the quarter.

Also had pressure from non-fuel costs

“While fuel was the biggest headwind in the first quarter, we also faced some pressures in non-fuel costs, which drove our CASM ex-fuel up 3.6% higher year-on-year. This was driven by the timing of our maintenance spend, various products investments, employee pay increases as well as pressure from lower capacity during the quarter. “

Delta 4Q16 Earnings Call Note

Delta Air Lines’ (DAL) CEO Ed Bastian on Q4 2016 Results

$7 billion of operating cash flow in 2016

“Financially, we produced $6.1 billion of pretax profits, 16.5% operating margin and a 26% pretax return on invested capital. It looks like we will be the only major to have grown its operating margin in 2016. We generated $7 billion in operating cash flow and nearly $4 billion of pretax [loans] [ph] we used to reduce our adjusted net debt to $6.1 billion, achieved an investment grade credit rating and returned over $3 billion to our owners.”

Excited about infrastructure investment possibility

“Hi Duane, this is Ed. There’s a number of things we are excited about. One of the things we are very excited about is the potential investment opportunities of the new administration, talk a lot about improving in airport facilities we have been doing, a considerable amount of investment alongside our public partners in LaGuardia, LA, Seattle, Salt Lake, Atlanta, but the ability to continue to work with the federal government to drive improvements to the infrastructure is clearly a big deal for us”

Glen Hauenstein

Business yields were weak in 2016 but picked up after the election

“While total demand remained strong throughout 2016, weak business yields were prevalent and drove RASM declines. To address this, in the December quarter, we adjusted our revenue management approach and capped our capacity growth below 1%. Following the election in November, we began seeing improvements in business demand and the firming of business yields. These trends continued into December, which was the first month in over two years that yields improved on a year-over-year basis. As a result, our fourth quarter unit revenues were down 2.7%, better than both our initial guidance and the updated outlook we gave at Investor Day.”

We are substantially capacity constrained at LAX today

“We are substantially constrained at LAX today. We have, I believe, 15 gates currently in terminals five and six and when we get to terminals two and three, we have the possibility to come close to doubling the gate pods but it is going to take some time as we redevelop terminals two and three. That’s not overnight. And it will also take a little bit of the pressure off of the turns on the gate today. We turned terminals five and six to highest levels in the system and once we get a better gate pod, we will be able to reduce some of the congestion at the airport. So, we will have more gates but that doesn’t necessarily mean more direct flights as a result. But net net, we absolutely will be increasing our footprint and our capacity in LAX over the next few years.”

Should be opportunity to increase fares

“I think if you look at the travel spend on a lot of corporates, particularly in major lane segments of domestic U.S., they are considered to be the primary business segments, that the fares were down 30%, 40% on historical basis. And I don’t think we have to get a significant, we are not expecting them to go back to the historical levels in our current plan. This is a journey. It’s not a race. And so I do think that if the economy holds out, which we are forecasting today that it will and business continues to travel which we are forecasting it will, that the opportunity to raise fares in that environment with a lower level of capacity offering from the industry is significant and it gets better as we move throughout the year because the fare has got to be so low for business travel by midyear last year. If you take one of the primary business markets in Atlanta to City X, that used to be $750 for a day trip, it got down to $119 for a day trip today. It is sitting at $350 for a day trip. Could it go to $400? Could it go to $450? We see no propensity to decrease travel going from $750 to $100 and I don’t think we will see it our way back.”

Continued appreciation of the dollar would pressure foreign routes

“If I had one issue that I would be a bit of a cautionary issue is if the dollar continues to appreciate, that would put a little bit more pressure on foreign point-of-sale. But core demand as strong and capacity levels seems to be generally in a better spot this year than they were last year looking forward. So I am cautiously optimistic that absent of another run in the dollar, another significant run in the dollar, that this is, as we have said, in the Pacific, that the fourth quarter would be our low point and that we would move forward from there and that summer in the Transatlantic with heavy point of sale U.S. would be a very good summer.”

Paul Jacobson

Cost escalation in 4Q

“That said, fourth quarter saw a bit more cost escalation than we have been seeing so far this year. In addition to the impact of wage increases related to the ratified pilot agreement, there were timing issues in light items such as maintenance, contracted services and rents and landing fees that drove expense pressure in 4Q after having provided benefits in earlier quarters. ”

Low crude crack spreads have helped keep jet fuel prices in check

“Turning to fuel. Our total fuel expense declined by $240 million or about 15% despite higher crude oil prices, as we lapped hedge losses from 2015. While crude has moved higher, crack spreads have remained low, which has helped keep jet fuel prices relatively in check for the airline with pressures result at the refinery which lost $40 million for the quarter as expected. For 2017, we expect our fuel cost pressures will be weighted for the first half of the year. As you remember, during the first quarter of last year crude prices averaged $35 a barrel and hit a low of $26 in late January before they began to increase steadily from there.”

Delta Air Lines 3Q16 Earnings Call Notes

Delta Air Lines’ (DAL) CEO Ed Bastian on Q3 2016 Results

We have had a few incidents with exploding phones

“Well Doug, it is a challenge but I don’t want it to be blown out of proportion either. We’ve had a very few single digit number of incidents occur. We’re certainly reminding our passengers of the requirements, we’re educating our crews, we’re putting some additional safety elements on board the cabin to help mitigate a smoke situation. But it’s not fundamentally different than challenges that we’ve had for some time. We’re aware of the concerns around lithium batteries and we’re very mindful of that, safety is always our most important concern…So what we’ve done is of course really the target training with our flight crews along with equipment. There are some other modifications that we’re adding with containment bags as an example, that with any device that did experience a lithium battery fire you can put it in a containment bag that would certainly contain any possible scenario. ”

Glen Hauenstein

Biggest problem is persistent decline of unit revenues

Thanks, Ed and good morning, everyone. I’d also like to start by thanking the Delta people for their perseverance through a challenging quarter. It is your hard work and dedication that sets Delta apart in our customers’ eyes. And that translates into the revenue premium we realize to the industry. As Ed mentioned, the biggest challenge we face as a company is the persistent decline of unit revenues. This quarter our RASM was down 6.8%, including roughly 1 point of impact on the August outage and an additional point of headwind as we lapped the yen hedge gains from last year. Excluding our outage, our unit revenues were at the bottom end of our initial guidance range and we attribute that shortfall primarily to two factors.”

Reasons: weak transatlantic and weaker than expected close in yield environment

First, the Transatlantic proved more challenging than we expected, given the supply/demand imbalance in the region, caused by multiple terrorist events, low-cost carrier growth and Brexit which we’re primarily seeing in the devaluation of the British pound. Second, the domestic close-in yield environment was weaker than expected in the first half of the quarter, particularly in early August. Overall, domestic unit revenues declined 7% on 4% capacity growth in the September quarter, with nearly 2 points of the decline attributable to the August outage. While this result was weaker than we initially anticipated, we did see improvement as we went through the quarter, particularly as we lowered our capacity levels with our fall schedule in mid-August and adjusted some revenue management strategies.

Transatlantic hit by overcapacity

“And finally we get to the Transatlantic. September quarter unit revenues were down 9.7%, driven by overcapacity, particularly from LCCs and Middle East carriers, while terrorism concerns, sluggish economies and Brexit all weighed on the demand side. While the revenue environment was probably the most challenging, we also had a solidly profitable summer because of lower fuel. That said, as we go into the seasonally weaker period, we will reduce our capacity offering by three to four points starting in November to address the unit revenue challenges we’re facing.”

It takes a few months to ratchet up or down capacity

Hunter, that’s a great question and of course there are a lot of elements that go into those decisions, including the market sizes, the relevant positions of the carrier, the long term sustainability and profitability potential of the market. But we adjust on a monthly basis, as you know and at about 3 to 4 months out, the less we touch the schedule, the better it is for our customers, because customers once they buy a ticket want you to fulfill that commitment of applying what they’ve purchased from you. So that’s why it does take us a few months to ratchet up or ratchet down capacity in advance, once we see the trends developing.

Paul Jacobson

Fuel prices have been trending higher for a while now

“We’ve known for a while now that fuel prices were trending higher and as we’ve talked about for multiple quarters, we’re here. And that is fully expected and we believe the steps that we’re taking are the necessary ones to preserve the foundation that we’ve created.”

Higher fuel should lead to higher fares

“if you look back at history, significantly lower fuel ultimately translates into lower fares. That’s kind of a very high correlation over a long period of time, higher fuel turns into higher fares. The exact lag can vary, but it’s usually in the 3 to 5 month category and as Paul says, we’re facing higher fuel. And so we would expect seeing what we’re seeing in the events and what we know, based on history of how long it takes for that to work its way back into the pricing structure, that it is right around the corner, we feel.”

Fare realization inside of 21 days are improving

“I think that the fares that we’re realizing inside of 21 days are improving generally and the question is they are improving at different rates, corporate managed versus unmanaged and I think they are at slightly different rates, with managed being slightly below unmanaged. But the general trends are that inside the month now, we’re seeing a more robust fare.”

Delta Air Lines 2Q16 Earnings Call Notes

Delta Air Lines’ (DAL) CEO Ed Bastian on Q2 2016 Results

Taking out capacity to fight unit revenue headwinds

“Despite our strong results, we continue to face persistent headwinds on our unit revenues on a number of fronts that we are working hard to combat. Capacity is one of the biggest levers we have to move the needle on our unit revenue performance. In May, we announced that we plan to take one point of capacity out of the fourth quarter. That brought our second half capacity growth plan to below 2%. Now, with the foreign currency pressure from the steep drop in the pound, the economic uncertainty from Brexit and continuing yield pressures in the North Atlantic, we have decided to take an additional 6 points of capacity out of the UK for the winter IATA season. ”

The large fuel savings are now behind us

” the reality is that the large year-on-year savings driven by lower fuel are now behind us, market prices are essentially flat for the third quarter and look to be higher year-over-year in the fourth quarter for the first time since 2012.”

Third quarter is the peak of the year

” I think the third quarter is the peak of the year. Candidly, it’s this June, July and August, right? So, that continues to be our – that’s our sweet spot.”

Currency putting pressure on purchases to the US from Britain

“The currency certainly has impacted the booking point of sale. And we have seen some strength in the U.S. point of sale to the UK as the talent has deteriorated. Likewise, we have seen some reduction in our UK point of sale coming to the U.S. And that’s why we are making certain of the capacity adjustments combined with overall high levels of capacity in the North Atlantic, which is putting pressure on yields even before Brexit.”

Paul Jacobson

Potentially is some impact on pension from low rates

“Well, I think it’s a little bit too soon to tell. Obviously, our balance sheet liability is impacted by rates. We have talked about that in the past. So, assuming rates don’t revert back higher, we could see a higher balance sheet liability, but keep in mind that, that has little impact on expense and little impact – no impact at all on our minimum funding requirements for our strategy going forward, which is much longer term based.

Glen Hauenstein

We are not trying to forecast any turn in the cycle, we’re just saying where we are

“Jamie, you asked a lot in that question and I have not gone back to check to 2008. 2008 to me is a blur going back in time. Listen, our guide is our best estimate to where we sit now. We do not think that we are at a – trying to forecast any type of inflection on the cycle or the margins if that’s your question. It’s really where we are. Fuel prices have bounced around a fair bit and fuel prices are up a bit in Q3 versus Q2, hedge aside. And we realized that we do have unit revenue weakness, particularly in the first half of Q3 that we are recognizing. So, I think that if you look at Q3 year-on-year, I think we are about flat, 20% pre-tax margin and I think that’s a – that’s about all I can draw from that.”

Strength in Mexico

“I think we have mentioned in the prepared remarks that the Latin unit revenues were up in the month of June for the first time in 26 months. So those green shoots that we saw last quarter are actually coming in and again being driven by strength in Mexico and a lot of that strength may be related to the presence of Delta and Aeromexico together because it seems that we are getting a much higher share of some of the corporate travel to and from Mexico.

London represents 35% of total business between the US and Europe

“London has – is the biggest market in the UK. But London has a very, very high business component. As a matter of fact, London represents about 35% of the total business to and from the U.S. between U.S. and Europe. So what we are doing is we are taking potentially down frequencies in off peak days. We are down-gauging equipment into the regional cities. Manchester tends to be a perfect example of much higher UK point of origin market and that one because there is a lot of leisure travel coming out of Manchester. And those would be the types of markets that we would look at to reduce.”

American Airlines (AAL) CEO Doug Parker Interview

American Airlines (AAL) CEO Doug Parker on how having kids has made him a better CEO

“I learned so much from being a father that I can use at work.  Raising children is this amazing thing.  Watching development and watching your kids interact helps me manage the company.  I’ve become a better CEO because I’m a father.”

American Airlines (AAL) CEO Doug Parker on the importance of relationships

“The most important thing I would tell you is that relationships matter.  What I have learned in my career is how important is relationships are and how you treat people and your relative success.  There’s this perception amongst some that the way you get ahead is to backstab others.  It doesn’t work.  What matters is that people, in every relationship you have, you have to treat people with respect and dignity.”



Source: Stanford Business School Video Interview

Delta 1Q16 Earnings Call Notes

Ed Bastian


“I’ve been asked many times over the last couple of months as I take over as CEO as to what my priorities will be as we look to the future. Our goal as a team will be to continue to invest in the initiatives that are producing adorable, sustainable and industry leading foundation at Delta.”

Domestic fleet renewal is a medium term need

“The focus we’re in the midst of currently is the domestic fleet renewal over the next five years. It’s not a short-term need. It’s a medium term need, because MD-88s do need to retire. We have roughly 115 of them currently. And we also need to continue to up gauge our regional flying to the main line which we’ve had a lot of success in and there is much more to go. And I think we can do it cost effectively.”

Paul Jacobson

Lower fuel costs providing huge benefits, but a lot of uncertainty

“While lower fuel cost are providing huge benefits for our business, there is a lot of uncertainty in the global environment and we know fuel won’t stay low permanently. As a result, we remained focussed on staying disciplined with our cost.

Glen Hauenstein

The industry needs to fill capacity in order to maintain margins

I think those are always are concerns. I think that the demand that is strong particularly ex U.S. and it’s been little bit weaker ex Europe. But if these elevated level stay and fuel goes up and economies don’t grow, I think that would be an indication that industry would need to full capacity in order to maintain margins.”

Delta Airlines 3Q15 Earnings Call Notes

Our performance puts us along side companies like 3M and Lockheed

“These types of results investors expect from a high quality industrial company like Delta, our metrics rank among the top 10% of S&P Industrials. Our free cash flow performance puts Delta in the company of companies like 3M and Lockheed Martin.'”

Opportunity from low fuel prices

“We have a significant opportunity ahead, as fuel prices remained low, and we continue to push forward to achieve positive RASM. RASM growth remains a key component of how we drive margin improvement over time and we remain committed to improving our unit revenue trajectory. ”

Corporate demand remains solid

“Corporate demand remains solid with volume growth of 5%. In the domestic entity, corporate growth was notably strong in the Transcons and West Coast markets as we successfully leverage our investments in New York, LA, and Seattle. We saw meaningful improvements in our healthcare, financial services, and media sectors, offsetting declines in energy and manufacturing.”

Cargo/passenger businesses have domestic performing well but international headwinds

“Our cargo business is facing a similar dynamic to our passenger business with domestic performing well, while the international business is facing significant currency and related demand headwinds.”

The stock price does reflect our performance vs our peers, but not relative to industrials broadly

“our market cap does reflect it and our stock price does reflect it against the industry. I think our next closest domestic peer has a market cap it’s $10 billion lower. And when you look at where the P — the forward P is where our opportunity is, is to continue to derisk the balance sheet, derisk our business model, have the best employee relations in the industry, investment grade balance sheet, and continue to move our P/E up to match our performance versus the S&P Industrials and we’re going to quietly continue to do that.”

We can move rapidly to adjust capacity

“I think the thing that people don’t have a full appreciation for just how rapidly we adjust to markets. And if you even just think out about 2015 and what we said we were going to do in December of ’14, in fourth quarter 2015, situations change, currencies got weak in Brazil, currency got weak in Japan, fuel surcharges ran off, sanctions in Russia, and we’ve responded very quickly. And that’s the wonderful thing about what these assets are. If you own a hotel in Manhattan and something doesn’t go well in Manhattan and you can’t move the hotel? Right. But we can take our frequencies in Venezuela down to one a week and we could take Russia down to one a week and you don’t see all those moves, but the reason why we have ever expanding margins is at some point the Street just needs to understand that we’re going to continue to manage the business to drive margin and free cash flow and we have a lot of leverage to do that.”

There is a huge wide body bubble in the world

“we’re seeing a huge bubble in excess wide-body airplanes around the world and we’ve been approached by more than one party. I mean the market appears to be the 777-200s about 9 to 10 years old the price is about $10 million. And on A330-200 the lease rate is about a fifth of what it would be new.

So we do think that the aircraft market is going to be right for Delta and over the course of the next 12 to 36 months and we think that that weakness in that aircraft bubble in wide-bodies is going to spread to narrow-bodies and that there will be some huge buying opportunities because low interest rates really have created a huge wide-body bubble in the world.”

This is a small market with a handful of buyers. There is no deal at these prices, prices are going to go lower

“There’s no deal on the works we just — it’s a relatively small market in the world right there is not many people in the world that can take a dozen 777s, right, there’s a handful of customers. It’s a very small market, it’s a very transparent market, and we get calls all the time. There is no deal. Prices are going to get lower; you wouldn’t strike a deal now.”

Delta 2Q15 Earnings Call Notes

22% y/y EPS growth

“We maintained our revenue base despite an 18% decline in fuel prices, which allowed us to expand our pre-tax margin by 200 basis points, improving earnings per share by 22% year-on-year and generated free cash flow of $1.6 billion in the quarter.”

Business conditions remain pretty stable

“Regarding the current environment, business conditions generally remain favorable, currency volatility continues to impact our international business while domestic yields have been under pretty significant pressure”

Revenues softer than expected thanks to yield weakness

“Despite these improvements the strong dollar and lower fuel surcharges remained headwinds for international business while softer yields in certain domestic markets resulted in revenues that fell short of our initial expectations.

For the June quarter, passenger unit revenues declined 4.6% with 2.5 points attributable to currency and lower surcharges and the remainder attributable to lower domestic yields.

This yield weakness domestically was limited to a small group of markets. In fact, three markets accounted for 50% of the overall domestic yield weakness. ”

28% Fuel savings

“With the recent sharp drop in fuel prices, we currently expect our September quarter fuel expense will be $1 billion lower year-over-year, net of roughly $200 million of hedge losses.

At $1.90 to $1.95 per gallon, our second half fuel price will be 28% lower than what we paid in the first half of 2015 according to the current curve. We expect this price will be in line with the industry average for the balance of the year.”

Fuel prices should be a $2B benefit this year

“Overall, we continue to expect fuel cost to be an enormous tailwind and provide a net benefit of more than $2 billion for Delta this year. We’re also well positioned to benefit if fuel remains at these levels for 2016.”

Has Spirit match type of pricing now

“Well, our three really branded fares that we’re talking about today, one is basic economy, which is our spirit match fare if you will or ultra low cost carrier which is a de-comp dented product. We have Comfort Plus, which we re-launched in the quarter with a few additional amenities and we saw a huge uptick now. We believe this is all incremental because the transaction is actually a post purchase transaction. So you have to go in and buy the additional service upgrade after you purchased your ticket and so we view that as fully incremental.”

Corporate demand is very very strong but there is yield impact

“I think as you look at where the weakness is, it is not in corporate demand. It is in the yield that we’re obtaining from corporate demand. And so as we continue to move forward, we don’t talk about future pricing initiatives we never have and so — but I would say is I think that corporate demand remains very, very strong and very, very strong even out of the cities that have had this yield impact and how the industry reacts will determine how those three cities do.”

We have not experienced demand deterioration, just yield deterioration

“I did want to clarify that because I have read it in several reports where people were talking about close in demand deterioration, which is not what Delta has experienced, but we have experienced closing yield deterioration in several key business markets.”

Most people are opting to take the higher fare, non spirit match

“So if and let’s just give an example of this, if the lowest fare from Detroit to Orlando is $59 and that was match of an existing spirit fare from it was presented on the $59 gets you a product that is without a seat assignment most people are opting not to take that fare, but to take the next higher fare, which is essentially an added on price.”

Delta Airlines 1Q15 Earnings Call Notes

We run the best operation in the industry

“We continue to run by far the industry’s best operation. In the March quarter we delivered 98.6 completion factor that had a lot of tough weather days in it but we did have 25 days with zero mainline cancellations.

Our mainline on-time rate improved 3.1 points to 83.4%. This operational performance is contributing to solid increases in customer satisfaction, we have achieved all time highs in our Net Promoter scores and our customer complain rate has decreased by 23% so far this year.”

Business is performing well, while strong dollar is creating a headwind

“Looking forward the business on the whole is performing quite well, while the strong dollar is creating a $600 million headwind for our international revenues, it is also a factor in keeping fuel prices down which will contribute over $2 billion in gross savings year-on-year in 2015.”

Corporate travel managers optimistic about travel

“Our recent survey shows corporate travel managers continue to be optimistic about the remainder of the year with roughly 85% of respondents anticipating they will maintain or increase spending over the balance of this year.”

Toughest revenue environment is asia, driven by forex

“We face our toughest revenue environment in the Pacific where unit revenues declined 9% with roughly seven points of the decline driven by foreign exchange’

Softer demand trends in Brazil Russia, Middle East and Africa

In addition to currency, we’re also continuing to experience softer demand trends in certain markets including Brazil, Russia, the Middle East and Africa. ”

Supply is outstripping demand in China

“Yes Mike we are seeing good flows, but candidly the industry capacity between China and the U.S. I think the number in Q1 was about 20% of an increase. So either the supply is certainly outstripping demand but demand is strong and our early indications on our — the new flight we were launching between LA and Shanghai are very positive. So we’re not the predominant player in China at this point, so we’re still building strength as we go.”

Better to assume a high oil price than a low one

” our long term philosophy and this is how we’ve always run the airline is to assume a high fuel price, and to assume a much higher fuel price than the forward curve.

And that does a lot of good things for you. I mean we put it this way, having tried different ways to budget airlines over a really long period of time the only rational way that we found is to assume a high fuel price over the long term, because you are never disappointed when its lower. But if you assume – if you assume a low fuel price then the fuel price ends up being high then you are put in a situation where you’ve got to go tear apart the company in order to get your cost down.”

Net promoter score is the best measure of brand performance

“Well, our net promoter score is, we believe, the best measure of brand performance and it’s across multiple consumer industries, not just the airline industry. And we’ve seen a very tight correlation between improvements in our unit revenue performance and outperformance that’s directly attributable to customer satisfaction and net promoter score.”