Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2020 Allegiant Travel Company Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session.

Thank you, Towanda. Welcome to the Allegiant Travel Company's fourth quarter and full-year 2020 earnings call. On the call with me today are Maury Gallagher, the Company's Chairman and Chief Executive Officer; John Redmond, the Company's President; Greg Anderson, our EVP and Chief Financial Officer; Scott Sheldon, our EVP and Chief Operating Officer; Scott DeAngelo, our EVP and Chief Marketing Officer; Drew Wells, our SVP of Revenue and Planning; and a handful of others to help answer questions. We will start with some commentary and then open it up to questions. The Company's comments today will contain forward-looking statements concerning our future performance and strategic plans. Various risk factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or implied by our forward-looking statements. These risk factors and others are more fully disclosed in our filings with the SEC. Any forward-looking statements are based on information available to us today. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise. The Company cautions investors not to place undue reliance on forward-looking statements, which may be based on assumptions and events that do not materialize. To view this earnings release as well as the rebroadcast of the call, feel free to visit the Company's Investor Relations site at ir.allegiantair.com. With that, I'll turn it over to Maury.

Thank you, Sherry, and good afternoon, everyone. Thank you for joining our call today. First, let me thank all of our team members, their spouses and families, as we continue to fly through these difficult times and carry our passengers to their destinations. Thank you again for all your hard work and dedication. Last quarter, we were able to report some optimism. I qualified my statement at that time by saying some, this time I can say, more in the terms of optimism. And as it turned out though, we were a little more bullish on the call last quarter than we were able to deliver. Nevertheless, we had noticeable improvements over that quarter. My hats off to Drew Wells and his team, as he had to navigate – they had to navigated their way through the increased COVID problems in November and December. They did an excellent job maneuvering us through the declining demand during those months.

Thank you, Maury, and good morning, everyone. We are fortunate that our model and history of flying domestic leisure customers, we don't have to sit here today and predict the timing of vaccination rollouts. We are all aware of the benefits and future upside, but the air events were happening beyond our control. We have been laser-focused on what we can control, which is cost, capacity, capital, and network, which leads to deleveraging and balance sheet improvement. Without giving specific guide, I thought it might be helpful to provide some directional data points to help you understand how we see things in 2021. These directional guides assume no significant changes to the environment we are operating in today. With all the hard work and difficult decisions, we have pulled roughly $75 million in structural changes out of our cost structure, using 2019 as the baseline, a difficult but impressive number especially for an ultra-low cost carrier. As a result, our CASM-X for full-year 2021 should be less than Q1 of 2021. Greg will provide some commentary on Q1 2021 CASM-X. Given that, our best results and margins are ahead of us not behind. On top of that, our interest expense will be lower in 2021 and 2022 than 2019. I don't think another airline can make such a statement. Our capacity will be up in every quarter in 2021 versus same quarter 2019. Drew, of course, will give a little more color on Q1 of 2021. We expect to be EPS positive in the first quarter of 2021. Our net debt each quarter end of 2021 will be less than year-end 2019. Again, all these directional guides assume no significant changes to the environment we are operating in today. In regards to the Sunseeker Resort, we will not invest any more meaningful capital. We remain incredible believers in the thesis and future opportunities and continue to explore other options including other equity investors and/or non-recourse project financing. The resort is far more valuable built out and provides greater flexibility and more option than how it sits today.

Thanks, John. In 2020, our commercial approach continued to stay disciplined by executing against our data-driven recovery road map, which enabled us to do multiple things. We reduced marketing costs while still capturing a disproportionately high share of the leisure travel demand that did exist in the markets we serve. We continued building out transformational capabilities in the digital commerce and customer loyalty areas and ultimately, we laid the groundwork to enter 2021 well-equipped to drive a faster and stronger recovery in the post-pandemic leisure travel era. Our direct-to-customer distribution model continues to allow us to stay close to what our customers are saying and how our customers are behaving. As recently as Sunday, more than half of the customers who responded to our weekly survey said they plan to travel this spring and nearly two-thirds said they plan to travel this summer. While we appreciate that the situation and customer sentiment will continue to be fluid, it's noteworthy that flight searches at allegiant.com for the next month for key spring break weeks and for Memorial Day week are near or above prior year levels overall. And both searches and bookings continue to show relative strength for destination like the beaches along Florida's West Coast in Panhandle as well as other small and mid-sized cities nationwide that service gateways to national parks and outdoor recreation, what we marketed as non-stop in nature.

Thank you, Scott, and thanks everyone for joining us this afternoon. All things considered, I'm very pleased with the cadence of revenue results from the depths of the pandemic, especially considering the level of flying we've been able to maintain. Our yield and load factor metrics steadily improved over the third quarter and in absolute terms, our fourth quarter revenue performance of down 46.5% year-over-year was about 7.5 points better than the third quarter. We are further encouraged by our ancillary portfolio remaining in line with prior year and per passenger was down just 0.75% for the quarter, while 2020 was up 3% year-over-year. Our fourth quarter scheduled Service ASMs were down approximately 14%, as we flew heavily during the high demand weeks and cut significantly during the lower demand weeks, as mentioned in the previous call. This approach persists into the first quarter as January flight levels were quite low, while we are looking to fly decidedly more in the latter higher demand half of the quarter. Despite January ASMs being down roughly 15% versus 2019, we believe that first quarter ASMs will be between plus 0.5% and plus 5.5% versus 2019 level deploying. Our low-cost, high-flexibility model allows us to pull down capacity while setting us up well to operate when demand exists. As a matter of example, our typical Sunday has seen about 260 flights, while we haven't had a single scheduled Tuesday flight yet this year. Over the last several years, we have worked to increase resiliency through a diversified array of origination and destination profiles. Some of this is evident in the route expansion over the last 90 days with 36 routes and five new cities, including more non-traditional Allegiant destinations like Jackson Hole, Wyoming. This is assisted by the success of Scott D. and…

Thank you, Drew, and good afternoon, everyone. 2020 has truly reinforced our core belief and the incredible value of the flexibility inherent in our business model. Our low cost, low utilization model has allowed us to reasonably adapt to the unprecedented time of a low-fare low demand environment. On the fortunate side, we have benefited from the fact that flexibility has always been the bedrock of our model, but the pandemic environment has further highlighted its value. I think it's worth noting a few points to illustrate this. After adjusting for special charges and for the benefits of the CARES Act, we produced a full-year 2020 positive EBITDA of $35 million. Our full-year adjusted unitized cost decreased by 6% despite a decrease in capacity of 18%. These are pretty impressive full-year results given the circumstances. For the fourth quarter, our daily bookings averaged just under 2.5 million. This translates into $225 million in passenger revenue, sequentially this compares favorably with an increase of 23% quarter over the third quarter and a jump of more than 93% versus second quarter. While bookings ebbed and flowed throughout the fourth quarter, we are pleased to see strength as we moved into the peak holiday season. The result, we produced positive adjusted EBITDA, another key milestone we've reached on the road to recovery in the fourth quarter. We remain encouraged with recent trends of January averaged approximately 3.5 million in bookings per day with consistent improvements building throughout the month. On the cost front, our adjusted operating expense for the fourth quarter, which excludes special items was down 30% year-over-year despite a capacity reduction of only 15.6%. This translates into an adjusted CASM-X for the quarter of just over $0.0607, this is well below the $0.0674 averaged during the fourth quarter of 2019 and…

Thank you. Ladies and gentlemen, in the interest of time, we ask that you limit yourself to one question and one follow-up please. Our first question comes from the line of Joseph DeNardi with Stifel. Your line is open.

Great. Thank you. Maybe for Scott DeAngelo, there's been a lot of talk about pent-up demand. What are you seeing or hearing from your customers to support or maybe not support that notion. Are you asking customers whether they plan on devoting more wallet share travel post-COVID or that they'll travel more post-COVID than they did pre-COVID because they've been unable to? Are you seeing any of that or the opposite?

Yes. We're hearing that. When we survey, we do ask about the financial impact, the personal financial impact the pandemic has had, and the vast majority still say that they have either not have been impacted at all or only somewhat negatively impacted. And some of the items I quoted the fact that two-thirds are saying, they have summer travel plans or they plan to make summer travel and about half are seeing the spring break are all consistent with it. One other quick anecdotal data point, while obviously the city we live in Las Vegas, continues to get hit hard, our casino operators have commented that retail high-end dining, and other high-end experiences have actually been well up over prior year suggesting maybe the tip of the iceberg on some of this forced savings as well as some of the psychology behind going on a year of realizing how valuable it is to have the ability to travel and spend freely.

Okay. That's helpful. And then maybe a follow-up for Scott Sheldon and Greg. I think pre-COVID, the thinking was going to induct 10 airplanes a year at most. I'm wondering if given the opportunities you're seeing in some of the favorable pricing, if you could accelerate that or if you're going to stick to kind of the 10 cap? And then Greg, were you saying that to get to a five-handle on CASM-X, you would need to fly 120% of 2019 capacity. Is that what you meant? Thank you.

Yes. I'll kick it off there and I'll start with the last question there first, Joe. But yes, that's if you were to take and kind of max up the fleet on like a normal utilization profile, but yes, so that'd probably be about 120% of 2019 capacity would get you down into the low 6s or potentially a five-handle. And in terms of induction aircraft, I mean we were certainly capable of inducting more than 10 aircraft per year. That's been a good rule of thumb for growth for us, 10% to 15% I think just generally. But what I'd say is we'll be opportunistic in the markets like this, where there is the opportunity potentially to buy or acquire aircraft at good prices, and Drew and team have the ability to deploy those aircraft, and we can flex that up and we feel good about that and we have the infrastructure to support it.

Got it. Thank you.

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

Close enough. Thanks for the time. It's the gift that keeps on giving. Can you just repeat what you said about the first quarter CASM and then just generally to get CASM down in the fourth quarter on this level of capacity and appreciate you're a lower utilization airline to begin with, but like how do you do that? What are the reasons that Allegiant can get down CASM relative to 2019 on capacity that's down?

Sure. Duane, this is Greg. I'll take that. And maybe I'll start on the first quarter CASM-X. And the reason that's going to be top year, the highest quarter we think in the year is really given that with the PSP2 and bringing back the labor that we're going to need to bring back, not only the pilots, but we continue to pay the management folks that were also moving – or that moved on. So that's going to put a burden there, so it's going to put a headwind there I should say. On top of that, you may recall or you may not, I can't remember if I've mentioned this in earnings call, but typically in the first quarter, we recognized an expense for all our PTO for our crew members based on the rules and their CDA agreements, and that's roughly $10 million in and of itself, so it puts some pressure on the first quarter there for that. And then I think as you're just starting to mobilize and get ready to fly, as you're running aircraft through induction and just getting things going, there are some headwinds I guess reinvestments, if you will, back into the business and that will start taking place in the first quarter along with training and things like that. On your fourth quarter comment, it's a good question, Duane, and I think the way I've been thinking about it, it's almost just like this intersection at this point in time. On the fourth quarter, we didn't have the incremental labor, right. We had that out because the CARES Act had fallen off there. And we ran just all discretionary expense throughout. What I would say is that's just unique and as we think about the future and we think about positioning ourselves for growth, both short-term and long-term, you have to have a scalable sense – scalable type of infrastructure in there to support that growth. And so you have to spend a buck to make a couple of bucks. And so I would just – that fourth quarter again, that was an anomaly. We went back and we pulled out all discretionary expenses, but I wouldn't use that as like a run rate going forward, if that makes sense.

Does make sense. And then just for my follow-up maybe for Scott and Maury both, as you look at your portfolio of big focus destinations, who do you think is doing the best job of giving people a reason to travel, right, like we are here in the New York area, once upon a time that was a big leisure destination, you can have various opinions, but I argue maybe New York is not the best advocate for giving people a reason to travel here, whether it's Vegas or just Mother Nature as you highlighted, what are the destinations that are doing the best job of giving folks a reason to travel again?

Well, I'll give a high level. Scott may have more detail, but you've got to point to Florida. All your – with the international travel now that's been forced to have a test coming back, where your Latin American, your Caribbean, our testing is difficult, it's not impossible to get down there, you've got people wanting to get away the traditional spring break is coming up, Florida is the place to go, California is usually historically a good place, but it had a lot of don't come here types of messages going out, albeit they're getting better. Las Vegas is – it's still shut down for lack of a better description and interesting stat I heard the Highway-15 is back to its full numbers compared to a year ago. So coming out from LA, people want to move. We did a little analysis, where you took the bell curve of the population aged and you get from 18 to 50 is what 65% of the people in this country and you know stuff about COVID now, you know friends that have had it, may have known unfortunately someone who passed away from it, but you don't worry that much as the sense I'm getting, if you're a 30-year-old that you're going to get it. You get it, you have a cold, you move on and they just don't want to be locked down. It's human nature. We're social animals. We want to move. I was with some people from premier car manufacturer here recently and they had a, oh my God, fourth quarter and I asked them why. So, the simple as it is, people have all this extra money if they're not spending on travel going out to eat, all the stuff you used to consume money on, it's burning a hole in your pocket, so we bought a lot of cars. So, these things are going to revert back to the norm, which is leisure traffic and leisure travel and that's why I think we are so well positioned. Business traffic, I'm not in that business, but I wouldn't want to be on a business and trying to make that model come back quickly, Scott?

Yes. I would just simply add to that I think Las Vegas is doing a good job of laying the foundation from a health and safety perspective, because the eye is more on getting the big conventions back like the CES et cetera., but I would double down a lot more instead. Florida and specifically in these light visit Florida, visit St. Pete's Clearwater, Sarasota have been very actively and structurally partnering with airlines like us to go out and co-market together the part I mentioned about that was specifically related to those partners and others like them that beyond the health and safety and all the things required to operate are making an aggressive push to once again attract vacationers to their destinations.

Appreciate the thoughts.

Thank you.

Thank you. Our next question comes from the line of Savi Syth with Raymond James. Your line is open.

Thank you. Hey, good afternoon everyone. Greg, if I might, I know you're not looking at cash burn, but I know you've kind of talked to operating cash flow and you've given a lot of kind of items for us to think about, but just wondering if you could provide a little bit more color on just how much of ticket sales are cash versus vouchers, the ATL seems pretty high on our voucher basis and then what level of booking, you need to see kind of to get that EBITDA breakeven or better?

Sure, Savi. Let me kick it off and Drew may want to add some stuff on the voucher redemptions in ATL. But yes, what I'd say on ATL first is you probably didn't see or you probably noticed that we didn't reduce like as a percent of our outstanding ATL, the number of credit voucher. So I think in the third quarter, it was $220 million and I think in the fourth quarter, it was consistent. When you kind of peel that back a little bit and take a look what really happened in the fourth quarter is that you've seen, what we've seen is that there are still some issuances that are largely offsetting the redemption of the credit vouchers. So, but as we looked into the first quarter that trend, meaning the redemption of the credit vouchers is nicely outpacing the issuances or I should say in January. So we're burning that out and I think just in 2021, we'll continue to chew through that and then the one other thing I may add and then Drew wants to add some commentary, just to your kind of what we need to be EBITDA positive. I talked about the 3.5 million of what we're currently seeing and I want to highlight that's not inclusive of any voucher, so that's just true cash in the door. So that's what we're seeing there. And I think where we're at today, given some of the roll-off of the taxes, such as the FET taxes, the segment taxes and things from the CARES Act. They're now back in play in 2021. We've seen a spike in fuel, which is putting a little more headwind on your cash, I think you're probably closer to between 3 million, 3.5 million in daily bookings to get to that kind of EBITDA breakeven, give or take a little bit.

I think you've captured it.

Great. And then, if I might just quickly ask for a clarification on the fleet. So the fleet plan that was kind of provided in the release and that you talked about, does that include any aircraft in storage or is that just the plan kind of excludes anything kind of that's put in short-term storage?

So I'll take it. And yes, so what it does, Savi, is we – I think we talked about six aircraft in storage last quarter, three of those have already kind of run through the pipeline and are back in service, now as of the end of the year of 2020 and then yes, for that growth, I think what we're incremental 13 aircraft, three of those incremental aircraft in 2021 are the three additional storage aircraft coming back.

Okay. Perfect. All right. Thank you.

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

Thanks. Hi, everybody. Hey Maury, you have this vision of a travel sort of like ecosystem for Allegiant when you thought about Sunseeker, I'm kind of curious if the COVID crisis and then the thousand markets that you mentioned, does that open up enough growth for you organically, to the point where you're comfortable just focusing on the airline or is there still this draw to diversify the business because you just think it's sort of a good idea for your company anyway?

Well, it's hard to change the spots on a leopard, Hunter, again, long term, I just – it's proving to be just it's a huge number for us. We've done $1.7 billion of third-party revenue since 2002, of which we've made close to $550 million of operating income, pushing $600 million. So you can't say that that hasn't been a difference maker for us. We do things like we have no middleman between us and our customer. You have no Expedia charges, you have no branding charges, any of those types of things. Having said that, we're focused on the airline and we're not going to short change the airline whatsoever. We want to pick up and move as much as we can towards rental cars and hotels and we're doing a lot in the new website that we just opened and that's what we're using our strength in partnering. This whole reason for this Travel Company is we have a tool that no one else in this industry has. It's – we own our own res platform, we were the leaders in the 2000s in developing seating assignments and all the ancillary revenues and you can do that when you control the tool. So all these attributes in the add them up point towards a customer-oriented get as much wallet share as you can out of that customer and as we lead the industry in operating margin, and we've done it year in and year out because we have et cetera revenue. We have more revenue than the average carrier, who is fighting over that same person with those seats and who can commoditize it to a lower price or whatever. It's a business that we don't have a lot of separation, we have some certainly and we focus on a different customer than most at the leisure level, but you need differentiation and that we're different has been a constant use in our situation, so that's a long-winded answer there that basically says we're really focused on the airline now, we're going to grow this year, I think we said 19% something like that. There is opportunity and we're going to definitely take advantage of that. As far as Sunseeker goes, that's still on the backburner, it's something that is I think a good long-term strategy for us, but near term it's – let's keep our head down and take care of business here.

Hunter, the one thing I may add, we're not trying to guide the full year to 19% growth, simply that we have the ability to get there in the back half of the year, such that demand calls for that. So let's not run away with it.

All right, John. A follow-up for John. That land across the street from Sunseeker, how does the prospect of that getting developed impact how you're thinking about the valuation or the attractiveness of finding the equity partner and Sunseeker or selling the land to a third parties, is that factoring it at all, so the conversations that you're having?

No, not at all. I mean, all the people we're having conversations with, I would imagine most of them aren't even aware what may happen on the other side of the street to be honest with you. It's rather insignificant in the grant scheme of things. But no one's ever raised it or brought it up in my conversation.

Okay. Got it. Thank you.

You're welcome.

Thank you. Our next question comes from the line of Brandon Oglenski with Barclays. Your line is open.

Hey, good afternoon everyone and thanks for taking my question. I guess I do want to come back to the 20% comment and I realize you guys aren't guiding to full-year growth of that level, but I guess, can you give us some of the decision factors that would actually drive you to add that level of capacity in the network. Are we talking about EBITDAR margins that are matching prior levels or cash flow levels like, give us some insight into how those capacity additions would come on if they do?

Sure. This is Drew. I'm not necessarily setting EBITDA threshold at this point, but I'd like to get back to a point where certainly we're moving past just cash profitability on flights and thinking more expanded the gross margin perspective, I'm not baking in thoughts that future PSP is going to come online and crew costs are fairly a consideration as we move forward. So while I thought should have of given you specific threshold that it's more of a hopefully normalized perspective in terms of what is making money and what is best for the company and not just simply relying on cash profitability, because that's not something we can sustain for a long period.

Brandon, this is Greg. I might just add one quick data point to just the infrastructure for the 2021 growth was pretty much in place, right. Maybe not to the extent of the 19% growth in the back half, but if you think about it, we had – we have all the pilots and the crew to support it and then for the most part, we had the aircraft as well. So the large kind of infrastructure to support 2021 was in place.

Yes. Brandon, the results will definitely do, it's as simple as that.

Okay. I guess the question was just more around, is this where we should expect the network is going to grow, once you guys attain certain level of profitability. So we don't lose that returns focus long term, is that right?

Correct. Yes, I'm not – I don't think anyone here is trying to suggest that we're a long-term 20% company at this point, I think we see specific opportunity to Greg's point, we have infrastructure in place to be able to do this such that demand is there. So no by no means are we trying to reduce the margin profile of this company simply for the sake of growth, that's not at all the case.

And that's why Brandon, we threw out as well the EBITDA per aircraft to $6 million that we want to get back there to show the balance, if that's – that's our true north so to speak and I don't think we'll be there in 2021, but that's what we're looking at long-term, is to get back to that and now there are some positive catalyst to support that, that we think and that's what Maury said, he said, hey, you know that's our target, that's where we need to be economically and so we're keeping that in mind, as well.

Yes. Let me just clarify. We're not – Brandon, we're not going to grow just purely market share type of thing. One of the values I very much treasured is we keep our margins up, just to end up a bigger and cut our margins down by 30% or 40%, it's kind of like why you're doing that and there's plenty of real estate out there for us to look at longer-term, but this year to Greg's point we have infrastructure and ability to do it quicker, particularly in the first half of the year and we'll see where we go, all the numbers are pointing up, suggest we can go and do some things.

Okay. Thank you.

Thanks, Brandon.

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

Hey, good afternoon, everyone. I have just two here. One quick one, Greg, just the guide to positive EPS in the March quarter. What's the underlying fuel price range that you're using?

Yes. That's right now we're paying just about a $1.65 per gallon and it maybe worth just clarifying too, that would include that the GAAP number, so I think that would include the benefit from the PSP, which for us, Michael is $92 million all recognized in the first quarter as an offset.

Okay. Great. And then, second question it's probably to Drew and because – and maybe even Maury because he sort of mentioned it talking about the model and really flying during peak periods or peak days and not flying Tuesday's, Wednesday's, et cetera. When we look at the March quarter, excuse me, the March schedule, which I think you just loaded, there are city pairs where expect several or maybe even a decent number of city pairs, where you're operating what looks like maybe two and even in some cases three daily flights and I realize that that could be that you have Sundays or Fridays, where you're flying three or four, but the fact is it's a type of frequency that we just, we haven't seen in the past and knowing that March and especially to places like Florida can be a strong – a strong time for Allegiant, I'm just – I'm curious, you know, is this striking when the iron is hot, are you sort of deviating away – maybe I shouldn't say deviating away, but sort of expanding upon your peak strategy that you've used in the past, because I did think it was quite interesting to see the type of frequency ads in some of these markets. Thanks.

Yes. Drew here, you can certainly look historically and find those markets, where we have operated more than two times daily. I think one of the things I'm pretty keen on and my team can dodge with it is ensuring that we are rightsizing frequencies on the markets that can that can take it and so you won't see that specifically in the peak periods where there is a more resilient demand profile and we're looking to capitalize on that and part of the wide net strategy right is putting that out there, and it's a lot easier to be able to regain the customer and then you have to cancel to another fight on the same day – I think we have a little bit more flexibility as it pertains to that as well to where the wider net can be even more successful during these peak periods looking forward. So I have every intention of operating all of those on some of our thicker markets in the best of periods, but we will remain flexible in the event we need to pull down a little bit in demand in manifests quite in the way we expect it to.

Very good. Thanks, Drew.

Thank you. Our next question comes from the line of Darryl Genovesi with Vertical Research Partners. Your line is open.

Hey everybody, thanks for the time. Hey, Maury, back on your third quarter conference call in October, you talked a lot about – how important it is for customers to fly direct in this environment, how much more that's the case then it was pre-pandemic, can you or Scott DeAngelo based on your survey work help us understand is how much of an opportunity that is for you. And I guess, in particular, if I might just offer this question as a guide, do you think that the desire to go direct can meaningfully influence the passengers' O and D, specifically to markets that you serve direct versus those that you don't?

Yes. So I'll give it a start. Thanks for the question. The answer is we continue to push non-stop both as health and safety benefits and not go into crowded hubs, but the reality is, it has been high, it remains the key distinction point and I'll tell you, as you may have seen in charts I showed during Investor Day, it's the reason we share a lot of customers with Delta and Cincinnati, because while they might fly one for business on their own money, they'll be happy to flying to Sanford to take the family to Universal Orlando or Walt Disney World and then same thing happened in May, rather than where they might fly business the Sky Harbor. We continue to see that and that continues to be distinctive point. I can't speak how much of that is the health benefit they proceed versus just the convenience, but there's no doubt that it remains a high reason that we share customers with a lot of other airlines that you wouldn't think would mix, just because on the leisure dollar and on their leisure time they want to get there nonstop.

Okay. Thanks for that. And then I guess my sense, Greg, is that the fourth quarter CASM-X number came in a little bit better than you might have expected and just listening you talk about 2021, the outlook sounds perhaps a little bit more optimistic than what we heard from you in Q3, is there – and your $75 million number is the same. So I guess is there something about the more discretionary pieces of your cost profile that are perhaps coming a little bit better, both in the fourth quarter and into 2021?

Hey, Darryl. Thanks for the question. And, yes, I think it's fair. I was pleasantly surprised before we came in on the fourth quarter of this year, but there were some items there that some benefits that we saw maybe it's one-time in nature too like we had a some insurance proceeds that came in for an event in that was helpful as well. But as we think about it in the $75 million in structural cost savings, I think that's worth about 0.5% in CASM-X, on a full year thereabouts and so that's obviously helpful but we – I think what's giving us more conviction to come out and talk about that is just, we have more line of sight on what potential capacity could be and that's kind of the other driver in us getting down into the – to the low 6-handle kind of range. And so, I think that's giving us a little more confidence or conviction behind it. I'd just leave it at that. I guess.

Okay. Great. Thanks a lot guys.

Thank you. Ladies and gentlemen, in the interest of time, I will now turn the call back over to management for closing remarks.

Thank you all very much. Appreciate your interest and we'll talk to you after another 90 days. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.