Delta Air Lines Inc (DAL) — Q1 2025 Earnings Call Transcript

Thank you, Matthew. Good morning everyone, and thank you for joining us. On today's call, we will hear from our CEO, Ed Bastian; our President, Glen Hauenstein; and our CFO, Dan Janki. Ed will open the call with an overview of Delta's performance and strategy, Glen will provide an update on the revenue environment and Dan will discuss costs and our balance sheet. After the prepared remarks, we will take analyst questions. We please ask that you limit yourself to one question and a brief follow-up, so we can get to as many of you as possible. After the analyst Q&A, we'll move to our media questions. Today's discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Some of the factors that may cause such differences are described in Delta's SEC filings. We'll also discuss non-GAAP financial measures, and all results exclude special items unless otherwise noted. You can find a reconciliation of our non-GAAP measures on the IR's website at ir.delta.com. And with that, I'll turn the call over to Ed.

Well, thank you, Julie. Good morning, everyone. We appreciate you joining us today. Earlier this morning, we reported our first quarter results, posting pre-tax earnings of $382 million or $0.46 per share, which is flat to last year. Revenue was 3.3% higher than prior year, a new record for the March quarter, and operating margin was approximately 5%. We delivered free cash flow of $1.3 billion and a double-digit return on invested capital. Despite a choppy start to the year, I'm proud of our team for delivering solid profitability and strong returns that are expected to lead our industry. Operationally, we delivered leading on-time performance and system completion factor among our network peers. I would like to thank our people for their outstanding performance and hard work during the quarter, especially with the severe weather that we experienced across the country at the start of the year. The Delta people will always be our #1 competitive advantage and sharing our success is essential to our culture and our values. In February, we celebrated their well-earned profit-sharing payout of $1.4 billion, recognizing 2024s performance. Fortune Magazine recently recognized our people-first culture, ranking Delta the #15 company on their list of the 100 best companies to work for. Turning to demand and consistent with our update last month, February and March reflected a much more challenging macro environment than anyone initially planned for. Coming into 2025, we are positioned for another year of strong growth. However, given broad economic uncertainty around global trade, growth has largely stalled. The impact has been most pronounced in domestic and specifically in the Main Cabin, with softness in both consumer and corporate travel. While not immune in this environment, we do continue to see greater resilience in international and our diversified revenue streams, including Premium and Loyalty, reflecting the underlying strength of our core consumer. In this uncertain environment, our focus is taking action on those areas we can control, protecting margins and free cash flow. Our largest cost and lever is capacity, and we are making plans to keep our second-half capacity growth flat over last year, with domestic Main Cabin seats declining as we align supply to demand. Cost management remains an important tool to protect margins, and we are aggressively managing our cost base to reflect the lower level of flying and deliver on our commitment of low single-digit growth in non-fuel unit costs. And as always, the best way to ensure efficient and effective cost management is to leverage Delta's world-class reliability and premium service to our customers, at which our people are the very best in the business. The start of these actions is reflected in our June quarter outlook for double-digit operating margins and pretax income of $1.5 billion to $2 billion on revenue that is essentially flat to last year. Given the broad macro uncertainty, it is premature to project the full year, so we are not providing an updated full-year outlook at this time. However, with the actions we are taking and where fuel prices currently sit, Delta is well positioned to deliver solid profitability and meaningful cash flow in 2025. Over the last 15 years, we've worked to diversify our business and differentiate ourselves from the industry. During periods of heightened uncertainty, our differentiators and structural advantages become even more apparent, helping to insulate our business and create durability in our financial performance. No matter the environment, we manage our business for margins, cash flow, and returns. And with our bias to action and our position of strength, I expect our financial results will continue to lead the industry. And this year, proved to be another validation of our strategy, as we create differentiation and demonstrate financial durability. Thank you again for joining us. And with that, let me turn the call over to Glen and Dan to go through the details of the quarter and outlook and the actions that we are taking.

Thank you, Ed, and good morning. I want to start by thanking our employees for providing the best service and reliability in the industry to our customers every single day. March quarter revenue was $13 billion, 3.3% higher than last year, with unit revenues declining 1%. January unit revenue growth was solidly positive and in line with our expectations. As consumers and business confidence moderated, unit revenue trends stepped down in February and again in March, with stabilization as we exited the quarter. Through the quarter, diverse high-margin revenue streams showed resilience, growing at mid-single digits year-on-year to reach nearly 60% of total revenue. Premium and loyalty revenue were both up approximately 7% over the prior year. Remuneration from American Express grew 13% to $2 billion, driven by co-brand spend and acquisitions. Revenue from our travel products portfolio grew by 7%. Cargo revenue increased 17% year-over-year on higher yields and double-digit volume growth and MRO revenue grew 7% on heavier engine work scopes. From a geographic perspective, domestic revenue grew 1%, impacted by demand softness in the main cabin. International revenue growth was 7% on solidly positive unit revenue over prior year. Transatlantic revenue grew 5% with unit revenue strength driven by premium products and network optimization. The Pacific also performed well, up 16% year-over-year with modestly positive unit revenue growth on double-digit capacity growth, driven by strong demand to Japan and into Seoul as our partnership with Korean Airlines matures. Latin grew revenue 5% on modestly negative unit revenue and now turning to our June quarter outlook. Given the recency of last week's policy changes and market moves, it is early to assess the impact on consumer and corporate travel demand. For the June quarter, we expect 2Q revenue to be down 2% to up 2% over the prior year. Consumers remain cautious and corporate travel trends are choppy with overall corporate volumes currently expected to be flattish over last year, similar to what we saw in March. Main Cabin demand softness in both domestic and international is persisting, particularly in off-peak times. Premium, Loyalty, and International are continuing to show greater resilience. Internationally, approximately 80% of revenues are U.S. point of origin with bookings remaining strong for the peak summer period. The strength of our brand and quality of our offering are enabling us to drive strong load factors, attract new SkyMiles members, and continue to grow our valuable American Express co-brand program. With more moderate demand growth, we are reducing expected capacity growth in the second half of the year to flat over last year to align supply with demand and optimize margins in this environment. We are prudently using our available levers to efficiently manage where and how we fly, focusing on where we have seen the most weakness. With these changes, our main cabin seat growth will be down year-over-year in the second half. At the same time, we are executing on our multi-year commercial priorities outlined at our November Investor Day that support our long-term margin expansion by continuing to make the right investments in the customer experience and diversify our revenue stream. Yesterday, we announced a significant milestone for our maintenance, repair, and overhaul business with a 10-year agreement with UPS. This is an exciting win for our MRO team and supports long-term revenue diversification and growth. In closing, while this year has started differently than we expected, we are taking action and leveraging our advantages while staying true to our long-term strategy. And with that, I'll turn it over to Dan to talk about the financials.

Thank you, Glen, and good morning to everyone. For the March quarter, we delivered pretax income of $382 million with an operating margin of 4.6%. Earnings of $0.46 per share were flat to last year despite a more challenging macro environment than we anticipated as we started the year. Non-fuel unit costs were up 2.6% over last year, which was better than our initial expectations and roughly 1 point better sequentially, despite elevated winter weather early in the quarter, as the teams continued to deliver on efficiency. Fuel prices were $2.45 per gallon, approximately $0.03 higher than our initial expectations, including breakeven contribution from the refinery. We generated free cash flow of $1.3 billion after paying $1.4 billion in profit share to our employees and investing $1.2 billion back into the business. On debt, we repaid $530 million, ending the quarter with gross leverage of 2.6 times. Recognizing the strength of our investment-grade balance sheet, Moody's further upgraded Delta's rating during the quarter, our third credit upgrade in eight months representing Delta's highest credit quality in decades. Moving to the outlook. For the June quarter, we expect an operating margin of 11% to 14% and earnings of $1.70 to $2.30 per share. Non-fuel unit cost growth in the June quarter is expected to be up low single digits year-over-year with performance similar to the March quarter. As we reduce expected capacity growth this year, we are managing our cost base to deliver on our long-term target of up low single-digit non-fuel unit cost growth. On the fleet, we now expect our net aircraft additions this year to be less than 1%, with 10 or fewer incremental aircraft, as we manage both retirement and deliveries. Lower growth and accelerate aircraft retirements will drive incremental maintenance savings. Additionally, we are adjusting plans around our workforce and supplier base to align to lower growth levels. For the full year, we now expect our workforce to be below levels of last year on natural attrition. While it's still early and there is much to play out for the year, we continue to adjust to the evolving environment by aligning supply and demand and managing our cost to protect margins and cash flow. Durable cash flow is an important differentiator for Delta. It enables us to derisk the business by further fortifying our balance sheet and growing unencumbered assets to the highest level in our history. We continue to expect to repay at least $3 billion of debt this year, and we'll be opportunistic on our highest cost debt through repayments or refinancing. In closing, Delta's decade-plus commitment to our consistent strategy, investment, and execution has created a differentiated and durable business that positions us to navigate periods of uncertainty. Over the medium to long-term, we continue to see secular tailwinds for our industry and are confident in delivering on our three-year to five-year financial framework. And with that, I'll turn it back to Julie for Q&A.

Thank you, Dan. Matthew, can you please remind the analysts how to queue-up for a question and then go to our first analyst question from Conor Cunningham at Melius Research.

Hi, everyone. Thank you. I was hoping you could provide some context just to the high and the low end of the guidance in the second quarter. Glen, you mentioned stabilizing transacting the quarter, but then noted the policy changes. So we're just trying to figure out how the weakness you're seeing in the price-sensitive U.S. domestic market doesn't eventually bleed over to International and Premium, as you guys highlighted those areas of strength. Thank you.

Well, Conor, I think that's something we are all watching very closely. We know that approximately $5 trillion of wealth has been wiped off the books, but we are still about $32 billion higher than we were in 2019 in terms of the affluent cohort's wealth factor. So while we are monitoring the situation, we haven't seen any negative impact yet, and we continue to experience strong cash sales, particularly for long-haul travel. We are aware of the current market conditions and are paying closer attention to demand than ever before.

Okay. And then bigger picture, does the slowdown change your view just on the long-term industry structure? Just trying to understand how your conviction level has changed with demand weakening? And just if your priorities are shifting at all as you look like over the next couple of years? Thank you.

Thanks, Conor, this is Ed. I'll take that. Obviously, in this environment, there is not a lot you can say in the next year or two without having some better clarity as to how the tariff skirmishes end up. But what I can tell you is that for the last 20 years every time that we've had any level of economic dislocation, Delta has been advantaged. Delta has done the right things a step forward and has been opportunistic. And if you compare where Delta was 20 years ago to where Delta is today, there is no comparison. So I would anticipate there will be opportunities during this bump in the road. We are not quite sure how long it's going to be, but I'm confident that it's not going to be elongated. And you can expect that the strong will get stronger.

Hi, good morning, everyone. Maybe first question, just kind of a few quick ones here just on the capacity cuts that you talked about. I guess first, when we look at the 2Q schedules, are those set right now? Should we expect any changes there? And then second, just on the back half cuts, should those start over the summer? Or is this something that you are thinking about kind of post Labor Day? And any color you can give geographically would be helpful as well. Thank you.

Well, we are working through these cuts as we speak. And I think what we would say is that 2Q is largely intact; there may be some trimming around the edges, but largely intact. 3Q, we have a very different disparity in terms of what is traveling post August 15. With the South continuing to go back to school earlier and earlier and with Florida being a big component of our network, August demands are much lower, and August is no longer a peak month for Delta's travel. So we will be trimming starting in August and moving through the rest of the year, not waiting for Labor Day. And those trims in August will be concentrated in the Southeast where the schools go back earlier. Other than that, I think that's all the color we are going to give right now other than to say that we are monitoring this every day, and we're going to take out capacity that has high recapture and that will improve our profitability and our margins moving forward.

Great. That's helpful, Glen. And then maybe as a follow-up, kind of in a recessionary environment, can you maybe talk to how the different demand cohorts have performed maybe Corporate Premium, Main Cabin, International. I know every downturn is different, but what have you learned from history? Thank you.

I'm going to address this point as well. I believe we've never had premium make up a larger percentage of our total revenues as it does now, as I mentioned earlier. What impresses me is that we continue to enhance our ability to sell those tickets, which has shown great resilience. While certain segments of our business are currently facing challenges, primarily in the Main Cabin lower end, we have yet to see any issues in the Premium area. We are optimistic that, as we navigate this together, the Premium segment remains strong, especially as we provide more opportunities for customers to access the front cabin than ever before. Whether using base fares and miles or just miles themselves, the intention to repurchase is very high, and we aren’t seeing people downgrade even during a recession.

Good morning, everyone. Thanks for the time. My first question is for Dan. So you're cutting capacity in the back half, and based on 1Q actual and 2Q schedule, give or take, I think that means you'll increase capacity closer to 2% this year. So about 1-point below the low end of your initial guide makes a lot of sense, given the uncertainty. But you are maintaining your CASM-Ex outlook. You called out attrition and maintenance in your prepared remarks, but can you just give us some examples of where you have the ability to get cost out of the system this year?

Yes. As we evaluate capacity, we are always assessing areas of demand softness identified by Glen and the commercial team, while also focusing on our highest cost capacity. Initially, we look at direct flying costs related to our crews, which are eliminated as we reduce flying hours. We also consider maintenance cycles and the timing of maintenance to determine which may be heavier. Regarding airport operations, it is essential to align labor hours with the new volume levels, whether on a daily or hourly basis, making the necessary adjustments. Our supplier base allows us to be more aggressive in this environment of lower or no growth, which supports all activities across the company. Additionally, we aim to identify and manage non-value-added costs, ensuring that the workforce is appropriately managed, and we have discretionary spending options that can be evaluated on a line-by-line basis. All of these factors give us confidence that as we reduce capacity, we will also address the incremental costs.

And Catie, this is Ed. One other thing I'd add to Dan's comments is that we are announcing and making this decision now, so that we have several months to ensure we stay ahead of scheduling.

Matthew, we can now go to our next analyst question Duane Pfennigwerth from Evercore.

Hi, thanks. Just on the capacity cuts, maybe you've touched on this, but what regions, if you had to guess now, will you be most focused on? And what fleet types as we think about maybe retirements would you be most focused on?

Most focused on domestic main cabin in off-peak time channels for domestic Main Cabin. This would be our first line of defense. Then again, accelerating retirements on the older airplanes.

Consistent with our previous approach, you will notice the 75s are present in some of the older 319s and 320s.

Okay. And then on loyalty, if you can disaggregate that a little bit for us, kind of on a same-store sales basis, how are you seeing card spend? And how much of the double-digit growth is being driven by card growth versus card spend in the current environment? Thanks for taking the questions.

Good one. Most of it is driven by spend growth. Acquisitions account for probably three to four points of the double-digit improvement. But the vast majority is due from existing card members spending more on our cards. And what's exciting about that is even through. We have the swipes up through yesterday, and they seem to be holding up. So we don't have the revenue associated with it, but the transaction numbers are still remaining at these elevated levels. So, hopefully, that stays intact as well.

Hi, good morning. I got two here for Glen. Glen, can you just talk about how bookings have trended over the last week or so, presumably, they took a hit. And are you actually seeing a notable increase in cancellations? Tickets that have been booked where maybe people are backing away.

Initially, we experienced a slight decline, but it only lasted for about a day or a day and a half. As of today and yesterday, our sales have surpassed last year's figures. This indicates that we are seeing strong demand recently. Last year's sales at this time were high, following Easter. We haven't noticed any significant effects on cash sales yet, but we are closely monitoring the situation to see if any trends decline. Additionally, there has not been a notable increase in refunds.

Okay, great. As you consider the booking curve, I'm curious about two things. First, how much of the Transatlantic bookings are secured for the summer, or perhaps I should ask about international bookings more generally. Also, in the previous quarter, you made some adjustments to your pricing approach for the bookings due to a lack of strength in closer-in reservations. Are you noticing any improvement from those pricing changes, or is it still a work in progress? Thank you for answering my questions.

Sure. I believe those are essentially the same question expressed differently. The booking curve has indeed changed and extended further out, which resulted in empty seats at the end of the curve back in February and March. As a response, we adjusted our approach to secure more bookings earlier to address the weakness in close-in demand. Coming into April, we managed to go in slightly ahead after being a couple of points behind in February and March. We aim to further improve this as we transition into May, June, and July. Currently, we are focused on enhancing our load factor until we reach our desired levels. We are actively working on correcting the issues with the booking curve changes. And international on the books, April is well over 90%. May is in the 80s, June is in the 70s, and so international is well booked for the early part of the summer and spring.

Hi, thanks so much for the time. There is a debate about trade-down in this environment and I think the low-cost carriers often say that they should see a share gains. But I feel like given your evolution with revenue segmentation, and the carrot and stick that you have with the loyalty program and the global network, I feel like Delta and other legacy carriers are better positioned for the retained share in this environment, but I'd like to get your view on trade down on the broader competitive environment in the demand flow now?

We are very excited because our brand is so strong, and demand for Delta is very high. And so when we have seats that become available at the lower-end, I think we have what we call first call on those customers. And so as we think about that, that probably puts more pressure at the bottom-end carriers than you would think at the surface. So we will run full. We might run, and as we did even through the great recession, but we might run at slightly lower yields, which I think puts a lot of pressure on them. And then, Glen, if you look at historically in a downturn, International can be down more than domestic. And I know there’s been some questions about this, but that's not happening yet. Do you think that's just the longer booking curve for international that you talked about? And this is bound to get worse in the second half of the year, maybe that speaks to the lack of full-year uncertainty or do you think there is a reason why international just holds up better this time? Well, I'm going to go out on a limb here and say the reason I don't see it right now is that we monitor cash sales by entity every day. And those cash sales that are coming in the door as of yesterday that we are recording today as cash are very strong for international through the summer all the way out to September, October. So we are actually up significantly in transatlantic, for example, in cash sales year-over-year. So you would think that's the first line of – it is not just the booking curve, it's people's intent to travel in the future. So again, uncharted territories, this is kind of I think, what many people are characterizing as a self-imposed issue in terms of uncertainty, and we'll see how it resolves itself. The other thing I would say is that the cohort that is traveling right now has an average age in Delta One in the 60s, which means the baby boomers are traveling. And being a baby boomer, I can say this without fear of retribution, there is only so much time to go to Europe or almost so much time to go see Australia or Japan, and so you've got this wealth effect where this cohort of retirees is wealthier than any other cohort even with the most recent rundown, and they want to go do things.

I want to add a few points to what Glen mentioned, Scott. Since 2019, we've pointed out several times that our core customer primarily consists of individuals with annual household earnings of $100,000 or more, representing 40% of U.S. households. This is not an elitist perspective. This group has accumulated $35 trillion in overall wealth since 2019 from their real estate and market investments. Despite the recent market pullback of $5 billion to $7 trillion, I understand the concerns individuals may have. However, I believe they will prioritize their spending even more. The trend of wanting experiences rather than possessions is likely to remain strong. This is reflected in our booking data, our American Express data, the premium product category, and is what Delta excels in. While we acknowledge the challenges linked to the overall economy, I feel this situation is somewhat different. As Glen mentioned, we will monitor it closely, and I anticipate that we will gain new insights during this time.

Thank you, guys.

Hi, good morning everyone. Glen, does the booking curve for Premium differ meaningfully from that of Main Cabin?

Not significantly.

Okay. Perfect. And look, most of my RASM and CASM questions have been addressed, but I do have a question for Ed. Obviously, there have been a lot of new hires post-COVID, that put some strain on operations in the past. And so for some portion of your workforce this is going to be their first crisis or downturn or bump in the road, however you want to characterize it. Does that change how you personally Ed, think about managing the business day-to-day? I'm just trying to think through the implication of lower profit sharing this year relative to last year, whether that feeds through to operations or customer service or anything like that? And any thoughts on how you might be managing the workforce differently?

That's an interesting question, Jamie. I don't think so. I mean, obviously, we will take action. We're not planning on any involuntary actions at all at this point. But I think we have enough tools and levers in terms of manpower planning and schedule flexibility and opportunities as we demonstrated during COVID, to get meaningful cost out in a relatively short basis using voluntary measures. A lot of the new hires that you referred to that joined us on the front lines actually came from the industry from other airlines because they always wanted to get to Delta. So these are people that do appreciate that this industry can get and bump into turbulence. I can tell you virtually every time I speak with our frontline teams, and that's probably just about every day. I always remind them that while we may be doing well, this is a very humbling industry. And all we know is what we can see for the moment, and we always have to be prepared to make change. And when change happens, that's the opportunity for Delta to differentiate itself. So, I don't look forward to this opportunity, but I'm confident the Delta team will rise to the occasion.

Hi, good morning. And thanks for taking the question. So Ed or Glen, I mean, I know this year is different with our self-inflicted liberation tariff wounds here. But if I just rewind the tape for the industry, I feel like the last three years, we've been talking about off-peak weakness and that's through what's been pretty much a growing economy in the past few years. So I guess at what point does the industry say, we really have to restructure the way we look at off-peak? Or is that just too challenging from a cost perspective for a network like yours?

The last few years have focused on revenue growth for the industry. When revenue increases, we enhance our off-peak time channels. Currently, we are overbuilt on Tuesdays and Wednesdays compared to last year and are performing better than American or United in that timeframe. This strategy serves as our defense during less profitable periods, as off-peak channels tend to struggle first. As we move into the second half of the year, we plan to adjust our focus from being over-indexed on these days to better align with expected demand. Tuesdays and Wednesdays have a high recapture potential, which makes them particularly valuable. The recapture rates for flights at different times, like a Friday evening versus a Tuesday morning, vary significantly. We are optimistic about leveraging opportunities in this challenging environment where low-margin options with high recapture rates are available.

Yes. I want to mention two things. We have discussed incremental retirements. Last year, we were in the low 20s, around 21, and this year it will be 30 or more. We expect less than 10 net additions. Overall, regarding maintenance, we are in a unique situation where last year marked a high point due to our volume and the opportunity to reduce that volume over multiple years. This is also influenced by the proficiency of our workforce, the industry's cycle times, and challenges related to material availability that affect turnaround times. When considering retirements and other factors, we will gain additional benefits. As we remove incremental flights, we'll focus on high-cost operations, which will lead to maintenance-related savings.

Matthew will now go to our final analyst question, Ravi Shanker from Morgan Stanley.

Great. Thanks for fitting in here. Maybe just to wrap up the call. If you can take a little bit of a step back here, can you just help us with what the anatomy of a downturn usually looks like? And is it normal to have growth slow to stalled growth and then flip to a decline? Or I'm just trying to get a sense of should we be pleased that like it's not worse than being stalled here? Or is that like pretty normal for an old run?

Ravi, having been here for 26 years, I've lived through most of the at least recent history, whether it's 9/11 or recession the period of time we saw during COVID. And they're all different. COVID, as you can remember, was dramatic. It happened overnight and it spread quickly, and it affected every part of our business. And one of the things that this team is quite good at is managing those positions of challenge. I've said oftentimes somewhat in jest that as airline managers were excellent in dealing with adversity, managing prosperities tends to be a problem for us sometimes. But we're good when trouble hits, and we are because we know where the levers are. We know what the actions to take, we close ranks quickly, and we may change. This right now, it's hard to know how this is going to play out, given that this is somewhat self-imposed. And I'm hopeful that that sanity will prevail and we'll move through this period of time on the global trade front relatively quickly. But we're prepared in any event to make sure that we protect Delta through this.

All right. Thanks, Ravi. That will wrap up the analyst portion of the call, and I'll now turn it over to Tim Mapes to start the media questions.

Thank you, Julie. Matthew, we adjusted the queue to accommodate a few media questions. Could you please clarify the process for queuing up and remind us about allowing one question and one follow-up? This way, we can maximize the number of questions we address in the limited time we have.

Thank you. Good morning. I wanted to see if you could be any more specific on your discussion with Airbus on not paying tariffs on new planes that you're taking this year. Is that sort of a negotiation? Or is that just a flat-out Delta position that you are not going to move off of? How does that play out?

Well, Mary, the tariff just went into effect this week, so it's still early. We'll be collaborating closely with Airbus, who are excellent partners and understand our viewpoint. Our stance is quite clear, and I don't feel the need to go into further detail. We hope this matter will be settled through trade discussions rather than through actions from Delta or Airbus. One important aspect to note is the imbalance in trade between the U.S. and Europe in the aerospace industry, where the U.S. exports six times more to Europe than Europe exports to the U.S. This is a crucial fact, and I hope our leaders in Washington are aware of it.

Great. Thank you. And if I could quickly ask, I believe that you said earlier that you were seeing some decline in International, Leisure in the Main Cabin. Is that correct? And if that is can you put any kind of a number of percentage on that?

We would say of the international, the Premium is outperforming Main Cabin and we have not put a number on that nor would we want to do that.

Hi, thanks so much. Just a follow-on to Mary's question quickly. Are you looking at deferring any deliveries until there is more clarity about the tariff situation or just because of the growth slowdown?

We will defer any deliveries that have a tariff on it.

Got it. Okay. And if I could ask one more, I know the investigation is still ongoing, but I'm curious if there's been anything that you've learned after the Toronto incident. Have you re-evaluated anything in terms of pilot training or your regional operations?

Hi, Alison, it's Peter Carter. So that investigation is ongoing. And I think you know we don't comment on ongoing investigations until the final reports come out.

Thanks, Ally. Matthew, if we could get one more in, maybe Leslie, we'll try to cut this right at 11:00, please.

Hi, thanks for taking my question. Back in November, you have said that the incoming Trump administration was likely going to be kind of a breadth of fresh air compared with the prior and that was regarding some of the consumer regulations that the Biden administration put in. Have you had any response from the Trump administration on reversing any of those rules?

Yeah. This is Peter again. So in fact, the Trump administration has issued an order that in essence is freezing many of those proposed regulations. And so we are hopeful that many of those end up being put aside for the long term.

Thank you, Leslie. Matthew, that will conclude our session today. Thank you, if you want to conclude the call.