Southwest Airlines Company

Good day and welcome to the Southwest Airlines fourth quarter in annual 2020 conference call. My name is Chad and I will be moderating today's call. This call is being recorded and a replay will be available on southwest.com in the investor relations section. After today's prepared remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. At this time, I'd like to turn the call over to Mr. Ryan Martinez, Managing Director of Investor Relations. Please go ahead, sir.

Thank you, Chad, and I appreciate everyone joining us for our call today. In just a moment, we will share our prepared remarks and then open it up for Q&A. First, you will hear a comprehensive update from our Chairman of the Board and CEO, Gary Kelly, Chief Operating Officer, Mike Vandiven, our President, Tom Nealon, and Executive Vice President and CFO, Tammy Romo. A few reminders. We will make forward-looking statements today, which are based on our current expectations of future performance, and our actual results could differ substantially from these expectations. And we also had several special items in our fourth quarter results, which we excluded from our trends for non-GAAP purposes, and we will reference those non-GAAP results in our remarks. And we have more information in our press release this morning regarding forward-looking statements, non-GAAP reconciliations to GAAP results, and other important risk factors. You can find our release and other helpful resources on our investor relations website. So let's get started, and I will turn it over to Gary.

Thank you, Ryan, and good morning, everybody, and thanks for joining us for our fourth quarter 2020 call. We closed out the year as expected with no surprises, and even Southwest is not immune to COVID-19, and we recognized our first annual loss since 1972. It was a big one, and with non-GAAP losses coming in at $3.5 billion. Having said that, we were and remain very well prepared to weather this continuing storm, and especially important is that we want to emerge on top in the airline industry. We have the strongest liquidity. We have $14.3 billion, including $13.3 billion in cash and equivalents. $12 billion in unencumbered assets, and that doesn't include our frequent flyer program. We have the strongest balance sheet, and pre-pandemic debt to total capital was a company record low at 24%. We have investment-grade credit ratings, and we have cash well in excess of our outstanding debt. Third, we have the best business model. We have an unprecedented run of 47 years of profitability, and that was built on low costs and low fares. and coupled with great service. And that, in turn, has resulted in unprecedented job security, especially unprecedented for an airline, going on 50 years without a furlough, without a pay cut, and the only major airline to avoid all of that during this pandemic. And I'm very, very proud of that. We have the best operation. And as evidenced by the Wall Street Journal's annual ranking of airline performances, it was released this week with Southwest as number one. And finally, we have the best customer service. And I base that on numerous brand surveys and my expectation that, once again, we will be at the top of the industry in terms of the United States DOT Customer Satisfaction Index of fewest customer complaints. Now, no one can deny that that is a powerhouse combination of attributes for any company. And it just reminded me as I was recapping that, I was listening to Herb, Many years ago, he pointed out that most companies never achieve the best designation in a single category, much less five. And I mention these things really not to brag, but just to put things in perspective. And that is to say that, yes, these are bad times. Yes, we had our first loss since our startup year. But we have much to be grateful for, and we have every reason to be hopeful that, This too shall pass, and when it does, we will be ready. And speaking of being ready, I mean a surge, a resurgence in traffic and revenues. So we want to be ready for that. We have to have that to achieve break-even and then beyond that, prosperity. So there's a balancing act here, and we're balancing a desire to conserve cash and minimize our losses which requires that we operate in a reduced schedule as compared to the need and the ability to achieve break-even by generating more traffic, and we can only do that by offering more flights. So getting that balance is key, and we're intensely focused on that. And I'll just add that we've got the talent, we've got the experience, and we have the tools that we need to execute and execute that well. Once we get past this January, February winter doldrum, we'll see what happens, and we'll respond accordingly. So we've got excellent updates prepared this morning for you from Mike Vandiven, our COO, Tom Nealon, our president, Tammy Romo, our CFO. So I don't want to steal any of their thunder except to say one more thing. I mentioned before that we have a lot to be grateful for, and we do, and especially at Southwest. And I mentioned gratitude last time in our third quarter call, but I think it's important to repeat it again. I am especially grateful for our people, their resolve, their resilience, their civility, and their love. They've gotten us to this point. They will get us through this. They have performed superbly, and I know that everybody in this room with me would join me and say how proud we are of them. and we all just want to thank them profusely. They are heroes. So some of these heroes are sitting here with me, and Mike, I want to congratulate you on a magnificent operational performance. So why don't you kick us off this morning? Mr. Mike Vanderman, COO.