Marcy Brand - Gary C. Kelly - Chairman, Chief Executive Officer, President and Chairman of Executive Committee Robert E. Jordan - Chief Commercial Officer, Executive Vice President and President of Airtran Airways Laura H. Wright - Chief Financial Officer, Chief Accounting Officer and Senior Vice President of Finance Ginger Hardage - Senior Vice President of Corporate Communications

Duane Pfennigwerth - Evercore Partners Inc., Research Division James D. Parker - Raymond James & Associates, Inc., Research Division William J. Greene - Morgan Stanley, Research Division Jamie N. Baker - JP Morgan Chase & Co, Research Division Michael Linenberg - Deutsche Bank AG, Research Division Glenn D. Engel - BofA Merrill Lynch, Research Division David E. Fintzen - Barclays Capital, Research Division Raymond Neidl - Maxim Group LLC, Research Division

Welcome to the Southwest Airlines First Quarter 2012 Conference Call. My name is Tom, and I will be moderating today's conference. This call is being recorded, and a replay will be available on southwest.com in the Investor Relations section. At this time, I'd like to turn the call over to Ms. Marcy Brand, Director of Investor Relations. Please go ahead, ma'am.

Thank you, Tom. Good morning, everyone, and welcome to today's call to discuss first quarter results. Joining me on the call today is Gary Kelly, Southwest's Chairman, President and Chief Executive Officer; Bob Jordan, Executive Vice President and Chief Commercial Officer and President of AirTran Airways; and Laura Wright, Senior Vice President, Finance and Chief Financial Officer. Today's call will begin with opening comments from Gary, followed by Bob providing an update on AirTran. And then Laura will provide a review of our first quarter results and current outlook. As a quick reminder, Southwest's first quarter 2012 consolidated results include AirTran's results. Prior-year consolidated results do not include AirTran. However, in order to provide what we believe to be more meaningful year-over-year comparisons on today's call, we will also be discussing specified results on a combined basis as defined in this morning's press release. In addition, outlook commentary will be provided on a combined basis. Please be advised that today's call will include forward-looking statements. Because these statements are based on the company's current intent and expectations and projections, they are not guarantees of future performance and a variety of factors could cause actual results to differ materially. As this call will include references to non-GAAP results such as combined results and results excluding special items, please reference this morning's press release in the Investor Relations section of southwest.com for further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. And now I'll turn the call over to Gary for opening remarks. Gary C. Kelly: Thank you, Marcy, and thanks, everybody, for joining us this morning. We'll jump right in here. We -- while we had a modest operating profit of $10 million, we had a net loss of $18 million, excluding items first quarter. Better than estimates, it represents a $38 million swing from last year's modest net profit. So comparing to combined with AirTran results from a year ago, our fuel bill was up about $216 million on essentially a flat capacity, and that was the challenge that we had to overcome and with revenues. Our revenue performance was strong. We were up almost 6% on a combined basis year-over-year. While I am dissatisfied with our earnings results even with the seasonally slow first quarter, I'm very proud of our people. I'm very proud of their revenue performance. On top of all that, our operations turned in the best on-time performance in, I think, 2 decades. So very, very strong operating performance. So I'm not going to try to rationalize a first quarter net loss. But I will share that it was the January, February problem. If you look at March's results, our profits were better than a year ago. And so far, the same is true for April. Obviously, our profit outlook has much to do with fuel prices, and we're keeping a wary eye out on that. The real story besides fuel is the construction work that's underway at Southwest Airlines investing in our future. We have a -- a huge amount has been accomplished since 2010, including our All-New Rapid Rewards frequent flyer program, the AirTran acquisition and a major new contract with the Boeing Company. But since last year, we've made significant progress integrating AirTran, in particular, and I just wanted to run through that very quickly with you. First of all, we have a handful of labor seniority list agreements that are done, and I'm very pleased with the progress that we're making on the ones that are not done yet. We've consolidated the AirTran headquarters function into Dallas. We've implemented all new aircraft maintenance management technology. We have implemented technology to support multiple fleet types. We've, of course, received our single operating certificate from the FAA. We have also, since then, we've launched conversion lines to move AirTran 737s into the Southwest Airlines livery, that work is underway. We plan to get 11 airplanes converted here in 2012. We made significant changes to AirTran's revenue management processes and also significant changes to AirTran's flight schedule, including the redeployment of aircraft to new markets, hopefully more lucrative international markets. Related to all that, we've spent months working on the best international solution for Southwest Airlines. As you all know, we're -- our technology is all domestic. And I'm very pleased that this morning, we announced Amadeus as our reservations technology solution for Southwest International. Implementing that will be a top priority for us so that we can operate flights in 2014. It also sets the stage for us to move all of our reservations, the domestic reservations that is, to Amadeus if we choose to. Along those same lines, we see a significant opportunity to serve Houston with international flights out of Houston's Hobby Airport. We have a major campaign underway to obtain the necessary approvals to launch that service in 2015, which is what the Houston airport service would like. And finally, soon the technology will be ready to allow Southwest and AirTran's frequent flyers to use their flight awards on either carrier, and that'll be a very nice enhancement for our customers. Unrelated to AirTran, but significant nonetheless, is the addition of the 737-800 to our fleet. This was a significant effort to develop the required technology along with new procedures and certifications. So we have our first 2 aircraft up and flying in revenue service this month, and this whole effort was done on time and on budget. We've also begun the cabin retrofit of our 737-700s, which not only improves the customer comfort but delightfully, we're able to get 6 more seats onto our 700s. That work has started. And we continue to work the bugs out of our Row 44 Wi-Fi product. I believe we have about 250 aircraft that are -- 210, I beg your pardon, aircraft that are outfitted, and we are anxious to get that rolled out by first quarter next year on our 700 fleet. Notably, the 800s will come delivered with the Row 44 Wi-Fi equipment. So just as a reminder for everyone, we have 5 strategic initiatives that we're focused on over the next several years. Two are already up and running and in production, which is our All-New Rapid Rewards program and the 737-800. The other 3 remain a very significant work in progress, which is the AirTran integration, fleet modernization and ultimately, our reservation system replacement, which you now know at least the international piece of that will be Amadeus. A lot of work has been done, I want to, again, thank all of our people not only for the terrific results on a daily basis serving our customers, earning Southwest such high brand rankings. But I also want to thank them for their hard work on these strategic initiatives. There's a lot of work to be done, but I'm very, very, very pleased with the progress we have so far. So Bob, how about if I just hand it over to you and you can tell us what's going on at AirTran? Robert E. Jordan: All right, Gary. Thank you, and thank you to everybody who is joining us on the call today. I am very pleased to give you a report on AirTran and on the integration. But first, I want to congratulate of our AirTran folks on continuing to keep their eye on the business as we make progress on integration. The AirTran operation is performing very, very well. For the second year in a row, AirTran came in first in the annual Airline Quality Rating or the AQR. AirTran also continues to post industry-leading DOT numbers. For example, in February, AirTran posted a 91.2 on-time performance. That's 5 points ahead of the industry average and a 1.32 mishandled bag ratio, which is half of the industry average. And it's all because of the people of AirTran and their focus, and I am very proud of them. On the integration front, there's a lot to report. We were delighted to receive our single operating certificate last month. To get to SOC at just 10 short months is remarkable. Southwest and AirTran will, of course, continue to operate independently, but SOC gives us the ability to begin to combine the operations. And for example, the first 3 AirTran 737s are now in conversion to the Southwest livery. And our first groups of AirTran pilots are currently in training to move to Southwest. As Gary noted, we'll transition 11 aircraft to Southwest in 2012, and the majority of the remainder of those AirTran aircraft will transition to Southwest in 2013 and early 2014. We also continue to make progress on the labor front. We now have agreements with our pilots, our flight attendants and our flight instructors. And we are making progress in other areas, and I hope to have something to report there soon. We have now transitioned facilities in a total of 24 airports, bringing AirTran and Southwest much closer together to enhance the customer experience there, and over 400 AirTran employees have now fully transitioned to Southwest Airlines. We are also continuing to make AirTran -- the network moves, many of those in the first quarter, most notably, the introduction of Southwest service to Atlanta on February 12, which has been just a fantastic complement to our existing AirTran service there. While it's early, the new Southwest service is already beating our expectations for both traffic and revenue performance. And to redeploying capacity primarily from our closed small cities on the AirTran network side, we've added a number of new AirTran international markets, including Denver-Cancun that started earlier this week, and in the next 60 days, we'll be adding San Antonio-Mexico City; San Antonio-Cancun or Orange County-Mexico City; Orange County-Cabo San Lucas and Midway-Cancun. I'm really pleased with the performance of our international markets, and I'm just very optimistic about their future potential. And as Gary noted, the agreement announced this morning with Amadeus to develop a robust international solution for Southwest is a key to moving these international markets from AirTran to Southwest over time. Overall, AirTran's business continues to improve solidly year-over-year. Positive RASM trends continue, and AirTran's yields outperformed Southwest in the first quarter, up about 13% year-over-year. The synergies realized in the first quarter are already half of the $80 million realized in all of 2011, and our plan calls for reaching our $400 million total pretax synergies in 2013. We've made a lot of progress. We've got a lot of work in front of us. We've got a lot of complicated work in front of us that we're managing, and that includes fully connecting the networks that we anticipate having in place in 2013. But there is just an awful lot of progress in the short 11 months since we closed this transaction on May 2 last year. In summary, I am just very pleased with how the integration is going. I'm very pleased with AirTran's performance, operational and business year-over-year. And I can report that the people of both AirTran and Southwest continue to be extremely positive and excited about the integration, and that is just unheard of in the airline industry. And with that, I'm going to turn it over to Laura to take us through the financials. Laura H. Wright: Thank you, Bob, and good morning or afternoon to everyone. Excluding special items, our first quarter operating profit was $10 million compared to $110 million in the first quarter of last year for Southwest stand-alone and $86 million combined. Our revenue performance in the first quarter was strong, and our nonfuel operating costs came in better than expected. I'd like to thank our employees for answering the call to focus on cost and productivity in the first quarter. Certainly, their efforts produced tangible results. The primary source of our decline in our operating profit was higher fuel prices. Excluding special items, we reported a net loss of $18 million or $0.02 per diluted share, and this compared favorably to first call's consensus estimate of a $0.05 loss. Our first quarter was another quarter of strong revenue performance. We have record operating revenues, passenger revenues, passenger revenue yield, passenger unit revenues and total unit revenues. Our passenger revenues increased 27% or $795 million from last year's $2.9 billion Southwest-only results. 3/4 of this passenger revenue growth was attributable to AirTran, and the remaining 1/4 or approximately $200 million was from organic growth at Southwest. On a combined basis, our revenues experienced a solid improvement. On a unit basis, our passenger unit revenues grew 5% versus last year, and our total unit revenues grew 4.6%. Compared to 2 years ago, our passenger unit revenues are up 15%, and they're up over 30% versus the first quarter of 2009. That represents remarkable revenue progress, especially as we manage through a complex integration and certainly is industry-leading, if you look over a several year time period. During the quarter, our PRASM strength came primarily from our yields, which were up 6.3% on a combined basis. And as Bob noted, we continue to improve AirTran's year-over-year revenue performance. Our average fares on a combined basis were up 6.3% or $8.71, as a result of 5 systemwide fare increases we've taken since the first quarter of last year. We have a solid outlook for our second quarter passenger revenues. At this point, our April month-to-date year-over-year increase in passenger unit revenues is currently exceeding March's 5% year-over-year increase. Our freight and other revenues were in line with our expectations, and we currently expect our second quarter 2012 freight and other revenues to be comparable to second quarter 2011 freight and other revenues. Now turning to fuel, our first quarter 2012 economic fuel price per gallon was $3.44. That was up 16.6% or about $0.50 per gallon from the prior year combined. The $3.44 included $0.12 in per gallon and unfavorable cash hedging settlements, primarily from locks and losses from our legacy hedging portfolio. We were able, however, to reduce our hedging premiums to $6 million versus $31 million in the prior year, and those premiums are reflected in other gains and losses. The $3.44 was better than our last guidance for the quarter of $3.50, and that was primarily due to slightly lower-than-expected refinery margins as our physical fuel purchasing and flight selling techniques took advantage of favorable geographical jet fuel pricing that took place during the quarter. Looking to the second quarter, our hedge protection is minimal, which is a result of reducing our floor exposure and recapturing premium expense. At current market prices, we expect our second quarter economic fuel price, including taxes, to be in the $3.40 to $3.45 per gallon range. That's based on the April 16 forward curve. As noted in our fuel hedging sensitivity table that is included in this morning's press release, this includes an estimated $0.03 per gallon unfavorable hedging loss, much less than what we had in the first quarter. Our second quarter premium expense is also expected to be down to approximately $12 million. That compares to $26 million a year ago. As we look to the second half of 2012, our hedges provide meaningful protection in a rising fuel price environment with 25% to 50% of our fuel volume hedged in the $90 to $130 WTI range. At current expected market prices, our second half fuel hedge portfolio performed better than the first half. And at current prices, we expect a $0.02 per gallon hedge benefit. In the event prices rise from the current forward levels, some will benefit from our fuel hedge protection. Again, all this is laid out in the sensitivity tables that were provided in this morning's release. Our second half premium expense is estimated to be $27 million. That brings our total 2012 premium cost to $45 million. That compares to $114 million a year ago. Turning to our nonfuel costs. Our first quarter unit costs, excluding fuel and special items, were up 2% year-over-year on a combined basis. This was better than the 4% increase that we expected, primarily due to lower labor, airport and other costs. The milder winter weather certainly provided some unexpected benefit in both our labor cost and our winterization materials. We did diverse some advertising spend and our airport cost benefited more than we anticipated from airport settlements. As we look to the second quarter, we're currently anticipating unit cost, excluding fuel and profit-sharing, to increase in the low to mid-single-digit range compared to second quarter of 2011's combined $0.0741 and likely at the rate that will exceed our first quarter 2% inflation. The second quarter year-over-year increase is primarily driven by increased labor, maintenance and airport cost. Additionally, our year-over-year increase also includes some unique items related to our fleet modernization plans. In the second quarter, we expect about a 1-point cabin impact from these initiatives. Again, just to remind you, the Evolve retrofit for our 700 fleet is expected to increase our full year 2012 maintenance expense by about $50 million. We expect about $14 million of that in the second quarter. We also have some additional depreciation expense, which is noncash due to the accelerated retirement of our [indiscernible] fleet, and that's currently projected to be in the $50 million range in 2Q. Our net interest expense for the year is expected to decrease by approximately $60 million on a combined basis due to paying down $1 billion of debt since our acquisition of AirTran on May 2 of last year. And again, as noted in our fuel discussion, our fuel hedging premiums, which were recorded in other gains and losses, will be down approximately $70 million from 2011. Our cash flow in the quarter was very strong. We generated $1.2 billion of cash flow from operations, and that resulted in $1.1 billion of free cash flow net of our capital spending during the quarter of $127 million. Our cash and short-term investments at quarter end were $3.8 billion, $3.9 billion as of close of business yesterday, with full availability of our $800 million revolving credit facility. The strong cash flow was driven in part by cash collateral from our hedge counterparties, as well as a $720 million increase in our air traffic liability. All-New Rapid Rewards continues to perform well with approximately $100 million in incremental cash sales from our business partners compared to first quarter of last year. And as a reminder, the vast majority of the business partner cash flows are still being deferred, which is increasing our air traffic viability, and those will be recognized in passenger revenues as more flights occur in the future. During the quarter, we repaid $431 million of debt. And our leverage, including the off-balance sheet leases, the aircraft leases, is approximately 46%. We expect it to continue to decline modestly throughout the year. Through the end of the first quarter, we repurchased approximately 275 million or 33.2 million shares, of LUV, under our current 500 million authorization. And for 2012, we still expect our capital spending to be in the $1.3 billion range. For the remainder of the year, we have very manageable scheduled debt maturities of approximately $130 million. And again, extremely pleased with the cash generation the first quarter, which is typically the weakest quarter of the year. And finally, let me finish with a quick fleet and capacity overview. We ended the first quarter with 694 active aircraft. This does not include the first 2 Boeing 800 deliveries we took in March as they did not go into active service until this month. We also had 4 retirements during the quarter. They were all 300 and classics the 3 of those were lease returns. And so far in April, we've received another 800, and we have another 1 coming today. And after today's delivery, we'll have 29 more by year end. We're still planning for 40 total retirements that will put our year-end fleet count at approximately 691. We've completed 14 of the Evolve retrofits thus far, and we expect to have the entire Southwest 700 fleet retrofitted by first quarter 2013. The majority of that will occur this year. In terms of our capacity plans, our 2012 available seat miles forecast remains approximately flat with 2011. And although we are increasing the gauge with the 800, which adds 38 more seats and we're adding additional seats to our 700 fleet with Evolve, our 2012 trips are projected to be down 3% year-over-year. That's heavily weighted to the back half with a 4% decrease in trips in 3Q and a 5% decrease in the fourth quarter. And, Tom, with that, I am ready to turn the call over to you to take questions from the audience.

[Operator Instructions] We'll now begin with our first question from Duane Pfennigwerth with Evercore Partners. Duane Pfennigwerth - Evercore Partners Inc., Research Division: Just with respect to your seasonality of earnings, just thinking about AirTran's earnings profile, it seems like they made all their money in the June quarter. So I mean, is it fair to say some of what we're seeing here in the March quarter is just maybe a modestly more seasonal earnings stream for Southwest? Gary C. Kelly: Well, they've got a pretty big footprint in Florida, too. But the -- first of all, a lot of things have changed under the Southwest watch since a year ago with AirTran. I think what is a fact is that we've been able to reduce their cost pretty significantly. And as a consequence, Bob gave you a very comprehensive report on their first quarter revenue performance. But in addition to that, the net effect was, and you'll see this in the 10-Q, their loss was worse a year ago than this year. So we've been able to make some improvements on the AirTran performance. But I thought that their revenue performance was better in the fourth quarter than it was in the first. So there -- you may have a point there. This is -- this business segment is new to us, and it is a little different for us because it does have different drivers. Their bag fees and dual-class services and things like that. So I think that's possible. But to be fair and I want to see if Laura or Bob have a different view, I'm a little reluctant to guide you that way because I just don't feel like we have enough experience with that, and we're going to continue to make a lot of changes to their network. And again, I would use the word radical. There will be radical changes on an ongoing basis. Ultimately, I think it's going to look and feel like Southwest Airlines. It will just take us 24 months here to get through this transition process. Duane Pfennigwerth - Evercore Partners Inc., Research Division: And then just on April, I wonder -- April looks like a modestly easier comp, Laura, so I wonder if you could give us any more detail in addition to the sort of slightly better than March's rate? And then how we should think about comps for the rest of the quarter? May for the industry, is it tougher comps? And maybe could you walk us through some of the history of May last year and why that was so much stronger. Laura H. Wright: Yes, so certainly, where April, as I noted to date, is performing better on a year-over-year basis PRASM than what we reported for March. If we look at April alone, if you just look at it compared it to March on a sequential basis, you would expect April, on a nominal PRASM basis, to be down from March. And that's what we're seeing but it's right in line with historical expectations. If we have to guide you for March, we would say mid-to high single digits. I mean, April, I'm sorry, I'm getting my months turned around. I think beyond April, it's a little early to tell. But certainly, there's nothing that we're seeing in any of our bookings or trends that indicate anything that would be different sequentially just like we're seeing in April versus March. Excuse me, Gary or Bob, if you have anything you want to add? Gary C. Kelly: Laura, I would agree with everything you said. And maybe just to say it a little bit different way. The first quarter performance, Duane, sequentially, compared to fourth, looked very normal to us. And if I remember correctly, we do have easier -- first quarter a year ago was pretty darn strong. Second quarter a year ago was a little off-trend. So I think if that's what you're suggesting, is that maybe we have some easier comps, that's possible. But in any event, what we do know, what's in the bank, so to speak, the first quarter performance was right in line with what we would have expected. We're not seeing some of the dramatic year-over-year increases that some of our competitors are, but a lot of that, I think, we earned -- that's in our more difficult comparisons. So we're up dramatically over a multi-year period. And feel very good about where our revenues are here, at least in the first quarter. And like all of us are saying, so far, April looks like it's more of the same, a little bit better. Laura H. Wright: Before we take the next question, could I correct, make a correction from one of my statements with the audience?

Go ahead. Laura H. Wright: Okay. I noted an increase in depreciation of $50 million. That is a full year 2012 impact, not second quarter. Gary C. Kelly: That makes a difference. Laura H. Wright: Yes. My apologies.

And we'll move on to Mr. Jim Parker with Raymond James. James D. Parker - Raymond James & Associates, Inc., Research Division: Looks to me like there are 2 very significant sources of earnings growth underway at Southwest. And the first, of course, is AirTran synergies, which you have broken out. Looks like those are on target. The other source is fleet modernization plus adding the 6 seats. Could you provide a bit of a timeline when we should be able to see those -- the positive impact become pronounced from those items that, I think, if we add all of those things together, where something like, I calculated, $0.38 from share from fleet modernization plus the 6 seats? Laura H. Wright: We are getting that, Jim. Yes, so really no change to the numbers that we reported in our last quarter call. The real benefits start in 2013. We do expect to see some improvement in our 2012 earnings before tax. The estimate was around $70 million this year. Again, more weighted to the back half of the year because we're really not seeing the benefit of the additional seats yet as of both the 800s and the Evolve come in. In 2013, we'll have most of the Evolve in service for the full year, and the contribution to EBT for 2013 is expected to be in the $300 million-plus range. And then certainly, 2014, which is when we'll have a substantial number of 800s and have the Evolve retrofit complete, our forecast is EBT contribution in excess of $500 million. James D. Parker - Raymond James & Associates, Inc., Research Division: Okay. And just looking at your RASM year-to-year growth, it is -- in this first quarter, it trailed the A-for-A RASM growth by 3 percentage points and trailed last year in the last 3 quarters by, looks like anywhere from 1 to 3 percentage points. Can you provide a little bit of insight? And this is for domestic, of course, A-for-A why Southwest lags the performance of the industry? Gary C. Kelly: Well, beyond what I've already said, Jim, which is we have seen significant increases in our revenues in 2010 and 2009, especially. So we -- I would argue that we have harder comps. We've definitely seen stronger revenue growth compared to A-for-A over the last 3 to 4 years. The other thing I would quickly say is that we're still sub-optimized here between Southwest and AirTran. And until we get AirTran fully converted, fully merged, fully integrated into Southwest Airlines, that will be the case. So I'm sure there are some network inefficiencies, so to speak, that are in there that perhaps comparing to A-for-A on an ongoing basis, if we had it all merged together, we could probably do a better job of scheduling our network. But from a revenue management procedures and tools, we've made good progress over the last several years. We have more revenue management tools that are coming. And I think it will improve our ability to better manage our revenues, O&D revenue management in particular, something that is coming. And then the network inefficiencies, again, are simply a matter of having 2 separate brands that obviously we'll get that addressed as well.

We'll take our next question from Bill Greene with Morgan Stanley. William J. Greene - Morgan Stanley, Research Division: Gary, I recognized you're trying to manage a lot of complex changes at Southwest, and you've got a lot of strategic initiatives on the table. So if we accept sort of the view that you mentioned here just now, okay, we're of course sub-optimized and we've got the tools that are going to serve and improve the situation, when do you start to lose patience, though, with the inability of the company to kind of keep up with fuel? When do you say, like, we got to take a bolder action, whether it's a capacity cut, maybe we got to take a lead on fare increases? How much more patience do you sort of have? Is it a year because it's a 24-month integration? Or when do you sort of say, okay, that's it? Gary C. Kelly: Well, I think it's premature to make that judgment today just because we do have so many things in progress that are all so promising. And looking back over the last 5 years, we've delivered against what we said we were going to do. So I feel very confident that the company will deliver. Just back to Laura's quick summary there on the fleet modernization, 6 more seats is 6 more seats, man. So there are just no way around it, and we're going to get more revenue as a consequence of that very modest incremental investment. So that will come. The new frequent flyer program, we are generating already hundreds of millions of dollars additional -- and it doesn't burn jet fuel. This is specifically related to our frequent flyer program. It is in deferred revenue awaiting those customer. So revenue benefit you'll see in the future with higher yields for free awards when they're flown compared to where we were with our R10 [ph]. So those are all very hard facts and will come along. The outlook that we have, as I mentioned to you, if you look at just March, April trends, they are very different than the story that you might get from the first quarter. And again, I would argue that the first quarter result this year weren't materially different than last year despite a $200 million increase in the fuel bill. So our outlook is good. We have a lot of opportunities to optimize our network, meaning, eliminating nonperforming flights with a lot of opportunities to redeploy that capacity as opposed to grounding capacity or cutting capacity. If we do reach the point where we need to cut capacity, obviously, we can do that. We can simply accelerate the retirements of our fleet and manage it that way. But no, I'm confident about our plan. And assuming fuel prices stay about where they are, we don't see some right turn in the economy, and I think we have a good outlook for the balance of 2012. William J. Greene - Morgan Stanley, Research Division: All right. So just as a follow-up to the last comment they made there about sort of changing some of that capacity if you need to or addressing some of the flights, 717s, are they sort of a problem here at this fuel price? We've seen regional jet challenges maybe it's starting to affect some of the smaller jets even at a mainline level? Gary C. Kelly: Well, I would certainly concede that they're not optimal. And I think that's simply affirming what I've said now for well over 1 year, which given these fuel prices, the 717 doesn't really bring any additional value to Southwest that a 737 can't. And arguably, it's not as good just because, if nothing else, it's just a more complication -- it's more complicated to have an additional fleet type. The fuel burn is good. The mission for the airplane is short haul, so it doesn't have the flexibility that a 737 has. But as long as one can schedule it that way, it works okay. Bottom line, on the economics, and Investor Relations can show you all this, they look fine. Would we rather have 137 seats going to 143 versus 117? Well, sure. And so we -- and therefore, we do have an effort underway to see if we can retire those aircraft from our fleet faster. But in the meantime, no, I don't think it's a matter of us making money or losing money because of the 717. That would be the wrong conclusion to reach. Can we better optimize our fleet? Absolutely, and that's what our objective is.

And we'll go next to Jamie Baker with JPMorgan. Jamie N. Baker - JP Morgan Chase & Co, Research Division: Most airline managements and clearly, the overwhelming majority of investors feel that American's standalone plan represents a clear and present danger to industry prosperity. I'm wondering if you have a view as it relates to Southwest on this topic? Gary C. Kelly: Jamie, you're coming in very faint. I heard your question, so just redirect if I'm not on point answering your question. I think that at Southwest Airlines, the competition that we face in the future is different than the competition that we faced over the last decade. The fact that legacy carriers, including American, will be more cost-effective. And at least in some legacy carriers' cases, that's translated into profitability. That makes them more formidable competitors. So that doesn't really change our strategy per se, but it certainly imposes the right discipline on us. We've always taken the competition very seriously. We've always had an underdog mentality, and I do think that, that is the right outlook. You have a little bit different nuance to your question, and I realize that. I don't -- I'm simply answering your question from a perspective that I believe they will get their finances in order. They'll get their cost down, and they'll be a more formidable competitor because of that. You seem to be suggesting that your concern or there are concerns that they will now behave in a way that is damaging, and I don't have a comment on that. Whatever they do is what they're going to do, and we're simply preparing ourselves to have a more formidable competition in the future. We're doing that in several ways. We have initiatives to get our costs down. We have initiatives to become more fuel-efficient. We have initiatives to improve our customer experience and enhance the already glowing brand that we've earned. And we intend to win. Jamie N. Baker - JP Morgan Chase & Co, Research Division: Excellent. And I'll speak up for my second question. Earlier today, you cited in an interview that I didn't catch, you cited some consumer pushback to higher fares. I'm wondering if you could add some detail. What sort of markets were you referring to? What sort of AP requirements? Is this long haul, short haul? Any additional granularity would help. Gary C. Kelly: Jamie, it was more of a macro comment and acknowledging that our load factor was off 1 point compared to a year ago. And of course, you and I both know that 1 point isn't all that insightful. But after having multiple fare increases and being the expert airline at reducing fares and stimulating markets, we know that there's price elasticity and, obviously, a resistance to fare increases. So we do sense that -- and again, considering that this is the weakest season of the year, our customers were definitely shopping harder to get discount fares. And you can see that in our mix, which I think Laura reported on. So I don't know that I would extrapolate much from that. Whenever we can have unit revenue improvements of 5%, which is what our PRASM was, that's good. There's nothing wrong with our revenue production in that sense. I think the challenge, obviously, is that fuel prices demand more. So yes, I am concerned that we're seeing some consumer resistance, and I don't think that it really -- I don't think there's any more granularity that I can offer up. It feels to me like that's a systemic issue as opposed to some geographic region or length of haul issue.

And we'll go next to Michael Linenberg with Deutsche Bank. Michael Linenberg - Deutsche Bank AG, Research Division: Two questions here. Laura, I want to go back to -- on the costs for the quarter. I mean, the numbers came in -- they came in very good. And I would say I think initially, you were targeting up 4% ex fuel. And I would say that, that was sort of where the guidance was even in early March, and I know you highlighted a couple of things that looked like that there were some good guys -- there's some stuff on lower revenue -- I mean, lower advertising expense, some stuff on labor. And some of that would seem to be that you would have known about that earlier in the quarter. You did mention some airport settlements. Were there any sort of good guys that maybe came in -- related to that that came in late in the quarter and helped that number? Laura H. Wright: Yes, Mike, I mean, that's a fair question. Certainly, we were out in early March, I think around March 6 or so when we gave that guidance. We hadn't completely closed our books for February as well, but we did see improvement, more improvement in March. We saw some in February as well. But certainly, weather had a big impact on our labor costs, as well as just improved productivity. We really did as we saw energy prices go up. And we really put a call out to the field and all of our employees and leaders to respond, and they did. So our labor costs improved. We had a lot of savings in winterization because as we continued throughout the quarter, we continued to have really mild weather. Airports did improve in March as well. So I'm not sure -- and then advertising was actually less in March than we anticipated at that time as well. Michael Linenberg - Deutsche Bank AG, Research Division: Okay, that makes sense. And then my second question, and I don't know if this is for Bob or maybe Gary, during this quarter, we did see for the first time, we had the opportunity where Southwest and AirTran were in some markets side by side. And I'm curious just from observing where -- like a market like in Atlanta to Chicago or in Atlanta to a Baltimore. What did -- and I realize it was only a few months. But did you notice any sort of a difference in behavior with customers realizing that some of the flights, there were charges for bag fees. Some of the flights didn't have the fees. Were you getting a revenue premium on the Southwest flights? I know you mentioned the fact that the response -- the customer response in Atlanta to the new flights was exceptional. Was it that the Southwest flights were a lot more profitable than the AirTran flights despite the fact that there are no bag fees? I mean, what can you tell us that you saw between the 2 products where they were operating in the same market? Gary C. Kelly: Mike, let me give you my perspective, and then Bob can be the closer here on the question. First of all, the Southwest is operating 15 daily departures, something like that, and soon to go to 26. Those flights, we compare to a typical new city startup, and they are exceeding all of our pretty stout expectations. So we are really, really pleased with the subset of Southwest flights, so Southwest brand and everything you would expect. And we have a very successful launch of our service in Atlanta, and we're very warmly received in the community. And so all that, I would just grade as an A+. While we were doing that, we were also adjusting the AirTran flight schedule. So I don't remember the Chicago flights off the top of my head, but I did have, as an anecdote, Atlanta to Houston. And I've been spending some time in Houston, so I've got that anecdote in my mind. But we did reduce AirTran Houston flights in favor of adding Southwest flights. So in other words, in fairness to your question, we did help Southwest along where we could by pulling some AirTran capacity out. Moving over to the AirTran performance, AirTran's Atlanta performance is also improved versus a year ago, at the same time that we're introducing the Southwest service. They are different brands with different products, and we -- I'm sure that we have some customers who are challenging the difference in the brands, but it is certainly nothing that -- from a broader management perspective, it is not an issue. I'm very confident that we'll be able to get from here to fully integrated without any material problems. And most of it because of what Bob Jordan said earlier. The AirTran people are doing a phenomenal job of running that business unit, outstanding on-time performance, great customer service, #1 in baggage handling most months. So they're just continuing to do a terrific job. Bob, is there anything... Robert E. Jordan: Well, Mike, I would just add, yes, the same thing. Where we have moved in overlap markets, we've moved out maybe a few AirTran flights in favor of Southwest. There are no noticeable changes. So the improvement year-over-year in AirTran, the improvement year-over-year in Southwest is showing up in those markets. And then a good example would be some of the new international adds, and it's very early. We just started the Denver-Cancun, but we've got bookings in some of the others. Some of those flights are coming out of cities where AirTran has very little domestic presence. And even in that case, those new international AirTran flights are booking up pretty strong. So again, I think it's the AirTran people. It's putting the flights into the right markets, where we know there's going to be success. But we've not seen any -- in my mind, we've not seen any issue in being able to maintain the integrity of the AirTran service while maintaining the integrity of the Southwest service on those overlap markets.

And we'll go next to Glenn Engel with Bank of America Merrill Lynch. Glenn D. Engel - BofA Merrill Lynch, Research Division: Two questions. One, can you please give ASMs by quarter? Laura H. Wright: Yes. Let me get those, Glenn. Can you ask your second question while... Glenn D. Engel - BofA Merrill Lynch, Research Division: The second question I have is on -- when would you expect your computers to allow you to cross-sell AirTran? I think you pictured out sometime next year, but I wasn't sure what part of the year. And two, if you can't cross-sell, wouldn't that suggest that your revenue synergy target gets pushed out as well? Gary C. Kelly: The target for, calling it, codesharing, for lack of a better description, was the first half of '12, and we pushed that to 2013. I'm not ready to give you a date yet because I don't have one that I'm confident in. Glenn D. Engel - BofA Merrill Lynch, Research Division: You won't even say first half of 2013? Gary C. Kelly: I won't. It is a -- for several reasons. Number one, I can actually make a case that for business reasons, we may not want to codeshare sooner than later. We have 11 aircraft that are converting in 2012, and that will have minimal impact to the AirTran network. We will be converting roughly 60-some-odd aircraft next year, so that's where we'll really need the facilitation, if you will, of the codesharing to make that conversion from an AirTran market more rapidly to a Southwest market. The profit effect is probably negligible. There's no doubt that we'll pick up some revenues. But you're also going to -- because the brands are so different, you're going to confuse the brand. And we'll have to deal with fees that AirTran charges and on a codeshare itinerary, obviously, we're not going to charge a bag fee. So I don't know if it's $1 for $1 tradeoff there. But another way to think about it, Glenn, is to say if you were to challenge us and say how are you going to recover the $300 million worth of fees that AirTran collects, I would tell you that yes, I think that that will be a takeaway, and at least during this transition period, we'll make it up with codeshare. So on a net-net basis, I just don't believe you're going to see a material profit benefit. Finally, said a third way, the $400 million worth of synergies that we all keep talking about are not counting on a net benefit from codeshare. The benefit is from moving away from the AirTran brand to a pure Southwest brand, where there's a superior revenue performance. It is our priority, by the way, on technology, and our technology folks have done a phenomenal job of delivering on a whole list of projects. We've deferred this one. But our priority will be implementing the necessary technology to support international service. So that will be our top priority. What is now in place, and I'm very pleased with, of course, is the support for the 737-800 and the multi-fleet technology capabilities. So all that is in place, and we'll work hard to make hay out of all of those investments. Laura H. Wright: Glenn, here's the ASMs by quarter. So for 2Q, our year-over-year ASMs will be down between 1% and 2%. For the third quarter, the ASMs will be down approximately 1%, and we currently expect 4Q to be flat with last year.

And we'll take our next question from David Fintzen with Barclays. David E. Fintzen - Barclays Capital, Research Division: Just a question for Laura on the cost side. I think last quarter, for 2012, you had said a modest CASM ex-fuel growth. Just curious, given the 2Q guidance, is that sort of the high watermark for year-over-year growth in ex-fuel costs? Or is that sort of carried through into the second half? Just any color there. Laura H. Wright: Yes. No, I think the guidance that we gave for 2Q, which is low to mid-single digit, is in line with the full year guidance at this point, again, all of the -- I just gave the ASMs to Glenn. So with ASMs down in 2Q and 3Q, that certainly provides some pressure. We've got the fleet investments. But I would look at the full year similar to the guidance that I gave for 2Q. Gary C. Kelly: And one thing about that is it's somewhat of a transition year for us. While some of the cost inflation that you're seeing in 2012, we can't fairly assign that to the AirTran integration, but it is related in a large degree to our fleet modernization. So these are some upfront costs. If you want to think about it that way, that will have very significant cost and revenue benefits in the future. David E. Fintzen - Barclays Capital, Research Division: Are there very specific 800 implementation costs that sort of you hit upfront like ETOPS, et cetera, that we just don't -- I mean, is that the kind of thing you're talking about, just for clarity? Laura H. Wright: I think it's not really. That's not material in terms of operating expenses. The cost of the Evolve retrofit is all expensed, and that's about $50 million for the full year of 2012. So that will be included in our maintenance line item, again, as a really quick payback, and that's going to come on the revenue line. And we also have some additional expense based on our decision to retire our classics earlier than we had previously planned. But again, the economics of the replacement aircraft with a better fuel burn and maintenance and so forth, it's a very good return. You're just seeing some of the costs to doing that hit in P&L. Gary C. Kelly: Depreciation is an example. David E. Fintzen - Barclays Capital, Research Division: All right. That subtly sounded like there's something else there. Gary C. Kelly: I think they're all things you know, but it's just to acknowledge with you that there is some cost effect of that in '12. But of course, a lot of the fleet modernization, just to repeat what Laura just said, a lot of the fleet modernization efforts will result in lower cost as time goes by, lower fuel burn, lower maintenance cost, and so this is a bit of a transition year cost-wise on the fleet. David E. Fintzen - Barclays Capital, Research Division: Okay, okay. And then just quickly, I know there's a lot of change going on this year. In terms of how you're deploying capacity seasonally, is there anything sort of changing or anything, as you're going through the AirTran integration, that allows you to maybe move some things around seasonally in ways that you couldn't in the past? Then what would be the impediments to really sort of flipping airplanes around more through the year? Gary C. Kelly: I think that's a terrific question. It's somewhat related to Bill Greene's question earlier. We definitely need more flexibility in our business. And today, we schedule the airline on a hard schedule, Monday through Thursday, and then there are variations on Friday, different schedule on Saturday, different schedule on Sunday. So we need more than that. And I think January, February, in particular, are challenging months, and we probably -- what we would like is to find some better scheduling technique for that seasonality. So the short answer to your question is we completely agree with you. We're a different airline today than we were 5, much less 10 years ago in terms of dealing with seasonality. We definitely have seasonal service. So there are city pairs that are scheduled some times of the year and not all year long. Orlando, in particular is probably the most dramatic, where we actually have -- unlike any other city in our system that I can think of, Bob, we have more flights on a Saturday than we have on other days of the week. So we're doing what you asked. We're just not doing as much as I would like. Some of that is capability-wise, and some of it is just the business judgment that we're not quite ready to be as radical as, perhaps, we could. But it's definitely something with fuel prices the way they are. You just can't afford to fly airplanes that aren't profitable. So we are definitely -- we definitely have the same mindset that you do.

And ladies and gentlemen, we have time for one more question. We'll take our last question from Ray Neidl with the Maxim Group. Raymond Neidl - Maxim Group LLC, Research Division: Just 2 very general things I wanted to address, Gary. The first, I know you're still committed to the no charge for baggage fees. You think it's revenue positive for the company. But it seems with some other airlines, the travelers have changed their behavior and they pack much lighter now, saving on fuel costs. I know you're very concerned about your fuel situation. Could that be another side of the benefit that you haven't really looked at yet? Gary C. Kelly: Well, all of that may be true. If the bag still ends up on the airplane, it's just upstairs instead of downstairs. I don't know that it's a fuel savings, but if people bring less, I think that that is a credible argument. We've just made huge progress with our revenue production compared to the rest of the industry since they started charging for bags. I mean, the evidence here -- you're an analyst, go look. It is absolutely indisputable. So I think it gives us a significant competitive advantage. We've never had higher brand rankings and continuing -- obviously, we're continuing to invest in our customer experience so that we not only keep what we've earned but win more customers. I think we have a huge opportunity to win more business customers. So yes, you know that we're not wavering, Ray, on our desire to have no hidden fees. And again, I think that the evidence is very clear that that's revenue positive for us. Raymond Neidl - Maxim Group LLC, Research Division: Okay. And finally, broadly, with AirTran and Southwest and integration not happening fully to 2014, you will be doing some international routes with AirTran. And then with the Hobby situation, you've made it clear you want to start doing some international routes out of Hobby. Can you expand that? Are those 2 things, one, independent of each other? And Number two, would you expand international services beyond Hobby and AirTran routes and maybe even investigate trying to get the law changed so you could do international routes out of Love Field in Dallas and some other cities? Gary C. Kelly: Well, on your last question, the answer is absolutely not. We've got an agreement that we will honor, so we would not do that with the right amendment. On the Hobby situation, I don't think you're thinking about it incorrectly. The only thing I wanted to share with you all today is I know that that topic is in the news, and it is a significant undertaking by Southwest and one that we think is important that the Hobby airport system proposal is that international service would be readied by 2015. So I think that, that answers your question. So AirTran, in other words, would not have an opportunity to serve Hobby internationally before that. The airport won't be ready. They need to build gates. They need to build an international facility. They need to have customs and all of that kind of stuff. And that's what Houston and their airport system are undertaking. So the airport has proposed that Hobby add international service. We've told them that we're very interested in that, and that work is underway. So AirTran would not be a player most likely in that whole discussion, if that makes sense to you.

And at this time, I'd like to turn the call back over to Ms. Brand for any additional or closing remarks.

Thank you, Tom, and thank all of you for joining us today. And of course, if you have any follow-up questions, we are available this afternoon. Thanks, and have a great day.

And ladies and gentlemen, we will now begin our media portion of today's call. I'd like to first introduce Ms. Ginger Hardage, Senior Vice President of Culture and Communications.

Thank you, Tom, and we thank everyone for being on the call today. We'd like to now switch over and have questions from the news media for Gary, Laura or Bob. So if you would give the instructions for queuing up, that would be great.

[Operator Instructions] We will now begin with our first question from Terry Maxon with the Dallas Morning News.

Elaborate on the Amadeus contract, if you will. Can we presume that if the international capability works well for you, that this will become your new reservation provider for all reservations? Gary C. Kelly: I'm a little reluctant to just say yes to that just because it's hard to anticipate what might happen, what might change over the next 3 years that would cause us to feel differently. But clearly, we're going to be going through a lot of effort with Amadeus to implement this module, if you want to think about it that way. And if it works well for us, we'll obviously take a very hard look at domestic. And we've admitted that. I mean, why go to all this trouble to work with Amadeus with the thought that you're not going to continue to do business with them in a broader way? So we're going to -- we're positioned where we can take advantage of that, and if things go well, then, perhaps, that'll be our decision.

All right. And will this capability work side by side with your existing system, or will they be, in effect, 2 completely different systems with no real talking between the 2 of them, your domestic and what Amadeus will provide for you on the international side? Gary C. Kelly: Well, you know what a technology expert I am, Maxon, so I will step right out there. But it's -- one way or the other, it has to be integrated in with the rest of our systems. But I think it's safe to say that this piece will probably be set aside from our domestic reservation system. Is that fair, Bob? Do you want to clean that up? Robert E. Jordan: Yes, Terry, obviously, they're all passenger records, and the systems have to talk. So there is a -- there'll be a period of time where Navitaire, which is the AirTran system, Sabre, which is our current RES platform and Amadeus, which will be the international platform, are all talking to each other. That's all contemplated in the plan. And obviously then, as we move on through the AirTran integration and then make our ultimate RSR decision, we'll be back to one system over a period of years here. But yes, they will talk to each other to pass passenger information back and forth, just to enable a really good customer experience for our international passengers. Gary C. Kelly: And it should all be transparent to our customers. Robert E. Jordan: Yes.

All right. It sounded kind of Rube Goldberg, but that's -- but everything at technology is beyond my ken, so... Gary C. Kelly: We're both dinosaurs, Maxon.

We'll take our next question from Jack Nicas with The Wall Street Journal.

Real quick first question. Pro forma net income for first quarter of 2012 -- for 2011. I didn't see that in the release today. Do you guys have that? Laura H. Wright: Are you talking about combined income with AirTran?

Yes. Laura H. Wright: Yes, it is not. So under GAAP rules, we only include the impact of AirTran from the date that we acquired them, which is May 2 forward. So the comparisons do not include prior year. Now, we do provide certain statistics that are on a combined basis, and I believe we go down the operating income on a combined basis, so we don't go down to net income. AirTran actually did not ever report their first quarter results last year. They were just in that period where because of the acquisition, they were never required to file a first quarter's 10-Q. But we got an operating income, which I believe I pointed out -- that was $86 million this year.

Right, I do see that. Gary C. Kelly: Did you find that combined income statement?

Yes, I certainly have the combined statement with the operating income, but just without the net income, I feel like it's tough to make a true comparison. Gary C. Kelly: But does the 10-Q will have something in addition to that? Laura H. Wright: No, this is all you'll see. So, yes, so on Page 17, you can see that there was an operating loss at AirTran of $29 million. Now if you just want to go look at some of their performance prior to that, you will note that they have expenses below the operating loss line for interest expense and those types of things as well, which have never been reported.

Okay. Now we're hearing sort of that there may be some plans to lease some AirTran 717s to Delta Air Lines. Is there any truth to that? Gary C. Kelly: Well, we don't comment on rumors. I think that, that one cleanly fits within the definition of a rumor. If you were listening to -- I just don't want to be repetitive for you, but if you listened to our analyst call, there's no secret that we are working hard to modernize our fleet, which is a euphemism for saying that we're retiring aircraft that we would prefer not to have in the fleet in lieu of replacing them with next-generation 737, either 800s or 700s. The 737 classics fall into that category as do the 717s. So we are in a retirement phase. Currently, we're retiring 737 classics. If we can find a home for the 717s, then we would -- assuming that we can reach the right economics, then we'll consider retiring those aircraft from our fleet earlier. Today, we have a fleet of 698 airplanes. 88 of those 698 are the 717s. So I'm sure you can quickly surmise that we would prefer to have all 737s. And 717 is a great airplane. Again, it certainly will do the mission for us. It's just a little bit more complexity to have a different fleet type, and we don't really get much benefit by having the unique 717. So in fairness to your question, we're certainly open to retiring the 717s from our fleet early.

Okay, understood. And just real quick, I believe some Atlanta flights that were converted to Southwest had to be converted back to AirTran recently. Could you just elaborate what happened there? Gary C. Kelly: I think it's very simple. We are lining up several things. One is the physical conversion of airplanes. Obviously, for us to launch Southwest flights, we need airplanes in the Southwest configuration. For us, with our integration, it's more complicated than many airlines because our airlines are so different. So we're all coach. AirTran has business class. They assign seats. They charge fees. We don't. So there's a number of things that have to line up physically on the airplane side. Next, all of the technology that connects our 2 networks needs to line up with some of the conversions of these flights as well, and we have elected to defer both. We've elected to defer some of the airplane conversions to beyond 2012, and we've elected to defer some of this technology beyond 2012. Our priority, as we said earlier, is to get our international capabilities with Amadeus up and running, in particular, as well as launch the 737-800 flights.

And we'll take our next question from Kiah Collier with the Houston Chronicle.

Gary, I was hoping you could go into more detail about Southwest's campaign for the Hobby project. Just what exactly is the game plan, especially after the Houston City Council's kind of skeptical reaction this week to the study, showing that the project would be kind of an economic boon for the Houston region? From what I understand, you still have no lobbyist registered with the city. Is that part of the plan? Or what exactly is the plan? Gary C. Kelly: What is our campaign plan?

Right, right. Just more details about what exactly you all are doing. Gary C. Kelly: Well, I think we've got a pretty straightforward approach here, which is -- we are supportive of what the Houston Airport System has proposed. They have asked us if we would be willing to launch international service. And our whole focus is on Houston at this point, so we are working with the city council. We're working with the mayor. We're working with the airport to answer their questions. As you know, we have put forward our commitment to guarantee debt, if that's necessary, to issue bonds, to construct the new facilities. And you've obviously learned today that we've announced what our international technology solution is as well. So we're fully committed to launching international service in Southwest Airlines, number one. We would -- we see a wonderful opportunity to lower fares and add flights and destinations in Houston through Hobby airport, number two. And we are making ourselves available to answer whatever questions there might be to -- in order to launch that service. So we'll work hard to get our message out both with the city council, the mayor, the airport, but also with our customers and our fans in the Houston area just so they know what it is we're trying to accomplish so that we have their support.

Okay. Can you go into a little bit more detail, maybe this is a question for Bob, just about how international flights and service kind of are part of your future with AirTran, just how it fits into the division of a merged carrier in the future? Gary C. Kelly: Well, right now, we have 9 international destinations at AirTran with just a handful of daily departures. So it's a relatively small component of AirTran. AirTran will wind down as a brand over the next several years, so by the time you get to 2015, AirTran is no longer relevant to the conversation. It will be all Southwest Airlines. And by that time, Southwest Airlines will be flying the international flights that AirTran had, that we choose to move over to Southwest. So nothing is guaranteed at this point. But from Southwest -- so at that point in time, we're talking about Southwest. So from our perspective, we see some wonderful opportunities to expand our domestic footprint in the 48 states beyond the borders and especially South, to Latin America. So we are -- and we see Houston as a wonderful opportunity to focus our international activities, at least in Texas. There are about 137 daily departures today at Houston Hobby. We're hopeful that we could add a dozen or 2 to that and serve international markets, at least that's, from this vantage point, what we're thinking about.

[Operator Instructions] We'll go next Kelly Yamanouchi with the Atlanta Journal Constitution.

I was wondering how long you want to or how long can you maintain the bag fees on AirTran given what you discussed about you can make up for it with incremental revenue from codesharing in the future. Gary C. Kelly: Well, Kelly, certainly, for this year, it's -- again, AirTran's business is very solid. Their financial performance has actually improved versus a year ago. They're doing an outstanding job of serving our AirTran customers. These things can't be pieced apart. So they have a nice product. They have a nice brand. They have a fair structure that includes fees, and that will continue until it gets converted to Southwest Airlines.

And we'll take our next question from David Koenig with The Associated Press.

A real quick one. What is your current estimate of the percentage of your passengers who are business versus leisure? And then how is that number or ratio is changing if it is? Gary C. Kelly: David, I think here -- I don't know that we can give you a real finite answer to that. But over -- so it's more -- over time, we see the trends pretty consistent. But I would put our business travel at no less than 35%, probably no more than 40%. And it's been there for quite some time. We're obviously very hopeful that -- we carry a lot of business customers, as I know you've heard me argue over the years just because we carry so many customers nationwide. So we're arguably the largest carrier in the United States of business travelers. But I do see an opportunity for us to win more, and that's why we've invested in an all new frequent flyer program and are investing in some of the other customer amenities that we've added. But I don't see that that number has changed. Laura H. Wright: The only caveat is the AirTran mix is, I would argue, is less than that, and that's the opportunity that we have with the acquisition. Gary C. Kelly: Yes, thank you, Laura. So Dave, that's an important point. So that really is the Southwest business. AirTran, we're pretty confident that their business mix is probably less than 25%.

We'll take our next question from Andy Compart with Aviation Week.

Just to clarify one thing quickly, and then I'll ask my question. But on the bag fee and the change fee, et cetera, at AirTran, it's going to be 24 months to have the Sabre conversion. So you're expecting the fees to remain in place until sometime in 2014, if I understand that how you're explaining it. But secondly, Gary, you said during the call, and I believe this was regarding AirTran's network, that there will be radical changes on an ongoing basis. And I'd like to see more clarity on what you mean by radical changes. What are you foreseeing there? And what areas do you see these changes, and what will make them radical? Gary C. Kelly: Well, without attempting to be too colorful, it's really just -- and that's not a new statement. We're changing our routes. We're changing cities. We're adding and subtracting -- there's just -- what you have with AirTran today is not what you're going to have with those airplanes when they're integrated into Southwest Airlines. So it'll be a very different route network. If nothing else, the hub-and-spoke system that they currently operate in Atlanta, we won't do that. We'll have our typical point-to-point network established, and we've already laid the groundwork for that with the Southwest Airlines' launch. But AirTran has already announced that it's closing 15 locations this year, as one example to what I was referring to. And that capacity, they're very small cities in operations. But there is capacity that becomes available as a consequence of that, and that's what Bob Jordan was reporting earlier, that they're redeploying those flights to new international destinations that we think will be very successful for us. So we're opening up Cabo San Lucas on AirTran, Mexico City on AirTran and connecting -- and also, I guess adding some new U.S. cities to those international destinations. Orange County, California is a new city for AirTran as is Austin, Texas. And those will be serving our international markets. San Antonio, I believe, for the first time, will also be getting international AirTran service, and that's Cancun, Mexico City. So a lot -- I consider that to be pretty radical. But again, when this is all done in 2014, then it'll be a very different route system for these 140 airplanes.

Okay. And the bag fee is until 2014? Gary C. Kelly: AirTran will have bag fees. So as long as AirTran is out there marketing as AirTran, it will have its business class, its fare structure, its fee structure.

And ladies and gentlemen, we have time for one more question today. And we'll take our last question is from Rich Rovito with The Business Journal Milwaukee.

Gary, just with all the changes that are happening in Mitchell Airport here in Milwaukee, specifically Frontier's decision to scrap its hub operation here, currently, AirTran and Southwest now have about 50% of the market share at Mitchell. But what are your thoughts on the Milwaukee market? And is Frontier's decision to essentially drastically cut service here open up some more opportunities for AirTran and Southwest? Gary C. Kelly: Well, I'm excited about Milwaukee. I think Milwaukee is a wonderful city, and I was delighted when we finally made the decision to serve Milwaukee. I think that was in 2009, and we've had great success since then. The acquisition of AirTran obviously accelerates the Southwest brand in that market by the time we get to 2014. So we're very excited about that. Milwaukee is a great market. San Antonio is an example. It's one of our original Southwest cities, and we have about 50 daily departures in San Antonio. So I have every reason to believe that Milwaukee will be at least that. So we are obviously mindful of what our competitors do in the market. Clearly, if they pull flights out, that gives us an opportunity to consider expanding. It requires more research than just a casual view, though, because we all don't serve the same cities. But clearly, if we have competitors that pull out of our city pair markets, that's an opportunity for us to quickly win more customers. And we'll do our best to serve your community very well.

And at this time, I'd like to turn the call back over for any additional or closing remarks.

Well, great. Thank you so much, everyone, for being on the call today. We're sorry we ran out of time. We know we have some additional people in the queue, and we'll do whatever we can to assist you in getting those answers. So if you want to follow up, please call (214) 792-4847, and we, our communications team, are standing by to assist in getting those answers for you. And we have no additional comments at this time, but again, thank you for being on the call.

And this does conclude today's conference. Thank you for joining. You may now disconnect.