Welcome to the Southwest Airlines First Quarter 2014 Conference Call. My name is Tom, 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. At this time, I'd like to turn the call over to Ms. Marcy Brand, Senior Director of Investor Relations. Please go ahead, ma'am.

Thank you, Tom. Good morning, everyone, and welcome to today's call to discuss our first quarter results. Joining me on the call is Gary Kelly, our Chairman, President and CEO; Tammy Romo, Senior Vice President, Finance, and CFO; Bob Jordan, Executive Vice President and Chief Commercial Officer and President of AirTran Airways; and Mike Van De Ven, Executive Vice President and Chief Operating Officer. We will begin with opening remarks from Gary, followed by Tammy providing a review of our results and our current outlook. We will move to the Q&A portion of the call following Tammy's remarks. Please be advised that today's call will include forward-looking statements. Because these statements are based on the company's current intent, 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 excluding special items, please refer to 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. I'll turn the call now over to Gary for opening remarks.

Thank you, Marcy, and good morning, everyone, and thank you for joining us. Our first quarter results, $126 million, were excellent. I'm very pleased, very happy for all of our Southwest people. They worked very hard to get us to this point, and I am delighted to see them rewarded for their efforts. Demand was very strong and very steady and resilient, you might say, considering the extreme weather and all the flight cancellations. And I'm very grateful to our customers for hanging in there with us as well. The bad weather definitely cost us but we still managed to stay on plan. Fuel prices continued to be stable with some help from our fuel hedging program, and currently, we expect fuel price stability to continue with modest hedging protection, at least for 2014, at about 20% coverage. I'm very pleased with the progress on our 5 strategic initiatives, starting at the top: All-new Rapid Rewards is, of course, up and running and very smoothly. And in my opinion, and where our folks are delivering the best frequent flyer plan in the business, and it is exceeding our expectations. Next is the 737-800. We're now up to 54 units in the fleet. It's delivering high load factors, very strong revenues and, of course, lower unit cost. So very pleased with that initiative. Third is the rest of our fleet modernization. It's very much on track. The Evolve seating retrofits were completed last year, and those aircraft are also delivering the added revenues at a lower unit cost. The AirTran's 717 retirements are underway, gradually being replaced by 737s in Southwest. This, too, significantly boost revenue per trip for the, really, the same if not lower cost per trip. And then finally, we're continuing the accelerated retirement of the 737 Classics.…

All right. Thank you, Gary, and thanks to everyone for joining us today. I'll begin with a quick summary of our overall results, and then I'll jump to the revenue and cost trends. As Gary said, our first quarter net income, excluding special items, was a record $126 million, which was $0.18 per diluted share, and that exceeded First Call consensus of $0.16. This was a significant improvement over our first quarter last year's $53 million, which was driven by improved performance each month of the quarter, especially March, which was a record profit performance. Our first quarter GAAP net income was also a record $152 million. Operating income, excluding special items, also set a first quarter record of $242 million, which was a stellar performance, especially considering the estimated $50 million reduction resulting from the winter storms. Our pretax return on invested capital, excluding special items, for the 12 months ended first quarter was 14.2%, which, on an aftertax basis, was 8.9%, which exceeded our average cost of capital. These are superb results, and I'm grateful to our Southwest and AirTran warriors for their outstanding efforts, especially during this year's challenging weather. We are close to our 15% pretax ROIC goal and we plan to hit it this year, although, of course, it's always difficult to predict the economy and fuel prices. But we will continue to exert every effort to hit it. Our record first quarter operating revenues increased 2% year-over-year to $4.2 billion on a 1% decrease year-over-year in ASMs. Solid load factors across all haulings and healthy contributions from our revenue products contributed to our very strong first quarter revenues. In addition, our strategic initiatives remain on track and continue to contribute significantly to our profitability. Both operating and passenger unit revenues were record first quarter…

[Operator Instructions] We'll now begin with our first question from Michael Linenberg with Deutsche Bank.

Tammy, I think you talked about most of the AirTran -- or I think Gary had mentioned, by year end, that the commercial side will be -- will have been wound down. What's the carrying cost? Like, I can go onto the website, and there's an AirTran website, and I can call up and presumably, I'm speaking with an AirTran res employee even though they're a Southwest employee. What's that additional carrying cost that essentially goes away? Is it $30 million, $40 million a year? What's the number, how do we think about that?

Just to make sure I'm tracking your question, Mike. You're asking what kind of inefficiencies do we have as we wind down the AirTran brand?

Yes, the cost of just supporting a separate brand. I don't know if there's still any billboards left, but the signage -- I mean, there's -- obviously, to maintain it, there's got to be some cost associated with it that presumably would go away.

Yes, no. There's -- we -- I agree with you. We certainly -- there are some inefficiencies as we maintain 2 brands, and just the fact that we -- just from a scheduling perspective and a crewing perspective and especially, given that we don't have a stable -- we've been managing our schedule through this integration. I agree with you, there will be -- should be some opportunities for improvement next year. We haven't -- we'll start to work on our plan here for 2015 very soon, but I would anticipate that there would be some efficiencies that we'll be able to gain next year. We haven't put a figure to it yet, but, yes, we'll certainly work to wring out any efficiencies that we can. And of course, our unit cost will also benefit from the up-gauging in our fleet modernization efforts as well.

And, Mike, the only thing that I would add to that really perfect answer is that most of the obvious stuff is gone. So in other words, the way you were describing it, I don't think there are any material inefficiencies there by having a dual brand because our marketing folks are managing to one marketing budget. So you might say that the AirTran brand -- in other words, it's possible that the AirTran brand could be a bit under-supported, but in any event, I think there are definitely inefficiencies in the scheduling of 2 separate fleets that Tammy was referring to. And those, I think, we've at least described qualitatively but I don't think we have a number to that yet. But most of the obvious stuff is gone. We don't have 2 headquarters, we don't have 2 -- we don't have anything like 2 headquarters, departments operating, that's all consolidated into Southwest. So it's really the inefficiency of having 2 operating companies, I think, is where the big opportunity's here.

Mike, I'll give you just one example of an inefficiency, it's just as we're going through the transition with the implementation of a new reservation system as an example. Right now, we are maintaining 3 reservation systems and, of course, with the goal to ultimately get to one. So we do have some of those inefficiencies that we'll continue to work through. So it's those types of ideas that we'll need to -- or opportunities that we'll need to continue to work as we plan for 2015 and even into 2016.

Okay. Great. And just my second question, you talked about the higher CapEx number due to the purchase of the slots. Have you called out what that number is, what you paid for the slots? And then sort of along those lines, I know that you've -- you're interested, obviously, in the Dallas Love Field gates. Are there other American U.S. Airways gates around their system that you'd be interested in or is it just Love Field?

Well, I'll let Tammy speak to the slots. I believe that's confidential, so we have not disclosed that. But the Love Field gates are obviously -- there's only 2 of them, so it's a rather modest opportunity there. But in any event, at this point, we don't have any other interest.

Mike, and the slots, the slots are confidential and we have not disclosed that.

We'll take our next question from Savi Syth with Raymond James. Savanthi Syth - Raymond James & Associates, Inc., Research Division: Just on the seat growth in 2015. I know it's still very early stages but I was wondering, how much of that might be domestic versus international?

Well, international, Savi, is so small. It's only 1% of our total capacity right now. The international opportunity that I highlighted that you're aware of out of Houston Hobby is fourth quarter. So it's not going to have a material capacity impact on 2015. If I'm thinking out loud, I think the vast majority is going to be domestic and probably oriented towards -- what we've already announced is our plans to expand the Dallas Love Field, so all of that will be domestic. So it'll be heavily weighted towards domestic.

Yes, I would agree. It's really Dallas, and it's really the investment in the DCA slot flying and the LaGuardia slot flying that carries it into 2015. And as Gary said, our international business is a very small percent of the total already. So even Houston on that, for part of the year, it's a small percent of a small percent. So it's really the domestic.

Now we -- and let me just repeat, again, that we're only published through October. So these are committed plans that Bob and I are sharing with you. That's just our -- assuming that the fleet is flat and assuming you see that kind of seat growth, that is what I would assume the split would be with those markets. But we could decide, just to be fair to your question, we could decide, between now and whenever we publish the second half schedule, that we want to put more capacity next year internationally. But that -- to me, that's what is assumed with that flat fleet. Savanthi Syth - Raymond James & Associates, Inc., Research Division: Understood. And then just on the national flights that you're switching from AirTran to Southwest, I know AirTran has some ancillary like baggage fees and other fees. Are you able to capture that through higher fares on these international flights? Or is maybe introducing bag fees on just international something you would consider?

I think the answer to your first question is yes. You just look at the continued unit revenue growth. And that includes bringing down the AirTran brand and bringing those flights up at Southwest. And the other, there is no thought to confusing the brand by offering bag fees on certain flights like international. No. Savanthi Syth - Raymond James & Associates, Inc., Research Division: All right. Great. And just if I may squeeze one last one related to this, just -- so 1% of ASMs today, how much and how fast could that increase, do you think, over the next few years, international?

Well, again, I think it's premature. First of all, we're -- we want to grow but we're cautious. We -- the first priority here is to hit and sustain our return on capital. So I think that's really premature, but if -- I think it's going to continue to be a relatively modest component of the Southwest route system for the near future, for over the next several years.

And we'll take our next question from Glenn Engel with Bank of America.

Two questions on labor, Gary, Tammy. One is when I looked at the departures, they were down 5.9% in the quarter yet headcount was down only 1.4%? So why aren't we seeing -- it seems like your productivity, at least on the departure basis, got worse. And then, two, can you go over the profit-sharing calculation and how we should do that going forward, and whether current integration charges are now starting to flow through the profit-sharing line?

Yes. Glenn, I think on just your question on trips relative to headcount, we obviously had a lot of inefficiency just due to -- I'll attribute that largely to the weather. And on the profit sharing, again, our profit sharing was $29 million for the quarter and that was reduced by $6 million related to acquisition and integration costs, half of which were incurred in first quarter '14, and the other half related to integration costs incurred from April 2011 through December 23, which was in accordance with our profit sharing plan. And so the integration costs that deferral period -- for that deferral period totaled about $385 million, and that will result, and this is probably what you need, Glenn, and that will result in $58 million of lower profit sharing expense to be recorded January '14 through December 2018, and $3 million of which lowered our first quarter '14 profit sharing expense.

And additional integration cost, did those now impact profit sharing? Are those also...

Those just flow right through, like you normally would. So that was our -- we're past our cutoff period. So yes, that would just flow through the profit sharing calculation as normal.

Glenn, on your headcount productivity question, the other thing -- and of course, I know you know all this, but you can't just use trips as the only proxy for the headcount. So the available seat miles are probably a better proxy for flight crews. And then the trips are also getting -- some of them are getting more flight attendants per trip as an example. So there's a -- while, yes, the trips are down, and it does provide some relief for some workgroups, it is certainly not all.

And we'll take our next question from Hunter Keay with Wolfe Research.

So Tammy, about a year ago, you said you guys are going to tighten some flexibility around some of your most restricted fares, and you said it was going to be done later in 2013. I'm kind of curious what you did, what you found out and if it was successful or not and if there's anything you can do going forward on that.

Yes. Hunter, what we did recently is we did tighten restrictions on our Wanna Get Away fares, and that's just essentially -- it's just a no-show. I would consider that really more of a no-show penalty, and essentially, if you don't call and cancel your flight, those funds would be forfeited.

Okay. You're -- specifically for the No Show policy?

That's right. That's exactly what I was referring to.

Okay. And can we talk about sort of the relationship between advertising expense and distribution strategy. You guys spend about $200-plus million a year on advertising, which is a lot. And I understand that because you need people to go to southwest.com to buy your tickets. But have you thought about that in the context of maybe putting some more of your inventory on online travel agencies? That would give you more exposure that way and maybe alleviate some of the expense on the advertising side that you would have to get in people's minds to go to southwest.com. If they just go to Expedia and see your fare there, maybe you could spend a little bit less on advertising while sort of also tweaking the distribution strategy a little bit. Any thoughts on the relationship between those 2?

Well, Hunter, I guess I'll comment and then see if Gary or Bob have anything to add. But in terms of -- usually, the online, as you know, those are usually customers looking for discount fares, and we have no issue with that on southwest.com. We drive a lot of customers to southwest.com because they know that they can rely on us for low fares. And just another, I think, interesting fact, too, is that once we started distributing AirTran fares on southwest.com, we quickly became their largest distribution channel. So we're always looking at advertising and always looking for ways to spend those dollars more efficiently, and we'll obviously continue to do that going forward. But at this point, we don't have any major changes contemplated for our distribution strategy.

Yes, Hunter. This is Bob. I'll just add a couple of more things. Obviously, AirTran uses the OTAs, and to Tammy's point, we've seen no issue converting AirTran market flights to -- and customers to southwest.com. In fact, those markets are converting and maturing at a rate that's better than a typical new market for Southwest, so I really believe in our distribution strategy. The other thing really on the advertising, when you comp us to others, you've got to think about total distribution costs. So what's -- what you've got to add back are they're paying for GDS fees and bookings, and there are all kinds of costs that you have to look at in total as distribution, in addition to just advertising. And every time we look at that across all of our competitors, we are in the lowest, whether you look at that on a per-passenger basis or a per-revenue-generated basis. So I'm very comfortable with where our costs are, if you look at total distribution costs, which would include advertising. But as Tammy said, we're always watching our advertising costs. I mean, as an example only, we're managing the combined AirTran and Southwest brand basically at the same level of advertising cost that was Southwest only prior, so we're constantly looking for efficiencies there.

Yes. And we certainly have realized that, to Bob's point, which all that's been factored into the synergy numbers that we provided for AirTran.

And we'll take our next question from John Godyn with Morgan Stanley.

Gary and Tammy, definitely appreciate the additional color on seat count growth next year. Of course, some of that is sort of onetime in nature. I'm curious if the team is willing to speak to a long-term ASM growth rate. If we envision a world where you're hitting your 15% ROIC target, what would be like a steady-state Southwest growth rate?

Well, I think it's premature to say. I think that's really not so much a strategic question as it is tactical. This is a very tactical business, and especially when it comes to growth and growth opportunities, I think, number one, is you have to have a strong balance sheet. Number two, you have to have confidence that your earnings will provide adequate returns, and then you have to be confident that you know how to manage growth. So we've been a growth company for most of our history, and I do feel like the company has a lot of institutional knowledge about how to identify new markets and about how long it takes to develop them and about how much should be exposed at any given point in time. The other factor, of course, over a longer period of time that is key to your question is what are fuel prices going to be; and then, secondly, what our overall costs going to be because that will mean everything about generating more passengers and traffic and share for Southwest Airlines. So under the assumption that we continue to be if not the low cost producer or darn near close to it and maintain our low fare brand and fuel prices remain stable over the next decade, I think we have significant opportunities to grow the fleet from here. I wouldn't say that that's 10% per annum, I think that, that was for this industry and for our company otherwise. So something in the low-single digits makes sense in terms of a planning horizon. But you are right to point out, John, that here, in the meantime, when you go from 2012 to '13 to '14 to '15, there's a lot of noise from year-to-year. And so once we get clear of 2015, that's something we'll be focused on, and we'll want to manage our growth very carefully and again, with an eye towards keeping the balance sheet strong and hitting our return on capital.

That is very thorough. And the good part about the noise, as you mentioned, Gary, in your prepared remarks is that it's going to improve the cost structure. When we think about all of the moving parts in 2015 and we think about sort of the seat utilization kind of popping back on the up-gauging from the -800 and the change in mix there, as well as perhaps even going back to Mike's question earlier on some of these AirTran expenses going away, I mean, it seems natural to think that we should see a deceleration meaningfully in the CASM x fuel growth, perhaps even a flat to down trend given all these numbers. I'm not sure if I've got the moving parts right. Maybe I'm missing some risks outside of labor. If you could just help me kind of think through that directionally, that would be helpful.

Well -- and Tammy, you chime in, too. John, you've been very thorough as well in your analysis. That is all intuitive. We have the same view that you do. We have not finalized our plan yet, and therefore, we're just not ready to provide any guidance. But if you think about the swap from the 717 to the 737, just to repeat what I said in my remarks, the costs are essentially the same. They may even be lower to operate the same number of airplanes, yet you're getting 26 more seats on every single departure. So when we talk about growth for Southwest next year, I'm not going to argue to you that it's free because it is true that we can choose to have fewer airplanes if we don't believe that we can generate that much traffic. But you're right, with this -- the growth we're talking about in the near term should come at a very modest cost relative to a normal view of a fully allocated unit of growth. So that certainly factors in somewhat to our thinking, but the bottom line is we need to be comfortable that we can generate traffic to absorb the increase in seats that we are planning for next year. So if we end up growing seats 2.5% next year, then we need to be comfortable that we'll grow our traffic by 2.5%. If we don't, then I don't think that we should be pursuing it.

And we'll take our next question from Joe DeNardi with Stifel. Joseph W. DeNardi - Stifel, Nicolaus & Company, Incorporated, Research Division: I guess my understanding, the part of the reason you're keeping capacity flat this year is to facilitate ROIC improvement. So does that imply simply that growing capacity is a negative for ROIC?

No, but I think it's just common sense that tells you that if your base business is not achieving your return target, why would you increase the base? I think it's just that simple. As a practical matter, the other thing that we keep reminding you and everyone about is that there's just a lot of work going on. So the aircraft movements out of Southwest, AirTran and into Southwest are going to be in record numbers. And then for Mike Van De Ven and our operating departments, that creates record numbers of training events for employees, so it's a lot of activity to manage. If you then said, "Now I want to grow by x number of aircraft on top of that," I just think that that is unwise on its face. So for several reasons, we want to maintain relatively flat capacity in 2014, but the main reason is we haven't hit our 15% target yet. So I think we need to do that first and then make a judgment about whether that's sustainable with growth. Joseph W. DeNardi - Stifel, Nicolaus & Company, Incorporated, Research Division: Okay. Yes, that's helpful. On the flexibility you have in terms of capacity for 2015, should I think about the driver there in terms of up or down, is that really going to be a function of the demand and pricing trends that you're seeing? Or should I think of it more as you guys using that as a means of managing kind of CASM growth?

I think it's demand. Yes, clearly, what we're trying to do is optimize the network to match customer demand, and I think our commercial team is doing a great job with the network and -- as evidenced by our first quarter results.

And again, that's what I was trying to say earlier, which is if we're going to increase seats, we need to be comfortable that we will also increase customers. It helps mitigate the risk to know that the growth is going to come online at a very attractive cost, but that's not the reason to grow. The reason to grow is because we believe we can increase the traffic and the revenues and then it would, again, come hopefully at a very attractive cost of debt service.

We'll take our next question from Thomas Kim with Goldman Sachs.

Tammy, can I just ask you with regard to some cost items, can you provide a little more color on the maintenance side? I think you had mentioned that there was a little bit of delay or deferral in Q1. Should we assume that that gets pushed into Q2? And if you could quantify that to some extent, I would appreciate it.

Yes. Our maintenance costs that we did have, that came out a little bit lower than expected for first quarter just due to shifting. But all of that has been incorporated into the guidance that we gave you, so it's not -- I don't -- it's not material.

Okay. And then just a minor point but I'm curious as to what drove the 5% increase in other OpEx.

Oh, part of that is weather. If you look at our increase, the 3.5% CASM increase, unit cost increase, excluding profit sharing and special items, really, most of that was attributable to weather for the quarter. And we also had some shifting in our technology spend, but -- so some of that will get shifted out throughout the rest of the year. But again, that's been incorporated into our 2% to 3% increase for the full year in that guidance.

We'll take our next question from David Fintzen with Barclays.

Gary, can you remind me -- we've been talking a lot about the 15% return target. Can you remind me why it's 15%? I mean it's something that I can -- I just remember as long as I've been around. I mean -- and I suspect it came in the '90s when 15% probably meant something much bigger than it does today. And what I mean by that is 15% now as a return target, not dissimilar from your other large competitors, and frankly, it's lower than really the growth-oriented carriers. So when you start thinking about growth and return targets, shouldn't that target really be much higher?

I don't have a problem in debating where the target should be. And as -- I think it also depends on how fast one grows. So if we don't grow, I think that the target probably should go up. If we do grow -- the main thing is are we creating shareholder value or not. And so it's a matter of art as to how much of a premium over our weighted average cost of capital we need to be earning. You look at -- of course, you're an expert at this. You look at broader indices or broader performance across industries, which we do, and feel like the 15% is an adequate return. But that's something that we obviously would continue to consider and talk with our major shareholders about. And so the other thing, and you know the industry well, that I would remind you is that there are very few -- there are no airlines who have hit a 15% return on invested capital over this cycle except for Southwest Airlines. And that is what we did in the '70s. That's what we did in the '80s, and that's what we did in the '90s. So that history alone would tell you that it is not -- it's not a layup to hit that. But in any event, Tammy already said that that's our target and the target has not changed. Does that mean that it will forever be 15%? No. I don't think -- I wouldn't say it that way, but certainly, for 2014, we work very hard for a decade to get to this point and are not going to be ashamed to turn in that kind of performance, if that's the way it turns out.

Okay. No, that's helpful. It just helps to kind of put the -- frame the debate around the fleet growth. That's very helpful. The other question I actually intended to ask was, can you just help us think a little bit about aircraft utilization and maybe even broader asset utilization kind of going forward? I mean, historically, you've run kind of sweat the assets. It's a little more tactical business now in terms of keeping schedules in the meat of the day and the meat of the year, so to speak. I mean, should -- when we're thinking about aircraft utilization over time, should we be assuming that you don't go back to where maybe Southwest ran 5, 6, 7 years ago?

Well, David, you -- again, you know us well, and you know this business very well. The utilization, just as a quick refresher, has varied a little bit since we bought AirTran. So AirTran, as a unit, has never been, I would say, efficiently scheduled. So we've had a little bit of slop in there. And then, of course, we've had a lot of aircraft out of service in 2013 and now in 2014, going through various conversions, either of all the seats or now converting airplanes out to Delta or converting them into Southwest, all the things that you know about. So at least we can say that we are underutilized right now and that the utilization will improve once we get clear of this integration work in 2015 and, especially, 2016. So that, we can agree to. As to will the airline schedule the way that it did before 2008 or '09 where we had a lot of early morning flights, a lot of late evening flights, I don't think so. And again, I think we just only have to be open to the fact that things might change. But unless the demand reappears at that time of the day and it is efficient to schedule an airplane on a marginal cost basis, I don't see that that flying will come back. But you've got $100 crude oil, $110 crude oil today compared to a time where it was $10 to $20 a barrel, which made it more viable to operate flights on the shoulders with less than 50% load factors, and that's just not the case today. So as long as that case remains, then absolutely, you'll see the flight schedule in the meat of the day. And Bob, we're probably at the highest percentage ever. Aren't we about 88%, 89%, 90% scheduled between 7 a.m. and 7 p.m.?

We are. We -- for 5 years now, we've cut those early and late flights really just based on demand. I mean, it's a flight-by-flight, market-by-market exercise. And yet, we've got more flights than ever where the demand is in the day, so I think it's a great thing from a financial and flight performance perspective. Yes, I would expect that -- I wouldn't expect that trend cutting early and late to continue at the pace it has over the past 5 years. So I think we're more stable now, but I don't see us going back.

For us, we've got opportunities to consider. Red-eye flying and things like that, and that is something that Bob and Mike are thinking about, but we don't have any plans to make any material change in the way we're scheduling the fleet, for any reason for that matter. But that would be the 1 exception perhaps to the shoulder flying comments.

And we'll take our next question from Jamie Baker with JP Morgan. Jamie N. Baker - JP Morgan Chase & Co, Research Division: Just a quick clarification for Tammy on non-passenger demand. Did you say other revenue would decline here a bit more than in Q1 or freight mail and other. It doesn't make a huge difference, but I wanted to clarify.

I said other. And that's just obviously, as we're moving AirTran flying over to Southwest, that would be the ancillary revenues. But -- and so we'll see that's just simply the remainder of ancillary charges going away as we move them over to the AirTran brand. Jamie N. Baker - JP Morgan Chase & Co, Research Division: Got it. And then, a question -- I'm sorry, were you adding something else?

Jamie, I was just going to clarify that at least on the freight side, since we haven't talked about freight, we are adding more and more markets since AirTran did not previously carry freight. So I think we have decent opportunities to grow the freight revenue category. But the other category that you asked about that Tammy mentioned, yes, that will continue to decline. Jamie N. Baker - JP Morgan Chase & Co, Research Division: Got it, got it. And then, Gary, a question on the progress with the pilots. The challenge that I'm facing is that your existing contract already appears to be among the industry's more, if not most, efficient. And I certainly understand that the pilots like to see wages increase. I mean, that makes perfectly good sense. What's less clear is what management's ask [ph] might look like in terms of improved economics. It's not like you need scope really for RJs or anything like that. So I know you don't want to negotiate in public, but are there any competitor contracts that you could point to and you'd say, "Hey, Airline X over there has some really interesting flexibility in the pilot contracts," something like that?

Well, Jamie, you're right, we are efficient. But we have things that are tangible today that are under discussion that would give Southwest more flexibility and make Southwest more efficient. So as good as we are, there are always things that can change. And as a matter of fact, there are absolutely some examples with competitors. And if you will permit me, I won't share who those are. But in any event, absolutely, there's always opportunities with every workgroup, always, to find ways to improve. And the nice thing is we're doing well, we've got good news, there are definitely some things that we can do for our people going forward as well and keep Southwest strong and build well for all our employees, and that's a wonderful place to be.

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 as always, if there are any follow-on questions, please feel free to call. We appreciate you all joining today, 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. Linda Rutherford, Vice President of Communication and Outreach.

Thanks, Tom. For the media folks on the call, if you've got a question, go ahead. And Tom, let them know how they can queue up for that.

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

As you are probably aware of, Virgin America has scheduled an event tomorrow to announce something about their Dallas operations. The -- have you got a sense that the competition for those gates have been settled? Have you gotten any word whether Virgin America is getting them or that you're out of the competition for them?

Terry, we are waiting patiently to see what the next step is in the process. So as far as I am aware, we are still in the running for consideration.

Delta wants the City of Dallas to take control of the gates and make them common use gates. Is that an acceptable alternative to Southwest? Or do you believe that, one way or the other, one airline should definitely get them?

Well, I think that sort of gets into the contractual aspect of the lease, and nothing that I really want to comment on. So I can understand why somebody would argue for that, but it's going to be up to the City of Dallas and its lease with American and their sublease rights to determine how to apply this. So I'd rather not comment on that.

And we'll take our next question from Andrea Ahles with Fort Worth Star Telegram.

So I think Terry asked part of my question, which is about the Love Field gates. But I was wondering if you could also talk about how has demand been for the new flights since you released the schedule? Have you had a lot of interested people on the Love Field flights and which might be getting on it [ph] ? Are you considering other cities you might be adding in 2015 if you get those gates or if -- as you start to improve your schedule going forward at Love Field?

Well, Love Field is -- of course, it's going to happen, so we've already preannounced that we'll be selling more flights to more destinations sometime soon. So we're not taking bookings yet, Andrea, as I think you know, on the 15 new nonstop destinations that we've announced. That's a "stay tuned." I think Tammy mentioned already that our business out of Love Field is up significantly. It's up double digit this year even without the new flights yet. So I don't know that we can quite explain that other than just a great service that our Southwest warriors offer every day. But yes, our business in Love Field is good, and we're looking forward to launching the new service here later this year.

Do you know when you're going to make those flights available for purchase?

I do know.

When would that be?

Linda, have we disclosed that yet?

We've not yet at the time.

We haven't said that yet, so stay tuned.

We'll take our last question from Aaron Karp with Air Transport World.

You talked about how you think the international flying will be a relatively modest component for the next few years. How much of a revenue enhancement do you think international will be near term? And are you looking at it primarily as a long-term growth opportunity?

Well, over the long term, I think it's a large opportunity. We're thinking about it as North America. I would throw in Hawaii and Alaska, just because it is so different than flying in the 48 states, into that whole growth opportunity. We serve 96 cities today with Southwest and AirTran and have a potential to add 50 new destinations over some period of time, and that would be several hundreds worth of airplanes -- worth of flying. So it's a very material opportunity. And as I mentioned earlier, growing the airline is, in many ways, tactical. We've made the strategic investment to create the capability at Southwest to fly beyond the borders and to fly longer distances. So that strategic decision is made and is in place. Then where we decide to go within that geographic footprint, that will depend on a lot of factors. But in any event, I would absolutely expect that 1% would grow as a percentage of our total. At what rate, I'm not willing to predict yet. Bob, I don't know if you have a number off the top of your head, what the potential is. I don't think it's going to be half of our business. It's not going to be anything like that. I'd be surprised if it was 25% of our business. But it could probably be in the 10%, 15% range, don't you think?

Yes, I think so. The domestic market is obviously much more mature. So the international markets that we're looking at are -- there's still a lot of room for development, so more room for competition, a lot of higher fares. Obviously, those will connect very well to our very mature domestic network, our very wide domestic network. So I think there's a lot of opportunity there. But it's a lot of opportunity on a relatively small base compared to the total. So yes, I would expect, to Gary's number, sort of the high-single digits, low-double digits is where I feel like we can grow to. But again, that growth rate -- the growth potential on the current base is much larger simply because the base is so small today.

And again, this all assumes 737 service. The geographic footprint is all of North America, including the Caribbean and actually, the northern reaches of South America. So it's a very exciting opportunity, 200 airplanes. I didn't do the math in my head, but that would be about, not quite 1/3 increase in the fleet. So it's longer-haul flying, which takes longer, and it is higher revenue, so maybe our 10% to% 15 estimate is low. But we need to walk before we run here, and we're excited and ready to get started.

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

Thank you, Tom. If anybody has any follow-up, members of the media can reach out to our folks in the communications department, and have a wonderful afternoon.

Ladies and gentlemen, this does conclude today's conference. We appreciate your participation.