88% of 2019 revenues restored and managed business demand ahead of our expectations for December.
It's amazing, when in the first three weeks we had roughly 5,000 employees test positive for COVID, with employee cases roughly two and a half times what they were during the delta variant.
I'm pleased to report though that over the last few weeks, the operation and staffing has stabilized, and we've seen performance even better than during the holidays.
Yesterday, for example, we were 95% on time, which I'm just usually proud of.
To maintain sufficient available staff, we extended incentive pay programs for ops employees through early February.
Hiring is part of the equation, of course, and we met our 2021 hiring goals and we are on track with plans to add at least 8,000 employees this year.
And as we continue retiring older 737-700 aircraft and taking the MAX aircraft this year, in support of our fleet modernization initiatives as well.
All combined, these initiatives are expected to deliver incremental EBIT of 1 to 1.5 billion in 2023, and we continue to expect roughly half of that value this year, given the initiatives in place.
We reported a $68 million profit in fourth quarter or $0.11 per diluted share.
And excluding special items, we reported an $85 million profit or $0.14 per diluted share.
For full year 2021, our net income was 977 million or $1.61 per diluted share, driven by 2.7 billion of payroll support program proceeds.
Excluding this temporary benefit to salary, wages, and benefits expense, and other smaller special items, our full year net loss was 1.3 billion or a $2.15 loss per diluted share.
As a result, our first quarter unit cost inflation compared with first quarter 2019 and excluding fuel special items and profit sharing has increased about 10 points.
Roughly half of that increase is driven by the 150 million of additional incentive pay we are offering to operations employees to early February, and the other half is associated with flying fewer ASMs than we were planning.
Market fuel prices have continued to rise here, which also resulted in a $0.10 increase in our fuel cost per gallon guidance.
Our estimated first quarter fuel price in the $2.25 to $2.35 per gallon range is also roughly $0.25 higher than our first quarter 2019 fuel price, and that's inclusive of an estimated $0.35 of hedging gains here in the first quarter.
Our planned flight schedule adjustments take some capacity upside optimism off the table for this year and reduces our full year 2022 capacity outlook by about four points from roughly flat to down 4% versus 2019.
I've already covered the 150 million of additional incentive pay in first quarter.
And in order to be more competitive on the hiring front, in particular for ground operations, we are raising starting wage rates from $15 per hour to $17 per hour, which is estimated to be a 20 to $25 million total impact to this year.
Although it is early based on our current plan for 2022 and preliminary plan for 2023, we expect 2023 CASM-X will decline year over year compared with 2022.
We currently have 77 MAX firm orders and 37 MAX options with Boeing this year.
While our plan assumes we will exercise the remaining 37 options this year, we maintain the flexibility to evaluate that intention as decision points arise.
As I have mentioned to you all before, we won't incur a material CASM-X penalty from holding on to extra aircraft in the event we temporarily park some of our -700 while capacity is moderated this year.
We ended 2021 with liquidity of 16.5 billion, our leverage is at a very manageable 54%, and we continue to be the only U.S. airline with an investment-grade rating by all three rating agencies, which I believe is one of our key competitive advantages.
The negative revenue impact to Q3 was $300 million.
At that time, we estimated negative revenue impact to Q4 of $100 million.
Our operating revenues finished within guidance, down 11.8%.
And managed business revenues came in better than guidance, down 50% in December.
The negative revenue impact from the delta variant came in lower than we thought at around $60 million as we saw a continued rebound in demand and yields throughout the quarter.
However, we saw some choppiness in late December from decelerating bookings and increasing cancellations, and we had a $30 million negative revenue impact from the omicron variant as COVID cases increased.
Combined, this $90 million COVID impact in Q4 was slightly less than our original estimate of $100 million from COVID as we were able to mitigate some of the load factor decrease through higher yields.
While we can't share the specifics about the incremental revenue from our new credit card agreement, you can see that other revenues in fourth quarter 2021 increased 20% compared with Q4 2019 while outpacing the recovery in passenger revenue, and we are on track for expected benefits in 2022.
Now, looking at first quarter, we estimate the weather-related and staff-related flight cancellations in January, resulting in a $50 million negative impact to operating revenues.
We expect the omicron-related negative revenue impact to January and February combined to be roughly $330 million.
We expect first quarter managed business revenues to be down 45 to 55% versus 2019, and improve sequentially from January through March.
When you put all these moving parts together, that gets us to our first quarter operating revenue guidance of down 10 to 15% versus first quarter 2019.
The result of this exercise, combined with the flight cancellations we have experienced so far this month, is a three-point reduction in first quarter 2022 capacity from down 6% to down 9% compared with the first quarter 2019.
And for full year 2022, as Tammy mentioned, it's a four-point reduction from roughly flat to down 4% compared with the full year 2019.
As of March 2022, we are roughly 75% restored based on trips, and we continue to expect to restore the vast majority of our route network by the end of 2023.
And our on-time performance for that period was 87%, and that was better than our five-year average.
So, we ran a similar play over the Christmas holiday, and our daily trips there increased to roughly 3,600 a day.
And because we had those people to pitch in to pick up extra shifts during that week of Christmas, we had a completion factor of 99.2%, and we had less than 1% of our flights canceled in the face of that COVID surge.
All told, we ended up the fourth quarter with an on-time performance of 72.6%, mainly due to some of the challenges we faced in October.
And we had roughly 5,000 employees become sick in the first three weeks of January.
And that week, we canceled roughly 3,800 flights.
About 1,900 of those were for weather, and about 1,600 of those were for staffing.
And then our on-time performance of that period was 41.5%.
And so from January 9th through the 25th, our on-time performance jumped to almost 87%, and that leads the industry for marketing carriers, and the incentive pay program runs through February 8.
And just by way of example, we had over 700 pilots and 1,500 flight attendants that were able to work in that time frame.
Those COVID numbers have dropped substantially since then to roughly 100 to 150 people for each group, and that's a lot closer to what we originally expected.
For the over 8,000 employees that we intend to hire this year, about 40% of them are fly crews, about 40% of them are ground operations.

Summary:
I'm pleased to report though that over the last few weeks, the operation and staffing has stabilized, and we've seen performance even better than during the holidays.
To maintain sufficient available staff, we extended incentive pay programs for ops employees through early February.
And excluding special items, we reported an $85 million profit or $0.14 per diluted share.
Although it is early based on our current plan for 2022 and preliminary plan for 2023, we expect 2023 CASM-X will decline year over year compared with 2022.
However, we saw some choppiness in late December from decelerating bookings and increasing cancellations, and we had a $30 million negative revenue impact from the omicron variant as COVID cases increased.
While we can't share the specifics about the incremental revenue from our new credit card agreement, you can see that other revenues in fourth quarter 2021 increased 20% compared with Q4 2019 while outpacing the recovery in passenger revenue, and we are on track for expected benefits in 2022.
When you put all these moving parts together, that gets us to our first quarter operating revenue guidance of down 10 to 15% versus first quarter 2019.
The result of this exercise, combined with the flight cancellations we have experienced so far this month, is a three-point reduction in first quarter 2022 capacity from down 6% to down 9% compared with the first quarter 2019.
As of March 2022, we are roughly 75% restored based on trips, and we continue to expect to restore the vast majority of our route network by the end of 2023.