UAL - Earnings call 4 2023 | United Airlines Holdings, Inc.

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Operator

Good morning, and welcome to United Airlines Holdings' Earnings Conference Call for the Fourth Quarter 2023 and Full Year 2023. My name is Tegan, and I will be your conference facilitator today. [Operator Instructions] This call is being recorded and is copyrighted.

Please note that no portion of the call may be recorded, transcribed or rebroadcast without the company's permission.

Your participation implies your consent to our recording of the call.

agree terms, not the drop do line. you with simply these off If

turn to Investor presentation will the I now over ahead. Kristina Managing go today's Edwards, your Director Please of Relations. call, for host

Kristina Munoz

Thank you, welcome Fourth our Call. and Quarter website earnings Conference everyone, release, Year Earnings available we to at on XXXX our United's Full Yesterday, Good Tegan. morning, and issued which is ir.united.com.

the forward-looking company's is made expectations during conference statements. yesterday's which future in contain represents are based concerning performance. release, which beliefs available upon Information financial information All current company. statements call or this and currently may events the to forward-looking

XX-K factors factors. the United from cause Please description Airlines our Airlines expectations. by and A results to thorough of other these Form United and to could reports filed XX-Q our number SEC Holdings, and with current for differ materially Inc. refer more of release, a actual earnings

discussing otherwise a be Unless reconciliations metrics on definitions press related to in we basis call. and our on release. non-GAAP noted, Please the refer will our financial this

non-GAAP to For our of these release. of the the GAAP tables refer measures a at end comparable the most earnings measures, reconciliation please directly to

results the and Chief Executive Kirby; Financial Officer, Joining to us and Leskinen. Officer, President Vice Chief Nocella; Executive President and call outlook Commercial Executive discuss and President, on Chief our Vice our Hart; today Scott Brett Officer, Andrew Mike

the executive on the In of line to addition, assist we other have the team available with Q&A. members

the to like turn I'd over call Scott. to Now

Scott Kirby

for that Next other headwinds really globe, today. to came on call and together. the and United was our Despite numerous XXXX morning Kristina, geopolitical the good plan everyone you, a year Thank around the

turn airlines. operational other streams because last true lead from diversified to other at differentiate would for certainly continued to year were in United to and those was Our leading time cost revenue. this is higher constraints us pressures and That that cost converters, our factors thesis revenue

in that I'd that was a RASM new higher saying while between and either is the our And of That's United's hard we exactly forecast the we a XXXX. the we the predicted. have forecast. between best or therefore, in is confidence that and could year, earnings relationship be forecasting get link could we X, have Another way in margin build higher And happened RASM confidence by CASM to have solidified. exactly the correct, believe on and that what being CASM never

same members XXX,XXX make thank the And to so team of world continue and employees to huge United deliver the in like that. And I'd XXX,XXX to those around hard on the customers people worked so who our impacts the proud has and aircraft. team, from we X that safe the since been who's before of January X MAX nonstop to MAX taken tech ensure working service. XXX% I'm is ops it return the to days XX-hour our lead face

happens prevents to also effort FAA we us, also working the situation be the what for leadership again. so they hours with their I'd professional to ever it this thank in also are that know for acknowledge that like that long happening weekends we'd from confident an that too ensure sure remediation and in and

what what in performance XXXX ago. XXXX. especially United repeat to impressive, year was a X sets likely stage is the just considered really were be for financial expecting analysts

within think why some trends was got $XX spend to we earnings $XX. I targets initial full there delivered year to we per today above examining United the our range XXXX, persist of in those XXXX. of will and share how In $XX, which time we want

other including catch-up be environment down our challenge we as environment. than more constraints, Two, X on thought. traffic carriers adopted out hiring chain capacity we control points operating operating to the plans, by One, environment even challenging, those own to be maintenance air expect directly set, turned issues. coming to new driven the industry supply and and and operating It challenging led FAA, average pilots to

and year For Newark, schedule are made setting of records. in operational the United, share Brett we changes moment, Newark. accomplishments but will a to detail and the in we really particular, The operation ever more it's constraints we rightsize aerospace, last for closed That's our customers. good the our to improvements allowed in waivers been than the out one to is that physical most our FAA important year. good us just achieved better in that that an and performing for airport run business, been

operating believe be fair, fact, bogged challenging and inflationary predict and to that maintenance United those like [ across CASM-ex the a face talked we the we underestimated, a being at But forecasting. cost pressures are same cost as cost in have as the we or, exactly would in were year up pressures conversions wind supply but we pressures in Three, labor, that and cost even that led industry. issues, pass-through, the environment led chain what primarily to happened. we industry-wide absolute than to and ] higher we pressures will from industry, -- been the ago, when much is, fuel entire And the past,

we industry revenues. higher-than-expected CASM-ex costs those While drove higher-than-expected offset pressures United, cost higher at with

Mali, in like point. fires the conflicts which difficult fuel the Five, East, pressure. inflationary spike, final to rising to the while events in persisting Middle predict price leads

range So globe. $XX United it The rather XXXX months meant multiple in many to around advance. $XX that XX United's we despite other in year CASM the and at our CASM those difficult connection than make things RASM achieved timing between that headwinds to full EPS predict initial

full history, labor to back That cost Next, means new to remain. path successful overlapping a maintain we and made is soon. RASM CASM adjust anytime United the year The continue going shows FAA This will years necessities can to and and important and down and in challenges the XXXX success and expect to grow combined of with before operational you XXXX will of continue. The to and It reality, our what such will for link the reasons. out follow margins. just expect same normal. and a new the challenges will the be between But capacity still similar convergence We're CASM revenues new aren't agreements, supply ratchet our United away in EPS cost chain which staffing. is the

is connection X.X exactly our laid we the plan There ability and United's road. United XXXX, is more expected over earnings out that long the United's in years revenue. as and been working growth the be grow the margin because of between ago, But we and cost the we bumps to strategy. In in our there future about tighter feel to Next will have confident almost demonstrated bright. continue we term

and to spring. no emerging is Looking We'll United and ahead have capitalize move capitalize better with later macroeconomic plan opportunities. our more is Investor Next XXXX, to you on to to than United, trends to at on continuing airline share industry aggressively working positioned and this the we're Day

for the on another And employees hand we're our year great In and to shareholders. and our focused with meantime, Brett. customers delivering I'll it over that,

Brett Hart

you, and Thank good Scott, morning.

been MAX Boeing X Saturday, January grounded. has X, As XXX aircraft of

in operator are aircraft our of approximately Boeing the of representing the We type largest currently first [indiscernible] capacity fleet quarter. the X%

since start aircraft XX is Our January. X grounded financial of assumes guidance MAX the that United

year were Tech MAX Scott's I'm year XXX fleet. record our did but affected history. working our and ensure growth of closed any to records MAX them by we travel with XXXX was carrying time before And set aircraft safety only customers. The a again. gratitude consolidated who misconnect grounding of all the start worked we Thanksgiving team, over quarter X proud I of we the also DX, the who echo strong in our our so the Christmas. the company restoration. out carefully United operational a for for customer year Ops were of of best also million busiest our for extremely hard results, operations [indiscernible] plans fourth we're during flying [indiscernible] X and rate record-setting Not quarter, we record-breaking AX quarter the and

up in lowest year history. the had month highest ever of the entire and December. the rate our scores with cancel quarter Thanksgiving NPS post-pandemic We for fourth our wrapped the

One air to more York historically flying system being of the traffic now air and United have to and by the the than is proactive than faced airlines intervention thanks addressed, -- largest all handle challenges flights traffics can from New FAA.

reliability aerospace United's best hub been the flight fall. on the Newark, no per since this FAA runway operations XX and activity operating the mandated that record of with more with largest has be hour consistent limitations to

XX%. activity XXXX. from flight reduced about cuts by those to Newark remainder we of for continue meant the with Expect that United, For

States cascade Our and passenger of improved. customers York and benefiting airspace New United from now flying flow delays York across are has significantly from the that historically New would every the

company the in Newark from Our customer DX of XXXX. XX% QX record

operations as even to with this operations for at to expect that upgauge United hour as our mandate the to continue We is ensure or plans performance continues there continue flights. our of capacity to long fewer customers plenty going to available FAA per flat fewer forward. flying level Newark remain the of XX

recruiting, and retention at XXXX was also hiring year banner a for employee United.

hire the year. our heels hired last than We On big hiring the of people talent our more in best the of of aviation skill employees -- and in we operational professionals year. our the half XX,XXX of a The the airline outperformance best. performance role another to played XX,XXX XXXX, in second

performance financial an record-breaking the in during as XXXX. and overall airline our Our scores customer holidays

We about average sharing than because successful over higher way higher proud XX will airline employees, paying month. years. team. are gone better, last of million announce Xx next in our happy This eligible the of profit we And growing I'm the XXXX, is our $XX Xx we've our a the of to than more and people. I'm be

airline be without profit them. I'll of will today sharing Our the team results this be impressive part these sharing.

to will that, Andrew. I over pass With it

Andrew Nocella

Thanks, Brett.

the increased with TRASM Consolidated down on a As revenue and PRASM the strong third for slightly to in were quarter. from Total was the and year-over-year, pressures over the PRASM stellar Scott was revenues comp trends XX.X% demand negative the down in increase fourth quarter capacity. improvement performance in quarter. the results quarter X.X% X.X% quarter mentioned, led a Domestic X.X% in nice holidays. healthy was

positive growth QX Atlantic in QX X.X% of X%. PRASM consistent with growth year-over-year was of

Pacific has measurable QX quarter. conflict flying in Asia in We across by a of moderated. PRASM period experienced for by United weakness the Europe XX.X% but demand was triggered XX% that year-over-year. small also increased Israel, but now down the

weekly daily. Amongst In adjust fare levels and to industry revenues continue Pacific. pressured levels we've now state. capacity pre-voted to Latin China post-pandemic in by discounting. quarter, twice revenues heavy city flying our across to to capacity we XX.X% restored unit record to changes fully other by decreased from the their increased American state X new many flights the quarter, the Cargo

the all Amongst cargo changes yields, XXXX, XXXX. revenue For were lower $X.X billion, XX% volumes. due revenues to than not

[Technical to quarter. outlook our for Difficulty] the first Turning

expect stronger on strong in yield Domestic growth positive to increases TRASM few addition best year-over-year, this nice be flat quarter. volumes the a domestic demand to sequential in expect year-over-year of traffic far We pricing and year, QX with we purchased a in remains We year-over-year for business quarters. improvement approximately versus past is PRASM the departure. to the be see week thus occurring tickets within which

early Service and February our Atlantic to and sooner safe to but are Bookings in as for these quarters. second Tel we third customers it's trends XX. soon expect no will and Aviv into fly than for resume continue as crew strong yields the also and XXXX

results which London. step-up for has focused growth across London demand saw combined weeks, We QX recent slow a to remain United in also date capacity lower XXXX. nice We Atlantic to Heathrow in helped when on Atlantic in business with the in

as we Asia into remains Pacific added growth head QX, normal in we incremental continue to Pacific the Asia XXXX. absorb capacity above

We margin expect Asia QX. to United's QX all of produce into capacity we strong as head new and results

to these Latin for XXXX San FAA capacity for remain York QX in capacity that We're QX. over the on limitations up international with and elsewhere. likely optimistic United a New will in expected year-over-year, have RASM trend for at both from growth domestic is hubs. that either virtually demand limit imposed prioritized airport. X most to supply industry Francisco We've recovery hubs lagged the American into that's will of negative all XXXX XXXX continue of catch

in growth domestic on weaker summary, in performance absorb America growth XXXX, to early and we in Latin as XXXX Atlantic capacity Asia with industry record In we due unit capacity expect levels. strong revenue results and

the our international model international revenue about for While in grow U.S. that materially very for period, the streams think, I of just expect slower we flying and network commercial domestic one. durable than domestic and a that United We, a than for has higher less other just in have United, product will we RASMs maybe XXXX, diversified of versus expect in versus a have created will largely our our exception really XXXX. also every gap airline decommoditized at margins

resulted United allowing the Our in inflationary for price United has -- in only we of commercial larger for the changes just strategy also at inputs at but in fuel, fair in us pressures levels cost to XXXX. overcome than cost not expected

revenue in You relative our performance can see this quarter-to-quarter.

to U.S. fleet United United unique decades profitable do strong Unique today. continue for or our in have hub a Next able cabin growth hub the and allowed revenues over premium remains performance, been and in underpins from from recent as have The network elevated. be years true United not in driver system, capacity have value the replicate. products has cities to these and particularly our you revenue not to gives largest outlook see system plans hubs can results simply unlock and which of our access we aircraft our the flying others us built to demand

For the coach, domestic rate revenue of year-over-year our in double over data validating grew another point strategy. example, QX, premium XX%

fourth growing monetizing a deficits Economy future. Basic to at gauge focused the also component premium was revenue up Correcting Economy. year. a quarter remain on nearly XX% we remain our Domestic we the key committed last remains United While versus of Basic capacity, in

maintaining domestic We continue we to add believe unit flying gauge revenues. can to while strong

has in gauge American XXXX, United while also increased growth. Since North by leading XX%, PRASM its

to hubs mid-con Dallas, we in and implement in XXXX. Washington, as domestic intend focus years, new we structural in we we confidence is levels why us. XXXX, connectivity. is Diversified growth our change focus our key United's of it revenue coming key streams success Next being relative across in on United connectivity as had plans. global advantage our This significant we in our remain global a For RASM network of the have network our much to the differentiates will accretive

results. With to that, hand thanks to United financial to entire over say Mike? team Mike and I the wanted to our it discuss

Michael Leskinen

delivered billion, you Andrew, ahead significant operationally XXXX, the note, of Thanks, at the a industry $X.X high for the report more consensus improvement operational $XX and and in delivered guidance financially. I'm to expectations earnings per of XXXX. over proud despite than we about closing pretax United share that We this $XX.XX $XX, to thank up and initial well billion both year headwinds income to achieved $X.X team a of within our on the whole We $X led constraints range and of to year. of beginning that lower capacity. of

quarter. the we For income high share Strong as CASM-ex range. the above revenue fuel up per $X, and ahead to and X.X% delivered of trends did a consensus prices and pretax Aviv of full supported fourth end operate the in performance, earnings million Tel quarter, of flight guidance our operational quarter $XXX for results. Fourth decrease robust we these of not was

third industry. the unit our quarter to in near end in on the the in with on came an point year-on-year distribution in X completion top CASM-ex year-on-year our the certain has X CASM-ex operational relative that CASM-ex fourth and result the approximate expense. classifying change X.X or through This favorably increased unit This during quarter points. of net quarter, to better year-on-year effective performance due flow. of strong the cash also commissions no Compared classified fourth increase been as added has by will quarter now the RASM trended and costs than impact year. Underlying change contra-revenue this fourth revenue The factor Additionally, approximate headwind point X.X XXXX, performance. an planned to point we our to of income quarter as was are

performance of As delivering execution Scott United remains strong outlined, Next. to relative cost critical the successful

the unit are in by have costs clear ultra More United costs emerging reliability to simultaneous higher fuel convergence XX% for labor passed provides. XX.X% the maintenance always both been relationship that relationship recently, higher Historically, XXXX the prices along on a up result industry with ascertained We well. Notably, prices. costs as an been borne lag. cost and is with operational more has versus cost unit jet are be that are this has than our occurred entire carriers in for and expected XXXX preference That to average. low-cost product. The that United X-point costs compared were top-tier The up with unsurprising. clear

of Our that margins journey. have early and dramatically innings the improved, and we're only in structurally

per share negative we For expect $X.XX XXXX, $X.XX. negative loss the a first of between and quarter

faces While our first headwinds. costs core few track, our remain CASM-ex quarter on a

close canceled quarter interrupted of Due also are the have the trip expenses in incurred cancellations of fixed. the MAX capacity. X our these flights nature we first reduced expenses. most to of And assets, First, additional

the approximately items We combination CASM-ex points. X by increase expect of these will

the we that contra-revenue expense reclassification is mentioned X distribution the as in Second, the headwind. point

impact points. And an as headwind. of ] challenges CASM-ex to annualize they new X to Third, [ continued engine of chain lead the fourth, and events higher supply volume labor agreements of a another additional as X point X

While the an earlier. primary are the United-specific maintenance headwinds, labor that I issue, are first and and the X described items industry-wide drivers cost mentioned Scott conversions of

share be confident we're expect importantly, of the full historically $XX. our off continue to we costs XXXX of inflation our year our pace will lower XXXX Most $X momentum, favorable to to competitors. Building cost versus in be earnings that between per

the We our didn't be working but United upcoming we This update are trends financial Investor our to is at that are out longer-term remiss our our guidance, targets are point seeing plan encouraged if Next plan I'd higher. We I well. targets our and by is internal Day.

guidance. to take we intend a ahead, approach different Looking to

grounding, in industry. XXXX the just in operate we a MAX dynamic recently and demonstrated As with

I expect CASM-ex detailed to led intended the likely we the we TRASM, this off interrupted we're is share. We've take The our but team. quarter, and United will to deliver capacity earnings guidance and the pandemic and provided those first our and time RASM joined as on target, plans, share earnings so after last Investor per metrics that per for remove TRASM the the shortly no and the you us Relations should for now quarter. focus but do philosophy, quarterly With past crisis, we excuses on

both industry our We the to continue on United be trends fulsome this and transparent business and will views commentary the future will to towards. continue of our with managing impacting we for the provide business. that we're longer-term

confidence to the line we will We fleet. bottom fourth of results. Shifting your the MAX XX Boeing In delivery AXXX delivering X gears by aircraft. quarter, took earn Airbus and

ahead unrealistic to is of a will deliver planned. Looking we being total have XXXX, scheduled XX those at to currently XXX believe those of to this time aircraft as of It all maximized. aircraft deliver,

We also on XX and an aircraft remainder XXX order the XX MAX of MAX have aircraft. through the XXX auctions additional decade for

time, We spend. would current towards there are But the progress closely. our lead to and the and our billion this delivery Boeing's monitoring a total grounding supply is to bias At CapEx continued of chain approximately given X aircraft XXXX acting a downward certification $X XXXX. issues, schedule MAX in

complete. We will plan, a reduction and also is from fleet the when share will expect This in that orders work of in XXXX. our deliveries details Boeing reworking require we and

our liquidity, quarter We Turning the with to the balance undrawn $XX.X billion revolver. including sheet. ended in

a the debt Managing at the X.Xx, team years. less towards top business for adjusted with over our provided the of positive Our be the of free flow Xx EBITDAR net will year. leverage priority consistent to than start target coming was our cash

realized in is less plan. structural consistently growth Our delivered XXXX significant earnings undervalued, even that valuation. fact United Next of at the marked we Xx trading cash also to in strategy stock despite we profitability improvement and XXXX. But important increasing the while relative full flow execute XX.X% our is revenue understand deeply an component generating we our first the year free Next United than

a throwing they year are that some exited curve It's United. choice, we are balls, customers choosing clear the but ever. are quickly We when than given adapted and stronger

the clearly industry. see it margin can and relative You our to in revenue performance

United start provide to margin happy Day We shareholders. With Chicago. expansion and of Q&A. the it we delivering and in sustainable over on to free cash that on relative by an customers plan will and in that, Investor another I'm our looking momentum, flow. Finally, to plan I'm results some our Next the a hosting to I'm progress tailwinds an and employees, for solid introduce be United Xst year with will update Kristina I the pass announce forward continued our will encouraged drive May to

Kristina Munoz

Thanks, Mike.

from will take We now the Instructions] questions [Operator analyst community.

Operator

go Shanker will queue. to caller Stanley. We Morgan from Instructions] in first [Operator the Ravi

Ravi Shanker

So the said expected years? kind growth make your of at start to order you long-term be think went the that maybe want you on plans as I pressure the capacity there coming and Investor of Next can expect downward Scott, that something and saw this look the through achieved during XXXX book United what your well. you there's pressure said kind at you Does Day? Is can and practically you in

Michael Leskinen

that Robbie, MAX this is the hoped grounding, the deliver with that reality believing back, broke MAX the had schedule the Mike. is this straw will with we with on the is the XX for. the kind Look, camels that of

And we're plans a can Next with working to working through in XX do will plan. an we get We It plan to see on how years. The so our longer rate on elevate to MAX little And alternate there. growth alternate app. expect the the track. firmly growth higher take United slow much is coming we're

to we're fulsome the update we we're aircraft we'll conference on Day. help The have closely, and when certainly monitoring I still May have Investor a so XX it, Boeing, counting working our you we'll them. plans. we'll we Now for have by great rooting that X on and first share the aircraft. hope can't alternate more call, MAX we'll can everything we're by on a But quarter details It's get do and and we and certified. we're count

Ravi Shanker

follow-up. And quick maybe as helpful. a Very

pretty think can said be comes decent have I back. you Asia kind of guys as it

that think And Do normal? than think me temporary Asia be you profitable do better if demand were on I routes think to wrong. China pandemic. the of a margins up? you is that's Or kind the before? the I'm Correct in new sustainable guys catch prior can you

Andrew Nocella

It's Andrew.

rebuilt rebuild we we it. Asia, As definitely wanted to

than it pre-pandemic, which nice margin pre-pandemic. although I our our this it was is And not has at profitable climb highest it to And did to that, sustainably higher think, very be carefully. We're pre-pandemic China gone point. was we've us size, So about back fair. for margins

As the we move bring is sure produces in that I across all it entity back, are to our our And make I to things that Pacific well global of the to Asia do goal ahead. rest network. similar least around XXXX, margins Asia is expect that a think that at flights is expect bit, lot we we're a well. China going very We I in looks QX, QX the we Asia going to about capacity bullish back come particularly more But as in added absorbing of forward. like are and online. and quarter, think it, what do Pacific capacity that particularly

So in Asia about very long-term the post-pandemic. bullish prospects

Operator

JPMorgan Stanley. Baker from Jamie

Jamie Baker

morning, Fair enough. everybody. Good

Andrew. for one First

that who's is can driving XX% brand-new share the What question increase Basic with from Is us LMAs. growth? simpler about Is composition scratch? MileagePlus of trading some is growth you members demand from said for some I guess down? the shift the percentage stimulation of tell So you -- the Economy. revenue some percentage percentage

Andrew Nocella

how we more across and have increased we now we biggest Jamie. data, distribute out I product. here refining that largely needs to it been have developed the whole attract low-cost premium, We lot is a share customers need and in product it, of think and competitive a been on gauge, we the it Economy at from some Basic we've ago been an hubs numerous think more the market more we've could shift, required be particular, there. profitably. And that board. in do But change share And We of that are the it's how look to carriers competitive it's to our and that Economy able range we've we we attract as important a in as across sell Basic years we able of but do product know our the lineup. focus our

indication So take given forward we're that effectively really this we'll increases, pleased it's push our more on even able be traffic and as continue should that every to with gauge development, share more. our base us to and grow we

Jamie Baker

fact, -- a couple ago, almost there United were then And are Mike, things subsequently day it was pretty of a looking portion reports MileagePlus. to years Okay. the And then that of front. monetizing that might in X it press been, for was quiet at years like, went have you that on

So a questions. of couple

no, First loyalty it or important And to calls. a United as And hard on so as the flow leading how broader at might thoughts on Delta? see any topic is, second, floor. Delta's is the is this multiple? this industry into if its get value United to happy cash to I'm answer is to investors higher the

Michael Leskinen

have We've MileagePlus towards business. Jamie, significant jewel in growing crown thank that you. Airlines. United I made the progress is about. appreciate we at passionate businesses the here question. This very is something a I'm some

new in a have Richard leader We Nunn.

We market around the X up We can monetize to the we experience and how have that and data, ideas and better have expect significant higher premium multiple you that projects data customer do on those attention the the bring Day. on fulsome Investor can a how very update create earnings May value underway And a to should simultaneous. at. to value trade will about in some recognized of we in actions some the future we'll that when near highlight discussed reports. we those in future. been And have -- is our of value if options, But to carriers, those, share have the more. ready share analyst and take we're the not And more the we've several written

Operator

Linenberg from Bank. Michael Deutsche

Michael Linenberg

Great. guys me hear Can you now?

a United, on with the case the in of issue guess, I MAX to, XX, least, back the getting fortunately, Just do choice. Scott, at you have

Airbus narrow-body You're well a product. the the very product as operator large as of Boeing

with point out consider As chain given still be but -- Right some constraints Has about that supply across there. that from AXXX United it wide-body future that OEM looks the where from XXX at we on for like OEM. think space, you're order is the another is a United you of have size it's the a it and there issues the thinking thinking the changed? perspective, now, your to would wide-body that prudent

Michael Leskinen

Mike, is aircraft. thanks for the an question. The AXXX incredible

significant right mix we now, XXX subfleet a book and is a older young. and have We quite have aircraft, a for order of are XXXs relatively some

look is We to are aircraft new timing don't next the XXXX's, of you looking at. early be any AXXX As the decade. with share into the today, that an news we will we that have part but the

Michael Linenberg

But were Jamie quarter, you the follow-up then function just actively difficult pull And up is, to you point more of up Basic a of XX% XX%. a what Economy, just brought trying side? question RASM? comp? a seen to about Great. Or and that on the on inventory on quick increase given last back And your pretty cost to that between obviously significant. surge maintain back is back Economy gap And the that sort just of CASM we've the Basic did is

Andrew Nocella

for did reason. product. cabins very It's Andrew. No, great And we stream last the the We're have remember, all also on We're bullish point that we it as year-over-year didn't is, across the of to pull And year. are diversified of we Basic. revenue but back very consider to have math bullish try these you comps, what our about decommoditize our about we premium. a really

hopeful it and effect really the basic continue the appropriate drive are be across We to industry. that in P&L effect competitive having at United to we'll volumes increasing seems

not of. less want So more to it's do something of, we

so should that. you expect And

Operator

Conor Research. Cunningham from Melius

Conor Cunningham

-- have RASM. confused the link comment a between CASM would on I between have been thought on I'm would and that the before. case little the

that industry being at understand -- So of more you're what's here? better trying it trying to Or comment outcomes? it that an from really drive Is I'm just predicting changed. is you're just to like

Scott Kirby

had including United, the airline, others an really industry It's if is CASM if any had up, past, the United while comment. going -- In denominator. CASM had the common going down, lowest price

industry So an comment. it's

it that a industry and if a just going we As trying all affects point what to maybe were it one that year affects -- ago, it's room the a were forward. exactly industry but we And If happen make, -- articulately, was is fuel. not, like affects it's this it the do sitting through, but pass in it pass-through. going what's airline, was Anything whole is that and airlines, that is we happened. didn't to

Conor Cunningham

for appreciate that I does And outlook unclear for prepared the just are for include remarks. accruals -- then in a XXXX? the plan it little costs labor that. open what was And your cost just the in see risks contracts? trying Okay. I'm you

Michael Leskinen

include Conor, expectations all for our this We in agreements Mike. our is pace. labor

Operator

O'Brien Goldman Catherine Sachs. from

Catherine O'Brien

level guess, CASM-ex the CASM-ex for quarter. How but on I more everyone. Thanks puts then one that flight inflation? Before does in I the I'm following full to here. comp the side, takes decelerate accrual? just fees, Conor's attendant a much that Good include of year, EPS cost each XQ. low fair might my question, about quarter the basis, impact quickly XQ way missing? single-digit we first would on think stick And course so of versus time. put think Is Or over looking and year-end CASM-ex point your morning, model a do I pretty impacting originally a on through it? that the that, Versus ex-MAX there year up guide similar about is finer any with the growth to just was ended ex-MAX than for assuming today, and lumpiness year-over-year

Michael Leskinen

expectations let in last agreements guidance. our me include for labor Full question the We So stop. our Catie, take first.

aircraft you QX see expected. will that slowing Regarding in gauge fly. away. although do gauge Again, have CASM tailwinds we're deliveries, getting 'XX and X, trends and to We would increase headwind with than we the that you would less with would expect increase, some closer seeing go be some in United-specific X think MAX to

to from That's points. X United. for to of headwind about see unique industry continued pressure X will CASM-ex, not You an labor

We will lap quarter. And the lumpy expect it we of offset, TRASM then into be enter should lead majority continue to that's that X you of to quarter-to-quarter. higher the as we will maintenance see to that point, going about headwind fourth to but

in about it's each think At chain As And that takes fix we beyond well in the it quarters. the probably point, I today, don't point today. see I will XXXX. some of aerospace, year. this X here I itself think but sit supply

and being persistent. -- headwinds about about labor maintenance should think think should to you as you the So summarize,

Catherine O'Brien

to maybe I've tied just with unless sticking Very million your CapEx contractual clear. Got that's figure it. you, Mike, the commitments, And wrong. that $X got

the versus MAX, largely billion? basis grounding, does XX% last on $X probably were that but delta than given about dollar more you in expecting of that flipped going there's aircraft how a reset should as the I think risk what's downside magnitude, contractual XX-Q MAX order between today, and expected before less Even the guess your amount. of deliveries we downside on with contractual

Andrew Nocella

loss year, $X thinking on you growing. what to yet. it's for contractual about growth. you of than and working That now. know would mitigate expect as and CapEx and settled CapEx you're it. what we we trajectory some and But And the delta should about alternate in this the how That's through exactly 'XX between lower below That's are don't maybe working in is we're expected where coming billion yes, think an strategy beyond.

Operator

Scott from Group Wolfe Research.

Scott Group

your flexible. stands So and little wondering, RASM the just is it bit. think year? then this us you But that plan shaping positive And Mike, be the think as is maybe I today, to year -- you I'm totally get a going help message do fluid can about just just

had quarter second year, last at helpful. Are shape there moderation a color of second back then pretty look I Any and year. be if a the half weighted? thinking would half So more in maybe the similar you or massive

Michael Leskinen

say, but Andrew. TRASM will yes, off from positive, details it year will think and kick I'll for the come Scott, the be we

Andrew Nocella

exact we're giving year. on not the other guidance Well, than, very here we're yes, bullish

domestic year out case is strong. laid I the incredibly business where a starting think I

I QX, capacity business And to do then which expect we laid head we're down and out QX trans-Atlantic Asia those I a with too. we've bolster for numbers, case obviously think step materially into to to do capacity. going as going where is

bullish year. the remain on I So

Scott Group

if Andrew. if any just thoughts for the I follow-up you just for know maybe year any shaping then other Mike, you on my have had color. And us, don't

it about Maybe sure margins be more? just make improving domestic a little domestic Just international additional point the I -- color year. domestic I'm good? there and Is just less great. want any on but both they're Just international better understanding converging this a improving, is getting in Or is little it. to bit would this

Andrew Nocella

think say think really word diligently quarter are the bit well. in I ahead I the I will Look, strength at, the for take and but good We're domestic gap to now, well we're RASM But I'll QX make the in in working a very do of continue domestic to a outlook good seeing XXXX. International is margins domestic on expect and which margins in profitable margins Maybe ahead that I'm seeing for right seasonal we're hate based they'll looking narrow darn United. more XXXX, be exceptional, that's -- that pretty of to again, I well domestic. Yes. as shape going to gap. narrow

didn't I prior the a our fly that think obviously, in made on the when that out, to those use how those QX, we we changes confident about trends, details. domestic, the in MAX But and if RASM are I that grounding. you take now way been would well where we update in to we talk as all had desired to have can you lot changes we effect. particularly And at am to of QX, estimates I our look all

quarter. won't out, our I it best stellar to stands global those network, be much in quarter QX that to sure again QX continue future, QX X over to better have build the can and our -- months will be relative it make we in be we As and that XXXX. really say to a But expect and ever in be well, it blunt,

Michael Leskinen

normal with pattern, due going Scott, X It's bigger asking in quarterly albeit to the specifically shape year. about through loss quarter a slightly our the to just the MAX first a of grounding. earnings seasonal look like

Operator

Becker Cowen. Helane of

Helane Becker

Great.

X So here's questions. my

The do first maybe about how to in say, X% X, question the 'XX to, is, and XXXX you'll think margins, roughly on from update at as XXXX? bridge XX% XX% May us you we year-end

Michael Leskinen

Next we the have we it Day. at thanks from Helane, from And our longer-term will strategy, be the update used to expect was preference proven, on connectivity, a United, United from to But paper. tailwinds margin that the gauge, strategy we for a the piece -- from it Investor fly the question. of targets

proven that have We working. it's

deliveries And about we 'XX strategy, we Next continued so 'XX, as momentum. United of just that reaccelerating 'XX, being less see than into little a and think

the upward both trajectory pacing, so and confident to working, an for and on And to going is XX% earnings update as we're to XX% But of to the specific Xst. strategy margin. you we're level have in May very

Helane Becker

follow-up. Okay. And just then for my

off financing, this billion again, than and other targets, less as of the Your $X of for of just -- obviously, net debt But them we about should Next is, last I how $XX XXXX. billion update suppose, end billion United year, for you'll year. think say, think, thing I adjusted is the table the let's $XX

which billion it bring next or $XX your X over $X the billion you CapEx or $X billion, it might about or we think program, but to be year, X target this might Let's Like, down billion 'XX. getting leverage given $X should debt to how billion or years $X paydown. the be plus to billion $X 'XX

Michael Leskinen

Yes.

years, into our that allowing debt. be pay years. And that CapEx the if we far area I high-level related and double-digit changes CapEx expect down the all But dig more try in today in low-teen cash can to delay in sit view, details additional our as of paydown positive, Let think cash free quite balance as sheet, grow that cover most flow to low I give me to into future. Helane, I not as expect will the a you to and would we here in margins us deliveries, the free that as about

margin. much will that we dependent we get pacing profile changes level to that long how how higher quickly what think the of is run, Now and CapEx be on on

Operator

Duane Evercore. Pfennigwerth from

Duane Pfennigwerth

the inbound, On international me. for available couple U.S. to a Just basically international so point

look XXXX? that from across that growth recovered there international inbound? recovery about any you think of that out you network, in how set markets And stick your As demand are is potential? a had room How do

Andrew Nocella

as and globe, Duane, entire think component Andrew. core continues been the across stronger entire as say that to Japan today during Sure, really recovery, origin a outbound Europe, the board, across Australia. What I the Germany it's of and particularly has trail traffic, the would is Europe, I continues well U.S.

the that. resulted continue has results monitor last difference world the quite so U.S. in the has strong effectively made year. regions in we'll the But and most to up And of consumer over very

when see what just the strong. outlook happened further brings. XXXX the the I customer future. that's we'll inbound But starts think is consistently across It rebound, globe, profile the hasn't in I but think to So upside

Duane Pfennigwerth

Okay.

kind bullish up following San there. Just of Any thoughts markets, more recovery maybe inbound. Francisco, Asia Any specific there?

Andrew Nocella

San San consistent next months. is limited dramatically X runway going X ability with of in Francisco to It's has city. that to construction recovery a the to on our in there. going also a be significant There fly Francisco is amount unique over very slower that

to for us So be recovery, a fine combined I But I think San flying will international think with where that very fly Francisco, be much domestic going schedule the see is continues actually But you reduced are domestic schedule, San the Francisco. to strong. in the okay. probably in just we it's smaller

In terms contribution, perform profit exceedingly Asia of Francisco, in well. continues San to

Operator

That will Andrew America. from of Didora Bank be

Andrew Didora

broadening but a seeing mentioned well. bit we've on in getting a better I this could little been in some speak remarks, data you So -- and hearing maybe Can maybe other as it bit your outsized of a guess travel dig Andrew, see you to any you corporate and prepared particular seen sort to today recovery? at maybe this sort markets And at level or out more have sustainable growth than the corporate corporate any points verticals of where growth? you make in

Andrew Nocella

our predicted of few But did okay. budget It as new notice was January We've count than over and last in all And QX Sure. corporate any clients, calls business the we on graphic will significant started all season times in sat say, the recovery more of wasn't spectacular way. for big I step-up. we the a I years. can

outlook say, of well as should and nice it's few as of hesitate I domestic our weeks, it's It's I in but "Oh is. RASM my still GDP gosh, been So to behind step close We're And relative it think growth, Because strong well that. up. seeing that's look, that from really really one a it's gains the early. it be fixed." is where yield only result a it's reasons course, as to

first that hopefully, and the going be, of strong At report continues. off and January, weeks that know it I how think, for we've is start, But us gotten on of quarter, end of let you so really this X that course, to the year. least And to gives we'll at a very it signs the looks. increasing a good

Andrew Didora

lot a my helpful. flow That's potential. obviously cash free it. then talk future question, second of Mike, Got for on you And on your call have the just real

your cash do free cash you're when taxpayer? anticipate flow, looking Just at a when become you you will

Michael Leskinen

off a I on few does still but it it's -- up with my it's moderates, Hendry, on get CapEx does me that -- still, years and Pam think profitability, a Andrew, treasurer, let and are depend on depends you with precise on years follow it few off. depend how It all the year.

Operator

Oglenski from Barclays. Brandon

Brandon Oglenski

the worried probably industry think that But a like I And you or or didn't year those years perceived year. trends what things at able for that, P/E here? is Just call. could think Mike, I at that continued us premium? coming keep the trading confidence this second be because where path up United Scott know decouple this credit giving are I out. And roughly Next targets mean like the going here least view that guess to about I the you and margins margin control of that industry midpoint to the to from many you costs back investors a drive give your Xx you to can or here. Is one you're stock for can here, maybe forward are at is the also you going to control lot going context of X United so end it what is investors just the to hit is guys guiding flat But are

Michael Leskinen

customers think we'll as industry and industry, to for we convergence. That if majority, exist. commodity it's peers that that's And leading Those revenue airlines, the is to costs of a industry the in But -- carriers and fly of existed Look, it as to evidence had the is and from year, operated our lower United accruing happening X they Brandon. because the that and legacy cost that the eventually, an the industry in change it's see in the a ourselves see clearly reason longer all, leading the there that structural I whole no has costs. cost lower I our ton well. think -- is differentiated growth of have low-cost with convergence, this to those Thanks, airlines, and a investment not was community, simultaneous one path. choose

-- the think, I margin, the is permanence that to creates, [indiscernible] where exactly that that resilient And it sustainability that today. higher But where so that by and to capital higher more and settles, stable a still higher us. and markets more And recognized we a is margin. not

Operator

David Bernstein from -- David Vernon from Bernstein.

David Vernon

is you capacity So Andrew, margin that's going terms in of through the your from ladder. think to helping I'd help like negative to get going impact can, to some be fare of to of if industry how some forced the you out

fare that because that into translate to anything sort impact basic maintenance, would on to capacity of that be some pressure upward how to understand of just rationalized economy like Beyond have ladder help basic fares, -- to we shift what is general of capacity your trying of unbundled bunch to of sort it's sort see out. Is margin really if of give impact have negative I'm carriers fares could take going a versus these the helpful. capacity us you impact going

Andrew Nocella

probably than honest. the unproductive call, capacity lot been that's conference think generally, just a more has can I detail I leaving be to a mean I system. do on But

that's I been for the United. think and good system good for

manage our going do all something airline. of Polaris is It the opportunities. But we'll Basic and the on. important like we're want. The not customers to of at Economy we is bottom of that I top up the be our Basic giving what the is an Economy our part diversify take to revenues so of at choice normally our just want advantage of RM And to reiterate to

continue that obviously more there our returns for thing. But The of more only provide working revenue and increases. talk are do the fare but diversified to are they as really gauge the expect our putting choice. our streams we not it will to our can of we'll ladder what and predict We competitive right are, And I for really only United, dispersion provide maximize we're I and us the dynamics out can't flying. across geographic again, them.

have. with couldn't just we Airlines. quarter, our time be and United we'll year, more it at in results with think, it. just the investor good by so be it's is, way, And I pleased If be revenue outlook an the QX a quarter But always after change we the industry in changing, Airlines dynamic, and is to last not not United and

David Vernon

the through you Or that's get from benefit look of And are going that's something into you as that any of seeing year? forward yet forward develop rationalization sort some you we capacity to bookings? to as do think

Andrew Nocella

outlook for domestic all. PRASM our for think says I Look, QX it

Operator

We will Guy. now switch of media of Points the David the [Operator portion Slotnick The to Instructions] call.

David Slotnick

I going the ticket see all Atlantic a about them all you and talk given across been London could know or if down just any bit about prices? you from slower was more on across wondering growth consumer you perspective. There's see impact just talked some the about talk a up, the I that? summer. Atlantic. you next Do Do capacity

Andrew Nocella

this new Northern that of become is capacity and And more more destinations moving than probably London We Europe, Heathrow Germany of I in summer. more as Spain I've destinations biggest or tell more year-round would numerous Southern more in that particularly Italy Europe, to consumer we and QX is to and probably you that's see would of times, and seasonal. that is again strong I an next it and -- -- is the David, And what tilted said into year. capacity, incredibly we'll decided the do change out post-pandemic to Southern what year. we're our prepared with We've say slow for Europe. that have reacting what we go of out we're and

price terms about the points, of predict the don't talk really I that to just this really expect We at strong not In across Atlantic. pricing. summer say, a going we exactly would point. I'm But

growing solidly added us we to capacity and be that's last the few Our allow profitable capacity going we've to think is not years, get materially. And mature the over in and incredibly really XXXX. of all to

Operator

be will That Rajesh Reuters. Singh from

Rajesh Singh

have CNBC grounding fix playership MAX made camel's comments morning you in problems its have leadership on that Do the Scott, current will some this able will called question and confidence have to the be faulted for that the back. some that Boeing's you all broke into it quality people problems.

do you in the current have So leadership? confidence

Scott Kirby

great it they had, is it get is now, to And through their going of it believe everything -- they're of that outside can biggest the committed -- the challenges to biggest do going be and to help. history them from They've have storied and one no company, but to And a of great They're term best best impact to even biggest are bigger of we me, it. there, great a bottom will is and some right of there They're exporter. will has a been patch a cheerleader. near critical together. across they've I'll faster. of but -- I times, that we're fixing do their one United the supporter changing and in I people are also engineering. Boeing board the technology Boeing Boeing thousands one top I'm their than people. history. to wants succeed companies in rough There's the at because I American encouraging that's Boeing

Rajesh Singh

about comments about MAX some misconstruing that Can Scott, comments clarify Just are you you it clarification, one XX XX? the to planning are your order. MAX about cancel your people

Scott Kirby

order. the canceling not are We

taking out of plans. our are internal it We

that be able with we're on Boeing taking our those what internal that. leave Boeing. so of to at many deliveries But at we'll contractual plan. let's And And working going on their not And is means it be airplanes. least out to meet exactly of

Operator

closing time the questions over for call is turn we that for have now And Kristina will back remarks. the all to today. I Edwards

Kristina Munoz

have Please Media Relations we questions, if Investor contact you next Thanks for talking joining call look you forward and further any or quarter. to to today. the

United Airlines (UAL) 23 Jan 242023 Q4 Earnings call transcript