Good. Next up, we have Delta Air Lines, and very happy to have with us, CFO Dan Janki, our President, Glen Hauenstein, and Julie Stewart from IR. Team, thanks so much for coming out to Laguna. Well, thank you so much for having us, and it's a beautiful place. Thanks for having us. Thank you. So you guys put out an 8-K this morning with a bit of a guidance update. So I don't know if you want to start with kind of walking us through some of the numbers there? Absolutely. Sure. I guess I'll start. And I've got my cheat sheet here because our IR team has all the facts they want me to give, so I'll make sure I hit them all. So this morning we filed an investor update, reiterating our full year guidance of EPS of $6-$7 per share, and revising our third quarter earnings to higher fuel and non-fuel costs, which Dan will talk us through in just a few minutes. On third quarter revenue, we expect growth to be in the upper half of our initial guidance, with revenues down two to three points, PRASM down two-three points, including a one-point pressure from the MRO and cargo. So PRASM is really down in the one to two category, so we think that's a pretty good number these days. Domestics performed in line with our recent expectations. June was actually the low point for domestic PRASM year-over-year. I don't think most people would have expected that. Stability has been displayed through the entire 3Q, where we expect the number to be down four points year-over-year. Solid domestic performance and continuing into the fall. Performance within that has been led by strength in the premium demand cabins. We actually ran a record-high premium paid load factor domestically last month at 74%. For those of you who have followed us a long time, you'll recall when we started this project, that number was 13. So 13% paid load factor to 74% paid load factor over an 8-10-year period. Also real strength in Boston and New York, where, of course, we have the leading position in both those markets. Business demand, we're really encouraged about. After Labor Day, we wanted to see what those trends were, and they're coming in very solid, up high single digits year-over-year in terms of bookings. Our international demand remains robust, led by Transatlantic. And as you know, Transatlantic usually starts to trail down this time of year. We kept our peak schedules in a little bit longer than usual to the full end of the IATA season, which is the end of October, and we're experiencing really incredible results right there. And the early returns for the winter in terms of bookings and yields look very, very encouraging. With that, I'm done on my part, so I'll hand it over to Dan. Some additional color as it relates to the third quarter operating margins, 13%. EPS, $1.85-$2.05. Mm-hmm. As it relates to the reduction versus our guidance, half of that is related to fuel. Yep. As you'd expect, fuel's up 30% since early July. It's been volatile all year. Mm-hmm. The other half of that is related to non-fuel costs. We expect them to be up one to two points in the quarter on a year-over-year basis, and that's driven by maintenance- Mm-hmm. ... maintenance expense, that we now expect maintenance expense to be flat in the second half of the year and, third quarter in line with the first half. Really driven by three things: investment in fleet health, expanded work scope related to the PW2000 engine, which is a workhorse for our 757 fleet, and, additional just challenges in the supply chain as it relates to turnaround time, pace of productivity- Mm-hmm. ... on that front. So those are the three items that drive that. With that, we expect non-fuel costs to be up a couple points for the year- Mm-hmm. ... versus flat. And when you look at the efficiencies that we're looking at, no change to that. When you look at the other costs, what the teams are driving, in line with expectations, and when we look out, we've talked about $1 billion of efficiencies, inefficiencies in our system. Mm-hmm. We still see line of sight to that- Mm-hmm. ... and we'll execute those over the next 12-18 months. Got it. Maybe just a first follow-up to you. Just on the maintenance side, what is the slope of that curve? Kind of are you pulling forward future spending? Are you incurring new spending? And kind of how long does that last before that tails off? Yeah, let me give you a little more context on those three items. Flat with the first half, so in line with the run rate. Mm-hmm. Third of it is related to investment in the fleet health and reliability. Mm-hmm. As we went through the summer, we saw, you know, things like aircraft out of service as an indicator of fleet health, up 30% from normalized levels. So to ensure that we deliver the reliability that our customers expect and we expect of ourselves, we've put a set of fleet maintenance activities in place that will run through the back half of the year here. Mm-hmm. When you look at the early September trends that we're seeing, they're starting to have an impact. We're starting to move that needle on fleet health and improving it with aircraft out of service, down delay minutes, other factors, but we're going to stay at that through the second half of the year. Right. As it relates to the PW2000 work scope, we're in a wave of heavy maintenance overhauls, and as we've gotten into them through the summer, the engines that came off wing, they required more material and more labor. And with the material consumption, we've depleted our used material- Mm-hmm. ... so we're putting in new material. As we forecast forward, third quarter actuals and the rate going forward related to those overhauls, we've now factored in the increased material costs, both on volume and rate, along with labor. Mm-hmm. That's now in that second half forecast. The third piece is just related to supply chains. If you look at turnaround times, they haven't improved, whether it's components, airframes, engines. So this is really the pace at which we can get after productivity. Yep. We've adjusted that pace for the back half of the year, and we'll get after that as we get into next year. Got it. So again, numbers coming down, obviously very understandable in the case of fuel, and again, very prudent in the case of the maintenance cost... And the big relief is that, you know, your messaging on the top line continues to remain very robust, very resilient. Not asking you to answer for other people, but yesterday was an interesting day at the conference, with updates from some other peers, especially on the low-cost side, pointing to a big drop-off in domestic demand in the last few weeks, in particular. Doesn't sound like you're seeing any or much of that. Yeah, I think, we were surprised to see some of the comments and some of the magnitudes of those changes, and I think, you have to look at what's the demand and what's the supply. Mm-hmm. Those tend to also be the fastest growing carriers, so maybe they're out a little bit over their skis in terms of allowing the demand sets to catch up. Mm-hmm. But, we see really strong, particularly business and high-yield demand through the fall, and, we're pretty excited. I think when you think about what we have to achieve between here and the end of the year, it's a decent business October, it's a good Thanksgiving and Christmas, and they're both shaping nicely. And then, you know, making sure that we have traffic in that lull period between Thanksgiving and Christmas. And then you're kind of, you're kind of done with the year. So I think we have a good line of sight to what demand looks like till the end of this year, and the, the markets that have longer booking curves, like the international long hauls, look very good through January, February, March, even now. Got it. You guys have done a really good job, and you've been very vocal about the job you've done about becoming a premium airline, a premium product, kind of driving the front of the cabin, et cetera, and kind of attracting a premium customer. Is there a possibility that the low-end customer here is very weak and the mid and premium customer is very resilient? And if that is the case, what is the likelihood that the low end is a canary in the coal mine and will spread to the rest of the industry in the coming months? Well, I think we look at all the same economic data you do, and what we see is our customer, and our customer generally is a customer with an average household income of over $100,000. Mm-hmm. Their savings is still at record levels, right? Mm-hmm. And if you look at also their intent to purchase and what they want to do with that savings- Mm-hmm. What's really exciting, I think, for us, is where travel sits. Yep. ... in that spectrum, and it's still, even to this day, at the most recent survey I saw just, I think, came out on Monday or Tuesday, where travel was the number one. And so people say: "Well, when is revenge travel gonna be over? Yeah. I think it's got a long way to go, and I think, for our customer, it'll work well through 2024. Got it. Again, not asking you to answer for other people, but there was a stat raised yesterday that the ARC data was down, like, 16% over the last several weeks, and so that was viewed as an indicator that it is not an isolated problem for one or two airlines, because if the industry is down, like, everybody should be down, especially the big guys like yourselves. How would you explain that discrepancy? Well, you know, I think ARC is becoming less and less relevant as a macro dipstick, because more and more year bookings are coming direct every day. Mm-hmm. So, you know, we, we used to all depend on ARC as one of the big benchmarks, less and less so these days, because more of our business and more of our high-yield business is coming direct than ever. So I, I... Listen, we don't discount ARC, we don't say that that's not something we should continue to look at, but its relevance as a percent of total, it's, you know, less than 30% of our 30%-35% of our bookings. Yeah. That's, that's a very important point that, that may be overlooked by the market, so yeah, thanks for raising that. Maybe kind of shifting gears a little bit. Obviously, you and, and your network peers had a record transatlantic, a record international year. There is some talk about 2023 over-indexing on the international side, and that pendulum may swing back towards domestic going into 2024. Do you see that happening, and, and what would that mean for your numbers? Well, first of all, I don't think that the customers that were going to Europe this summer were people who might have otherwise been on budget carriers, because it was incredibly expensive to, having just gotten back from Europe on Sunday, and looking at my credit card statement. An Amex card, no doubt. That Amex card. My Amex card, of course. You know, that seems like you're mixing apples and oranges a bit, right? Yep. It's the people who are going on budget-conscious airlines are people who are looking for budget vacations, and Europe, by all measures this year, was not a budget vacation for anybody. So I, I discount that a little bit in saying that they're gonna return to domestic. Mm-hmm. I do think we see a bit of weakness in some of the beach resorts and the closer-in markets, but that's in August, right? And August is not notoriously a great time to go to a place like Cancún or the Dominican Republic, where it's really hot and sticky, and you run the risk of a storm hitting you. So, you know, we're in the bottom of the demand set for those markets right now, and still, they're doing quite well. So, I think that international, again, from what we can see, is going to be strong through next year. And from all the indications and surveys of our customers, we think long-haul international will be strong. We've got China opening up a bit, right? Mm-hmm. It's not fully open, but it'll open a bit. If you look at Europe, China's to Europe traffic has been restored to about 50% right now, or, you know, in the single digits right now between the U.S. and China. But when you look at what's about to be restored, it's probably in the 25%-30% range. So if the Europe, we think there'll be a good supply-demand balance for the foreseeable future in China. Mm-hmm. It won't be margin accretive for China, but it will be P&L accretive for China. Great. We're excited about that. Mm-hmm. The Pacific is really having a very strong year, and I think, underappreciated, how well the Pacific is doing, and we continue to add more capacity into the Pacific. And then, of course, Latin America is a big story for us with the LATAM relationship and really, working with them for the first time since we've now had ATI for less than a year, but, coming up on a year of getting those, synchronized and getting the connectivity there and getting our corporate clients to have, agreements that include LATAM, all in different phases of work. But we're really excited about what's going on in South America. Got it. Just a couple more questions on demand side. There's some speculation that if 2023 was the year of Europe, 2024 could be the year of Asia. And I personally know a number of people who are planning trips to Asia over the next six, nine months. Do you see that happening? And again, you touched upon that very lightly, but can you expand on a little bit more kind of what your Asia expansion plans are? And B, what does it mean if more capacity gets routed to Asia from Europe? What does it mean for your network? Right. I think, you know, we're not going to give 2024 capacity levels, but, That's right. Right. Nice, nice job. But I think we will have moderate expansion in Europe, a very more, more to what we would usually do in an average year- Okay. ... between 2023 and 2024 to Europe. And, but we do have probably an outsized growth to Asia with the start of our new Auckland services, which we begin at the beginning of winter IATA. Advanced bookings for that market look incredibly strong. Mm-hmm. We've gone to double daily in Sydney for peak, but single peak year-round. Bringing back Tahiti, for those of you in this room who might want to go to Tahiti, I highly recommend it. Not great for the Amex either. Right. And then, and then our northern, and more of the industrial markets, leveraging Incheon as, as the connecting hub. And for any of you who have used Incheon, if you have not, it's a really wonderful connecting hub. We think it's the best in Asia, and, and very efficient and, and very reliable. So continuing to leverage that as well as the increased China frequencies, that should give you an idea of where that portfolio is going. Got it. Let's talk about corporate. Kind of, as you mentioned earlier in your comments, there was a expectation that there would be a big push to return to office post-Labor Day. It does feel like that is happening, especially on the tech side, and if there are friends that I have who are now being asked to go back to the office more often than they were before the pandemic. Again, where is your—like, obviously, your corporate surveys are extremely good, extremely reliable. What do they tell you in terms of the return to office and then the travel process? Well, very, very, very strong in tech, right? And tech was the big laggard. I think as much as six months ago, there was corporate on tech was down in the high teens. Yep. And so we're seeing a really nice uptick, as we head into the fall- Mm-hmm. ... as people are returning to office. But there's some counterbalances to that. In aggregate, we're really excited, but we're also big in the E&P industry here, particularly in Los Angeles, as being LA's number one carrier. You know, the writers and the actors being on strike is not a great thing for that sector. So you see a combination. We're also, of course, watching the automotive industry as we head into potential strikes there. Yep. So there are really puts and takes here, the net of all that together, and hopefully, all these strikes get resolved at some point here in the near future. But the net, net of that is that we're in a very positive, in terms of volume period, period for total corporate business. Got it. Let's shift gears a little bit and talk about the operations. It was a little bit of a shock earlier this year to see the FAA say, "Hey, we don't have the ATC capacity, so all you airlines take down your capacity over the summer," which again, is like, you know, they're telling you to fly less. Is that a new normal for the industry? Is there anything you can do to kind of work around that and help resolve the situation? Is that? Do we need ATC reform? Kind of, what, what's the way out of that? Do you want to take it or you want- You can start, and I'll add. You know, we've been in very close contact with the FAA, and they're great partners. What I would say is they had very similar issues to what we had in terms of people leaving during COVID- Mm-hmm. ... and not knowing how long it was gonna stay in place. Yep. I think all of us got behind the hiring curve as demand came back so rapidly. That's the good news. The bad news is it takes quite a while, as we understand it, for the controllers to get fully trained so that- Yep. ...... And so that's a two to three year process, and while they've been adding controllers, they, in terms of total numbers, that hasn't impacted the total number available on any individual day, and that's gonna take a little bit while longer. Mm-hmm. So what are we gonna do in the interim there? You know, first, I'd say this is not a new problem. I remember when I started in the airline industry in 1982, most of the people in the room probably weren't born then, but... And working in Newark Airport, and it was a blue sky day, and there was a storm over Pennsylvania, and everything was four hours late. So, you know, that was 40 years ago. It hasn't changed that much. So we need to work together. We need to find better solutions. Obviously, taking capacity down is not one of our first lines of defense, but we're willing and happy to do that because we want to offer a reliable product. That's our real priority, is reliability. So there are some things we can do, including improving our order, over-water airplanes. So, you know, we want to may have a fleet that's more capable, because if the West gates are closed, we'll just go south, over the water until you get down to where there's not a storm line. Mm-hmm. There are things we're doing, increased sparing ratios, redundancies in the hub, so we can operate even later. So we're working really hard on what we can control, but this is a partnership with the FAA, and I think as we continue to get to the fall and winter, next spring, I think we're gonna need some more relief. Got it. I think that it's that partnership. After every event, you know, the team spent a lot of time together- Sure. ... decomposing what happened and what could each side have done better. Yep. You know, so it is a deep partnership, and it's just continuous learning until the longer-term staffing and technology come into play. Got it. Again, I cannot imagine being stuck in Newark Airport without internet on my phone, so that must have been a difficult time. Dan, maybe kind of to follow up again on the maintenance stuff. Does the efforts you're putting in right now get you to the point you want to be, where kind of operational reliability is gonna be, like, really good for the foreseeable future? Or do you need to be more aggressive with renewing the fleet and maybe taking out some of the older aircraft? We believe that the one is we've been on a fleet renewal, you know, as it relates to it, and especially around our the narrow body and what we're doing with the NEOs and the 220s- Mm-hmm. And the work that we've done on that. We believe that these efforts that we're putting in the back half of the year, the whole intent is to ensure that we give ensure that operational reliability. We want to reduce the delay minutes that from maintenance events, cancellations from maintenance events, and ensure the reliability of the fleet. So yes, the actions we're taking in the back half of the year has that intent. It probably- If I might add, just one thing, is that between 2019 and where we are today, our narrow body fleet has actually gotten younger- Yes. as we retired some of the older airplanes. Mm-hmm. The MD-88s and the MD-90s, in particular, the old 777s. So we know how to operate an older fleet reliably. Even though our fleet has gotten younger, I don't think that should be our impediment- No. -to operating, really reliable. Mm-hmm. I think the steps that we have in place, we feel very confident will get us back to where we need to be in terms of maintenance, dispatch, reliability. Got it. Shifting gears a little bit, talking about loyalty. You guys have arguably the best brand in the airline industry, probably in any kind of U.S. brand. Loyalty is a huge driver of revenues for you, but you guys made a very big change to the SkyMiles program yesterday. So maybe you wanna talk through what that means to... I won't talk about what it means to me as a frequent flyer - and qualifying for status anymore, but, for investors in this room, kind of how does that move numbers? Well, this all stems really with a couple of concepts that we had as a prerequisite. One was simpler. If you looked at how you got to be elite status, it was quite complex. And I've got to say that even I was in meetings where I didn't quite comprehend- Yes, I agree with that. the difference between the MQDs and the MQSs and Yes. So getting it to be one currency was really one of the paramount things. And then we wanted to emphasize where we are going as a company in terms of the brand and expand ways to earn miles. So, you know, previous to this, if you used our network to buy your rental car, your hotel, or your Delta vacation, you were not necessarily rewarded in terms of your loyalty to our ecosystem. Mm-hmm. And so adding those in was really paramount to us. And then third was making sure that we had the right people in the right categories, because, you know, when you have too many in certain categories, you're unable to fulfill the commitments that you make in terms of really being an upscale brand. And I think people saw that in our club visits. People saw that in lines waiting for the clubs. And I think, particularly in New York, for example, where that's most acute, in JFK, between now and next year, when we open even more facilities there, that we should have those problems pretty much solved. Now, this doesn't take effect till 2025, as you know. Yep. If you are, thank you for being a Delta frequent flyer. So I'd like to thank you and ensure that there are now many more ways to win here. Yes. Got it. And for those who are newer to the industry, when was the last time you made kind of a dramatic change to the SkyMiles program like this? And what's the near-term outcome? Because I know that in among my friend circle and kind of online, there's a little bit of chatter about, you know, "Hey, will I qualify? What's going on? You know, it's harder now," which is kind of the plan. But like, do you see people try more and kind of get new targets? Do you see people drop off because they're kind of disenchanted? Kind of, how does that turnover happen? You know, I'd say the last big thing we did was the transition from mileage to dollar spend. Same with you. Yeah. You know, when you think about transformative things, that was clearly transformative. I think there are... You know, this is another step in that direction. I think over the next several years, we'll announce additional changes to not only the qualifications, but to how a mile is awarded. Mm-hmm. I think there's opportunity for us to continue to work that. When you think about this, it was structured back, I don't know, when in the eighties, where mileage counted, and, you know, when you think about who was rewarded then, it was people who were on low fares. The arbitrage was low fares and high distances. Yes, correct. By moving to dollars, I think that was a good step forward in trying to match the value to us, the value to you. Mm-hmm. I think this is the next step in matching that value. I think there are additional steps we'll take over the next years to make sure that our best customers, I mean, this is the real tenet of this, our best customers are receiving truly premium experiences. Yes. Continuing to work to elevate those for our best customers. Absolutely. Any questions in the audience? Yeah, one here. So earlier this week, we got a lot more information from RTX about the GTF engine issues. I just wanted to see if you had a sense of if that might impact your capacity growth plans over the next few years? Still in the early stages of assessing that. Pratt owes us the more detailed assessment at the end of this month. We've taken delivery later in the cycle for our 321 NEOs. We'll end this year just under 50 NEOs, so we think in the near term they'll be less impacted. But it's something I think just beyond just the direct impact. I think will be minimal at this point, but we got to assess it. You got to look at the secondary impacts as it relates to new deliveries, other knock-on effects in a supply chain that continues to be fragile in nature. So that's something that we've got to keep our eye on, and our operating teams will. Just from a commercial perspective, obviously, two of the lower-cost carriers appear to be the most impacted by this. Is this a max issue all over again, where when you take capacity out and that rising tide kind of lifts the, you know, pricing boat across the industry, or do you think it's much more limited than that? I think we'll see what happens. Yeah. I don't think we understand it for our own fleet yet, so it's hard for us to make judgments on what it's going to mean for other fleets. So I think twenty-ninth of September, we'll get- We'll get the detailed analysis. Yeah, the next phase analysis. Yep. Any more questions from the audience? One up here. This is just back to the loyalty and kind of SkyMiles. Just curious your thoughts, is there enough demand where people are going to continue to try to spend to get to the next upgrade, or do you think there will be, like, a slower, and less spend for people just if they're like: "Okay, maybe I can't get status this year? I think when you look at what this is designed to do, it's to get a higher share of wallet for the people who we know can spend. Mm-hmm. Our hypothesis is that people will find their way to get to the levels they want to. That's the whole premise of the frequent flyer program. The loyalty program, to begin with, is to encourage behaviors that demonstrate loyalty to us, and in return, we give you benefits, right? I think that's what this is designed to do. I think it's hopefully going to be stimulative. We're you know, we didn't mention it, but, we're expecting our Amex remuneration to be just under $7 billion this year, which was, I think, an increase from where we were just a bit ago. That continues to work well, and we did this all in conjunction with our partners at Amex. This was really an integral where we did a lot of research with customers as to what was going to drive their decisions to use cards. I think we feel very comfortable that where we came out, and this is something that should be accretive to our customer base in the long run and us in the long run. Yep. Maybe just to wrap, you gave us three-year guidance, and you said that you'd be doing $7 of EPS by 2024. If fuel breaks back your way in the last couple of months of the year, you may get there this year to the high end of your full-year guidance range. Obviously, it's really impressive you get there one year early. What's next in the plan? Again, I'm trying to ease your 2024 Investor Day and your long-term targets again, but just big picture, like, what's the next stage here? No, I think we have a lot of exciting things. We're not, we're not in a position to announce them today, but I'd just say, think about the way we have gone about segmenting the main cabin. I think when you think about that, you think of all the value we unlocked by introducing things like basic economy all the way up the ladder. We really haven't touched any of the premium products. As you think of our revenues now coming close to 50/50, premium versus main cabin, the ability to now start working to segment the higher end and offering even better experiences, but being able to demonstrate value to our customers through the purchase plan, just like we did in Coach, is something that's going to drive, I think, extraordinary value. That's a hint towards what's coming. Yeah. And, uh- We talked a lot about them at Investor Day and set the foundation for them, but not all in building and enhancing a better core, but the things that we can build off that core- Got it.. right over time. I think we are just about out of time, but maybe one last question, an important one here. What can Tom Brady do for the airline? What can he do for me? Well, he was at our leadership conference yesterday. We just Yeah. We missed him, unfortunately. We missed it on purpose. We had to fly out. Because we had- I applied to make sure that we- Oh, no. We're able to get here and also see our Los Angeles facility. It would have been a justifiable skip. Yeah. Or you should have brought him here. No, but I heard he was fantastic- Yeah. -from our employees. In the feedback. And I think it's about what he brings is the culture of winning, the culture of teamwork, and how you create a dynasty. And that's really, I think, where we are. We've had an incredible amount of success, and I'd say one of the things about success is that it's actually harder to stay there than to achieve it. Yep. Our goal over the next five to seven years or 10 years or forever is to stay in the position we're in- Yeah. -which, we've enjoyed now for many years, and we need to enjoy into the future. And who better to help us along that journey than somebody who is the master of that? Yes. As a Giants fan, I will grudgingly acknowledge that he is the GOAT. There you go. Well done. Great. Glen, Dan, Julie, thanks so much for being here, and we will see you on your conference call. Thank you, Roy. Great. Thank you. Appreciate it.