All right, we are coming up to the top of the hour. So I want to welcome you all to Bernstein's 40th Annual Strategic Decisions Conference. We are delighted today to be joined by Scott Kirby, United Airlines, and the investor relations team. We are going to get started here in just a minute. We're going to start off with some of the forward-looking disclaimers that we normally do. I'd remind you all that we will take some questions from the audience through the Pigeonhole application. If you want to go ahead and put anything through there or promote or demote any of the questions that might be in there, that's kind of our new index card methodology for collecting audience questions. And with that, I will turn it over to you for the forward-looking. Thanks, Dave. Information in today's release and the remarks made during this conference may contain forward-looking statements, which represent the company's current expectations or beliefs concerning future events and financial performance. Often, forward-looking statements are based upon information currently available to the company, and please refer to our SEC filings for any further details. All right, now that you have all been appropriately forewarned, we can kick it off. Scott, thank you so much for making time for us and supporting the conference. I'd like to welcome you back, and maybe you can kick us off with some early remarks about the state of United Airlines and maybe whether or not it's all over after American's re-enhancement. Well, thanks for having me. It's good to be back here again. I want to start by welcoming my son, Sean, who's joined me at another conference and just sitting up here with me. I'm sure there's a lot of smart people in the room, but I think Sean is probably the smartest in the room. So it's also great to travel with your 10-year-old son. Everyone should do it, and I'm not saying that just because it would be good for airline revenues. It really does make business travel a lot better. At United, Look, we'll get to Q&A, but we feel really, really good about how things are setting up. The last four years, like, I think back to what we thought was going to happen in March of 2020, it has played out both for United and for our competitors, for each and every one of our competitors, almost exactly like we thought. And, you know, it's, it's an industry now that there are two airlines that are probably going to be close to 100% of the profitability in the U.S. airline industry this year, when all is said and done, that are different, in ways that are structural, permanent, and irreversible. And I'll look forward to talking about why all those things are true. It is a different, industry. The pandemic was a once-in-history opportunity, to change, and restructure. That happened. I'm really proud of the United team and what they're doing out there every day. You know, this is no longer, I've talked about it for the last four years. It's no longer hypothetical. This is now past tense. This has happened. You see it in the results. A lot of reasons to think that there's a lot of upside ahead for United and for the industry, for that matter. But we feel really good about where we are and that things have shaken out almost exactly like we thought they would. Okay, so, yeah, you know, one of the things that did come out in the last 24 hours is that one of your peers had noted a weakness in the domestic markets. Is that also something you're seeing, or are you guys not seeing that? Or are there some other offsets that are maybe happening to help smooth that transition? Well, I'm going to use this to talk more broadly about what has happened. And one, I think for them, that was just a forecast issue. Not weakness, it's a forecast issue. But when I say the industry has been restructured, I highlighted that before. Let me tell you more what I mean, and I'll expand on some of the comments I made on the last earnings call. I'll start with saying a pretty good way to think about the customers in the airline industry is in three groups. Not perfect, but it's a good approximation. There are premium travelers. They typically fly international. They buy first class. That's a reasonable chunk of the market. There are what I call domestic road warriors. These are typically small business travelers, owners, who mostly fly domestically to see their customers and clients. And they care a lot about flexibility. That's probably number one on their list of concerns. And then there are price-sensitive customers, infrequent customers, typically leisure, but infrequent customers, who travel not a lot. What has happened as we've come out of the pandemic is United had a moat around our business, but it was breached in two places. And we've now repaired those two breaches, and so now we have a solid moat around the business. And that moat is, we have the best customer service, the best proposition for customers. And when I say it's permanent, it's structural, and it's irreversible, I'm going to kind of go through each one of those segments and explain why. For premium, you know, there, if you want to cater to premium, you've got to have a big international network. You've got to be able to fly to places like Tahiti, Cape Town, Dubrovnik, Paris, to get customers, you know, places for their frequent, It makes the frequent flyer program infinitely better if you can get them to places like that instead of just to domestic destinations. It just makes our frequent flyer programs better. You combine it with clubs and lie-flat business class and all the other amenities we have, and that's what the moat around the business has always been, and that always appealed to premium customers. But the change has really been less about that. There's been that. We've dramatically improved in that, you know, and there's two airlines that sort of top of class in that regard. But that second group, domestic road warriors, that was always Southwest's bread and butter. I already talked about what those customers care about is flexibility. This is not a criticism of Southwest. They do a great job. They have for 50 years. They do a great job. But the number one advantage that Southwest had for those 50 years was no change fees. Nobody recognized. I guess I recognized it, but most people didn't recognize it. No one there recognized it. It is the biggest advantage that they have, and I can tell you stories of friends of mine back in the days at America West in the '90s, that flew Southwest because of no change fees, business travelers that needed flexibility. I mean, I've known it for a long time. It was the overwhelming factor that let them over-index on close-in travel, for their whole career. Not that they did anything wrong, but when we got competitive with change fees, and the rest of the industry got competitive with change fees, it meant all the other stuff mattered. And so now, if you're a domestic road warrior, before you flew on Southwest 'cause of no change fees. But today, your choice, you have no change fees on any airline. So your choice then becomes about things like the frequent flyer program, the ability to upgrade to first class, the premium travel. That's why I say this is structural, it's permanent, and it's irreversible. It's not a knock on Southwest, but we finally got competitive with that, and we have seen huge increase in close-in market share, in those kinds of markets as a result of eliminating change fees. So we repaired that breach in the moat. The second breach in the moat was around price-sensitive customers, and the ultra-low-cost carriers built a better mousetrap than us for customers that only cared about price, that were willing to have the price disaggregated, and get low headline prices. And we had to do two things to repair that breach. One, we had to create a viable, competitive, basic economy product, but secondly, we had to upgauge. The only way we could be profitable selling that basic economy product is we couldn't do it with 50-seat regional jets. We had to upgauge to bigger airplanes, so that we had seats to sell and could do so profitably. But because we repaired those two breaches, in our hubs, like, no one can compete with us. Like, we just are winning, and we're going to win in our hub. It is structural, it is permanent, it is irreversible in our seven hubs, that we have a structural advantage where we're gonna win. And by the way, we aren't trying to go fight on turf where we don't have the high ground. We fight on turf where we have the high ground. We're not going to fly, you know, Nashville to Orlando and try to compete where we don't have the advantage. But in our hubs, we have the winning hand, and we're gonna play it. And, you know, that's why we're leading the industry in margins now. It's why our domestic RASM outperformance, that's the best metric to look at, has been so strong compared to everyone else. And that's only gonna improve because it's structural. This really is, That's the real point. This really is structural. Okay, so you started off by saying that it wasn't, that from your perspective, it wasn't so much of a market issue as much as it was a forecasting issue in terms of the- Yeah the unit revenue weakness that your competitor is experiencing. Have you seen any sort of change in corporate travel or share in the recent couple of months that is over and above what you'd normally expect, based on what you've been Well, I guess that's really a question about the distribution strategy It is at American. And we think the distribution strategy change at American has had an impact. It's pretty small. If you looked at kind of the margin gap between Delta and United on the one hand and American on the other, it's a single-digit percentage of that. I'm not gonna list the issues that I think are different and that make a difference, but it wouldn't make the top five of the issues. Not that it's not an issue, but it would not make the top five issues. And we saw market share shifts happening in competitive markets, but then we've seen it for years happening. This is, this is long-term. This goes back a long way. We've seen it for years happening, but it's not unique to American. We've seen it happening versus Southwest. We see it happening versus the ULCCs. You know, we've picked up market share really versus everyone. It's not about distribution, or if it is, it's a small part of it. A small piece of it, okay. And then, you know, maybe you think about the longer term, right? So, so I've been covering the airlines now since 2015, 2016, and I kind of came into it at a point where people were getting very bullish on consolidation Mm-hmm this becoming a better industry. You know, we got the blessing from Omaha for a short period of time there before the pandemic. When you think about those bigger picture structural themes, right? A lot of times when I'm talking to investors about airlines, they initially sort of their eyes roll into the back of the head- Yeah and, you know, you're ready to, like, "Wait, supply, demand, commodity market." Like, do you think those issues around the industry dynamic being better are still intact, kind of post-COVID, or? Well, I think they're different. I think when I talk about the structurally better industry, what I mean is, I'll take one step back. Airlines can't fly places that they lose money. At our last board meeting, there's great data for airlines, so we can go do the route network P&Ls for everyone. They can do them for us, too. We're ±1 margin point, kind of by route. I look at everyone that's not Delta or United, and they have large chunks of their route network that lose money. I know where, I know how much. They can do the same for us. We make money in all seven of our hubs. We're pretty unique at that. Less in some, more in others, but we make them across the board. And that is a mathematical and economic inevitability, that they're ultimately gonna stop flying in places that lose money. Like, they're not gonna do it in the short term. I don't know what the catalyst is going to be. They're going to. The airlines don't keep flying places. They try to do it for a long time. People think strategic flying, I mean, I don't really get it, but people think about strategic flying. They fly, but they eventually, economic reality triumphs over hope. And, and, and that's what's gonna drive the change. And in the past cycles, you had everyone doing poorly. And so everyone was in a similar boat and would shrink, you know, and things would rise and fall on the tide. There was one airline that wasn't, which was Southwest, and they outperformed dramatically during that time. The situation now, the analogy is, it's Delta and United that are dramatically outperforming, that are above the tide, and everyone else has loss-making operations, and they're gonna have to close the loss-making operations. That's going to happen. I don't know when. I'm not predicting it tomorrow, I'm not even predicting it in the medium term, but it is going to happen. That is gonna be a much better industry for everyone, including them, when they do it, but for United as well. Is that just a function of the fact that you have more defensible territory to kind of reinvest in and improve the profitability of? Or, like, what's really changed in that competitive dynamic, though? 'Cause I mean- I mean, I think- One could say, like, if an airline's flying out of Chicago and is losing money today, they could eventually get the product right and get the equipment right and maybe improve that. That's why I say this is irreversible. So take the product. You know, well, eight years ago, American Airlines was putting I'll just use it as an example, not a criticism of American Airlines. I was president of American, we were putting seatback entertainment system on every one of our airplanes. Everyone at American thought that was a stupid idea. The day after I left, they reversed it, and they spent money to take it off the airplanes because it would save fuel burn, reduce weight and save fuel burn. We put it on, at United. We're putting it on every single airplane, at United, big screens, Bluetooth. I flew on one yesterday. As I always do when I fly on one, I walk from back to front. Two-thirds of the customers on the airplane are watching movies. Our NPS scores on those airplanes are dramatically higher than others. Not only are our NPS scores for in-flight entertainment, but the food is better, the flight attendants are better, the gate agents are better. The TSA screening is better when you fly with seatback entertainment. It's something that customers care about. We believe that air travel at United is not a commodity, and we've invested in it, and we've won large market share in those competitive markets. Size of airplanes, like, we got rid of 300 regional jets and replaced them with 200 mainline jets. That's what customers prefer. Like, those are decisions that would take you a decade to change, and then there's dozens, hundreds of others that are similar, that are smaller in size and scale. It's not changeable. It's not reversible. This, this is done. This took 8 years to get here. This has been happening, but it's over now. Okay. And I guess within the backdrop, one of the things that is talked a lot about is this idea of premiumization or de-commoditizing travel, however you want to think about it, breaking up the fare ladder into different buckets, adding attributes, all that kind of stuff. How has that changed competition between airlines, and how has that changed your relationships with your customers? You know, like I said, I go back to that moat. Like, we've always had a product, and we, The product is a lot better on United today than it was pre-pandemic. The biggest thing, by the way, is our people. They do a great job. I hear it from customers all the time. I see it on airplanes. You know, our flight attendants are the face of United. They do a wonderful job. By the way, United, I think we're the only ones still doing this, we still give out the, you know, wipes that you can use. We don't do that because people are worried about the pandemic anymore. We do it because it creates a one-on-one, eye-to-eye contact with customers to get on the airplane. That's why we do it. And those things matter. And our flight attendants do a great job. They like that. They're people-people. They like that, and they do a great job. Now I forgot what the question is. I get to bragging about flight attendants, but The question is really around, like, segmenting the cabin Oh, so And really kind of the change in marketing. So what we've done is we always had that, so we were always would have been the most compelling from a product perspective. We were the most compelling opportunity. But we had the two breaches. If you cared about flexibility, we had change fees, and one of our competitors didn't. If you cared about price, others had lower prices, and so we had to get competitive on those. So it's less, it's more about we fixed, we repaired those two breaches. That's really what happened. We always had the high ground on the product and the service and the experience, but we had to repair those two breaches before we could win in those categories. And so now we can win in every category. And you can't just be one category, and be successful. You know, and in our hubs, we still don't, like, we don't win in Dallas. We're not gonna win in Atlanta. We're not gonna win in Nashville against Southwest. But in our hubs, we just have the winning hand now, across the board. I guess as you think about deploying capital going forward, then, is it more about expanding your coverage area or monetizing the scaled network that you have? Well, so for deploying capital, you went to a different place than I thought you would. For deploying capital, for us, we said on our last earnings call we're going to do $7 billion-$9 billion of CapEx. By the way, we're doing that, I think that's the most that we, I think that's the right level. It's about 100 narrow bodies a year. It's going to be about half Airbus, half Boeing. That's the amount of aircraft I think that we can, That consistency is important. It's hard when you're ramping up and ramping down, makes it hard on the operation, particularly makes it hard on pilot training. And we're going to be at that approximately 100 airplanes, a year of narrow body. That means $7 billion-$9 billion of CapEx. That means, by the way, that certainly on the current forecast, we're generating a lot of free cash flow, even while we're doing that CapEx investment. And we're in a several-year accelerated growth phase, but that's gonna stop. We're gonna get our hubs to maturity, and that's gonna stop, and then there's gonna be really big cash flow at United. But even in the near term, and we'll say more about this when we do an investor day, but even in the near term, you know, we've essentially we have our balance sheet back to pre-pandemic levels. Our adjusted net debt is back to where it was pre-pandemic. Our net leverage is basically back to where it was pre-pandemic. We do still have one piece of high-cost debt, $1.8 billion of pandemic debt that's high cost. It becomes prepayable next month, so we will prepay that. But at that point, you know, talking about capital allocation is a reasonable thing to do. Our priorities for capital allocation are invest in the business, but we're doing that. That $79 billion, that's the most we can invest, practically speaking, and we're gonna continue to do it, but it's not gonna go above that. Second is prepay, you know, get our balance sheet into position and practically pay off high-cost debt. We'll have done that in June. And then that leaves you options for number three, once you've done those two things. Well, I was just sort of thinking about a more like, I appreciate the balance sheet rundown, but I was thinking about it more in the context of, like, okay, what are we gonna do next year? Are we gonna go ahead and take more share from somebody in another market, or are we gonna figure out a way to enhance the experience within our existing footprint to extract more economic rent from this So, so from the network we have? Well, I'm definitely not gonna use that word, but, Well, that's not the way I think about it. We're not trying, we're not, like, out trying to take market share from someone. We're trying to create a great airline for customers. That results in market share, but we're trying to create a great airline for customers, and primarily we do that by, I actually think I have the easiest job of anyone at United, because I think of it as my only responsibility is to create an airline that our employees are proud of. 'Cause if our employees are proud of the airline, they're gonna want you to feel the same way when you fly, and they're gonna take care of you. By the way, creating an airline they're proud of means doing things like investing in seatback entertainment because they're proud to have that system on. Customers tell 'em they like it, they're proud of it. It means investing in the app because they like being on an airplane, and when the inevitable happens, and there's weather like there was yesterday around the country, and flights are delayed, the customers have so much information at their fingertips, and they tell our flight attendants, "This is so much better than other airlines." It makes them feel proud. And doing things that make them proud, they deliver for customers. And so what we're trying to do is constantly make a better airline for customers, and that manifests as higher market share and higher profitability, but it's not, market share is not the goal. Better customer experience is the goal. Okay, excellent. And you mentioned before about this cycle being kind of different, right? What from an outsider looking-in perspective, it does feel like the lower-cost carriers are having a lot more problems than the legacy airlines. Typically, end of cycle, you would normally see the highest cost capacity having to recapitalize and move out. That's kind of been the history prior to 2015 or so. We're hearing now that a lot of the ULCs are having to change their strategy and move into different markets and trying to get out of the way. What's the driver of that change in industry dynamic from your perspective? It's a fundamentally flawed business model. It's a tiny market niche for customers that are willing to accept that product, and it worked as long as the big airlines were crappy. But once we got to be good, it doesn't work. I could give you a longer answer, but I don't want to. But anyway, the business model just doesn't work. It does not work against a competent competitor. Well, I think It works against an incompetent competitor, and we are no competent. Has the development of that Basic Economy product kind of meeting that same customer that maybe wanted that price point and valued that, has that been a big- Oh, sure part of the shift? Yeah, that was, We had to do that to be competitive for that customer, but we also had to upgauge. You know, like, we couldn't have basic economy on a 50-seat regional jet. You know, we did big airplanes, where we could afford to sell the seat and still be profitable at those kinds of prices, and, and we created that. Okay. Let's talk a little bit about the revenue and the loyalty part of- Mm-hmm of the airline investment case, right? Obviously, it's become a much more higher contribution component of it. You know, how does that change how you think about running the airline? I don't know that it changed. We've always had it. First, there's a lot of opportunity in loyalty. We, at our Investor Day, we'll talk more about it, that goes way beyond just the traditional loyalty program. I mean, if anybody wants to be enterprising and dig around at what United is doing, there are other companies that are doing what we're doing, but, you know, we have, we have probably the best premium customer database, probably of anyone in the world. And so doing good stuff with that is important. But the loyalty program, you know, continues to be a huge attribute for us. It's great for our customers. You know, they aspire to earn miles and take the family on the dream vacation to Cape Town, and, you know, and we can uniquely offer them that. It's good for customers, it's good for us. It's a huge part of what we do. If you put that into some economic terms that investors can kind of understand, like, what kind of contribution are you getting out of the loyalty program today? Okay. Where has it been in the past, and that Uh runway going forward? So, we will share more of this at Investor Day, so I'm not gonna do it today. I think we'll also start, at some point, breaking out the financials and reporting them, figuring out how to do that and what to say exactly, which will be good for investors, but I'm not gonna predate it. But the goal that I gave to the team is, which I think we're on, we are on track to achieve, and I think we'll achieve, is to double the, it was already good business with high EBITDA, double the EBITDA between 2019 and 2026, and I think we're gonna do that. Double the EBITDA dollar contribution? Yes. Okay. And as you think about the contribution of the loyalty program and the contribution you get from premium revenue, tickets, and stuff like that, like, how do you distinguish that? Like, how do you think about the buy-up on the ticket price versus what you're getting out of the rewards program? 'Cause you're kind of balancing that, the two sources of revenue. I guess I don't think of them as in a conflict to have to balance. I mean, again, it just goes back to, I think, make things simple. Like, create an airline that customers want to fly. That means create a great frequent flyer program. It means create, have a great premium product. That all goes together. Those don't I don't ever really think of things as being in conflict with each other, as really creating an airline that customers want to fly. And if we do that, I think the rest of it is taken care of itself. Okay, and then if you think about the runway you have to add sort of premium real estate inside the cabin, can you give us a sense for where you are in terms of maximizing the real estate footage that you might have on any given day? I don't think we're gonna change any of our, We're already way ahead of the industry. One, we're in more premium markets. Mm-hmm. You know, the largest. We have hubs in the largest premium markets in the world, so we should have more premium. You know, 'cause we've got hubs in Newark, Dulles, Chicago, San Francisco, LA. Like, we're in the big premium markets. And so we've always had more. We got unique products like the High-J, you know, 767 that flies here out of Newark to London, you know, that over half the real estate is business class, lie-flat business class seats. Now, we already have that. So mostly, I think our premium growth is going to be just as we take new aircraft. The new aircraft, you know, have more premium on them. But it's not a seismic change coming because we spent a lot of years preparing for it. We've been, since sort of 2017, putting more premium on airplanes. And that's a. You don't just, like, snap your fingers and say, "I'm gonna have more premium on airplanes." That's a multi-year, and we started it back in 2017. Just now beginning, now realizing the benefits of it. But we've been on this journey for a long time. Okay. Back to the topic of sort of the loyalty programs and credit card, and the co-brand cards, there is some push from a regulatory standpoint to you know, whether it's attacking junk fees or whether it's you know the efforts to regulate the card transaction processing stuff. How do you think about the risks to those revenue streams? So from some of those? So first, I think it would be bad policy, and it's well-intentioned, but it's misinformed. 84% of consumers have a loyalty card of some sort in their wallets, and use them. And they love them. People like getting their miles and taking a trip to Cape Town, or getting their miles and getting, you know, a free sandwich or, you know, a free meal at Chipotle or whatever they do. Whatever loyalty program they use. And those bills would eliminate loyalty program, would eliminate the credit card loyalty programs. It would eliminate it. So it's just, it's bad policy. It also targets the wrong target. If you look at small businesses, you know, that are paying high fees on interchange fees, the vast majority of their, you know, fees, you know, 60%-70% of the fees are typically the intermediaries in between the credit card companies and the networks, and the small merchant. So what they're doing is they're paying some company to, you know, install the readers and things, and those companies are charging, you know, 400 or 500 basis points, and just to provide the service. Whereas the credit card company, you know, the Visas, the Mastercards, the networks, are charging 200 basis points. But for that 200 basis points, they give you security. Like, just think about it, how many trillions of dollars in expenses are going through those networks, and we don't hear about cyber issues. Like, the security is amazing that those companies give you. They're giving you, You know, when there's fraudulent activity on your card, someone steals your card and purchases it, you get your money back. And, like, they're providing a huge service for that. And so I don't think the bills will become law because they're, while maybe well-intentioned by some that are pushing them, they're bad policy, and it's not what the consumers in the country want. And so I don't think they're likely to pass. Okay. And if we talk a little bit about supply constraints, I think you were really vocal, kind of through the pandemic, around the pilot shortage and made a lot of investments around pilot training. Where are we kind of as an industry, as United, in terms of staffing the airline and dealing with some of those hiring challenges? Well, at United, we never had an issue with staffing. We're at the top of the food chain, so, you know, pilots... It's remarkable, actually. I go out to the TK, where we do our pilot training in Denver every month, and I talk to the new hire classes, and I ask where they came from, how many came from other big airlines. But we don't have a challenge hiring pilots. But I think largely the staff, the pilot shortage, is mostly in the rearview mirror. There's still a lot of churn at smaller airlines, so they still got to hire a lot 'cause they churn out. But people can hire. There's other constraints. The air traffic control system's a constraint. The vendors are a constraint. But frankly, the biggest constraint is being able to make money with new routes. I mean, like, a lot of airlines that are unable to get aircraft right now, like, it's the best thing going for them. Like, they need more loss making routes look like they need another hole in the head. It's the best thing to happen to them, is that they don't have airplanes that they have to fly. You know, it goes back to what I said earlier. Like, every airline that's not Delta or United has a big chunk of their network that loses money. In that world, you don't want more airplanes, you want less. And the constraint, there's still plenty of supply constraints right now. But the constraint, ultimately, even if those supply constraints went away, the constraint is economics now. Can't fly places and lose money. As you think about some of the supply constraints that aren't related to pilots, give me your top three in order of importance? Boeing, Boeing and Pratt. Yeah. The GTF issue is probably worse than Boeing. Yeah. Those are easier. But it, through that whole supply chain, there's challenges everywhere. You didn't mention air traffic control. You said supply, so I didn't think of air Or airspace. Air traffic control. Sorry. Air traffic control is the biggest constraint. For the industry? I think. Okay. Um They're working on it. Yeah. I'm not trying to criticize them. Like, they're trying to come out of the pandemic and hire, and the new FAA Reauthorization Bill is going to be good, but it's the biggest constraint. What should investors be thinking about in relation to that being a big constraint, specifically for United? I don't think of it as an investor. It's not at the top of my list of things to think about, to be honest with you. I think it's going to ultimately get resolved. I think the DOT and FAA are committed to working to get it resolved. I think the issue is the, I think the industry is gonna, is moving towards a world where it coalesces around everyone flying places where they can be profitable. That's gonna be-- That's what's going to be a much better industry. Okay. And you mentioned a second ago that you thought the Geared Turbofan was a bigger issue than some of the issues- Yeah coming out of Boeing. Can you elaborate? Well, I mean, just look how many airplanes are grounded from GTF engines, and I'm not sure if, when it gets fixed. What does that mean for you with the decision earlier to kind of go with the GTF and now having split the fleet a little bit? You know, the new airplanes that we're releasing are LEAP engines because of that. That's why we want LEAP engines. Does that have cost consequences that you're worried about? Not really. Going forward? No. forward? No. Engines, unlike aircraft, engines, having two engine types if you have large fleets is not a big deal. Okay. Aircraft types, the reason aircraft types are different than engines is pilot training is different. Sure. A pilot can fly a 737, but not an A320. But a pilot can fly an aircraft, an A320 with a LEAP engine or a Geared Turbofan engine without any issues. The issue is pilot training. So aircraft complexity is hard, engine complexity is not. Okay. Then if we step back for a second, around sort of this idea of decommoditizing the industry. Still a little bit dependent on supply and demand. Yeah. How durable do you think earnings are going to be sort of through the next cycles, as you think about the industry being more having a larger basket of price points? Does that insulate you from some of the historical sort of margin volatility, or do we know? We're going to still be cyclical. Yeah. We are cyclical. And so we'll have an impact. But I think we'll be going into it structurally at higher margins and in a better position. And so I think we'll do better in a recession or cyclical. We also, at United, have a more diverse revenue stream now, and so if one segment is weak, others can make up for it. And so that diversity will help us in a relative sense Just in terms of the loyalty program? Well, in terms of the loyalty program, but also in terms of appeal to cost-conscious, you know, price-sensitive customers or to the domestic road warriors. I mean, we just have a more diverse revenue set. We used to be really focused on the premium customer, not to the exclusion of the others, but with big hurdles, with moat, with breaches, with moat, you know, with breaches in our moat, with hurdles to those customers. And eliminating those hurdles just gives us more resilience because we have more diversity of revenue. Is it right to think that that cyclicality that's still part of the business is going to be dampened in some way because of those factors, or do we know yet? I, in fairness, I guess we don't know. I think it will. Yeah. But, I'm certainly not wishing for a recession. But, you know, I guess we'll see when we go through it. But even when we've hit, you know, turbulence recently, like, I think what you see is two airlines that still continue to perform pretty well, when others hit turbulence. And I think that's probably a good indicator for what happens in a recession, but Okay we'll wait and see for sure. All right. So, a couple of years ago, you guys had come out with United Next strategy, ton of capacity growth, ton of aircraft deliveries. We've had to tamper the growth of that because of some of those delivery delays. How is that impacting your margin progression over that strategy? Or is it impacting it, or are you just I don't think it's really impacting it much. It's a, you know, at the margin, no pun intended, issue, and I think frankly, we're better off, you know, at 100 aircraft a year. We were kind of already marching towards something like this, before the MAX 9 issue happened in January. Our struggle was, like, we were trying to get Boeing to stop building us MAX 10s because we didn't know if or when they would get certified. And we were having a really hard time doing that. The MAX 9 incident in Alaska gave us the ability to get that contract restructured. We turned them all into MAX 9s, so we have a lot more certainty on what is going to happen. And I think getting to that kind of 100 a year, you know, it'll be ±10, you know, based on... But we're going to be pretty close. And so, like this year, we're carrying quite a bit of extra costs, 'cause we were supposed to have a lot more airplanes than we have, and we planned for it. Even though we thought we might, you know... But anyway, we planned for it, and we hired for it. I think getting to that certainty, you know, we'll have a better cost structure, we'll have more consistency, it'll be good for our operation. Better for the FAA. Like, everything about it will be better. And I don't think it really impacts our margin. You know, we'd be even that, that number of aircraft, you know, we're going to be, call it, 50 airplanes short this year. You know, that's a couple of percentage of capacity points. Like Yeah that's not driving a huge difference at United. Is there a productivity drag created for that if you, like, staffed- Well out the maintenance operation to have that many more aircraft and pilots? Yeah, we have a, Right now, we're carrying extra costs. Right. That is my point. Yeah. Like, by the time we get into next year, those those excess costs that we're carrying right now will have gone away. It'll be a tailwind for us from, from a cost structure perspective. Okay, and you touched on this earlier, but obviously, the CapEx profile comes down a little bit, taking the fewer aircraft. What are the plans for the excess cash that's Well, I already talked about it. I mean Well, as far as kind of shareholder return, we didn't quite get to the That becomes the third dividend. dividend analysis. We're not ready to make an announcement yet. We've got to pay off the high-cost debt, $1.8 billion, but, you know, that comes due, or that becomes pre-payable here, next month. But then we have the flexibility for that. As you think about, you know, kind of you and the board's discussions around what that would look like, is it more on the dividend side, more on the buyback side? How do we Well, certainly trading at 5x earnings, I can't imagine that it would be anything but a That it would be a dividend. That's helpful. I mean, at 15x earnings, it's different. Yeah. At five, it's pretty easy. Okay. And then, you know, one of the things that you've talked a lot about is this investment in the service and the onboard product and the and bringing flight attendants into Chicago to kind of get them, Mm-hmm. Backstage. Just sort of on board with the program. Can you talk about where that cultural transformation is? 'Cause when you got to United, I think the business was in a little bit of a different spot. You know, look, I said earlier that I have the easiest job of anyone at United 'cause my job is to create an airline that they're proud of, and I think we've done that. Like, I get on airplanes... Like, we still have issues, not perfect. Like, we have contract negotiations going on. That's always a little hard. But our people know the vision. They buy into the vision. We want to be the biggest, we want to be the best airline in the history of aviation. They know it. They all, they're on board with it. They believe in it. They also know that we are a team. I think of us as a team. I care immensely about our employees doing what's right for them. They all know it. They may disagree with me on some things, and they'll tell me that sometimes, but they all know it, that I'm with them, and that I want to and am going to create an airline that never again has a furlough, that is an airline that they can come here to work when they're 25, and they can work for 40 years if they want to and have a great career, support a family. They know that we're in it to make it great for them. Doesn't mean they agree with everything we do. They don't. But we're on the same team, and they're proud. They want to win. I tell them, I want you know, to me, I want when they get on crew vans, I want other airline employees to be jealous of them. They tell me that happens. When they go out to their kids' or their grandkids' soccer games or baseball games, I want them to want to put their United swag on because they're proud of it, and they want their neighbors and friends to know they work for United, and we're creating that culture. I think we've created that culture, and I am 100% committed to keeping it, and making it the biggest, best airline in the history of aviation, one that they're proud of, 'cause when they are, they deliver for customers. And that's why our financials are good- Okay because of what they're doing. Have you seen that sort of translate into net promoter scores as you've been going through that transformation journey and, like Massively. Can you tell us how that's Our NPS scores from pre-pandemic to today are up something like 40 points. Huge change. Okay. And then, question By the way, all this fits together. Yep. Like, you know, when I talk about all this, like the improvement in how employees feel about the airline translating into improved NPS scores and translating into improved market share, translating into improved financials, like, this is a flywheel. It works, and it's working. There's a question here around, sort of, you know, Boeing versus Airbus in the order book, and obviously, the delays in the MAX 10 switching to the MAX 9. As you think about the backlogs on Airbus, do you think you're going to have the ability to get that 100 aircraft a year? Yeah, yeah. You know, well, one, we've already got it done. We already have deals to take us out for the next several years. A big difference between Boeing and Airbus, too, is Boeing sells aircraft to lessors at a premium, meaning it's hard for an airline like United to lease a Boeing airplane because the economics don't work. Airbus sells them for the same kind of price. They sell a lot more airplanes to aircraft lessors, which means then it's just a financing decision. And so we can lease an airplane from an Airbus aircraft for the same kind of economics that we can buy them. And we can do that a lot more short term, so we can do that, We have a lot more flexibility, a lot more optionality to do that short term. With where United is, like, we're sort of the premier airline around the globe to, to lease airplanes to. So if we want more Airbus airplanes, instead of having to make a big capital commitment that goes a decade out into the future, you know, we can be much more flexible about leasing airplanes. Much harder to do that with Boeing because they have a different philosophy on selling into the leasing market. But, you know, I feel really good about where we are with aircraft on both. They're both great airplanes. You know, I think of Boeing, you know, as much as they've been challenged, they're still big, still big good airplanes. And they're going to be there for us, and they're going to get through this, and they're going to get it turned around. And similarly, Airbus builds, you know, good airplanes. But frankly, I'm more worried about the engine side of the business than I am those. Yeah. I'm not worried about it, but there's more challenges on the engine side. They're just less high profile, so not in the media as much. Okay, and as you think about the 100 aircraft coming in, is there going to be a shift in sort of financing strategy, or are you going to be taking them all as ownership? Or are you taking them with that? You know, we've done more, we've leased more airplanes than, You know, Mike, our Leskinen, our Chief Financial Officer, you know, brings a more open book to it. I kind of was always anti-lease airplanes, and he took a lot of convincing with me to go through the economics. And eventually he sorted through the economics and especially, you know, if you do your weighted average cost of capital, when our stock is trading. If our stock was trading at 15x, I think we'd buy all of our airplanes, or be biased to buy all of our airplanes. But when we're trading at 5x and our WACC is where it is, like, makes a lot of sense at least to lease at least some airplanes. Hard to say. Okay. And as you think about the investment opportunities outside of aircraft, right? Obviously, the industry's put a ton of money into airports, put a ton of money into the customer experience. Can you talk about some of your priorities outside of the fleet, in terms of where you want to put capital to work to accelerate the strategy? Well, we're doing those kinds. You're gonna always do airport investments. That's sort of like aircraft. You have to do it. We're doing a lot. Terminal A out at Newark is awesome. I flew into there yesterday. It's great, but opportunities like that are gonna always be there. We're doing a big project in Houston for Terminal B, that's gonna be really, really nice. It's gonna be done soon. We're doing a project in Dulles that's gonna sort of double our international capacity for new gates. In Dulles, that's supposed to be done by the summer of 2026. So those kind of projects are gonna always be out there. The biggest sort of discretionary investment that we make is technology. I think we are a leader. You can see it in the app. If you use our app versus others, it's the best airline app in the world. But there's a lot of other technology that is very unique at United. If I was talking about discretionary investment, it's the place that we over-index on is technology. We're doing a lot with AI. Right now, that's the place we over-index. What about onboard Wi-Fi? More to come. More to come? Yep. You're gonna keep me waiting for Investor Day, huh? I'm gonna keep you, keep you waiting until we have a deal done. Probably not Investor Day, but All right. And then what other parts of the like what? If you were to think about the critical path that you think is gonna unlock additional value on that technology side, if you kind of dig into that? Like, like, obviously not interested in understanding what the coding and all is. Yeah. So As you think about, like, the pain points that you see that technology can address. So a few things. One, there's a whole bunch of opportunities to just run the operation better, kind of behind the scenes, but really important to how the customer experience winds up showing. One of the important things to do is get off the mainframe. We've still got green screen stuff. We've still got Fortran. We've been working on it for several years. We have a path to get off of the mainframe. The reason getting off the mainframe isn't per se to improve it, but it's the only way you can ever improve it. Like, you wanna recode Fortran, like, first you gotta go find people that know Fortran, and it is massively complicated, and it's almost, impossible to do. All of it is around trying to improve the customer experience. I'll give you a couple of examples. If there's a weather delay and you need to get rebooked on a flight, it used to be a 40, about a 40-step process for a gate agent to figure out how to rebook you, and only a gate agent or someone could do it. We now have, we call it the Easy Book button, that will, with one click, push the button, rebook you, and give you all the options. You just pick an option off of a screen, and that's the one you get, and take. That means customers can take care of themselves without waiting in long customer service lines. Like, it's a better experience for everyone, to do something like that. The other thing that I have been on a mission to do my entire career, and I think we're gonna finally. We're better than anyone in the world at this, is tell customers what's going on when there's a delay, when there's an issue. Be honest with them and tell them what's happening. Don't send them, you know, these terrible emails of, you know, late-arriving equipment. "Your flight is delayed," not explaining it at all, which most airlines. Or late-arriving equipment. Well, why the hell is it late? Or weather. Like, you know, we had a situation in Chicago the other day where there was weather out over Lake Michigan, and the arrivals were coming from the east, and so you couldn't fly through it. There was a thunderstorm over Lake Michigan. You couldn't fly through it. So the airport was effectively closed. But it was sunny at the airport, and we're telling custom-- And by the way, I got diverted. I had a 13-hour travel day. I got diverted, because the airport was closed, even though it was sunny in Chicago. And so customers will be saying: "Wait, it's sunny in Chicago. What, you're lying to me when you say it's weather." We started doing. We just started this, so it's not happening everywhere yet, but it will be, sending them a map that shows their flight path. It said, shows a weather radar map. Like, you have to fly through this. That's why. Like, just telling people what's going on. What I've said, I said to our team on this, and artificial intelligence is really helpful for this, by the way, is what I wanna get to is a world where we're telling customers, pretend that I, Scott Kirby, have called the network operating center, and I'm on a flight, and I've said, "What's going on with my flight?" What would you tell me? I want to tell every single one of our customers exactly what you would tell me. I think that kind of transparency goes a long, long way. But there are a whole bunch of stuff like that, but it's mostly around either running the operation better and an awful lot to make travel easier for customers. I mean, look at our app. We're the only airline that still have on the home screen, if you fly United, on the home screen, it's great. Like, you go to the airport, like, your plane is, you know, your inbound plane is 23 minutes away, and you can just see it on your Apple home screen. Like, it's awesome. Your bag, like, you'll land and, like, here's where your bag is. It'll be at the, you know, counter or it'll be at the carousel in 14 minutes. And like, you just know what's going on. So anyway, lots of cool stuff. Appreciate that. We're coming up to the end of our 50 minutes. I usually like to give you a chance to give investors your view on why United as a stock, as we close this out. So, you know, look, you've heard it today. I think the industry has fundamentally restructured. I don't, I really don't, I probably came across as a knock on the others. I don't mean it that way, but the industry is fundamentally restructured. This is a journey that's eight years in the making at United. It is permanent, it is structural, it's irreversible. We're just, we're unique. We're in a better place. I think the whole industry probably has margin growth. Well, not the whole industry, but the big four airlines have margin growth ahead. I think we have more than anyone, and we're trading at five times earnings. Like, you know, this is, this is one you don't have to get everything right on. You just have to not get everything wrong, I think, to be successful. A really good chance we're gonna get close to every, We won't get everything right, but we're gonna get close to it right. It's hard for me to see many better opportunities. All right. Well, track record so far has been pretty good. Yeah. I wanna thank you for coming out and supporting the conference. I always learn a lot from these conversations. Thanks. Enjoyed being here. John has enjoyed it, too.