Welcome to day two of Barclays 43rd Annual Industrial Select Conference. I'm Brandon Oglenski, airline and transport analyst. Next up, we have United Airlines. Very excited to have them here, and I think Christina wants to read a quick message. Yes. Thank you, Brandon. So our presentation today might contain forward-looking statements with information currently available to the company. Unless otherwise noted, the financial measures we will discuss are non-GAAP. Please refer to our latest earnings release for definitions and reconciliations to the most directly comparable GAAP measures. Thanks. Thank you, Christina. Well, good morning, Mike. Joining us from United is Mike Leskinen, Chief Financial Officer. Glad to have you guys down here. Really quick, before we get into the conversation, just wanna do the ARS questions. So for those that were here yesterday, the keypad in front of you, we're gonna do a couple questions here real quick. So question number one, please. Do you currently own United? Yes, overweight, two, market weight, three, underweight, or four, no. Mike, every year I say I need to get you a clicker, but we don't. Question number two, please. What is your general bias towards United right now? Oh, you don't let us see the results? You just- Positive, negative, or neutral. You just went through it. Gotta be fast. There were some owners in the room, for sure. Uh-huh. I think I see a couple. Skewed very favorably. This is a smart group. All right, and question number three, in your opinion, through cycle EPS growth for United will be above peers, in line with peers, or below? This is an IQ test, guys. I think Burley might have been hitting the button a few times there. Well, good morning, Mike 100% unanimous in the room, above peers. That's great. Look, I'm gonna say one minute. Sure T hings. This is a transformational time for this industry. Last year was an airline recession for a number of reasons, and, you know, at United, we bucked the trend. We grew EPS despite that, albeit by a very small amount, but it was an earnings recession for the airline industry, no doubt about it. This year's setting up very differently, and despite Winter Storm Fern, we have the number one A0, the number one D0, and the number one A14 that we have ever had in United's history, year to date. We also have NPS scores that are continuing to rise, and I know there are some concerns around little skirmishes around the country. We actually have mid-single-digit RASM in the first two weeks of February in O'Hare. We're tremendously excited about this year. Q1 is shaping up near the high end of our EPS guidance range so far, despite the noise that we've seen in the industry. So, it's a great time to be part of the U.S. airline industry. It's a really great time to be invested in United Airlines. Well, Mike, that was a pretty strong opening there. I guess, can we talk a little bit on the, the 1Q, color? I know you guys are only guiding to an EPS range, but what's driving the upside as you see it today through February? There's a tremendous demand strength. I think it's—we're seeing continuing evolution of the American consumer to have brand loyalty and to like the segmentation, like the product, like the experience of flying on United Airlines. So I do think that there is an overall strength in the industry, but I think we're seeing continued preference of our customers to book directly on United Airlines. Well, some would call this the golden age of brand loyal airlines. Do you guys think you're just getting started on this, though? I think that this is a secular trend. I think that we have a five-year lead, if not more, on the competition, and it's gonna be a very special decade. Okay. Speaking about 2026, can we just unpack the volatility that we saw last year, though? 'Cause I think a lot of airline investors would say, "Hey, look, the stocks are cheap. I'd love to own them," but with earnings volatility like we saw last year, it's, it's just hard to get really excited, even when maybe the quarter is good, but, you know, you could potentially face headwinds very quickly. Yeah, I think it's incumbent on us. You know, lots of executives complain about their valuation. I'm not gonna do that. We need to earn our valuation. We've seen some expansion, and I think we've earned a lot of that, but the earnings volatility with some players in the space that act irrationally has been too much. One of the things we're doing at United, in addition to the foundation, which is driving brand-loyal customers, which takes the volatility out of earnings, by the way, it creates a much more resilient path, and it's frankly why we performed the way we did in 2025 at United. But the other thing we can do is we can continue to fix the balance sheet. So all of you have heard me pound away at our path to Investment Grade, take out some of the financial leverage at the same time that we're taking out the operating leverage by driving brand-loyal customers. And so I think you're gonna. You have already seen muted volatility in our earnings profile, and I think you'll see that continue to be. You're gonna see continued stability in our earnings as they grow towards double digit. Okay. Definitely wanna talk about the longer term prospects here, but in the near term, is it corporate demand that's incrementally better, leisure? Where are you seeing it, in your bookings? Our strongest, the strongest demand, our strongest profitability remains in the premium cabins and international. But I will say that the main cabin in domestic is also seeing an uplift, but we're still, we're still seeing more strength internationally and in the premium cabins than main cabin. Okay, but main cabin has incrementally improved? It's better. And that's where the challenges- It's better have been for the past year or two? Let's be clear, both have improved. Yep. International and premium has improved from more profitable levels. Okay. In any mix, corporate or leisure? Corporate's feeling pretty strong, but really, it's broad-based strength right now. Okay. Visibility looking good into, like, peak spring break periods? I think I opened by talking about how we're trending towards the high end of our quarter's earnings guidance. So, you can take that to mean that spring break looks strong as well. Okay, appreciate that. When you talk about a brand loyal customer, can you unpack that for us a little bit? It's a customer that increasingly books directly on united.com or through our app. It's a customer that loves our clubs. It's a customer that has been on one of our E175s and experienced Starlink. So it's a customer we always have to be schedule and price competitive, but it is a customer that, as long as we are competitive, has a distinct preference to be on a United aircraft, and so we're seeing that more and more. I think that's what makes for a healthy industry. It's why the hotel industry has done so well. It's why some of the cruise line industry is doing really, really well, and the airline industry was just a little bit slower to pick up on that trend. But we are now there. 2 airlines in the U.S. are now there, and it's gonna create not only a differentiated level of profits, but it's gonna create stability in those profits. And you're already. You don't have to take my word for it, you're already seeing evidence of it. I've experienced Starlink on one of your E175s. It was pretty amazing. It's better than the internet at my house. It- Go talk to, you know, Xfinity about what's going on with the fiber at my house. What's the rollout schedule for that, though, fleet-wide? We're gonna have a significant amount of mainline aircraft by the end of this year, and then by the end of 2027, we should be substantially complete. Okay. Apart from Wi-Fi, what else is coming on the brand loyalty side, especially in terms of product? Well, I can't give you all of my secrets today. We do have a media day coming up, is it next week? In March, in March, and we'll, we'll share a little bit more then. We also have plans, as Andrew Nocella alluded to on the earnings call, to improve our loyalty ecosystem. I think that'll end up driving some card acquisitions to United, but, I'm not gonna give any of those details today either. Okay, but I think he did mention relaunching the website. Is that right? You're gonna see, you're gonna see more details in two weeks. Okay. We'll keep our calendars open. So apart from those changes that are coming, what are network priorities in 2026? You know, we are continuing to grow out our mid-continent hubs, and we're getting closer to that. We talked about that on the conference call. So, this is about upgauging and continued growth and connectivity. I think Andrew maybe mentioned that a lot of that had been accomplished. Is that true? We have seen peak growth around connectivity of mid-continent, and that's what he said on the call. Okay, and I think what was important for me and maybe other investors too, you guys did mention that the high-water mark, and correct me if I'm wrong, for domestic capacity growth for you guys would actually be 2025. Is that correct? He did say that. So how do, a nd I know you guys don't want to guide to capacity, so I'm not trying to tease that out, but how do we think about the right long-term growth rate for your, your network, maybe domestically and internationally? You are teasing it out a little bit. This is about driving profits, not capacity. And so as we are determined to get to a double-digit level, double-digit margin, you're gonna see us bring capacity in, bring capacity up, bring it down, to flex utilization to drive the maximum profits long term. And so you're gonna continue to see us do that. We think that the connectivity in mid-continent has largely been built out, and now, as Boeing continues to deliver more MAX aircraft, we need to get 787 rates to be a little bit more stable. But as we see more narrow body deliveries, we can accelerate our up gauging. Okay, so should we assume that there's gonna be maybe some accelerated retirements to older aircraft? We'll see. Okay. We'll see. As we think about cost performance and the MAX 9 and upgauging, how important is the MAX 10 to, you know, your long-term unit costs? The MAX 9 is a great aircraft. The MAX 10 is incrementally better for us, but we're gonna have a good path forward with either. I am excited about the prospects of the MAX 10, and I think it's really built for the United network in a lot of ways, so I think it's gonna be powerful. But our path to double-digit margins is not predicated on it. When you say double-digit margins, is that pre-tax or operating margin? Pre-tax. Pre-tax. I think on the last call, Scott maybe alluded to this as well, like double digit in near term and teens margin. Is that right? Well, Scott's always stretching us. That's what makes him a great CEO. He sets high targets, and then you, you march towards them. I have clear visibility to the double digits, and I think that what's gonna happen with this industry, we've got this secular trend, which is driven by brand loyal customers to United and a preference for United, and so we have, within our own control, a path to double digit. And then at some point, I do believe that the low margin airlines in this industry, the have-nots in this industry, their stakeholders are not going to allow them to continue to lose money. And so at some point, there's a transformation that those lower margin airlines become more rational. And at that, when that happens, and maybe it happens this year, I'm not going to predict when, but when that happens, there's a step function improvement in the profitability of the entire industry, that United also benefits from. And so the combination of the idiosyncratic trends that we've built at United, and that transformation in the industry, which must happen, it's economic gravity, that's what Scott describes as getting us to mid-teens. Okay. And by the way, if there's any questions from the audience, raise your hand, we'll get you a mic. Coming back to cost, though, you guys don't want to guide to unit metrics, which I actually appreciate. I think it's good just having an earnings target out there for investors. Well, you're just beating me up about stability of earnings and the volatility and all of that, and I think it's fair. Like, that's a fair criticism. But you must therefore, if, if you feel that way, you must therefore give us the room to maneuver, to deliver on the bottom line earnings per share, to deliver on bottom-line pre-tax margin, but give us some levers because, you know, fuel prices move, demand moves. There is, there is some level of, of cyclicality to the industry, but if you give us the levers to control, we can kind of mitigate that and drive EPS into pre-tax margin. And that's what we're trying to do, and I think more and more airlines are adopting that approach. I think it will create a healthier neighborhood, a healthier industry, because you should hold us very accountable to delivering those bottom-line metrics. But in any given quarter, I might want to deliver the bottom-line metrics in a different way. Well, I wasn't getting at CASM specifically, but just inflation in the business. Obviously, you have some outstanding labor deals as well, right? So how do we think about inflation this year and next year? Inflation for aerospace, for this airline industry, has been running hotter than the overall economy for, since the pandemic. I don't think that's going to end. At United, we're gonna do better than the industry over time on CASM-ex. We've proven that. Last year was a phenomenal year. Specific levels for this year were not given. Okay, but you do have outstanding labor deals that could add a couple- I have labor deals, I have the outsized industry inflation, but I have all the global procurement next goodness, I have better operations, I have upgauging. I have all of that in the mix, and when we give you EPS guidance, all, all of that is in the thinking. I fully expect to have labor deals done this year, and I fully expect to have to pay that bill, and that's in my EPS guidance. Okay, appreciate that. Then I think two other areas that have been pretty inflationary, airport costs and maintenance costs. What can United do to address those as well? Airport inflation is. You know, I like to have really nice airports for our customers. It's part of differentiating our brand, and so, I want to make sure we're efficient in how we run these projects and manage these projects. But, having nice airports is important. So that's an inflationary item that I think is not going away, and you're going to see it at United. I think we'll work hard to mitigate, but it's an industry-wide phenomenon. Maintenance costs, at United, we're making a lot of progress. I've got nothing to share today, but we're making a lot of progress at bringing the efficiency of that operation up, making sure we have really competitive contracts for spare parts. I think we're gonna moderate that trajectory pretty meaningfully in the coming years. That, that sounds encouraging because most airline executives that we talk to just say maintenance costs are almost- Well, it's tough. It's tough, and engine manufacturers have a lot of power. But we have some unique opportunities at United to do better than we've done historically, and you're gonna see that. You've already seen some of it. You're gonna continue to see it. Okay, and I think in the past, you guys have really focused on deploying technology across the operations here, right? Where do you stand on AI and potential? It's you know, we're just starting to scratch the surface. For AI, we're doing a lot with customer service, service reps to be able to access information faster, answers to their questions, to be able to answer customer question faster. We're doing more preemptive maintenance. We're doing more predictive maintenance. We have iPads in the hands of our technicians that are making them more and more efficient. We have some of the operation where we can create some more automation around ground handling. I think it's gonna be helpful to overall cost trends. I don't see transformational just yet, but I do see helpful. I think another good example that I'm really proud of for the finance team is, we're getting better at closing the books faster and using more technology to help us do that. In fact, you, you may not have noticed, but we filed a 10-K a week earlier than we historically have. I'd like to even bring that a little bit closer to when we file earnings. But a lot of that is around modernization of our finance tools. Okay. I mean, that's a good point for question number four for the audience. So get your keypad there. And you, I think. Is this question number four? I think we already did three, didn't we? Yeah, but I like this question, so we can answer it again. We can go to question number four, please. 100%. Nice. In your opinion, what should United do with excess cash, both on M&A or larger M&A, share repurchases, dividends, debt paydown, or internal investment? This is a good question. Well, M&A has been a topic at this conference, not specific to airlines, but- Mm. I don't know, how do you feel about the environment right now, especially as you're talking about, you know, low-margin airlines having to face economic gravity? Well, this is a brilliant audience. That's about how I feel about it, too. I think it's a unique environment where M&A is possible. We'll see how that plays out. But I do think that this industry would benefit from some. Okay. Question number five, please. In your opinion, what multiple of 2026 earnings should United trade? Less than 10, 10-12, 13-15, 16-18. All right, we can vote, please. I see some folks, Six. They're gonna answer six, I think. Okay. I think- Yeah. Anything in that range would actually be pretty positive. And then- And then- I think the mode there, the three, that, you know, 14- 13 - 15, that feels like we've got to earn it, but I completely agree that that's where we're headed. It might take a year or two. Can we follow up by question number six, please? What do you see as the most significant share price headwind facing United: core growth, margin performance, capital deployment, or execution and strategy? Execution. Hmm. Well, I think that's 'cause none of the answers were good, so people just had to-- like, they're like, "Oh, I'm out of options, so I have to answer four. Well, Mike, there's been a little bit of, maybe a dust-up, if you want to call it that, in hometown Chicago, between you and another airline that maybe has a hub there. Mm. Can you talk to us a bit about some context of what's occurred here and? Temporarily. Temporarily. Temporarily, they have a hub. Yeah. Well, can you speak to United's perspective on Chicago and maybe why this is such a focus? It's our hometown. I mean, this is where we're headquartered. This is where, a lot of the brand loyal customers, we're winning, corporate customers. My neighborhood, everybody's switching from American to United, and they're doing it because we have a differentiated product, we have differentiated service. And so, yep, there's a lot of capacity being added to Chicago, but not all capacity is created equal. And so not only do we have a better hard product, but we have the schedule, and we have the connectivity, we have the clubs. So, they can fly around some empty airplanes, and there's some gate calculus around that. And so that puts us in a spot where for the long term, we have to protect our gate positions. It's gonna be a modest impact to our level of profitability. We've given you guidance. I gave you an update in guidance today, so you can see that it's not leaving much of a mark at this time. So I feel really confident in our strategy. We are making money in Chicago. We made a nice profit last year in Chicago. The other guy that's adding so much capacity is not. There's pretty good math out there. You can create with public data to get at that. And so, really, you should talk to them. It's an irrational strategy to accelerate their losses. Okay. But we shouldn't view this as something that's gonna spill over into the broader market between the two of you? I'm not overly concerned about it. Okay. You should fight, I mean, this is an industry where rational players that are focused on their shareholders, which is our obligation to be focused on our shareholders, you should add capacity where you have excess profits, and you shouldn't do the opposite. And so economic gravity is gonna catch up with players that are in an ego-driven way adding capacity where they're losing money. Okay. You mentioned international remains strong, and, but also that 787 maybe deliveries aren't quite where you want them. Is that true this year? We have a great partnership with Boeing. I've got a tremendous respect for that leadership team. They've done a lot to turn the company around. We've seen it on narrow bodies. Seven eight sevens are still struggling a little bit, but I'm confident they're gonna get there. It's taking them a little longer, and we're having, w e're seeing some incremental delay on seven eight seven deliveries, so it is frustrating, but that management team's great, and they're gonna, they will fix it. What have you guys said about expansion ambitions this year in your major regions? We haven't. I'm not going to today. Okay. I think, but did Andrew talk about transatlantic being roughly the same, or is that- He talked about taking a breather in the transatlantic. Okay. Yeah. All right. And then on loyalty, I know you, you teased that we need to- Now, some of the international growth, just to address that head-on, though, since you reminded me, we did say that. We do have a few 777 s that are Pratt-powered, where I do not have parts for those engines, and so those aircraft are going to be grounded in the summer. And so it's putting a little bit of pressure on our international ambitions in the short term. That'll be resolved in 2027. That's a broader issue for the industry at large, though, right? It is a broader issue, and I think it's an issue that's going to last for a few years to come, at least. Okay. And again, not to dig too much into what you guys are going to talk about in two weeks or, or two weeks' time, but- Mm. Can you speak to MileagePlus and the evolution there? Maybe to date, the performance that you've seen with your co-brand card, and- It's so intertwined with brand loyalty. So, you know, you have a loyalty system, and, you know, when you were a smaller airline, and you were an airline that maybe wasn't differentiated, it was less compelling. But as you build this airline where customers are brand loyal, and we are growing it above GDP, the growth rate in card acquisitions haven't caught up. And so I think what you're gonna see is the changes we will announce are gonna accelerate the card acquisitions to match the growth in our brand loyal customer base. And I think that's gonna be a really powerful profit driver in years to come. Any- That was a pretty good tease. The details you have to wait for. Gotcha. Any concern about, you know, capping interest rates and things coming out of the White House? We've got a partner in Chase that's dealing with all that, so we're following it closely, but that's, y ou know, our customers don't revolve largely, so it's not really our fight. Okay, so the value proposition is coming from other aspects of the card. The value proposition for our loyalty program is around the relationship with United and the bags and the clubs, and the points you earn by flying on United aircraft. Okay. Sounds like more to come there. Mike, we only have a couple more minutes left, but- Nobody from the audience? Oh, any questions in the audience? I think you said you have, Oh, do we have one in the back? Hi, Mike, how are you doing? Just going back to the AI question, it's just so frequently asked this week, and particularly among some of the other subsectors Brandon covers. You talked about some productivity initiatives internally that it could benefit. Some people are starting to allude a little more to also top-line benefit, whether it be a la pricing or something else. Is there, is there something there that we should be thinking about for the industry and for United? Yeah, I, we 've got a great revenue management team and revenue management system. We do use a lot of technology, but I don't see a big needle mover using AI at this time for that. What I do see, and I didn't mention earlier around AI, is when weather hits and your crews get displaced all around the system and your customers need to be re-accommodated, technology tools to function in those irregular operations are really, really important. And this is an area where I think because of the geography of our hubs, where United is far and away the leader globally, is developing systems with how we recover. You saw that recently with Winter Storm Fern, where it was really disruptive nationwide, but the recovery at United was aided by technology, so that we got our crews and our customers all where they needed to go as fast as possible. Mike, we only have one minute left, but, you know, adding all this up, especially with your confidence on line of sight to double-digit pre-tax margins, how do investors think about free cash flow, especially with a still pretty large order book on the horizon here? I mean, double-digit pre-tax margins should drive an expanding multiple, so you kind of get like a multiplication effect of growth in earnings and growth in multiple. And all of that is on a foundation of you know, a higher quality of earnings, not just more stable earnings, but higher free cash conversion. So I've talked about free cash conversion of around 50% as we go through this growth phase, 'cause a lot of our CapEx is growth, not replacement. And then, as we exit the decade and you have a lot more, you get closer to the level of maintenance CapEx instead of growth CapEx, you see, movement towards 75%. And then, beyond that, in the 2030s, I don't know. Let's see how it plays out. I do know that the best companies out there with the highest multiples, you need to get free cash conversion closer to 100%. I'm not ready to promise that yet today. Mike, this was an excellent conversation. Truly the golden age of brand loyal airlines, so thank you. Great to see you. Thank you, all.