Q1 2021 United Airlines Holdings Inc Earnings Call

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Good morning, and welcome to United Airlines Holdings Earnings Conference call for the first quarter 2020, what my name is Brandon and I'll be your conference facilitator today.

Following the initial remarks from management, we will open the lines for questions at that time. If you have a question. Please press star followed by one on your touch tone phones. This call is being recorded and is copyrighted. Please note that no portion of the call may be recorded transcribed or rebroadcast without the company's permission.

Your participation implies your consent to our recording of this call. If you do not agree with these terms simply drop off the line I will now turn the presentation over to your host for today's call, Mike <unk>, Vice President of corporate development and Investor Relations. Please go ahead Sir.

Thank you, Brad and good morning, everyone and welcome to the United and first quarter 2021 and earnings Conference call.

Yesterday, we issued our earnings release, which is available on our website at IR <unk> Dot com.

Information in yesterday's release and the remarks made during this conference call may contain forward looking statements, which represent the company's current expectations or beliefs concerning future events and financial performance.

All forward looking statements are based upon information currently available to the company.

Number of factors could cause actual results to differ materially from our current expectations.

Please refer to our earnings release form 10-K, and 10-Q and other reports filed with the SEC by United Airlines Holdings, and United Airlines for more thorough description of these factors.

Also during the course of our call we will discuss several non-GAAP financial measures for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. Please refer to the tables at the end of our earnings release.

Joining us on the call today to discuss our results and outlook are Chief Executive Officer, Scott Kirby.

And Brett Hart Executive Vice President and Chief Operations Officer, John arrangement.

And <unk>, Vice President and Chief commercial Officer, Andrew and the seller.

And executive Vice President and Chief Financial Officer, Jerry Ladder and in addition, we have other members of the executive team on the line available to assist with Q&A.

And now I'd like to turn the call over to Scott.

Good morning, and thank you for joining our call today.

And what a difference a year makes last year at this time.

And was almost completely shut down and we'd been burning up to $100 million per day.

And thanks to our People's hard work dedication and commitment to doing the right thing for our customers, where and a dramatically different place now.

We're proud of the fact that after being up over 30 points last year, our Q1 and customer NPS scores are the highest quarterly ever and United's history. Despite severe winter storms and higher load factors are testament to the enduring changes, we've made and improve the customer experience.

We're also pleased to confirm last week that our core cash flow for the month of March was positive and we continue to expect positive core cash flow moving forward.

This confirms the view that we first shared in October 2020 that we could see the light at the end of the tunnel.

We're more confident than ever and the recovery and and the long term earnings power of United Airlines.

And with business and long haul international demand is still off by 80 plus percent. We can now squarely focused on returning to positive adjusted EBITDA as our next milestone and fat, we now see a clear path to reaching that milestone, even with business and long haul down as much as 70 per cent.

In addition, we expect a return to positive net income once business and long haul international and recover to down 35 per cent.

And as we've maintained from the beginning of the crisis, we're increasingly confident that both business and long haul will eventually recover fully.

And when that recovery began no airline and better positioned to capitalize on it and United which is why we're so confident about returning to profitability and ultimately exceeding 2019 adjusted EBITDA margins in 2023.

We continued our returned and new vision and the first quarter and are making progress towards those milestones one.

A key pillar of returning to new is changing how customers feel about United So they choose to fly United.

And the quarter, we continue to pivot our operational measurement and decision making to center on our commitment to customers and John will talk about this and more detail, but at United We're innovating in ways that not only make us more efficient and improve our cost structure. These changes also drive a better customer experience.

We're also solidifying and expanding our leadership and sustainability last week, we announced the launch of Eco Skies Alliance a collaboration with global corporations to build on United already dominant position when it comes to the use of sustainable aviation fuel.

And earlier this year, we announced an agreement with Archer aviation, but as part of our effort to invest and emerging technologies for a more sustainable future and we're excited for more to come on this front.

And the United is clearly the sustainability leader and global aviation, but I'm encouraged by conversations I've had with other Ceos around the world, including others, and our industry, which reveal that more and more companies are looking to real solutions like carbon sequestration to decarbonize, our industry and our global economy.

Three the future United Airlines is also committed to being acknowledged industry leader and diversity equity and inclusion as Brad will detail. Further earlier. This month, we outlined our plan to train 5000 pilots at our Aviate Academy by the end of the decade with a goal that half of the students will be women and people of color.

Before turning to restoring our balance sheet last week, we announced a new debt offering using our slot gates and routes as collateral with proceeds to be used to exit the cares loan and we expect that this will be our last COVID-19 crisis related debt right.

And as Gerry five as Jerry will also detail and the first quarter. We made further progress on our commitment to $2 billion and structural cost reductions to offset inflationary pressures with nearly 95 per cent of the savings now identified.

As we returned and news this is not the old and United Airlines, you remember, the new United and our culture have changed for the better for our customers our employees and our shareholders.

Business and international long haul demand recover we expect to quickly ramp the positive adjusted EBITDA margins, followed by profitability and then exceeding 2019 adjusted EBITDA margins by 2023.

We remain confident in that trajectory and if anything recent results put us ahead of pace for reaching those goals and with that I'll hand, it over to Brett.

Thanks Scott.

And when to start by reiterating Scotts comments on how the United team performed and the first quarter.

And the face of continued uncertainty and some severe winter storms, our team never failed to pull together and we.

Couldnt be prouder of their performance is.

Just outlined and the first quarter, United made further progress and our commitment to return to new and.

And once again ramping up investments and our customers experience, including modernizing the gate areas, and our hubs reconstructing and expanding United clubs and Newark and Denver.

Enhancements to the onboard experience like preorder meal functionality, and providing individualized customer feedback to our to our flight attendants and hard product investments such as the continuation of our Polaris seat retrofit program and the <unk>.

Overall for the interior of our narrow body aircraft and.

In addition.

We continue to innovate and lead the industry and safety and cleanliness.

Develop new tools to deliver a safe travel experience for our customers.

We are now offering and expanded COVID-19 testing and pre clearance program for travelers to Hawaii partnering.

Partnering with Abbott to pilot at home Covid tests for international travelers Rolling out proprietary industry, leading technology and the creation of our travel ready sooner.

Customers can review COVID-19 entry requirements upload any required records, including proof of COVID-19 vaccination.

Have them certified and access their boarding pass and advance of arriving at the airport.

And the United is the only airline to offer this integrated capability.

And the first quarter, United Additionally, achieved hospital grade certification for cleaning and safety from the airline passenger experience Association and simplifying.

And I did was the first major U S carrier to be certified Diamond.

And the highest possible certification and this scientifically based assessment and we continue to pursue more ways to make the flying experience as safe as possible.

United has also.

<unk> airline and rollout touchless check in for customers with banks and first to require passengers to taken online health assessment before traveling and as he owned and the U S airline that is allowing customers to enter contact information for both domestic and international travel to facilitate COVID-19 contact tracing.

As we announced earlier this month, we recently restarted the process of hiring pilots and have already announced plans to bring on over 300.

As demand continues to rebound.

To train more than 5000 pilots over the next decade, we recognize that the competition from the best pilot talent is only going to heat up so we aren't standing still.

United is the only major U S airline on a flight school.

And it's called Aviate Academy, and we recently began accepting applications for the inaugural class.

Scott mentioned, we have ambitious plans to use the program to ensure that the next generation of United pilots is representative of the communities and customers we serve.

One of the biggest barriers to the pilot profession as a financial barrier for the training program.

Working with our partners at Jpmorgan Chase, we've established financial aid programs offer millions and scholarships. So the disserving applicants are no longer turned away just because they can't afford and training.

This allows us to successfully recruit the most talented and motivated students and provide a clear path to becoming a first officer at United Airlines.

And going more places to find the best talent and eliminating the financial barriers that had previously prevented smart and ambitious young men and women from pursuing a career as a pilot.

Will ensure that the next generation and the United pilots continues to live up to the exacting World class standards, and United and our pilots have probably maintained throughout our history.

This program is and it is an excellent example of how our commitment to diversity equity and inclusion is more than a reflection of our deeply held values.

Also a genuine competitive advantage.

Will deliver important benefits to United customers and shareholders for years to come.

With that I'll turn it over to John.

Thank you Brett and good morning, everyone.

I would first like to thank my coworkers around the globe as everything I'm going to talk about would not be possible without them.

We will return to now is a much more nimble and agile modern and efficient operation.

Puts the customer at the center of everything we do.

As Jerry will mention later, we are well on our way to meet our $2 billion cost efficiency target.

And operations, we've made the most of the downturn and we're able to develop and execute on a number of projects that.

That will drive meaningful and durable efficiencies.

We were quick to market with initiatives during the pandemic and we intend to be quick to market with upcoming modernization work as well.

I'd like to highlight a few of the most impactful initiatives that are underway.

We recently rolled out agent on demand.

A platform that allows customers to scan a QR code anywhere in the airport and be connected with a customer service representative line.

Five through video chat.

This has proven to be a great way for customers to immediately access to care and service they need, especially during weather events.

It also allows us to leverage our network of customer service professionals around the globe more efficiently.

Technical operations is enhancing our industry, leading United Tech mobile platform, which puts relevant and critical functionality.

At the fingertips of our more than 4000 line maintenance technicians, allowing them to return aircraft to service.

More efficiently than ever.

And we are rolling out similar functionality to other areas and the maintenance team as well.

By the end of this year, we will have transitioned our global aircraft parts inventory to a modern warehouse tracking system.

Which will enable us to manage these assets more efficiently.

Also we're using data analytics and predictive maintenance and so.

And so further improved reliability and increased aircraft availability.

We're also using technology to modernize our existing ground service equipment.

We are installing GPS tracking them 120000 pieces of equipment.

This will enable us to track our brand assets.

Deployed and more precisely.

And reduce our equipment requirement.

It will also save time as employees will be able to quickly glance at their device.

To find the equipment that they need.

Another big theme of our return to know is emerging as a more customer friendly airline.

Over the past year, we've revolutionized our operating philosophy and culture.

If you think about the traditional airline industry operating metrics, a 14 day zero completion factor.

They've been around for decades without much change.

These metrics are important.

But driving towards then can sometimes create suboptimal outcomes for customers.

For example.

Obsessing about D zero, and many instances leaves connecting customers behind.

Connection savor helped solve this at United.

As we use data determined when they can hold a flight without causing additional disruption down line.

Every day, we save many hundreds of connections.

In fact, and recent winter storms, we averaged over 2000 and save connections per day.

And I think we're committed to updating our infrastructure and changing our mindset to become more customer centric.

We are using data and automation centered on new customer insights.

To make it simple for our employees to make the very best decisions for our customers.

In addition.

We are leaning hard into artificial intelligence and predictive analytics.

Solve problems before employees have to deal with that.

During the pandemic, we've also strengthened our communication capabilities to connect with our customers during every step of their journey.

Sometimes weather and other events disrupt travel and when that happens we will clearly communicate the situations to our customers and real time and offer and actionable options.

I think demonstrates this better than our recent Sterne and Denver, Assortments and massive lasting multiple days.

Preventing us from operating at the airport for a day and a half.

Several days before the storm long before any other airline.

We proactively reached out to more than 200000 customers to inform them of the risk to their travel.

We offered rebooking options.

And actually added 22 slides before the storm to provide more options for our customers by far the largest such action we've ever taken.

Our forecast show a 45000 passenger passenger scheduled applied through Denver, each day through the storm.

And through our new proactive strategy.

More than half of those customers reschedule their travel and.

And avoid the risk of disruption to their plans.

Our forward leaning approach was and right one for our Denver operation and more importantly, the right one for our customers.

We have recovered our operations days before our competitors and received stellar feedback from our customers with NPS two cores.

Of those that we re accommodated approximately 50% higher than our system average.

Consider this customer comments and I quote.

We recently had a similar weather disruption when we're traveling on another airline.

We would have appreciated that if the other airlines have been proactive and changing our flight.

Changing online are super easy to.

The bottom line.

Is that the United team didn't let this crisis go to waste.

We've used the time to streamline our processes and pursue innovative ideas.

And that are good for our employees, our customers and our shareholders.

And with that I'll turn it over to Andrew.

Thanks, John <unk>.

And March we finally reached net demand inflection point, we had been looking for and we continue to see that resurgence today.

Vaccine distribution gains and the U S have renewed our desire and Americans to travel.

Near term demand strength was driven by domestic and short haul international leisure and VFR customers not by our business, our long haul customers well at least not yet.

Consumer confidence about air travel is clearly strengthening and we see that and all of our customer feedback.

And 2020, United led with the smallest decline and tried some of every single one of our domestic competitors and for Q1, we expect that continued great relative traveling pain.

Pace of the demand recovery really starting to accelerate at the end of the quarter with March passenger revenues up 69% versus February.

Overall, our PRASM in Q1, 2021 was down 43% and our trade zone was down 27% versus 2019.

Capacity was down 54% and total revenue was down 66% versus the first quarter of 2019.

Our ABL balances increased by about $725 million and Q1 versus Q4 as the booking curve began to finally returned to normal it's nice to see the ATL balance moving in this manner as it's the strongest indication of the strengthening of consumer confidence and travel.

About 12% of our new tickets are using credits accumulated and largely during the pandemic.

And throughout the pandemic, we are focused on making it simpler for customers to use their credits by making it easy refine and say check balances and redeem on United and Dot Com and RF.

The easy use of credits is yet. Another example of our customer focus following the elimination of change fees and 2022.

And customer focus combined with many other commercial and product initiatives such as the completion of Polaris and the opening of new and expanded cloud to provide our customers with an increasingly consistent world class experience.

And at United We're focused on returning to profitability as quickly as possible and the best way to do that is to balance capacity.

Real demand and our leading products and our customers choose one.

This combination leads to maximizing travel.

That approach has allowed United to lead the industry not only in trash and performance during the pandemic, but also on core cash burn in spite of the fact that United has the largest exposure to long haul international and business demand based on our network.

One reason for our strong performance also has been our cargo team, which continued to execute well with record Q1 revenues of $497 million.

Up 74% versus 19 and up 88% versus 2020. This is just absolutely amazing performance.

Our loyalty program mileage plus continues to demonstrate its underlying intrinsic value and growth potential and the quarter versus other operating revenues was down 23% versus overall passenger revenue is down 73% versus 2019. Our card partnerships are a critical driver of this performance co brand spend.

It's grown and healthy again, and new account acquisition has accelerated larger really a fraction of the strong market response to our new not be gateway card and our mid tier quest bar.

We also appreciate the productive relationship we built with chase not only and our cards business, but also helping the EBITDA program come to life.

As we've seen more new customers flying United We're doing a great job of enrolling them in our loyalty program New member enrollments are accelerating back towards pre pandemic numbers with the month over month enrollment rate increase and about 50% in March and April R&D outpace in March.

For the second quarter, we expect our trials them to be down around 20% versus the second quarter of 19 on capacity down around 45% continue.

Continued strong cargo demand and resurgence and passenger demand and a lengthening of the booking curve physician United to remain focused on maximizing PRASM PRASM in the coming months.

For April our book domestic load factors are only slightly behind 2019 and for May were ahead, a marked change from recent history with these healthy book load factors, we've taken the opportunity to manage yields closer to 2019 levels, we booked domestic leisure yields.

Above all the above.

About 2019, starting in mid June and.

Passenger load factors and excess of 80% our ability to reach 2019 yield levels. At this point provides us confidence were on the road to recovery with a realistic capacity plan to achieve that.

Long haul international line represents a significant opportunity for United.

We have seen in recent weeks.

Mediately after our country and provides access with proof of a vaccine leisure demand returns to the level of 2019 quickly and we've adjusted our schedule to take advantage of these opportunities. This spring and summer a few weeks ago. There was a rumor Bruce was going to open as soon as that rumor occurred our grease bookings total op.

And as our second best booked Atlantic market and this summer and we're excited to announce yesterday. The addition of a second daily flight degrees. This summer from our Dulles hub complement and our Newark life.

This line, which also permit access with vaccine proof is in our best booked Atlantic destination and this summer and as a result, we announced yesterday and plans to operate Chicago services Summer and addition to our normal Newark serves well.

And also announced plans to begin service between Newark, and Croatia. This summer and another country that permits access with proof of a vaccine.

And back into Q1, we fear the new mandatory testing and obligation for return and from Mexico with dampened. Our results. This spring, we even cut capacity day, Mexico Beach resorts anticipated and this reduction.

We were wrong, and we quickly reinstated and that capacity as more of our customers quickly adapted to the new requirements. As we look forward to our capacity levels in most parts of the Nir and Latin America, and now above 2019 levels wherever we look and Latin America, Europe, where access is permitted we see leisure demand in 2019 levels.

Far greater.

We look forward to the opening and a more and more countries and as vaccine distribution increases and governance ease restrictions, we have the aircraft standby and ready to fly. This summer for example, we anticipate operating between 8% and <unk> 10 daily flights to London, Heathrow and the summer if and when and travel corridor is permitted to open and.

We believe it's very possible that our fourth quarter adjusted EBITDA will be positive this year, even if long haul domestic long haul and domestic business travel remained depressed and approximately down 70% versus 2019 levels for the remainder of the year.

And after seeing the strong inflection point for domestic leisure traffic. This March we remain cautiously optimistic we could see a lot more demand later this summer for business traffic growth at home and around the world lift and our refined and financial results.

We continue to talk to our clients about the timing and what a rebound of business travel and looks like as we consider our capacity plans for the second half of 'twenty one.

We expect to post summer a positive inflection point and business travel demand and a strong acceleration into 2022, hopefully sort of perhaps surpassed and the down 770 different levels I mentioned earlier, maybe by early fall. Our best guess is that a rebound will be correlated with schools reopening and person and more people and return into the office.

A year ago, United got it right by forecast and a deeper and longer impact from Covid when everyone else thought it was short and we are now uniquely positive on the recovery given the data, we see and expect a full return and business and long haul international demand.

Again every data point, we see confirms that demand will recover and United is a uniquely set up to thrive in that environment, we have our fleet standing by including our full wide body complement we chose not to retire our 767 fleet and remain committed to that call. In fact, we expect that the continued use of the 767 fleet.

Will provide us a unique size and cost platform and many markets, providing us the strategic edge going forward.

Early in the pandemic, we entered and industry, leading deal and a pilot to avoid furloughs and minimize training train and consuming training events, which has already has us ready to bounce back a win for United and our pilots however to be clear business traffic recovery so far.

And given where we are a full schedule is not warranties and the coming months.

We also took the opportunity and the pandemic to rationalize or use a single class 50 seat RJ is down to three partner airlines, and allowing us to deliver a more reliable and cost efficient product. Our fleet of dual class <unk> $5 52 continues to expand and allowing us to deliver and world class product and smaller communities across the United States.

And we're now on track to operate our full schedule from Newark later this year. After slot waivers have ended and all flights will be operated with dual class aircrafts by the time, we get into 2022.

NPS results from our CRB and <unk> passengers, where some of our best.

United has 94 large narrow body airplanes, arriving in 2022, and 2023, which will finally start us on the path of raising our aircraft gauge we've long talked about this gauge mismatch versus our gigantic markets and our primary competitors close and our North American gauge GAAP is one of our biggest opportunities and it's been proven successful and many times.

Over by others and will also be a large positive to our NPS force.

And also remain bullish on our plan to grow connectivity and our mid con hubs and the improved revenue and financial performance that plan will bring and green.

Regardless of the domestic competitive environment over the next few years, we are focused on our 2023 EBITDA results between 2019 levels and delivering on the more than $2 billion and structural cost savings as we become more and more efficient and everything we do.

And with that I wanted to thank the entire United team for their amazing work this quarter and I'll hand, it off to Jerry.

Thanks, Andrew Good morning, everyone.

For the first quarter of 2021, we reported a pretax loss of $1 8 billion.

And and adjusted pre tax loss of $3 1 billion.

We ended the quarter with $21 billion of available liquidity, including funds available under our revolving credit facility and the cares Act loan program.

Average daily cash burn for the first quarter of 2021 was $9 million per day, representing a $10 million per day improvement versus the fourth quarter of 2020.

As evidence of the improving demand environment average daily cash flow and the month of March was positive and we expect core cash flow to remain positive moving forward.

We are excited to have reached this milestone and no longer expect to discuss cash burn metrics going forward and <unk>.

Third we will begin to discuss metrics such as adjusted EBITDA margin that reflect our focus on the return to profitability.

Last week, we price and expect to close tomorrow, a significant debt transaction that represents the final piece of our Covid liquidity plan.

Using our international route franchise and key domestic slots as collateral and we will be replacing the cares Act zone with a combination of $4 billion and secured notes and $5 billion and term months with growth better economics, and and improved maturity profile.

Pacifically had we borrowed the full seven $5 billion available to us under the cares act loan and including existing debt maturities, we would've had over $10 billion of debt maturing in 2025 with this new transaction, we've effectively spread these maturities over the period from 2025 to <unk>.

29.

In addition, with most of the new transaction issued and the term loan market, we retained prepayment flexibility, which will be enormously helpful. As we reduce debt and strengthen the balance sheet moving forward.

Finally, the transaction allows us to extend our revolving credit facility by three years from 2022 to 2025.

While we no longer expect to use the cares act loan we are grateful to the United States Treasury Department and the critical support they provided to the airline industry.

Without the backstop provided by their loan commitment, we would not have achieved our liquidity goals through the crisis.

We believe we now have more than enough liquidity to allow us to successfully navigate through the remainder of the COVID-19 crisis and position ourselves for a strong recovery and fact going forward, we expect our debt raising activity to be routine in nature, such as financing for new aircraft or refinancing transactions.

As Scott noted we are not currently expecting a full recovery and business and international demand this year.

Despite that headwind, we expect our second quarter adjusted EBITDA margin to improve by over 40 basis over 40 percentage points from negative, 65% and the first quarter to close to negative 20% and the second quarter.

Moving forward, we expect to see continuing improvement and adjusted EBITDA margin in future quarters and.

And as Andrew said.

Even with business and long haul international demand are down 70%. We believe it is very possible. Our adjusted EBITDA will be positive later this year and.

And while the timing is uncertain and any kind of business or long haul international recovery gives us gives us a straightforward path to positive net income and returning at 2019, adjusted EBITDA margins and higher.

On costs, we will be able to leverage our cost structure more efficiently as we ramp our operation back up.

Currently expect per second quarter operating expenses, excluding special items to be down around 32% versus the second quarter of 2019 on capacity down around 45%.

Looking quarter over quarter. This represents a two point change and year over two year operating expense and an increase and capacity of almost 10 points versus the first quarter of 2021.

As our operation and normalizes, along with demand, we expect incremental structural benefit from identified cost savings initiatives.

We're confident that we will achieve over $2 billion and structural cost reductions, which are both permanent and independent of any additional benefit related to increased average aircraft gauge that we can expect as we take delivery of large narrow body aircrafts and the coming years.

Of the $2 billion, we know and have identified initiatives totaling $1 $9 billion and savings up from the $1 $4 billion identified as of January of this year.

Here are some examples.

As previously discussed we have more than $300 million of annual savings driven by management and administrative positions that have been permanently eliminated as we strive to be a leaner and more efficient organization.

This reduction as durable as evidenced by the fact that we recently exercised our option to permanently returned three floors throughout landlord lowered at our headquarters in Chicago.

In addition, we've identified over $900 million and savings related to a combination of productivity programs and cost benefits driven by our voluntary separation programs nearly 13000 people voluntarily retired through our programs and the past year and.

In addition to these retirements.

We will be a more efficient organization going forward due to initiatives like agent on demand and digitize technical data that John discussed.

And on demand not only a win for its efficiency, but also a win for our customers you don't have to wait in line to get an answer to a simple question and wind per hour employees as well as congestion at the gate will be reduced.

Finally, it should be we should see more than $400 million <unk>.

And structural cost savings due to long term contract renegotiations.

We took advantage of the unusual circumstances, and the past year as well as more than $200 million, resulting from real estate consolidation.

These initiatives give us further confidence and our ability to achieve CASM ex flat or better to 2019 by 2023.

While the pace of recovery has certainly accelerated in recent weeks, we remain committed to structural cost reductions and ultimately paying down debt.

We are also squarely focused on returning to profitability and pre crisis margins is reinvesting in critical areas, while reducing fixed costs will enable us to maximize United its earnings power post pandemic.

And finally, we have more confidence than ever and the United team and our ability to achieve our goals.

Including positive adjusted EBITDA, followed by profitability and ultimately exceeding 2019 EBITDA margins by 2023 at the latest with that we can start the Q&A.

Thank you. Thank you Gary it's rich I'll take lessons.

Thank you Jerry and we will now take questions from the ALS community. Please limit yourself to one question and if needed one follow up question.

Brandon Please describe the procedure to ask questions.

Thank you the question and answer session will be conducted electronically. If you would like to ask a question. Please press star followed by one and you touched on phone if you'd like to be removed from the queue. Please press the punch line.

And if you had a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. Once again, if you'd like to ask a question. Please press star one on your Touchtone phone.

And please hold for a while but it will be a simple are cute.

From Raymond James We have Savi site. Please go ahead.

Hey, good morning, everyone.

And I appreciate the color on how youre thinking about leisure and business recovery I'm, just curious and on the Internet.

National front, if you could talk about based on what you're seeing and hearing today and how you think the individual III entities will recover over the next couple of years.

Hi, Savi, it's Andrew and I'll give it and try.

I think share haul Latin and is already there, it's not a very business centric.

Region for us.

And demand there looks very strong yields are a little bit weak but.

And so thats moving ahead nicely.

Do you think we're pretty bullish on that part of the world.

And regards to Asia and Europe.

Hard to say I think at this point I would tell you I think Europe is on a faster recovery base and Asia.

Only time will tell and as I said earlier, where we're prepared to begin quite a bit apply and to the U K and this summer and that does open up so I do think Europe is likely a little bit ahead of Asia, and Latin America and ahead of both at this point and hopefully that provides some california.

That's helpful and if I might just clarifying question from from Jerry.

And then kind of the last debt raise here.

And so but what do you expect from kind of a net interest expense standpoint, and looking forward to launch this is kind of a one and done.

Well, it's a hobby.

But theres no question, when you more or less double your debt you're going to double interest expense, but.

We're done with our significant debt raising.

That's COVID-19 related and as I said going forward, there will be more routine type transactions and ultimately we're going to be paying down debt, reducing the interest expense, but one thing I'd point out.

Is that we got through this crisis call. It one 2 billion of debt raise and actually very attractive rates and historically when airlines have been dealing with price. These like these and see.

And I missed your debit and double digit interest rates.

All of this post COVID-19 that re rating had probably a blended interest rate.

Just over 5% so extraordinarily attractive rates even in this environment. No question, we have a lot of debt more debt than we would like obviously and we will focus very hard over the next few years and managing that debt down.

And from Deutsche Bank, we have Michael Lindenberg. Please go ahead.

Amit I guess two questions here. The first two and drew you talked about having a wide bodies ready to go for this summer.

And the Max airplanes that have been grounded and how many were ground and due to electrical and when do they come back and then.

High density Triple Sevens have been grounded do they come back this summer or is the risk that they don't come back at all.

Thanks for the question, Mike I think I'll hand, it over to John right and then are ahead.

Head of operations and he can talk about the return to service from both aircraft.

Yes.

Thank you Andrew and thanks for the question, let's start with the Max we have.

17 of our 30, Max aircrafts that are out of our schedule.

Due to the electrical grounding issue that at Boeing identified and.

No.

We have really good collaboration with Boeing the FAA, we think.

Solution. Once it's formally identified is relatively straightforward and we're.

Looking forward to getting those but those aircraft back and the very near future.

Relative to the Pratt powered triple seven.

And again really productive collaboration with Boeing and the FAA and.

Progress and relative to that airplane and look forward to getting that aircraft back to safe operations.

And the future.

Great and then just a second question and maybe you can answer this Andrew I know you recently launched the JFK service and I know that you're out there looking for additional slots permanent slots.

I did see from your recent debt raise that some of the slots that were excluded from the collateral pool, where I think something on the order of 88 slots at JFK or those daily slot and at what point to those slots come back to you presumably they are on some sort of long term lease.

That's an awfully complicated question Mike.

Trying to keep it high level, though we may have to kind of go offline. So.

The company is engaged and slot transactions over many many years quite frankly long before I got here. So at this point and JFK, we're operating and a few flights per day to Los Angeles, and San Francisco, which we're excited to do after a five year absence.

And we're looking forward to BMO and maintain our JFK slots.

And grow our operation, but we are working with the FAA.

And to use idle fueled capacity.

And as available to us going forward versus the slot that you were referring to and those documents, but all will be happy to take this offline if you need any more answers and managed.

And a flat transactions over many E ons are pretty complicated to try.

And this type of call.

From Cowen and company, we have Helane Becker. Please go ahead.

Thanks, very much operator, hi, everybody and thank you for your time and so.

And I have two questions. One is probably for Scott and regret I think it's amazing that you guys are going down this path.

Culture, and diversity and increasing the number of women and obviously I would think that rate.

And then and others in the and.

And the pilot ranks and you're being told on some social media platforms and other platforms for that decision and people are.

Saying that its an unsafe choice. So what do you say to them to convince them that.

People like me I mean, not me, obviously, but people like me can be a pilot.

And then the other question is with risks as a business related question with respect to how youre thinking about.

And I think Andrew said that Latin was outperforming the Russell.

International right now are you thinking about that just in terms of adding more service to the region to capture more traveled down there or are you kind of happy with the.

Yes.

With the exposure you have so thanks very much.

Hi, Helane this is Brett I'll take the first question.

So as you think about.

And my question, we think that a true untapped.

Well of talent out there is with women and people of color and that we think that.

There have been true.

Limitations in terms of their ability to get into this profession and one has been.

A clear understanding of the path to become a pilot with a major carrier like United which we are clarifying with AAV.

Graham and with AAV and Academy, but also and most particular it is the financial impairment and we all know that it can cost upwards of $100000 too.

And to go through the entire process.

And becoming a pilot and.

Virtually from becoming a pilot at a major commercial airlines so.

We think that.

At the end of the day.

This amount of cash.

And out there.

And these areas where that we can quite frankly be advantaged by pursuing and you just have to make sure that people understand that the opportunities are available.

<unk>.

And the other thing and keep in mind, there's nothing about our selection process nothing about the certification process and the FAA nothing about training program that is changing in any way shape or form.

We're talking about 5000.

<unk>.

Pilots.

Over the course, so what is the better part of the next decade and up to 50% we're targeting for.

And for women and people of color.

That is not an outrageous number of people and the country of over $300 million of people and I'm sure you agree with that and I'm sure that most people don't understand that logic as well, but we're excited and at the end of the day. We think this will be a competitive advantage for us.

Kelly and in regards from the second part of your question and Latin America.

What I would say is this summer and we're planning to be at our 2019 levels already and there is very few parts of our airline we're at that level, we have a great Latin American franchise. However, it has been historically very Houston centric and we've taken the opportunity and the recent months and going forward to diversify that portfolio to now.

And I'll include more out of Los Angeles, Washington, and New York.

And our intention is to keep that and so we're really excited about that we're going to take our Latin and system from very decent centric too.

More diversified across the entire United Network.

Okay.

From Wolfe Research, we have Hunter Keay. Please go ahead.

Hi, Thanks, good morning, everybody.

Believe just wanted to per Scott I want to talk about labor for a minute I'm kind of curious what you might prioritize and a post COVID-19 world that might be new and out of the box I kind of look to you as sort of the most likely airlines crafts, something thats flexible and creative forward thinking is it maybe some flexibility unlike minimum pay maybe like.

Scope what are your priorities and you think about sort of re crafting the CBS.

Well, thanks for giving us the kudos for being the ones that are most likely to think creative I think youre correct.

But unfortunately, we're not we have some ideas that they have to be win win solutions and I think there are some ways to create win win solutions, we demonstrated that with our pilots.

Going through the crisis, where we negotiated a deal with them.

Turn out.

Quite well for them because the payroll support program.

I meant that some of the insurance policy that we bought wasn't really needed.

But it was a fantastic and important for us to be able to keep the airline intact and be ready to come back on the other side of the crisis and it's an example of the kind of win win solutions that we can have I think we've created a lot of trust as we've gone through the crisis.

With our Union partners.

And with the front line.

One of the and.

Additionally, in addition to minimizing our cash burn and one of the other benefits.

Accurate.

About predicting the course of the crisis has been the credibility that we gained.

With our team and because I think we're going to have some opportunities, but I'm not prepared to share them here today.

And until we get them nailed down with our teams and negotiating table, but thanks for the kudos.

Yes, no no problem Scott. Thank you and then Jerry just to follow up on an earlier question on the debt.

Any updated thoughts on and how youre thinking about well I guess, a two part question and how youre thinking about the ATL and now that it's building again and then how much of these debt maturities over the next few years do you expect to roll versus pay down and just sort of as you see things right now thank you.

Hey look we're all happy to see the ATL building.

And as we kind of get back to a healthy industry.

In terms of that.

Debt maturities.

Mostly I mean this year.

We have what I would describe as normal debt maturities I think its about.

And $1 five and $2 billion.

And we.

We will continue particularly for aircraft that is and amortize as and matures.

And aircraft become unencumbered and that's a good thing.

Yeah, there'll be a mix.

And we are laser focused on paying down debt and the pace of that will depend on the pace of the recovery and so we'll balance.

Combination of paying down debt, maybe a little bit of refinancing of some of the debt.

And then the big variable, we have and how much new aircraft financing we would do.

One of the quick ways to move.

Moving to lower debt balances to pay cash for aircraft.

That's not off the table going forward, so we'll see.

From Jpmorgan, we have Jamie Baker. Please go ahead.

Hey, good morning to everybody.

First one for Andrew.

And the absence of much corporate demand how much of your domestic.

And he is allocated to basic economy fares right now and how does that compare to this point in 2019.

Hi, Jamie.

I'm not sure I would answer it that way I would say that given where we are and the pandemic and how demand looks.

And everything else that we've seen occur over the last 12 months basic economy is a small portion of our business right now.

Below single digits is what I'm, saying.

Okay.

That's helpful and.

And not meaningfully different this time in 2019, I mean single digit then as well.

In the past and it was a higher number.

Okay interesting.

And then second I'll directly with Scott, Scott, you've been generous with us and will pass.

And sharing your views on the competitive interplay between your airlines business model and that.

Ultra low cost carriers, how does the COVID-19 experience.

All per that competitive dynamic in your opinion.

I don't well if anything I don't.

And the long term it altered it a whole lot other than I would have I would say that as we went through the.

And then the fact that United Airlines.

Hat.

And which should have the most exposure to COVID-19 of any airline and the country.

We have the biggest business.

Demand, we have the largest international network and those are the two things that are still down over 80%. We should have by all rights been hit the hardest.

But we have.

Hard to sort through all the numbers, because everyone reported cash burn and being typically including us by the way.

But if I look at cash flow.

From operations, we've started to do because that at least is a GAAP metric and there are fewer adjustments to it and you adjusted for size, we pretty consistently have been the number one and number two airlines not just compared to our big network carrier competitors.

Impaired to a low cost carrier competitors.

And that's remarkable and they had a head start and this race and we have managed and stay ahead and what that means is we have prepared ourselves and primed ourselves.

For when the recovery really comes back and the fact that we can be.

The front of the pack or near the front of the pack.

While we have.

Essentially two thirds of our business.

Down, 80%, which by the way just for round numbers roughly a third of our business is domestic leisure a third is domestic business and third is long haul internationally. So those numbers aren't exact but they're close enough for government work.

And we have two thirds of our business down 80% and we're still able to put up those kinds of results. Those two things are coming back.

And I'll give you one anecdote, Jamie and giving you a long answer to the question, but I'll give you one anecdote on business demand which is.

And I've been talking to one of the Ceos of one of our biggest travel partners as <unk>.

<unk> gone through the crisis and I can remember last summer.

Telling me that and it is.

Per for business demand permanently be down by 50%.

Because they realize presume was great and has it changed how they were going to interact.

And we got into the fall.

<unk> CEO and said well.

We're going to get back to a 100% with our customers because we realize we have to do that and we're losing ground with customers by not being in front of them and losing opportunities, but we're never going back to all the internal meetings that we used to have so we will be down 20% to 30%.

And I talked to that same CEO earlier, this year and said well as soon as the restrictions are lifted at least for the first year.

Some of our cultural connectivity, we've had new hires a lot of new hires coming in.

There is no way they can be a part of our culture sitting at home. So we're going to probably have to go 20% to 30% more than we did in 2019 and I'd.

Tell that story, because it's what we have bought at United All the way back a year ago.

Which is that we expect a full recovery and business demand because business travel is about relationships. It is not about transactions. It is about relationships and you cannot build even relationships.

And medium like this and so.

A long way of saying we have our business is still the hardest impacted by the exogenous environment, the lack of business demand and the lack of international travel.

But we're performing at the front of the pack in spite of that and those two things are coming back and when they do we are going to be and the leap.

No doubt about it but this is going to be the number one airline because if we can be at or near the front of the pack with those two massive headwind when those headwinds turn into a tailwind.

It's going to be really gangbusters here at United.

Im excited about the future and what it may.

And for competing with low cost carriers and with everyone else around the world.

Okay.

From Bernstein, we have David Vernon. Please go ahead.

Hey, guys. Thanks, and then taking the time I'm Andrew a question for you on the domestic fare environment of our leisure is there a way you can help us understand kind of how.

Here today for leisure travel on a like for like basis are trending relative to maybe it's one and 19 level not only just in the quarter, but as you look out and the booking curve for the summer months I'm, just trying to get a sense for.

Are you is.

The industry engaged and sort of demand stimulation here or is this just a question and ill.

Demand is coming back and Youre able to take fares up with that rising demand.

Sure I'll give it and try David.

<unk> been really focused on trying to figure out how to manage yields.

Moving forward.

And quite.

And quite frankly, as we look forward to this summer and particularly starting in mid June.

We see our domestic leisure yields as positive versus 2019, and that's one of the things from an RM perspective, we've been talking about a long time, and how do we get our pricing and yields.

Look.

Or at least our yields to look like they were and the past and I think we've made incredible progress and is not necessarily true and Q2.

Our yield outlook is as you see reflected in our and our revenue outlook.

Not as strong we were selling lower yields and the Q2 period earlier and the year.

We do see this inflection point is in mid June and I'm really pleased to see that we expect to have load factors that start with Nate and yield hopefully from a domestic leisure point of view that our positive year over year. I mean, we still have a long way to go and do some are still quite a ways off but I'm really actually quite bullish.

And that we've turned the corner on that.

And that's really helpful. Thank you and then Jerry maybe to follow up on the question before about deleveraging if we get to that level of say 2023, and EBITDA margins or better can you book and or is there a way to think about and.

And the annual rate of debt reduction like how steep should we be thinking about that deleveraging sort of curve happening and I know theres going to be a lot of puts and takes of aircraft deliveries and things like that but if you think about how much how much cash amount of and available to pay down at that at that future EBITDA margin level like what number should we be kind of penciling out on an annual basis.

And you answered your own question there are lots of puts and takes and.

And.

And.

And we will also depend on the cadence of new aircraft deliveries and what we expect to do there.

So it's a little premature to answer that question.

And we have a lot of flexibility and our ability to.

Pay down debt, that's why we kept as much debt as we could pre payable.

Give us that flexibility.

From Evercore, we have Duane and Citigroup. Please go ahead.

Hey, thanks.

Wanted to ask you about visibility just the general concept of revenue visibility as the booking curve recovers.

Visibility should start to recover your capacity plan feels.

<unk> fairly tight out into <unk>, certainly relative to some of your legacy peers.

It doesn't sound like you're expecting much of any acceleration close and which could happen and it could happen and a month like June.

So where does visibility stand today versus a quote unquote normal times.

And are we getting back to putting out guidance that you hope to exceed.

Hey, Brian go ahead.

I'll start.

So thanks for that question.

Hi.

You guys on the analysts on this call have been remarkably polite to us today because.

As we can see and both the stock price and then our pre coal according to Michael that's going to be only thank everyone and cared about was.

Why is the revenue guide different than other airlines and so obviously could take this opportunity to.

That's close enough to your question to attempt to address it.

And first I'd rewind, yet to 13 months ago March 10th.

2020 at the JP Morgan Conference, where we talked about.

The fact that we thought this was going to be deep and last longer and we were the only airline that did that this now is the fifth quarter and arose since then where we've been on calls.

We're our outlook felt more.

Conservative I suppose than our competitors the last sports turned out to be true.

And on March 10th of last year, we actually.

First coined the term hope is not a strategy and I.

Just happened to be reading.

Another book on Winston Churchill, disciplined and and the vial.

We had a bunch and I love Winston Churchill and.

<unk> growth last night, and I think is relevant to them.

And the day after day morning, after Churchill and just the nominated the Prime Minister become the Prime Minister of England, and the darkest hour.

Is it the whole quota is great but at the end of it is although and patient for the morning, I slept soundly and had no need for cheering dreams backs are better than <unk> and <unk>.

Got it couldnt agree more and.

And we have used BACS data science and logic to guide our approach and.

And just first and backs you already said this on the call that our business and sort of one third domestic leisure one third domestic business and one third international.

We've already said that domestic business and international are down 80%.

And it's not likely that that's going to change tomorrow, they're getting better they're going to gradually get better and business travel comes back and its borders reopened.

Business travel with two thirds of your business off 80%, it's really hard for me to make the math work and say 90%.

And we're 100% of the schedule as the optimal answer yes, we could fly 40% more capacity and would probably generate 10% more revenue.

And we'd probably drive 20% more cost and and so we would burn more cash.

And for what it's worth nobody knows when business demand or international we're going to come back for sure.

But we've been more accurate than most and so I'll give you my best guess I think business demand really starts to come back with the fall semester as kids are back and school, but we have to have people back and office buildings. If you go to I've been going to Chicago, and New York, but if you go to downtown Chicago The streets are empty.

And if people back and office buildings, which I think probably starts and the fall that.

And that begins business travel and I think it probably really begins in earnest in January when people will come back and had a chance to put business travel back into the budget is not and the budget for this year.

Business travel back into their budgets and business travel can really begin in earnest international demand is going to be entirely contingent on when borders open.

He took over 3000 bookings yesterday for our new services that we launched in Greece, Iceland, and Croatia and U S. U K opens up I think youre going to have a hard time, finding a hotel room.

And the U K, because theres going to be so many people want to go.

But international borders arent going to whole re opened immediately and my guess is that happened. Some time next year and so in terms of visibility, we're not gonna have a ton of visibility.

Net of you are when you.

When you start to see people and office buildings in downtown and Manhattan, and its hard to get a table at lunch and Youll know that business travel is probably back.

And you see borders open and the ability to go with vaccines internationally, you'll start to know that international travel with that and well.

And while we've been more conservative about the short term forecast, we have been consistent and remain consistent that we have incredible confidence and the long term I'm more convinced than ever with every data point, we see that both business demand and long haul international are coming back and that's why we focused on 2020 three.

And as opposed to what the next quarter is going to be the next quarter is about timing of things that are outside of our control.

The 2023 is an area, where we can have high confidence and I actually think it's probably a little earlier than that now, but certainly by 2023 and.

So while we are a little while we are more conservative about the near term.

It's also being accurate means we burn less cash, which means we have more resources and.

And best and the recovery and the other analogy I've been using and we're still in the pre season right now the regular season hasn't started yet.

And these are the warm up gauge and.

And I don't care as much about winning the preseason games and they do about winning every single game and the regular season, and then winning the Super Bowl.

And and we're setting our team up to win.

The regular season and the Super Bowl when it begins but it hasn't started yet it's going to start it is clear that we see the light at the end of the tunnel, but it just hasn't started yet so.

Hopefully that got close enough to your answer Duane.

Thanks for the detailed thoughts Scott I appreciate it.

Yes.

From Stifel, We have Joseph Genuity. Please go ahead.

Thanks.

Two quick ones I think Andrew along the lines of getting back to.

Positive yield and loans with that start with and eight by June and what percentage of 2019 capacity does that assume you're flying domestically, what's the capacity assumption behind that.

We are as we go through the quarter that June is our inflection point, where we add a lot more capacity.

And we'll get back to you with the exact domestic number.

But its in June where we have the inflection change and we're definitely moving a lot more domestically and we are due and international.

Okay, and then just a clarification and I think you said that co brand spend is now positive.

<unk> 2019, correct correct me, if that's wrong and then maybe a question for Andy.

Andrew or Scott.

When you think about kind of the factors that give you confidence that demand will not be structurally impaired as a result of COVID-19 how much how important is what youre seeing on the co brand portfolio.

Thank you.

To your first one I did not say that just to be clear.

I think the portfolio is.

And in many ways, just a great assets for United along with the whole require programming.

We are pleased to nurture it and grow it.

And again it has not been impacted nearly as much as the top line passenger revenue number.

As we thought would be and and it is actually the case. So we're really pleased by that and we're really focused on growing it we've seen things starting to return to normal although we're not exactly normal we've launched two new cards recently the most recent is the quest card and chase has been an excellent partner and build and all of this and we think we have a lot of runway in front of us.

As for the card as well as for the entire program. So a lot more to come on this we have high expectations and we think we're going to deliver a lot of value out of the program and the long run.

Thank you we will now take questions from the media and once again, if you have a question. Please tell star one on your Touchtone phone and <unk>.

We stand by what we are simple our Q.

And.

And from Reuters, we have David Shepardson. Please go ahead.

Thanks for having the call today I want to follow up on the Triple seven followed by the.

Whitney engines.

Walk us through.

And the schedule that we will take two and step those plans and get them returned to service and when do you anticipate the first planes.

Return to service.

And this is John and I'll take that.

As I alluded to before and it's just too premature for us to Atlanta, and Thats schedule looks like I'll, just tell you that.

And we've had really productive collaboration with <unk> and.

There is progress.

And.

We're really looking forward to getting the aircraft back and the air safely.

Okay and from CNS, and we have Chris Isidore. Please go ahead.

Yes, as Youre talking about doing hiring.

When would you expect that you would get totally to 2019 hiring levels.

Staffing levels again, or do you think that even when traffic is back you'll be functioning with with fewer employees.

How many of your employees.

So we.

Do expect when we return to new.

To be more efficient and you look at things like our management and administrative head count and we're going to keep it at a permanently lower level for example.

I think we will.

It would be back to a 100% head count.

We're back to a little more than 100% of our 2019 capacity.

What's likely to happen this year or sometime into next year.

From Bloomberg, we have Justin Bachman. Please go ahead.

Hi, Thanks for the time I wanted to ask a two part question first on the.

The 737, Max and the return there could you talk a little bit about what.

And sort of time length that work will take and when do you expect there.

To get through and if there are any more max that youre inspecting for any other issues and then secondly, a question for Andrew on yields.

Could you talk a little bit about how that through the summer and then change into the fall as far as any.

Capacity cuts to come and the fall and if you expect yields to improve then or how is that looking for the winter.

John right and again take the Max question is.

As I mentioned before that we have progress and the solution seems relatively straightforward for share.

Where we are in the space of just getting the service built and requirements finalized.

And it should be.

Pretty short process once that's completed.

And really looking forward to getting that aircraft back and there's no other issues with the.

With an accident and the 17.

And of our 30.

And if our schedule right now due to the grounding issue.

Thank you and we'll now turn it back to Michael <unk> for closing remarks.

Thanks, Brian and Im going to let <unk>.

Andrew finish answering the last question and then I'll and then I'll give closing remarks, hi, Justin and regards share yield question as I said, we are seeing.

And a lot more clarity in terms of this summer where our yields are are domestically, our leisure oriented business or uncertainty look positive, which is great to see as we enter into the fourth quarter and Thats really a long time away and particularly in the latter parts of a pandemic. So I don't want to my Crystal ball is not perfectly clear to be honest and a big part of it.

And it plays into the rebound and business traffic, which again, we expect to see quite a bit more of as we get into the fall, particularly as the kids go back to schools and.

Folks start to return into their offices in September.

So October is traditionally a very strong business month three.

And for United Airlines, and I think the industry and we'll have to see how it works out.

But we are carefully managing our capacity and we expect to be significantly larger.

As we kind of go through the process over the next few months and fall.

And we're making sure we do that with the right pricing and yield strategies from United Airlines.

We're moving and the right direction and I.

I think that those are my comments thanks Justin.

Thanks, Andrew and thanks to everyone for joining the call today, please contact investor or media relations. If you have any further questions and we look forward to talking to you next quarter.

Thank you ladies and gentlemen. This concludes today's conference. Thank you for joining you may now disconnect.

[music].

[music].

Good morning, and welcome to United Airlines Holdings Earnings Conference call for the first quarter 2021, My name is Brandon and I'll be your conference facilitator today.

Following the initial remarks from management, we will open the lines for questions at that time. If you have a question. Please press star followed by one and your touch total phones.

This call is being recorded and is copyrighted. Please note that no portion of the call may be recorded transcribed or rebroadcast without the company's permission your.

Your participation implies your consent to our recording of this call. If you do not agree with these terms simply drop off the line.

I'll now turn the presentation over to your host for today's call, Mike <unk>, Vice President of corporate development and Investor Relations. Please go ahead Sir.

Thank you, Brad and good morning, everyone and welcome to United and first quarter 2021 and earnings conference call.

Yesterday, we issued our earnings release, which is available on our website at IR Dot United <unk> Dot com.

Information in yesterday's release and the remarks made during this conference call may contain forward looking statements, which represent the company's current expectations or beliefs concerning future events and financial performance.

All forward looking statements are based upon information currently available to the company.

And number of factors could cause actual results to differ materially from our current expectations.

Please refer to our earnings release form 10-K, and 10-Q and other reports filed with the SEC by United Airlines Holdings, and United Airlines for a more thorough description of these factors.

Also during the course of our call we will discuss several non-GAAP financial measures for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. Please refer to the tables at the end of our earnings release.

Joining us on the call today to discuss our results and outlook are Chief Executive Officer, and Scott Kirby.

President and Bret Hart Executive Vice President and Chief Operations Officer, John <unk>, Executive Vice President and Chief Commercial Officer, Andrew and a seller and.

And executive Vice President and Chief Financial Officer, Jerry Ladder and in addition, we have other members of the executive team on the line available to assist with Q&A and.

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

Good morning, and thank you for joining our call today by what a difference a year makes last year. At this time demand was almost completely shut down and we've been burning up to $100 million per day.

Thanks to our People's hard work dedication and commitment to doing the right thing for our customers were and are dramatically different place now.

We're proud of the fact that after being up over 30 points last year, our Q1 and customer NPS scores are the highest quarterly ever and United's history. Despite severe winter storms and higher load factors are testament to the enduring changes, we've made and improve the customer experience.

We're also pleased to confirm last week that our core cash flow for the month of March was positive and we continue to expect positive core cash flow moving forward.

This confirms the view that we first shared in October 2020 that we could see the light at the end of the tunnel.

We're more confident than ever and the recovery and and the long term earnings power of United Airlines.

Even with business and long haul international demand is still off by 80 per cent. We can now squarely focused on returning to positive adjusted EBITDA as our next milestone and <unk>.

And that we now see a clear path to reaching that milestone, even with business and long haul down as much as 70 per cent.

In addition, we will.

Spectra returned to positive net income once business and long haul international and recover to down 35 per cent.

And as we've maintained from the beginning of the crisis, we're increasingly confident that both business and long haul will eventually recover fully.

When that recovery began no airline and better positioned to capitalize on it and then United which.

And why we're so confident about returning to profitability and ultimately exceeding 2019 adjusted EBITDA margins in 2023.

We continued our returned and new vision and the first quarter and are making progress towards those milestones one a key pillar of returning to new is changing how customers feel about United So they choose to fly United.

And the quarter, we continue to pivot our operational measurement and decision making to center on our commitment to customers and John will talk about this and more detail, but at United We're innovating in ways that not only make us more efficient and improve our cost structure. These changes also drive a better customer experience.

We're also solidifying and expanding our leadership and sustainability last week, we announced the launch of eco skies alignment and collaboration with global corporations to build on United already dominant position when it comes to the use and sustainable aviation fuel and.

And earlier this year, we announced an agreement with Archer aviation, but as part of our effort to invest and emerging technologies for a more sustainable future and we're excited for more to come on this front.

United is clearly the sustainability leader and global aviation, but I'm encouraged by conversations I've had with other Ceos around the world, including others, and our industry, which revealed that more and more companies are looking to real solutions like carbon sequestration to decarbonize, our industry and our global economy.

Three the future United Airlines, and also committed to being acknowledged industry leader and diversity equity and inclusion.

As Brad will detail further earlier this month, we outlined our plan to try and 5000 pilots at our Aviate Academy by the end of the decade with a goal that half of the students will be women and people of color.

Before turning to restoring our balance sheet last week, we announced the new debt offering using our slots gates and routes and as collateral with proceeds to be used to exit the cares loan and we expect that this will be our last COVID-19 crisis related debt right now.

And as Gerry five and Jerry will also detail and the first quarter. We made further progress on our commitment to $2 billion and structural cost reduction to offset inflationary pressures with nearly 95 per cent of the savings now identified.

As we returned and new this is not the old and United Airlines, you remember, the new United and our culture have changed for the better for our customers our employees and our shareholders.

Business and international long haul demand recover we expect to quickly ramp and a positive adjusted EBITDA margins, followed by profitability and then exceeding 2019, adjusted EBITDA margins by 2020 three.

We remain confident in that trajectory and if anything recent results put us ahead of pace for reaching those goals and with that I'll hand, it over to Brett.

Thanks Scott.

I want to start by reiterating Scotts comments on how the United team performed and the first quarter and the face of continued uncertainty and some severe winter storms our team never failed to pull together and we couldnt be prouder of their performance.

Just outlined and the first quarter and United made further progress on our commitment to return to new and.

Once again ramping up investments and our customers experience, including modernizing the gate areas, and our hubs reconstructing and expanding United clubs and Newark and Denver.

Enhancements to the onboard experience like preorder meal functionality, and providing individualized customer feedback to our to our flight attendants and hard product investments such as the continuation of our Polaris seat retrofit program and the overhaul of the interior of our narrow body aircraft.

In addition.

We continue to innovate and lead the industry and safety and cleanliness and develop new tools to deliver a safe travel experience for our customers where.

We are now offering and expanded COVID-19 testing and pre clearance program for travelers to Hawaii.

Partnering with Abbott pilot at home Covid tests from international travelers rolling out proprietary and industry, leading technology and the creation of our travel ready sooner.

Customers can review COVID-19 entry requirements upload any required records, including proof of COVID-19 vaccination.

Have them certified and access their boarding pass and advance of arriving at the airport.

United is the only airline to offer this integrated capability.

And the first quarter, United Additionally, achieved hospital grade certification for cleaning and safety from the airline passenger experience Association and simplifying.

United was the first major U S carrier to be certified Diamond and highest possible certification and this scientifically based assessment and we continue to pursue more ways to make the flying experience as safe as possible.

United has also.

First airline and rollout touchless check in for customers with banks first to require passengers to taken online health assessment before travelling and is the only U S airline that is allowing customers to enter contact information for both domestic and international travel to facilitate COVID-19 contact tracing.

As we announced earlier this month, we recently restarted the process of hiring pilots and have already announced plans to bring on corporate and 300.

As demand continues to rebound, we expect to train more than 5000 pilots over the next decade.

We recognize that the competition from the best pilot talent is only going to heat up so we aren't standing still.

It is the only major U S airline to own a flight school.

Called Aviate Academy and we.

Recently began accepting applications for the inaugural class.

And Scott mentioned, we have ambitious plans to use the program to ensure that the next generation of United pilots is representative of the communities and customers we serve.

One of the biggest barriers to the pilot profession as a financial barrier for the training program.

Working with our partners at Jpmorgan Chase, we've established financial aid program software millions and scholarships. So the deserving applicants are no longer turned away just because they can't afford and training.

It allows us to successfully recruit the most talented and motivated students and provide a clear path to becoming a first officer at United Airlines.

And going more places to find the best talent and eliminating the financial barriers that had previously prevented smart and ambitious young men and women from pursuing a career as a pilot.

Ensure that the next generation and the United pilots continues to live up to the exacting World class standards, and United and our pilots and probably maintained throughout our history.

This program is and it is an excellent example of how our commitment to diversity equity and inclusion is more than a reflection of our deeply held values.

Also a genuine competitive advantage that will deliver important benefits to united customers and shareholders for years to come.

With that I'll turn it over to John.

Thank you Brett and good morning, everyone.

I would first like to thank my coworkers around the globe as everything I'm going to talk about would not be possible without them.

We will returned and there was a much more nimble and agile modern and efficient operation.

The customer at the center of everything we do.

As Jerry will mention later, we are well on our way to meet our $2 billion cost efficiency target.

And operations.

The most of the downturn and we're able to develop and execute on a number of projects.

That will drive meaningful and durable efficiencies.

We were quick to market with initiatives during the pandemic and we intend to be quick to market with the upcoming modernization work as well.

I'd like to highlight a few of the most impactful initiatives that are underway.

We recently rolled out agent on demand.

A platform that allows customers to scan a QR code anywhere in the airport and be connected with a customer service representative line.

And through video chat.

This has proven to be a great way for customers to immediately access to care and service, they need, especially and during weather events.

It also allows us to leverage our network and customer service professionals around the globe more efficiently.

Technical operations is enhancing our industry, leading United Tech mobile platform, which puts relevant and critical functionality.

At the fingertips of our more than 4000 line maintenance technicians, and allowing them to return aircraft to service.

More efficiently than ever.

And we are rolling out similar functionality to other areas and the maintenance team as well.

By the end of this year, we will have transitioned our global aircraft parts inventory to a modern warehouse tracking system.

Which will enable us to manage these assets more efficiently.

Also we're using data analytics and predictive maintenance.

To further improve reliability and increased aircraft availability.

We're also using technology to modernize our existing ground service equipment.

We are installing GPS tracking more than 20000 pieces of equipment.

This will enable us to track our brand assets.

Deployed and more precisely.

And reduce our equipment requirement.

It will also save time as employees will be able to quickly glance at their device.

And to find the equipment that they need.

Another big theme of our return to know is emerging as a more customer friendly airline.

Over the past year, we've revolutionized our operating philosophy and culture.

If you think about the traditional airline industry operating metrics, a 14 day zero completion factor.

They've been around for decades without much change.

These metrics are important.

But driving towards then can sometimes create suboptimal outcomes for customers.

For example.

Obsessing about D zero in many instances leaves connecting customers behind.

Connection savor help solve this at United.

As we use data determined when they can hold a flight without causing additional disruption down line.

Every day, we save many hundreds of connections.

In fact, and recent winter storms, we averaged over 2000 and save connections per day.

And I think we are committed to updating our infrastructure and changing our mindset to become more customer centric.

We're using data and automation and centered on new customer insights.

To make it simple for our employees to make the very best decisions for our customers.

In addition.

We are leaning hard into artificial intelligence and predictive analytics.

Solve problems before employees have to deal with that.

During the pandemic, we've also strengthened our communication capabilities to connect with our customers during every step of their journey.

Sometimes weather and other events disrupt travel and when that happens we will clearly communicate the situation to our customers and real time and offer and actionable options.

I think demonstrates this better than our recent storm and Denver, Assortments and massive lasting multiple days.

Preventing us from operating at the airport for a day and a half.

Several days before the storm long before any other airline.

We proactively reached out to more than 200000 customers to inform them of the risk to their travel.

They offered rebooking options.

And actually added 22 slides before the storm to provide more options for our customers by far the largest such action we've ever taken.

Our forecast show a 45000 passenger passenger scheduled applied through Denver, each day through the storm.

And through our new proactive strategy.

We help more than half of those customers reschedule their travel.

And avoid the risk of disruption to their plans.

Our forward leaning approach was and right one for our Denver operation and more importantly, the right one for our customers.

We have recovered our operations days before our competitors and received stellar feedback from our customers with NPS two cores.

Of those that we re accommodated approximately 50% higher than our system average.

Consider this customer comment and I quote.

We recently had a similar weather disruption when we were travelling on another airline.

We would have appreciated that if the other airlines have been proactive and changing our flight.

Changing online are super easy to.

The bottom line.

Is that the United team did and that this crisis go to waste.

We've used the time to streamline our processes and pursue innovative ideas.

Good for our employees, our customers and our shareholders.

And with that I'll turn it over to Andrew.

Thanks, John.

And during March we finally reached that demand inflection point, we had been looking for and we continue to see that resurgence today vaccine distribution gains and the U S have renewed our desire and Americans to travel near.

Near term demand strength was driven by domestic and short haul international leisure and VFR customers.

And by our business, our long haul customers well at least not yet.

And similar confidence and that air travel is clearly strengthening and we see that and all of our customer feedback.

And 2020, United led with the smallest decline and track every single one of our domestic competitors and for Q1, we expect that continued great relative travel patient.

Pace of demand recovery really starting to accelerate at the end of the quarter with March passenger revenues up 69% versus February.

Overall, our PRASM in Q1, 2021 was down 43% and our traffic was down 27% versus 2019 and.

Capacity was down 54% and total revenue was down 66% versus the first quarter of 2019.

Our ABL balances increased by about $725 million and Q1 versus Q4 as the booking curve began to finally returned to normal it's nice to see the ATL balance moving in this manner as it's the strongest indication of the strengthening of consumer confidence and travel and.

About 12% of our new tickets are using credits accumulated and largely during the pandemic.

Throughout the pandemic, we are focused on making it simpler for customers to use their credits by making it easier to find say check balances and redeem on United Dot Com and our App.

The easy use of credits is yet. Another example of our customer focus following the elimination of change fees and 2020.

The customer focus combined with many other commercial and product initiatives such as the completion of Polaris and the opening of new and expanded cloud to provide our customers and increasingly consistent world class experience.

And United we're focused on returning to profitability as quickly as possible and the best.

The way to do that is to balance capacity real demand and our leading products and our customers choose first day.

This combination leads to maximize and travel.

That approach has allowed United to lead to the street and not only and traffic performance during the pandemic, but also on core cash burn and despite the fact that United has the largest exposure to long haul international and business demand is on our network.

One reason for our strong performance also has been our cargo team, which continues to execute well with record Q1 revenues of $497 million.

Up 74% versus 19 and up 88% versus 2020. This is just absolutely amazing performance.

Our loyalty program mileage plus continues to demonstrate its underlying intrinsic value and growth potential and the quarter worthy and other operating revenues was down 23% versus overall passenger revenue jumped 73% versus 2019. Our card partnerships are critical driver of this performance co brand spend.

<unk> grown and healthy again, and new account acquisition has accelerated larger really a fraction of the strong market response to our new not be gateway card and our mid tier quest cart.

We also appreciate the productive relationship, we bill and shape, not only and our cards business, but also helping the EBITDA program come to life.

As you see more new customers line, United We're doing a great job of enrolling them in our loyalty program New member enrollments are accelerating back towards pre pandemic numbers with the month over month enrollment rate increase and about 50% in March and April R&D outpaced in March.

For the second quarter, we expect our travelers to be down around 20% versus the second quarter of 19 on capacity down around 45% continue.

Continued strong cargo demand and resurgence and passenger demand and a lengthening of the booking curve position and United to remain focused on maximizing PRASM and PRASM in the coming months for April our book domestic load factors are only slightly behind 2019 and for May were ahead, a marked change from recent history with these.

Healthy book load factors, we've taken the opportunity to manage yields closer to 2019 levels, we booked domestic leisure yields.

Above from engagement, so above 2019, starting in mid June and expect passenger load factors and excess of 80% our ability to reach 2019 yield levels. At this point provides us confidence were on the road to recovery with a realistic path and plan to achieve that.

Long haul international line represents a significant opportunity for United.

We have seen in recent weeks and immediately after our country access with proof of our vaccine leisure demand returns to the level of 2019 quickly and we've adjusted our schedule to take advantage of these opportunities. This spring and summer a few weeks ago. There was a rumor Greece was going to open as soon as that.

Rumor occurred our grease bookings total.

Athens is our second best booked Atlantic market. This summer and we're excited to announce yesterday and the addition of a second daily flight degrees. This summer from our Dulles hub complement and our Newark flight.

Iceland, which also from me access with vaccine proof is and our best booked Atlantic destination and this summer and as a result, we announced yesterday plans to operate Chicago services Summer. In addition to our normal Newark Service. We also announced plans to begin service between Newark, and Croatia. This summer and another country that permits access from a proof of the vaccine.

Inc.

Looking back into Q1, we see are the new mandatory testing and obligation for returning from Mexico with dampened our results. This spring, we even cut capacity and new Mexico Beach resorts anticipated and this reduction well, we were wrong and we quickly reinstated and that capacity as more of our customers quickly adapted to the new requirements as well.

Look forward to our capacity levels in most parts of the Nir and Latin America are now above 2019 levels.

Wherever we look and Latin America, Europe, where access is permitted we see leisure demand in 2019 levels or greater.

We look forward to the opening and are more and more countries and vaccine distribution increases and governance ease restrictions, we have the aircraft standby ready to fly and the summer for example, we anticipate operating between 8% and <unk> 10 daily flights to London Heathrow. This summer, if and when and travel corridor is permitted to open.

We believe it's very possible that our fourth quarter adjusted EBITDA will be positive this year, even if long haul.

Long haul and domestic business travel remains depressed and approximately down 70% versus 2019 levels for the remainder of the year.

After seeing the strong inflection point for domestic leisure traffic. This March we remain cautiously optimistic we could see a lot more demand later this summer from business traffic, both at home and around the world lift and our financial results.

We continue to talk to our corporate clients about the timing and what to rebound and business travel looks like as we consider our capacity plans for the second half of 'twenty one.

We expect to post summer a positive inflection point and business travel demand and a strong acceleration into 2022, hopefully surpass that surpass and the down 70%, 70% levels I mentioned earlier, maybe by early fall and our best guess is that a rebound will be correlated with schools reopening and person and more people and return into the office.

And a year ago, United got it right by forecast and a deeper and longer impact from Covid when everyone else and thought it was short and we are now uniquely positive on the recovery given the data, we see and expect a full return and business and long haul international demand.

And again every data point, we see confirms that demand will recover and United is a uniquely set up to thrive in that environment, we have our fleet stand and by including our full wide body complement we chose not to retire our 767 fleet and remain committed to that call. In fact, we expect that the continued use of the 767 fleet.

Will provide us a unique size and cost platform and many markets, providing us the strategic edge going forward.

Earlier in the Pan and a pandemic, we entered and industry, leading deal and a pilot to avoid furloughs and minimize training train and consuming train and events, which had already has and is ready to bounce back a win for United and our pilots however to be clear business traffic recovery so far.

And given where we are a full schedule is not warranty and the coming months.

We also took the opportunity and the pandemic to rationalize or use a single class 50 seat RJ is down to three partner airlines, allowing us to deliver a more reliable and cost efficient product. Our fleet of dual class 50, CCR day, $5 52 continues to expand and allowing us to deliver a robust product and smaller communities across the United States.

And we're now on track to operate our full schedule from Newark later this year. After slot waivers have ended and all flights will be operated with dual class aircraft by the time, we get into 2022.

NPS result from our CRB and <unk> passengers, where some of our best.

United has 94 large narrow body airplanes, and arriving in 2022, and 2023, which will finally start us on the path of raising our aircraft gauge we've long talked about this gauge and mismatch versus our gigantic hub markets and our primary competitors closing our north American gauge GAAP is one of our biggest opportunities and it's been proven successful many times.

Over by others and will also be a large positive to our NPS scores.

We also remain bullish on our plan to grow connectivity and our mid con hubs and the improved revenue and financial performance that planned Wolverine green, regardless of the domestic competitive environment over the next few years. We are focused on our 2023 EBITDA results between 2019 levels and delivering on the more than $2 billion and structural.

Cost savings as we become more and more efficient and everything we do.

And with that I want to thank the entire United team for their amazing work this quarter and I'll hand, it off to Derek.

Thanks, Andrew Good morning, everyone.

For the first quarter of 2021, we reported a pretax loss of $1 8 billion.

And and adjusted pre tax loss of $3 $1 billion.

And we ended the quarter with $21 billion of available liquidity, including funds available under our revolving credit facility and the cares Act loan program.

Average daily cash burn for the first quarter of 2021 was $9 million per day, representing a $10 million per day improvement versus the fourth quarter of 2020.

As evidence of the improving demand environment average daily.

Cash flow and the month of March was positive and we expect core cash flow to remain positive moving forward.

We're excited to have reached this milestone and no longer expect to discuss cash burn metrics going forward. Instead, we will begin to discuss metrics such as adjusted EBITDA margin that reflect our focus on the return to profitability.

Last week, we price and expect to close tomorrow, a significant debt transaction that represents the final piece of our Covid liquidity plan.

Using our international route franchise and key domestic slots as collateral and we will be replacing the cares Act zone with a combination of $4 billion and secured notes and $5 billion and term loan with better economics, and and improved maturity profile.

Specifically had we borrowed the full seven $5 billion available to us under the cares act loan and including existing debt maturities, we would've had over $10 billion of debt maturing in 2025.

This new transaction, we've effectively spread these maturities over the period from 2025 to 2029.

In addition, with most of the new transaction issued and the term loan market.

We retained prepayment flexibility, which will be enormously helpful. As we reduce debt and strengthen the balance sheet moving forward.

Finally, the transaction allows us to extend our revolving credit facility by three years from 2022 to 2025.

While we no longer expect to use the cares act loan we are grateful to the United States Treasury Department and the critical support they provided to the airline industry.

Without the backstop provided by their loan commitment, we would not have achieved our liquidity goals through the crisis.

We believe we now have more than enough liquidity to allow us to successfully navigate through the remainder of the COVID-19 crisis and position ourselves for a strong recovery in fact going forward, we expect our debt raising activity to be routine in nature, such as financing for new aircraft or refinancing transactions.

As Scott noted we are not currently expecting a full recovery and business and international demand this year.

Despite that headwind, we expect our second quarter adjusted EBITDA margin to improve by over 40 basis over 40 percentage points from negative, 65% and the first quarter close to negative 20% and the second quarter.

Moving forward, we expect to see continuing improvement and adjusted EBITDA margin and future quarters.

And as Andrew said.

Even if business and long haul international demand are down 70%. We believe it's very possible. Our adjusted EBITDA will be positive later this year and.

And while the timing is uncertain and any kind of business or long haul international recovery gives us gives us a straightforward path to positive net income and returning at 2019, adjusted EBITDA margins and higher.

On costs, we will be able to leverage our cost structure more efficiently as we ramp our operation back up.

Currently expect our second quarter operating expenses, excluding special items to be down around 32% versus the second quarter of 2019 on capacity down around 45%.

Looking quarter over quarter and this represents a two point change and year over two year operating expense on an increase and capacity of almost 10 points versus the first quarter of 2021.

As our operation and normalizes along with demand.

We expect incremental structural benefit from identified cost savings initiatives.

We're confident that we will achieve over $2 billion and structural cost reductions, which are both permanent and independent of any additional benefit related to increased average aircraft gauge that we can expect as we take delivery of large narrow body aircrafts and the coming years.

Of the $2 billion, we know and have identified initiatives totaling $1 $9 billion and savings up from the $1 $4 billion identified as of January of this year.

Here are some examples.

As previously discussed we have more than $300 million of annual savings driven by management and administrative positions that have been permanently eliminated as we strive to be a leaner and more efficient organization.

This reduction as durable as evidenced by the fact that we recently exercised our option to permanently returned three floors throughout landlord Lord at our headquarters in Chicago.

In addition, we've identified over $900 million and savings related to a combination of productivity programs and cost benefits driven by our voluntary separation programs nearly 13000 people voluntarily retired throughout programs and the past year and.

In addition to these retirements.

We will be a more efficient organization going forward due to initiatives like agent on demand and digitize technical data that John discussed.

And on demand not only a win for its efficiency, but also a win for our customers you don't have to wait in line to get an answer to a simple question and the wind power and employees as well as congestion at the gate will be reduced.

Finally should we we should see more than $400 million and structural cost savings due to the long term contract renegotiations as we took advantage of the unusual circumstances and the past year as well as more than $200 million, resulting from real estate consolidation.

These initiatives give us further confidence and our ability to achieve CASM ex flat or better to 2019 by 2023.

While the pace of recovery has certainly accelerated in recent weeks, we remain committed to structural cost reductions and ultimately paying down debt.

We are also squarely focused on returning to profitability and pre crisis margins.

As reinvesting in critical areas, while reducing fixed costs will enable us to maximize United earnings power post pandemic.

And finally, we have more confidence than ever and the United team and our ability to achieve our goals.

Moving positive adjusted EBITDA, followed by profitability and ultimately exceeding 2019 EBITDA margins by 2023 at the latest.

With that we can start the Q&A.

Thank you. Thank you Terry take lessons.

Thank you Jerry we will now take questions from AOS communities. Please limit yourself to one question and if needed one follow up question Brendan.

Brandon Please describe the procedure to ask questions.

Thank you the question and answer session will be conducted electronically if you'd like to ask a question. Please press star followed by one and you touched on forward if you'd like to be removed from the queue. Please press the pound.

And if youre on a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. Once again, if you'd like to ask a question. Please press star one on your Touchtone phone.

And please hold for a while but it will be a simple our Q.

From Raymond James We have Savi site. Please go ahead.

Hey, good morning, everyone.

And I appreciate the color on how youre thinking about leisure and business recovery I'm just curious on the net.

National front, if you could talk about based on what you're seeing and hearing today and how you think the individual III entities will recover over the next couple of years.

Yes.

Hi, Savi, it's Andrew and ill give it and try.

I think share haul Latin and is already there, it's not a very business centric.

Region for us.

And demand there looks very strong yields are a little bit weak but.

And Thats moving ahead nicely.

Do you think we're pretty bullish on that part of the world.

And regards to Asia and Europe, it's really hard to say I think at this point I would tell you I think Europe is on a faster recovery base and Asia.

But only time will tell and as I said earlier, we're we're preparing to begin quite a bit of clients and the U K and this summer if that does open up so I do think Europe is likely a little bit ahead of Asia, and Latin America and ahead of both at this point and hopefully that provides some california.

That's helpful and if I might just ask a clarifying question from from Jerry.

And then kind of the last debt raise here and.

And so but what do you expect from kind of a net interest expense standpoint, and looking forward. Once this is kind of a one and done.

So Harvey.

Look there's no question when you more or less double your debt you're going to double interest expense.

But we're done with our significant debt raising.

That's COVID-19 related and as I said going forward, there will be more routine type transactions and ultimately we are going to be paying down debt, reducing the interest expense, but one thing I'd point out.

Is that we got through this crisis, you know call. It one 2 billion of debt raise and actually very attractive rates and historically when airlines have been dealing with crises like these and see.

And then issue debit and double digit interest rates and.

All this post COVID-19 that re rating had probably a blended interest rate.

Just over 5% so extraordinarily attractive rates even in this environment. No question you have a lot of debt more debt than we would like obviously and we will focus very hard over the next few years and managing that debt down.

From Deutsche Bank, we have Michael Lindenberg. Please go ahead.

I guess two questions here, the first and Andrew you talked about having a wide bodies and ready to go for the summer.

And the Max airplanes that have been grounded and how many were ground and due to electrical and when do they come back and then.

High density and Triple Sevens that have been grounded do they come back this summer or is the risk that they don't come back at all.

Thanks for the question, Mike I think I'll hand, it over to John right and then.

Net of operations and he can talk about the return to service from both aircrafts.

Yes.

Thank you Andrew and thanks for the question, let's start with the Max we have.

17 of our 30 Max aircraft that are out of our schedule.

Due to the electrical grounding issue that at Boeing identified and.

We have really good collaboration with Boeing the FAA, we think.

Solution. Once it's formally identified is relatively straightforward and we're looking forward to getting those aircraft back and the very near future.

Relative to the Pratt powered triple seven.

And really productive collaboration with Boeing and the FAA and.

This progress and relative to that airplane and look forward to getting that aircraft back to safe operations.

And the future.

Great and then on just a SEC.

Question and maybe you can answer this Andrew I know you recently launched the JFK service and I know that you're out there looking for additional slots permanent slots.

And I did see from your recent debt raise that some of the slots that were excluded from the collateral pool, where I think something on the order of 88 slots at JFK or those daily slot and at what point do those slots come back to you presumably they are on some sort of long term lease.

That's an awfully complicated question Mike.

And trying to keep it high level, though we may have to kind of go off line.

The companys engage and slot transactions over many many years quite frankly long before I got here. So at this point and JFK. We're operating a few flights per day to Los Angeles, and San Francisco, which we're excited to do after a five year absence.

And we're looking forward to BMO and maintain our JFK slots.

And grow our operation, but we are working with the FAA.

To use idle fueled capacity.

It's available to us going forward versus the slot that you were referring to and those documents, but we will be happy to take this offline if you need any more answers and manage.

And our slot transactions over many E ons are pretty complicated too.

And this ethical.

And from Cowen and company, we have Helane Becker. Please go ahead.

Thanks, very much operator, hi, everybody and thank you for your time and so.

And I have two questions. One is probably for Scott and regret I think it's amazing that you guys are going down this path.

Culture, and diversity and increasing the number of women and obviously I would think that rate.

And then and others and the and the pilot ranks and you're being told on some social media platforms and other platforms for that decision and people are.

Saying that its an unsafe choice. So what do you say to them to convince them that.

And like me I mean, not and they obviously, but people like me can be a pilot.

And.

And then the other question is with risk. It is a business related question with respect to how youre thinking about.

And I think Andrew said that Latin was outperforming the Russell.

International right now are you thinking about that just in terms of adding more service to the region to capture more travel down there or are you kind of happy with.

Yes.

With the exposure you have so thanks very much.

Hi, Helane this is Brett I'll take the first question.

And so we as you think about.

And that question, we think that a true untapped.

<unk>.

Well of talent out there is with women and people of color and that we think that they.

<unk> been true.

Limitations in terms of their ability to get into this profession and one has been.

Clear understanding of the path to become a pilot with a major carrier like United which we are clarifying with the aviator program and with AAV and Academy, but also and most particular it is the financial impairment and we all know that it can cost upwards of $100000 too.

To go through the entire process.

Coming a pilot.

And eventually becoming a pilot at a major commercial erle.

And so.

We think that.

At the end of the day.

This amount of talent out there.

And in these areas, where that we can quite frankly be advantaged by pursuing can you just have to make sure that people understand that the opportunities are available and.

And the other thing to keep in mind, there's nothing about our selection process nothing about the certification process with the FAA nothing about the training program.

That is changing in any way shape or form.

And we're talking about 5000.

Pilots.

Over the course, so what is the better part of the next decade and up to 50% we're targeting for.

And for women and people of color.

That is not an outrageous number of people and the country of over 300 million people and I'm sure you agree with that and I'm sure that most people don't understand that logic as well, but we're excited and at the end of the day. We think this will be a competitive advantage for us.

Kelly and then in regards from.

Second part of your question and Latin America, what I would say is this summer and we're planning to be at our 2019 levels already and there's very few parts of our airline we're at that level, we have a great Latin American franchise. However, it has been historically very Houston, and Patrick and we've taken the opportunity and the.

<unk> and months and going forward to diversify that portfolio to now include more out of Los Angeles, Washington, and New York.

And our intention is to keep that and so we're really excited about that we're going to take our Latin and system from various and centric too.

More diversified across the entire United Network.

Okay.

From Wolfe Research, we have Hunter Keay. Please go ahead.

Hi, Thanks, good morning, everybody.

<unk> believes this one is for Scott I wanted to talk about labor for a minute I'm kind of curious what you might prioritize and a post COVID-19 world that might be new and out of the box I kind of look to you as sort of the most likely airlines craft something thats flexible and creative forward thinking is it maybe some flexibility on like minimum pay maybe like.

Scope what are your priorities when you think about sort of re crafting these be CBS.

Well, thanks for giving us the kudos for being the ones that are most likely to think creative I think youre correct.

But unfortunately, we're not we have some ideas that they have to be win win solutions and I think there are some ways to create win win solutions, we demonstrated that with our pilots.

Going through the crisis, where we negotiated a deal with them.

And that's going to turn out.

Quite well for them because the payroll support program.

Net debt some of the insurance policy that we bought wasn't really needed.

But it was a fantastic and important for us to be able to keep the airline and attacked and be ready to come back on the other side of the crisis and it's an example of the kind of win win solutions that we can have I think we've created a lot of trust as we've gone through the crisis.

With our Union partners.

And with the front line.

One of the and.

In addition to minimizing our cash burn and one of the other benefit be accurate.

About predicting the course of the crisis has been the credibility that we've gained.

With our team and because I think we're going to have some opportunities, but I'm not prepared to share here today.

Until we get them nailed down with with our teams and negotiating table, but thanks for the kudos.

Yeah, No no problem Scott. Thank you and then Jerry just to follow up on an earlier question on the debt.

Any updated thoughts on and how youre thinking about well I guess, a two part question and how youre thinking about the ATL and now that it's building again and then how much of these debt maturities over the next few years do you expect to roll.

Versus pay down and just sort of as you see things right now thank you.

Hey look we're all happy to see the ATL building.

As we kind of get back to it to a healthy industry.

In terms of debt.

Debt maturities.

Well see I mean this year.

We have what I would describe as normal debt maturities I think it's.

Some are from one five and $2 billion.

And you know we.

We will continue particularly for aircraft that is and amortizing and matures.

And aircraft become unencumbered net that's a good thing.

Yeah, there'll be a mix.

And we are laser focused on paying down debt and the pace of that will depend on the pace of the recovery and so we'll balance.

A combination of paying down debt, maybe a little bit of refinancing of some of the debt.

And then the big variable we have is how much new aircraft financing we would do.

One of the quick ways to move.

Moving to lower debt balances to pay cash for aircraft.

That's not off the table going forward, so we'll see.

From J P Morgan and we have Jamie Baker. Please go ahead.

Hey, good morning, everybody.

First one for Andrew.

And the absence of much corporate demand how much of your domestic.

Passenger is allocated to basic economy fares right now and how does that compare to this point in 2019.

Hi, Jamie.

I'm not sure I would answer it that way I would say that given where we are and the pandemic and how demand looks.

And everything else that we've seen occur over the last 12 months.

<unk> economy is a small portion of our business right now.

No.

Below single digits is what I would say.

Okay.

That's helpful and.

And not meaningfully different this time in 2019, I mean single digits, then as well.

In the past and it was a higher number.

Oh, Okay interesting.

And then second I'll direct it to Scott.

Scott you've been generous with us in the past.

And sharing your views on the competitive interplay between your airlines business model and that ultra low cost carriers, how does the COVID-19 experience alter that competitive dynamic in your opinion.

I don't well if anything I don't.

I think and the long term it altered it a whole lot other than I would have I would say that as we went through.

The pandemic, the fact that United Airlines.

Had which should have the most exposure to COVID-19 of any airline and the country.

We have the biggest business.

Demand, we have the largest international network and those are the two things that are still down over 80%. We should have by all rights been hit the hardest.

But we have.

It's hard to sort through all the numbers, because everyone reported cash burn and being differently, including us by the way.

But if I look at cash flow.

And from operations would have started to do because that is a GAAP metric and there are fewer adjustments to it and you would.

Adjusted per side, we pretty consistently have been the number one and number two airlines not just compared to our big network carrier competitors.

Compared to low cost carrier competitors.

And Thats remarkable I mean, they had a head start and this race and we have managed and stay ahead and what that means is we have prepared ourselves and primed ourselves.

And for when the recovery really comes back and the fact that we can be at the front of the pack or near the front of the pack.

While we have.

Essentially two thirds of our business.

Down, 80%, which by the way just for round numbers roughly a third of our business is domestic leisure third is domestic business and third and long haul international those numbers aren't exact but they're close enough for government work.

And with two thirds of our business down, 80% and we're still able to put up those kinds of results. Those two things are coming back.

And I'll give you one anecdote, Jamie and giving you a long answer to the question, but I'll give you one anecdote on business demand which is.

And I've been talking to one of the Ceos of one of our biggest travel partners as <unk>.

<unk> gone through the crisis and I can remember last summer.

Telling me that and it is.

Care for business demand and permanently be down by 50%.

Because they realize consume was great and they were is it changed how they were going to interrupt.

And we got into the fall.

CEO and said well.

We're going to get back to a 100% with our customers because we realize we have to do that and we're losing ground with customers by not be in front of them and losing opportunities, but we're never going back to all the internal meetings that we used to have so we will be down 20% to 30%.

And I talked to that same CEO earlier, this year and he said well as soon as the restrictions are lifted at least for the first year.

Some of our cultural connectivity, we've had new hires a lot of new hires coming in.

There's no way they can be a part of our culture sitting at home and we're going to probably have to go 20% to 30% more than we did in 2019.

Tell that story, because it's what we have thought at United All the way back a year ago.

Which is that we expect a full recovery and business demand because business travel is about relationships. It is not about transactions.

And is about relationships and you cannot build even relationships.

Through a medium like this and so.

A long way of saying we have our business is still the hardest impacted by the exogenous environment, the lack of business demand and the lack of international travel.

But we're performing at the front of the pack in spite of that and those two things are coming back and when they do we're going to be and the leap.

No doubt about it but this is going to be the number one airline because if we can be at or near the front of the pack with those two massive headwind when those headwinds turn into a tailwind.

It's going to be really gangbusters here, so I'm excited about the future and what it may.

And as for competing with low cost carriers and with everyone else around the world.

Okay.

From Bernstein, we have David Vernon. Please go ahead.

Hey, guys. Thanks, and then taking the time I'm Andrew first question for you on the domestic fare environment of our leisure is there a way you can help us understand kind of how.

Players today for leisure travel on a like for like basis are trending relative to maybe a 2019 level not only just in the quarter, but as you look out and the booking curve for the summer months and I'm, just trying to get a sense for.

All you got is the industry and.

Gauged and sort of demand stimulation here or is this just a question of.

Demand is coming back and Youre able to take fares up with that rising demand.

Sure I'll give it a try David.

And really focused on I'm trying to figure out how to manage yields.

And forward.

And quite.

Quite frankly, as we look forward to this summer, particularly starting in mid June.

We see our domestic leisure yields as positive versus 2019, and that's one of the things from an RM perspective, we've been talking about a long time, and how do we get our pricing and yields.

Look.

Or at least our yields to look like they were and the past and I think we've made incredible progress and it is not necessarily true and Q2.

Our yield outlook is as you see reflected in our and our revenue outlook.

Not as strong and we were selling lower yields and the Q2 period earlier and the year.

And we do see this inflection point is in mid June and I'm really pleased to see that we expect to have load factors that start with Nate and yield hopefully from a domestic leisure point of view that our positive year over year. I mean, we still have a long way to go and do some are still quite a ways off but I'm really actually quite bullish.

And that we've turned the corner on that.

And that's really helpful. Thank you and then Jerry maybe to follow up on the question before about deleveraging if we get to that level of say 2023, and EBITDA margins or better can you book and or is there a way to think about and.

And the annual rate of debt reduction like how Steve should we be thinking about that deleveraging sort of curve happening and I know theres going to be a lot of puts and takes of aircraft orders and things like that but if you think about how much how much cash you might have available to pay down at that at that future EBITDA margin level like what number should we be kind of penciling and on an annual basis.

And you answered your own question there are lots of puts and takes and.

And.

And we will also depend on the cadence of new aircraft deliveries and what we expect to do there.

And so it's a little premature to answer that question.

And we have a lot of flexibility and our.

Ability to.

Pay down debt, that's why we kept as much debt as we could treat payable to give us that flexibility.

From Evercore, we have Duane and Citigroup. Please go ahead.

Hey, thanks.

Wanted to ask you about visibility just the general concept of revenue visibility as the booking curve recovers.

Visibility should start to recover your capacity plan fuels.

Feels fairly tight out into <unk>, certainly relative to some of your legacy peers.

It doesn't sound like you're expecting much of any acceleration close in which could happen and it could happen and a month like June.

So where does visibility stand today versus quote unquote normal times.

And are we getting back to putting out guidance that you hope to exceed.

Yeah, Hey, Brian go ahead.

I'll start with Andrew.

So thanks for that question.

Hi.

You guys on the analysts on this call have been remarkably polite to us today because.

As we can see and both the stock price and then our pre coal. According to my question and the only thank everyone and cared about was.

Why is the revenue guide different than other airlines and so long as you could take this opportunity to.

It's close enough to your question to attempt to address it.

And firstly I'd rewind, yet to 13 months ago March 10th.

2020 at the JP Morgan Conference, where we talked about.

The fact that we thought this was going to be deep and last longer and we were the only airline that did that this now is the fifth quarter and arose since then where we are.

Been on calls.

We're our outlook and felt more.

Conservative I suppose than our competitors the last sports turned out to be true.

And on March 10th of last year, we actually.

First coined the term hope is not a strategy and I.

Just happened to be reading.

Another book on Winston Churchill, disciplined and and the vial.

I've read a bunch and I love Winston Churchill and.

It came a growth last night and I think is relevant to the.

The day after day morning, after Churchill and just the nominated the Prime Minister become the Prime Minister of England, and the darkest hour.

Is it the whole quota is great but at the end of it is although and patient for the morning, I slept soundly and had no need for cheering dreams backs are better than journeys and <unk>.

Got it couldnt agree more and.

And we have used BACS data science and logic to guide our approach and.

And just for some facts and you already said this on the call that our business and sort of one third domestic leisure one third domestic business and one third international.

We've already said that domestic business and international are down 80%.

And it's not likely that that's going to change tomorrow, they're getting better they're going to gradually get better as <unk>.

Travel comes back and as borders reopened.

And with business travel with two thirds of your business off 80%, it's really hard for me to make the math work and say 90%.

Or 100 per cent of the schedule as the optimal answer yes, we could fly 40% more capacity and would probably generate 10% more revenue.

And we'd probably drive 20% more cost and and so we would burn more cash.

And for what it's worth nobody knows when.