Q3 2021 United Airlines Holdings Inc Earnings Call
Good morning, and welcome to United Airlines Holdings' Earnings Conference call for the third quarter 2020, what my name is spread Disney there will 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 one on your touch on boat.
All 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.
Do you do a 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 Christina <unk>.
Sector of Investor Relations. Please go ahead.
Thank you Brandon good morning, everyone.
Yesterday, we issued our.
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Yeah.
Yeah.
Yes.
Thank you very much.
Okay.
Which represent the company's current.
Future events.
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Yeah.
Factors.
Okay.
Yes.
Right.
Please refer to our earnings.
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Hey.
Okay.
Your line.
A description of these factors.
Also during the course of the call we will discuss several non-GAAP measures.
For reconciliation.
These non-GAAP measures.
Tom.
Yeah.
Good morning.
As a result.
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Great.
Mark.
Commercial officer.
President and chief.
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In addition, we.
All right.
Okay.
Now I'd like to turn the call.
Good morning, everyone and thanks for joining us today.
I want to start by expressing my thanks to the team at United for taking care of our customers and each other during an eventful summer.
And what we've done in the last.
Jean Marc standout even more than in normal times as we've all as we've also been a part of the humanitarian relief efforts around the world flying over 160 million doses of vaccine returning thousands of refugees from Afghanistan, and delivering thousands of tons of oxygen canisters and medical equipment to India.
95, many other things.
The personal stress and strengthened.
Our people have continued to run a reliable operation and deliver phenomenal customer service avoiding the significant issues that affect our team many of the aviation industry.
United team is emerging of Covid as the leader in global Aviation.
Prominently leading on site by effectively and efficiently implementing our early vaccine requirement.
We kicked off a third quarter with strong momentum as pent up leisure demand soared and booking remains to get the business bookings began moving in the right direction, though we obviously knew that Delta variant was arrested Andrew will give you more.
Details about the ups and downs in the second half of this year, but from my perspective, the long term recovery made on track with the opening of Europe, Australia, and Singapore and unexpected inflection point in business demand now anticipated in January.
Before we move to the traditional discussion about the near term environment I wanted.
Most of a few minutes to elite lay out our view for big picture trends that we believe make United Airlines.
Airline investment choice for longer term shareholders number one we will wait on cost inflation is high but within our expectations and we remain on track for CASM ex down in 2022.
Want to take down approximately 4% by 2023 is down approximately 8% in 2026 versus 2019.
No there are skeptics on this but it really is just the math of 30% planned to gauge growth.
But there are also real industry, leading unique structural technology and efficiency changes.
They were implemented.
I can see it and it's just walked through are a REIT press comments about hiring struggles that other airlines something that's not happening 89, because we really have become much more efficient dairy Copa number two geography becomes a competitive advantage during the pandemic.
It's geography has been a greater headwind than any other U S Airlines, given our largest business coastal hubs and international exposure the mass domestic and Latin revenues, where United is a smallest in percentage terms have been running in the 70% to 90% range versus 2019, while the Atlantic epithet.
Yeah.
I've been down 20% or more.
However, despite those significant geographical headwinds we've managed to produce results in line with or better than the industry in terms of minimizing losses, but most importantly for investors, we expect those headwinds to become a long term tailwind.
Five international wide body aircraft are significantly different than the domestic narrow body supply post pandemic.
We expect the Atlantic and Pacific to significantly outperformed the domestic market for many years to come with alternate current geographic disadvantage during COVID-19 into a sustainable long.
The supply managed for United Global Network.
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The power of United Max and growing our revenue.
Higher taxes are noticeably improving product and the extraordinary service of the United professionals I mentioned at the top are already driving rapidly improving NPS scores and customer choice.
We expect that improvement will accelerate as we take delivery of hundreds of new customer friendly narrow body aircrafts and retrofit all of our remaining narrow body in the next several years this will make United the airline customers choose to fly and help us drive premium revenue.
Number four ESG.
You're not in today is a leader in global aviation with argue unique and real not greenwashing commitment to climate change axis and the work we're doing on diversity as exemplified by the United 80 acre and its already matters to customers employees and regulators and I think you'll see it reflected in customer choice.
And perhaps even valuation in the years to come.
And all of that leads to our United next financial outlook, we will absolutely get our CASM ex target and we remain on track and on the revenue front, our United next targets assumed that it would take all the way until 2020 six to return to 2019 RASM.
While we are hopeful and I actually expect with RASM trajectory will be stronger than that that hopefully conservative assumption still leads to an adjusted pretax margin of around 14% and adjusted EPS of around 20 at our current share count.
In closing Covid appears to be playing out markedly close to what we.
Expected in May of last year, our expectation back then was that demand would probably remain depressed until Christmas of 2021, and then the business demand would it start in earnest until January of 2022.
But we always believe that total demand, including international with ultimately fully recover that.
Ill now looks remarkably pressure and we found new and successful international market in India and Africa.
Anticipating a robust European recovery and we're just now beginning to see the openings across the Pacific starting with Australia and Singapore.
United's perspective with singularly unique both of.
After the crisis, but also on the ultimate strength of the recovery that put us in a position to make long term decisions on fleet and permanent changes to our cost structure and we're now uniquely set up to reap the rewards of those decisions.
I'll hand, it over to Brett.
Thanks Scott.
Also like to thank.
Before we used for their hard work in the quarter July was our busiest months since the start of the pandemic. Despite regularly changing mandates restrictions and new protocols that have been part of commercial air travel in 2021, our team did a fantastic job, helping our customers get to their destination as seamlessly.
As possible as evidenced by our record high NPS scores year to date.
Now passed what we believe is the worst of the booking impact from this wave of the Delta Burke and looking ahead. There are some recently announced regulatory changes that are driving momentum in bookings.
We were pleased by the announcement.
Mostly that the U S entry restrictions on travel from Europe, U K, India and other international locations. The so called 212 F restrictions will be lifted by November eight and replaced by a global proof of vaccination requirement for all international visitors entering the U S. We look forward to more specific.
Specific details, including the effective date of the changes to avoid any confusion about the new requirements for our customers and employees.
Since the announcement, we have seen a 35 point increase in year over two year system bookings from international point of sale agencies for travel in November and December.
This gives us even more confidence in our expectation that summer 2022 particularly over the Atlantic will be robust.
Additionally, we have repeatedly innovated and upgraded our unites our industry, leading tool, which outlines where our customers the travel recommendation.
Sam requirements as it relates to foreign teens vaccination for COVID-19 testing.
This tool gives United customers, an advantage as they navigate the evolving patchwork of rules and regulations and reduces as much stress as possible at the airport, we are ready for the returning international travelers.
And lastly, as Scott mentioned with the exception of a small number of employees, who sort of religious or medical accommodation more than 99, 7% of our U S employees chose to get vaccinated.
We're committed to providing the safest environment possible. It also means that our customers can book with confidence knowing that.
This operation and their travel experience will not be hampered by changes to government vaccine regulations.
Speaking of the reliability of our operations, we have been proactive on the hiring front during the first three quarters of 2021, we've hired nearly 1000 pilots, which is more than we hired and all.
2019, and welcomed three new classes of flight attendants.
On ESG in the third quarter, we partnered with Honeywell to make yet another investment that contributes to our journey to become 100% Green by 2050 last month, we announced the industry's largest sustainable aviation fuel agreement.
And which we commit to purchase one 5 billion gallons of Hefei up over 20 years, making our total commitment more than double the combined total of the rest of the worlds Airlines public SaaS commitments.
Last week, we also became the first airline to fly a flight on 100% sustainable.
The aviation fuel due to both important steps in our goal of reducing our emissions by 50% on carbon intensity basis by 2035 and to net zero by 2050.
The third quarter was also punctuated by the prices in Afghanistan, we were called upon to assist the U S military and bringing 15000 Afghans through.
The U S and troops backhaul, we've operated approximately 40 simple reserve air fleet or craft license to date, we also converted our maintenance hangar at Dulles airport to a temporary shelter where travel weary of evacuees addressed get a warm meal and take a breath after enduring such a remarkable journey.
More than 8000 employees raised their hands to participate in these missions.
Working as crew members translators medics and more.
Many volunteers of personal ties to Afghanistan, or our military veterans I want to take this opportunity to extend my heartfelt. Thanks for their service, we're also helping Afghans.
Ill begin their new lives in the U S through our partnership with miles for Microsoft.
Where we have donated 15 million miles and continue to support incentivize donations from our mileage plus members.
As you can see the spirit of innovation at United has not been deemed by the pandemic in fact, we've relied on it to adapt to the changing economic.
Regulatory environment and put our expertise to work to help those in need that.
That makes me incredibly proud of this company and it gives us all of us more confidence in our ability to meet the financial targets. We've laid out I'll now hand, it off to Andrew described in more detail, how you plan to do that.
Amit Thanks, Brett before talking about the third quarter results during the fourth quarter outlook, it's important to acknowledge that the impact of the Delta variant on our business was substantial however.
However, we expect the worst of this wave is now passed in the last few weeks, we've seen on several of our leading business indicators return to where we were in July are better.
These indicators include number one ask.
Peter cancellation rates are close to 2019 levels and consistent with pre delta levels to positive domestic co brand spend for the quarter, New card acquisitions above 2019 levels and re tenant retention levels better than 2019, three passenger bookings.
So November and beyond travel had been above 2019 levels for the last week, a strong bounce back from a few weeks ago.
Demand for Atlantic travel is consistent with 2019 levels since the announcement of lower travel restrictions and yesterday was up 19%.
<unk> domestic business demand has rebounded to delta pre DARPA levels are better and our largest accounts are now increasing at a similar rate to our smallest.
This business traffic across the Atlantic is now tracking consistent with or slightly better than domestic business traffic.
And then Brazilian demand has rebounded quickly matching the strength, we've seen in for months and near lessened demand.
Eight book yields for upcoming holidays are.
Our positive as well as early 'twenty two are positive.
Nine award booking levels have exceeded 2019 levels. This week for the first time.
While we believe these leading indicators are solid evidence of a bright outlook for United.
Another set of positive indicators, we've been tracking in recent months is the relative strength of our premium leisure business during the pandemic.
These indicators include one domestic first half revenue reached 2019 levels. This summer with paid load factors.
Above.
50% of our revenue and Trans Atlantic Leisure market came from the premium cabins in 2021, a 13 point improvement versus 2019, three paid load factors for economy, plus increased by 10 points relative to 2019 this summer.
<unk> four antibodies seat revenues in Q3 were a record $9 17 per plane passenger.
Basically in 2019 levels, despite a 28% less capacity.
Whenever I talk about United next our long term strategy I tend to focus on domestic gauge growth of 30%.
And important however, United next also Greg premium seating accounts across our domestic fleet simply closing gaps you've had to our primary competitors are matching demand and our seven hubs that we've missed in the past few years.
This recent trend of increased premium leisure demand is a material incremental revenues for us or our long term outlook.
And at the potential to increase overall leisure yield by two to three points versus our original long term outlook.
While we still believe this traffic will return and so our plan will succeed even if it only returns to 85% to 90% of these levels given these yield leisure yield gains if they prove permanent.
Further in our revenue segmentation and premium leisure efforts, we've made the decision to outfit. Our 14 remaining 773, hundreds with our new mid tier premium plus product. So that all 760 Sevens. Now include this product. We can also confirm that we will offer the separate mid tier cabin on future deliveries of the <unk> hundred 21 extra.
In 2024 relative to 2019 premium plus performance across the Atlantic was our best performing cabin.
Our revenue segmentation strategies strategies have always been about offering a range of products customers want to choose from Polaris to premium plus to basic economy effective segmentation makes.
Our business model more durable when faced with elevated levels of competition, something we anticipate domestically in the coming years.
I'll now turn to my normal update of performance in the quarter and our near term outlook. I will also provide an early preview of our internationally focused 2022 the capacity blend.
Traffic for the third quarter.
<unk>, 5% and total revenues were down 32% versus 2019.
United did achieve positive year over to Travis for July as expected passenger.
Passenger yields were positive in July and August versus 19, but fell by 10% in September given the large with temporary industry supply demand in <unk>.
Balanced by the Delta bearing.
The impact of lower pricing and yields will continue into the part of the fourth quarter with October performance only marginally better than September close in bookings continued to track below 2019 levels, but are getting better week over week for the last few.
Just as in previous quarters.
Our cargo operation again delivered a record quarter for United total cargo revenue was up 84% from 2019.
Best third quarter on record the United cargo is once again regimes. All cargo flights are available wide body jet for the remainder of the year, which we expect will once again result in leading cargo performance.
Turning to our fourth quarter outlook, we now expect total revenue to be down 25% to 30% versus <unk> 2019 with November and December at the top end of the range.
The Delta variance impact on leisure demand is now gone.
On business travel in yields in the fourth quarter continues.
We expect capacity to.
To be down 23% in the fourth quarter versus 2019 down 13% for domestic and 35% for international.
We continue to slowly add back capacity consistent with our capabilities to deliver a consistent operation for our customers, while also matching our expectations for demand.
By December.
We expect domestic capacity will only be down 9% as we prepare for a very strong holiday season.
Our fleet of 50 to Pratt <unk> Whitney powered Triple Sevens are not expected to fly this quarter and we continue to have 57 idle narrow body just temporarily grounded we expect most of these ground suggests to returned to service.
In June 2022 in time for a strong summer demand.
As I indicated earlier bookings to Latin America and across the Atlantic have reacted well to the lower and restrictions for travel November eight and beyond we remain optimistic that our Latin and Atlantic client will gradually build to 2019 levels and above.
By summer 2022, and business traffic will accelerate early next year.
We currently expect capacity for 2022 to be up approximately 5% versus 2019, our plan consider our expectations of macro demand supply and pricing and focus.
100% of our growth in the international International.
Markets, where we expect capacity to be up about 10% versus 2019.
As a result, we expect domestic capacity for 2022 to be approximately flat, we remain agile with loop lengths of round as needed or even ground unneeded widebody jets if conditions warrant.
Consistent with our plan.
International growth through 2022 last week, we announced 10, new Atlantic routes with a focus on premium leisure destinations such as Bergen doors in Italy.
Her new routes have compensating a premium leisure business as we continue to diversify our global revenue streams, which in the past we're very business Center. We're also.
Planned diversifying our geographic scope across the Atlantic to India Africa, and the Middle East.
Many of our new routes also have low historic shared by United and our partners.
One additional common feature of all of these routes has the potential of our lead gateways in Europe in Washington, We have one more significant international network.
Also the conference planned for later this month as we work towards finalizing our 2022 outlook.
As the leading U S airlines across the Pacific, We do expect slower demand recovery versus other parts of the world. We've seen some really great news in recent days with a partial opening of Australia and Singapore.
Most of our capacity.
<unk> across the Pacific in Q4 is being supported by cargo revenues.
We continue to expect international long haul flying will ensure a strong period of margin improvement versus the last cycle and we are positioned in our capacity to take advantage of that trend not only have many widebody jets and retired across industry, but we expect.
<unk> that the industry premium seat capacity for the largest Atlantic carriers will be down approximately 10% per departure $2 46 seat as many aircrafts, including the 737 and <unk> hundred <unk> with large premium cabins have been grounded United wide body Jets have an average of $46 six approximately same number as our primary competitor.
Competitors.
As we rebuild our global network, our Polaris lounges are now set to reopen over the next few months, starting with our brand new plug of Washington Dulles Tomorrow.
Briefly I wanted to talk about our United next to get your interior, you'll now have taken delivery of 13, Max eights with the signature interior and it's a hit with our team.
<unk> and our customers each of these claims as NPS score is materially higher than any other domestic mainline yet we fly another large economy cabins, which feedback monitors at every seat. We will soon begin modifications of the remainder of the narrow body jets. So that by early 2025, the entire mainline fleet has.
This consistent superior look and feel.
Thanks for Indulging me in this rather long explanation of where things stand, but more importantly, where we're taken United.
I have to give thanks to the entire United team for delivering this summer in a pretty difficult conditions and with that I'm going to hand, it off to Jerry to discuss our financial results and outlook.
Thanks, Andrew and good morning, everyone, Andrew we truly enjoyed.
<unk> remarks, but everyone can take comfort in the fact that I will be shorter for.
For the third quarter of 2021, we reported pre tax income of around $600 million.
And an adjusted pretax loss.
Of around $500 million.
This was obviously different from our expectations. When we spoke to you in July but as Scott and Andrew discussed the slots is solely attributable to the impact of the Delta variant on customer travel in the months of August and September.
The good news is that our third quarter CASM ex.
About 15% was better than our guidance and we are we are on track for further improvement in the fourth quarter.
We currently expect CASM ex in the fourth quarter to increase 12% to 14% versus the fourth quarter of 2019 on capacity down around 23% versus the fourth quarter of two.
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Looking beyond this year, we are in the middle of putting together our financial plan for 2022 and expect to share more color with you in January However, I wanted to highlight a few items now that give us confidence in our CASM ex.
First we are exceeding our top.
2009 on structural cost savings as we have identified approximately $2 2 billion and initiatives, which we expect to fully benefit from by next summer.
As a proof point of this success, we estimate that we can fly it scheduled 10% larger than 2019 with the same number.
Target a number of employees we needed in 2019. This includes a significant and permanent reduction in management employees.
Second we expect to return all 52 grounded triple seven to service in the first half of next year.
This allows us to more appropriately match the right aircraft to the right.
Which will ultimately drive a step function in CASM X improvement as these low CASM and high gauge aircraft returned to the fleet.
Third our outlook for 2022 includes by higher inflationary pressure, we are seeing today across all aspects of our business.
Ranging from vendors range.
Marketers to supply chain bottlenecks.
It is for these three reasons that I am confident that our 2022 outlook of CASM ex lower than 2019 is both fair and achievable importantly, it also sets a strong foundation for achieve achieving the negative 4% and negative 8%.
Sent CASM, Mexico for 2023, and 2026, which we've already discussed in fact, I feel more confident today that our 2023 and 2026 goals than I did back in June.
Importantly, we are committed to achieving these cost targets, while also investing in a superior product and experience.
For our customers for example, all of our new narrow body aircraft are being delivered with state of the art interiors, including overhead bins that everyone's carryon bag and Bluetooth enabled seatback entertainment with a long list of choices displayed on large HD quality screen.
We are also retrofitting the rest of our.
Consistent with these standards.
In fact, I was recently on a new 737, Max eight flying home from Newark to Houston with all the bells and whistles.
<unk> was completely fall and everyone found room for their bags to.
The flight crew made sure of that customers knew about all of the amenities as the true with engage with everyone.
Our fleet the boarding throughout the play and as our customers to plan 15 minutes early by the way.
As I drove through the cabin during the flight by my Count at least two thirds of the passengers were enjoying the seatback system now even noticed several children entertained with a new children's amenity kit.
After this flight I was cured.
From pre op, the net promoter score and sure enough. The NPS for this life was over 40% higher than system average last year.
We will continue to make these types of revenue enhancing product investments, while we continued to reduce unit cost because of our plans for efficient gauge driven growth as well as our two.
$2 billion structural cost savings program.
Turning to capital expenditures, we currently expect to take delivery of $3 737, Max aircraft and one 787 aircraft through the end of this year. In addition to the 24 mainline aircraft already delivered this year.
A number of 787 deliveries.
Liveries previously expected. This year are now expected to occur next year, which resulted in the related capex shifted out of 2021 into 2022.
Including this change we now expect adjusted Capex to be around $3 billion in 2021.
We expect to use a mix of debt financing.
Leases and cash to fund the acquisition of new aircraft and we'll balance the mix with our United next financial targets in mind, including adjusted total debt to adjusted EBITDAR below four times in 2023 and below two five times in 2026.
As the recovery progresses.
Aggressive we expect economically pursuit deleveraging, while balancing our capital commitment.
In the third quarter, we made a $375 million voluntary contribution to our pension, which will drive PBGC premium savings and access to returns on the funds added.
While we are not required to make.
Any meaningful contributions to our pension for several years, we view our pension obligation is just another form of debt. This is effectively the most expensive pre payable debt currently had when we took the opportunity to take.
In closing as the impact of the Delta area appears to be receiving we continue our focus on managing.
Business efficiently to maximize our earnings power for the long term.
Focus on cost and revenue initiatives will drive improving margin leading to a 2026 adjusted pre tax margin of around 14% and adjusted EPS of around $20 at current quarter end share count.
While we have never expected the recovery from the pandemic to be linear we are confident that United's best days are ahead as we execute on our United next strategy in the coming years.
That I'll pass it to Christina to start the Q&A. Thank you we will now take questions from analysts please limit yourself to one question and if needed.
<unk>.
Brandon Please describe the procedure to ask questions.
Thank you Kristina asked a question and answer session will be conducted electronically.
Ask a question. Please press star followed by one on your touch towards bolt.
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Please hold for a little bit while we use similar Q.
And from Barclays, We have Brandon.
And in Oakland Ski. Please go ahead.
Hey, good morning, everyone and thanks for taking my question So Jerry.
Speaking of Capex can you talk to us about what 2022 could look like here.
And then maybe a longer term question for you or Scott like how do you manage.
The balance sheet risk here versus what is a very ambitious outlook.
Please.
Trying to improve profitability by leveraging those things you put out there.
So we will have.
Some more detail on 2020 Capex in January but I can tell you that the bulk of the reduction. This year is just shifting into next year those 787.
It obviously AQR.
That.
Cost reduction this year will just be additive for next year.
So when you add those to the.
48, narrow bodies, we have.
Youll see a step up in Capex, Although I think if you took this year and next year together blended.
It sort of consistent.
But you should assume that most of the Capex reduction this year simply got moved into the.
The first half of next year.
Longer term, we are laser focused on.
Reduce the net debt balance and deleveraging.
We could.
We have done some more.
If we had more pre payable debt, we simply down so we are going to over the next few years.
Focus on reducing that debt as we have the opportunity to economically prepay that debt that's a critical component.
Our United next.
Yeah.
I guess, if I can follow up on that Gerry if is it if you get upside to earnings you can get margins faster based on getting a yield premium and leveraging the international network is that how you plan to manage the balance sheet and potentially get leveraged down faster.
So we.
Yes, yes.
Answer is yes, as we implement the plan we see the return that profitability is going to go directly into into paying down the debt and keep in mind. We also have the flexibility.
Yes, the recovery takes a little bit longer.
Over the next few years we.
We have the flexibility to manage air.
Aircraft deliveries and retirement.
To adjust to whatever the environment is.
From Bank of America, we have Andrew Datura. Please go ahead.
Hi, good morning, everyone.
So Scott or maybe Andrew.
The consensus out there to this point is that yes. The international recovery expected is expected to take a bit longer than the domestic recovery. So just curious if you could maybe elaborate on your plans to grow to get international capacity back above pre pandemic levels before domestic.
<unk>.
And then also just curious on how you think about your Pacific growth as it relates to that 10% international growth next year.
Sure I'll take that.
Definitely the growth rate in the recovery will be different by the different regions of the world.
And the Pacific is going to be the slowest and we've said.
A number of times. However, when you go through all of our data what I would tell you is that we really need to start to break down our entities and do a little bit more detail, particularly going across the Atlantic. We expect and are again I said already today that our bookings across the Atlantic are now approaching in past 2019 level.
We expect.
Very strong bounce back next year in particular, starting in the spring and summer.
And then the second point I'll point out is that a lot of our Atlanta capacity does not go into the traditional core European markets, we've gone aggressively into the middle East and Africa as well.
For example, if a new flight to Amman replying to Cape town in New Hampshire.
For <unk> in Ghana.
Our numbers appear elevated across the Atlantic are going into new revenue pools that we feel very good about we feel very good about the pricing and those revenue pools.
And we feel really good about the bounce back in those revenue pools, and we're seeing that data already today, so were accounted for a slope as it recovered.
Secondly, we are accounting for a strong Atlantic, but that strong Atlantic really used across multiple different entities within the Atlantic today, which allows us to kind of bounce back that we're anticipating and again the numbers over the last few weeks have just been released in the last week have been incredible going across the Atlantic. So we remain really bullish and we think we have the right plan.
And we think we've pointed the aircraft to where we can make the most money next year.
Got it understood and then just my second question.
Obviously operational challenges have been increasing at a lot of your competitors yet you haven't seen the same type of disruptions.
Why do you think that.
And then I guess more importantly, what do you see as the biggest operational risks as you begin to ramp capacity back up to those 2019 levels. Thanks.
Well, thanks for noticing that and Youre right. It has been uniquely different at United.
At many other airlines, including all of our large competitors who are different types of.
Operational challenges in the past.
Year and really the reason it starts I think going back to the realistic assessment that we had all the way in February.
We get to February of last year, because we thought this pandemic was going to last all the way through the end of 2021.
It caused a different planning mentality.
It caused the difference.
At our management process, a very collaborative manner with process that drives the EC Crazy I suspect, but we do three.
Times, a week now three hours.
So nine hours a week, where we are all together either in person or on our teams meeting.
Every single one of US knows what is happening in every single other department.
And in many cases could you step into each other jobs, if we have to.
But that collaborative process in a really complex environment. Because this environment is really complicated when you brought the airline down 90% and then try to bring it back up that's really difficult to do none of us in aviation have experience to do it that process and that realistic assessment set us up.
Let us to make different decisions. We are the only airline out there with negotiated a deal with pilots for example, and then because of that we can pull the airline now keep everyone in their seat keep everyone in their position and bring them to airline back up without having the kind of crew shortages or kuiken states that have affected other airlines, we worked with our flight attendants on.
Processes onboard the aircraft.
Well to avoid escalation minimum wage some of the conflict that has happened on other airlines around mask, we've had over a 50% reduction in math issues. This year and our appliance initiatives, just an amazing job, but maybe professional the tone the environment its not that we have zero issues, but the tone the environment on United.
Aircraft certainly different than what I read about in the press.
On other airlines, we also metered into growth.
We didn't try to.
It out over our skis and say demand is starting to come back.
And and grow at a rate that we wouldn't be able to support.
We viewed that as risky to our customers and we've really changed the.
So experienced during this and we weren't going to lose it by trying to fly a few more flights.
And so we just manage it completely different that has happened at other airlines, you're talking about the risk going forward I mean, I think looking forward by far the biggest incremental risk, but in aviation in the United States our vaccine mandates.
<unk>.
Customer to our vaccine mandated obviously move forward as a mandate. We did we were done with it before government requirement came in so we did it purely for safety reasons.
Listening to other airlines that are not backing off those vaccine requirement.
Encouraging employees to just all apply for an exemption.
They are likely to have tens of thousands of employees.
That needs to be tested every week. This is in the rearview mirror for United This is not going to be an issue, but can you imagine you have tens of thousands of employed people forget to get their test people do the test wrong people don't get it done equal test positive and if you think whether in one state can lead to a meltdown imagine if you have thousands of employees on one day, calling in today.
Are they up for some reason that my tested in the past.
Is going to be a huge challenge for airlines that are not implementing vaccine requirement.
Customers can book with confidence on United Redundancy, you can book with confidence on United.
But if you are booking on an airline doesn't have a vaccine requirements. They got government rules they have to follow.
Without them tour.
From Jpmorgan, we have Jamie Baker. Please go ahead.
Hey, good morning, everybody I'm, Scott I like the four big picture trends that you discussed in your opening remarks question on the expectation for the Atlantic and the Pacific to outperform.
For them the domestic over the next several years is that really a comment on how strong the Atlantic and Pacific might be.
Or is it short hand for <unk>.
We expect the domestic to structurally suffer you know going forward.
Why why shouldn't I look at it with that.
Doubles advocate view.
Well, Jamie I'll, let Andrew will be better to answer maybe but most of the supply demand.
The supply demand balance is just significantly different.
The long haul international wide body market hundreds of airplanes around the globe have been retired and.
So that's a really long time to change the supply demand balance is more balanced.
Simple as that.
Okay Jamie.
Anything I can add is that.
We just have a structural advantage in terms of global long haul given where our gateways are.
This is the time for us to move forward.
And we're asking and when it makes sense and it's profitable in those regions of the world and in some respect I think we are uniquely able to do in the U S flag carrier and we're going to take advantage of it.
Understood and a follow up on that Andrew while I got you.
Just wanted to make sure I havent missed any changes in the last year or so as it relates to fuel.
Surcharges, so we do not have a fuel surcharge mechanism domestically.
But how broadly do they exist right now in your international markets, how should we think about that.
Again, just want to get into.
A lot of details there are certain countries around the world that do have fuel surcharges or a government mandated.
And in fact, they go up and down with the price of oil in it.
By country. So those exist in many other countries in other countries, we take care of it ourselves.
I think we have done this under control, but the price of fuel I think youre going to do is high by the way you do that price if you will be in.
Hi, Matt is there any sign that business demand is recovering.
As people get to work in factories around the world are maintenance things.
So that is a good thing not just completely a bad thing.
And that being said.
When can we price through this higher price of fuel is going to take some time the supply demand imbalance was broke.
Broken temporarily.
I think the industry well I think the United used in the right direction I think the numbers look a lot better as you get into next year, particularly as you get to the Presidents' day and spring break holidays.
So I'm optimistic about yield quality.
I've been like I said earlier our yields.
For the upcoming holidays and early next year are positive.
It is great to see.
That's great. Thank you Andrew Thanks, Scott take care.
Please go ahead.
Good morning, everybody and thanks for taking my question.
Kind of a fun.
Follow up to Jamie's question actually.
Over the past few months.
You guys had mentioned doing some domestic point to point flying.
How should we think about.
Where you are now in the.
Let's say gradual process, maybe phasing that out as such.
Some of your international Spools up and you move more towards.
Domestic capillarity out of your hubs.
Sure it's Andrew.
During the middle of the pandemic.
Likely look at some point to point flying and we had that out there.
We returned to normal.
When rapidly now.
Almost 100% focused on our seven hubs.
For all kinds of reasons, we think our best opportunities there and particularly your best opportunity for higher margins are there and that's where we're that's where appointed the metals. So thats. What you will see we do have a little bit appointed client in our system.
It's true.
What's left to proved very successful. So we'll continue to do that that is not our strategic focus our focus is on our seven months.
Okay very helpful. I'll, let someone else ask a question. Thank you.
From Raymond James we have Savi. Please.
Please go ahead.
Yes.
Berlin.
Just on the capacity I was wondering if you could help.
We understand just next year, how that progresses from down 23% are currently in the fourth quarter I'm guessing a lot of it comes over the summer, but I was wondering if you could help.
Bridge that kind of getting from down.
Our three top five next year.
Sure Bob.
The capacity too.
Measure, where our math, where we think demand is going to be.
So in early part of the year. It has continued to be a pretty low number.
And last part of the year. It is a higher number we haven't finalized our budget.
For next year. So we don't have the exact numbers in our overall numbers and approximate number at this point and as you can tell.
The other thing to note is our delivery for next year are heavily geared towards the latter part of next year. That's really that's what in many respects you really get started with United and that can change in the game.
Equation going.
<unk> 2000, and so we'll have more information.
On how the capacity meter in.
After this year early next year, when we can finalize our budget.
That's helpful. Thank you and then if I might I know we've.
<unk> talked a lot about cash flow.
Given that we have strong liquidity and.
Yes.
<unk>.
Forward things are turning around here, but I just kind of curious if you could provide some color on just the cash flow components over the next 12 to 18 months, especially how you're kind of thinking about APL here.
Hi, Jerry So we'll provide some more color in January.
I would say yes.
The reward returning to normal ACR will begin to return to normal is all you'll see the normal peaks and valleys.
Yes.
Driven by seasonality on sort of other matters.
The biggest.
Other things.
Yes.
Look at it.
As I said earlier debt repayment and when we start seeing those debt maturities kick in and prepayment opportunities kicked in.
Next year.
Relatively modest year on debt repayment about 3 billion about $3 billion.
Scheduled debt payments.
But we're going to focus on other opportunities to use that cash to manage the balance sheet starting as early as next year.
I appreciate it thank you.
From Evercore ISI, we have Duane <unk>. Please go ahead.
Okay. Thank you.
Andrew in your in your extensive list you talked about domestic.
Domestic business demand rebounding to 19 levels.
I'll admit I missed the context on that was that was that a premium comment and kind of where are we on corporate now relative to kind of exit.
Last quarter.
Yes.
<unk> was <unk>.
Last week, we have seen our total bookings for domestic and for the Atlantic exceeding the same period in 2019, which is great to see.
Not recovered fully on this is dropping and have a long way to go.
<unk>.
Right and the comment was the recovery on Atlantic business traffic is now similar to or in fact slightly ahead of the recovery for a domestic business traffic, which we obviously feel really good about to see that number and see how quickly the Atlantic business traffic is recovering.
Over the last few weeks in particular.
And lenders are heading towards down, 50%, but theyre not there just yet.
Just looking at the trend of only the last few days I would tell you our level of being bullish about this has increased a lot.
The numbers for the Delta variant cause things to go down quickly and now that we're past filter variant.
The numbers that they're going to go up hopefully just as quickly. So it is a bit more volatile than I think we would otherwise like to see but we definitely like the upward volatility that we're seeing right now.
That's helpful. And then just just for my follow up on.
Our non fuel cost can you speak to the cadence.
I guess the dependency here as when you expect longer stage flying to.
To be more fully restored at these fuel prices. It seems like March is maybe our best shot at the earliest.
But as the cost story more of a second half at this point I appreciate your thoughts there.
Yes sure.
And Umbro track the capacity so what you will see and what we've talked about in January.
In the first half of the year versus second half of the year and Youll see at the Triple Sevens come back as the other aircraft come in as we hit the full run rate on the $2 $2 billion.
Initiatives.
Next summer.
You'll see the second half of the year.
Being significantly different from the first half of the year.
You could.
Staffing track the capacity.
To the cap.
Thank you.
From Goldman Sachs, We have Catherine O'brien. Please go ahead.
Hi, good morning, everyone.
Thank you.
A bit of a different take on Jamie's question earlier, but.
How does the current demand backdrop or the competitive capacity backdrop in the U S changed your plans on domestic expansion at all since you introduced.
Index back in June.
Was it your view back then that 2020 domestic capacity would be flat or is it just with some of these international border reopening because the opportunities that changed things.
The latter.
The recovery that we're seeing.
Over the last few weeks.
We just think that the profit.
With Tonight as an opportunity is to deploy this license overseas and that's what we've done.
Okay got it and then maybe just not sure you can share this yet but could you give us any high level color on what entities are going to drive the 10% international growth.
Are you able to frame the impact.
Maximum new long range routes, you mentioned are having on that 10% growth. Thanks, so much for the time.
Sure Arun expectations, it will be more across the Atlantic and Pacific Obviously, given what I said earlier and so we arent, we arent running for Europe, and we put in a bunch of new markets.
That are brand new to United Airlines in fact, no other.
U S carrier apply so we're really excited about those.
But we've also announced more service to the middle East with Amman Jordan.
A lot of service to Africa, which has gone really well so far so you should expect more of that.
There's a lot going on there and as well as South America, which we think is on a path to.
The recovery, particularly Brazil in recent days given the change there.
Look really good across specific again much slower.
You expect across the south Pacific faster than the North Pacific.
But we are going to be really agile across the Pacific and be able to.
Cancel down or grow it has been in.
And we see we have the best specific network of any U S carrier and.
And we expect we will bounce back first and will bounce back stronger, but that being said we are going to be really careful when we choose to load that extra capacity.
Understood. Thanks.
From Wolfe research we have.
Please go ahead.
Hey, good morning.
So it seems like after labor day, a lot of folks went back to the office and they are excited to be there and that kind of feels like people are working from home a little bit more again, because they realize that commuting is really not fun I'm kind of wondering if.
Youre expecting that with business travel next to your scale.
If you're expecting a big pop in pent up business travel did not everyone's all excited to get back on the road or a 100% recovered and then maybe slowly sort of bleed back to like a lower watermark as the year progresses as sort of the euphoria wears off.
Okay.
Hunter I would put it it's Andrew what I would say is that delta variance clearly delayed some offices.
Like I could return.
United Today.
Our so called back in our office.
And when we talk to our corporate clients.
We definitely see hotspots and some are in and some are not but people are generally more and more return into their office and what we've been told although look it changes.
Depending on the week is that we should expect really an acceleration of business traffic next year with a lot of pent up demand, we had a lot of clients that.
That need to get back on the road.
They are anxious to do so and when they do so.
We're glad to have done it.
I know I'm excited to get back on their own have been traveling.
A lot more and less in the last few weeks so a lot of television.
I can't exactly answer that question other than the feedback we get is.
Tend to be very strong. We also expect consumer demand next year after being not able to travel as they would like for almost two years, we think it is going to be really.
Travel I don't include in here domestically by the way, we believe our profit maximizing opportunities are across the Atlantic right now at the India and Africa and the Middle East.
Also think theres going to be a domestic recovery, that's really significantly strong and in fact, hopefully by February March April is going to overcome this much higher price of fuel.
Really strong and that sort of trajectory on we feel good about it and that's our plan.
Okay.
And then how do you expect to injured corporates to book travel in 2023, I know that Theres a lot of direct bookings right now in 'twenty, two is probably going to be weird too, but is 223, you're going to look like 2019.
And are you going to have the same mix of GDS channel in PMC is just as relevant how do you expect that to shake out long term.
Long term I don't know technology is changing rapidly, but what I would say is we have really great CMT partners in may.
Greatly helped us reach our SME market.
And we use the GDS is to provide all that content and we do so successfully.
And in agreement with our major GDS contractors up until this point I don't expect any radical changes clearly there are those in the distribution network that we'd like to do things slightly different and we'll let those companies in those agencies.
Alex what they would like and we will do our best obviously with all of our clients in all of our customers to give them. The best customer service, we possibly can but I do believe the TNC and GDS model are really strong.
And helped deliver a high quality revenue to United Airlines.
Thank you.
From Cowen we have Helane Becker. Please go ahead.
Thanks, very much operator, hi, everybody and thank you so much for the time just.
A couple of questions. One is on the Triple Sevens that are coming back Gary whats the cost going to be to bring those back.
And is that included in.
Ex forecast for 2002 or will it be in your <unk>.
Capex forecast for fourth quarter and for 2022.
The Triple Sevens.
Our aircraft drive it's already in the fleet.
A capex component to bringing them back.
There is an opex component.
You're counting them ready.
And so that's included in our forecast has not included any forecast is whether there's any.
Contribution to that from from other parties, we're assuming in our forecast that we are incurring that cost.
Okay, that's very helpful.
And then the other question I have is with regard to all these new markets.
Little letter a is are you concerned.
That <unk>.
Your alliance partners will be.
Put off by the fact that your overflying their hubs to do this on your own and little later.
Or b can I give you a list of cities. So I'd like to go to that are on my bucket list.
I would have thought with the city to just add and we got to your bucket list.
But we work with our Great Alliance partners, we really do have the best Alliance partners in the globe.
What I would tell you is.
About how we came to the conclusion.
Citigroup AD for this summer's many of these city pairs.
And our Star Alliance partners had very low shares.
So traffic between the United States in those.
<unk> are carried by other alliances not ours and that's why these markets.
That's great.
I think I'll tell you.
Sometimes.
You have to make the market and there is a lot of.
Service to a lot of different places around the world, but for example, the Azores as a great opportunity for you personally and all your colleagues head on a reputation that was very very difficult to reach.
Previous years that'll be a lot easier to reach on United Airlines Nonstop out of Newark, starting this summer.
That's great very helpful. Thanks, everybody have a nice day.
From Deutsche Bank, we have Mike Lindenberg. Please go ahead.
Yeah, Hey, good morning, everyone, Hey, Scott back to.
Your point about the vaccine mandates being the biggest risk where are you maybe in conversations with the government and as it pertains to the TSA, which I think the latest data is that I think they are only like $60, 65% vaccinated are you, making any sort of contingency plans or as we approach. The holidays are we going to have.
To have additional United people to help staff and kind of get people through the airports, just where things stand on that thanks.
Well I have a lot of confidence to the TSA will get there they've been working hard I think they've been doing a great job during the pandemic really tough times.
So.
The same department.
Instrumental in Brea.
Tens of thousands of refugees.
Afghanistan, So I think we should do.
Kudos and credit.
The department of Homeland Security.
Talking about market and.
On the TSA for everything they're doing I'm pretty confident that we'll get there.
We are implementing vaccine requirements correctly.
We have proven that if you just do it if you put the requirement out there and youre not compromising youre not wishy washy, you don't Walpole backtrack that can get to over 99%.
And I think they'll do the same thing.
And we.
Okay very good and then just a quick follow up Scott you talked about hitting your targets with I think only 85% to 90% of corporate coming back and there's a lot of talk about premium leisure travel and I'm. Just curious is there is there something secular going on with that passenger segment or is this just united catching up to the rest of the industry.
I think and just having premium seats that are on par with everybody else thoughts there. Thanks.
Hey, Mike It's Andrew I would tell you, it's probably a little of both.
Although we had really not started to materially change the aircraft mix.
From when we announced the United next week, a few months ago.
A lot.
St.
In 2023 and beyond.
Amazing amount of premium leisure business are being able to sell.
In the first class cabin and even in the main cabin with much higher load factors than you've done in the past.
We're anxious to prove out that this is a permanent change.
Lot of that part of it is clearly that there is more inventory available closer in for the.
Corporate travel hasn't rebounded completely.
Corporate travel is 100%.
And we'll have to see where the premium leisure alright.
The balance.
Thank you, Matt would have better outcome given.
The change if any of them permanent.
We're bullish on it will be.
It is pretty material in the short period of time.
I'll have to wait and see for sure.
Because we need to balance that with the corporate demand when it comes back, but all that being said in the unlikely event corporate demand is not 100%.
We do have.
Other levers to push and this one has become increasingly obvious over the last three months.
There's an opportunity to do something a little bit different and get some more revenue onboard the aircraft.
Thanks.
Yes.
From MCM partners.
Please go ahead.
Hi, everyone. Thanks for the time I think you hinted at it in the prepared remarks, but what.
When you think about potential swing capacity in 2022 is it fair to assume that that.
Swing capacity in the domestic market could move lower.
Rather than making an adjustment on the international side just given the.
The competitive landscape I get that demand dictates all that but just curious on your thoughts on the high level.
I would tell you that we have a lot of flexibility to move aircraft around our aircraft of our factories and they clearly can be moved around wherever we need them to go whether it be domestically or overseas.
I think we've proved that continuously throughout the entire pandemic.
And we looked like.
Getting back on track and getting back to our normal schedule deployment, which again is why I said there'll be less flying in the future.
Well, we will be flexible to do what we need to do both domestically and internationally.
<unk>.
Ground widebody jets, if theyre not needed later this year, but what we can see.
Sure.
Okay, and then just a follow up to what Hunter was talking about on the business side. So I'm just curious on what sectors youre seeing the most pent up demand for business travel or maybe like what sectors Youre actually most bullish on longer term.
We think you can gain share or or however, you're thinking about that in the current context.
Well.
With everything we've done in United We just gained share everywhere to make that really clear view and all of our competitors.
We are seeing right now is consultant is obviously very strong.
As they get back.
But on the road and start helping businesses all around the globe. So we're also seeing rebound across the board.
But we will.
Thank you are moving in the right.
Thank you and we will now take questions from the media.
The other question please star one.
Background.
Ed.
And once again.
Yeah.
And from Wall Street Journal, we have Alison Sider. Please go ahead.
Hey, thanks, so much.
I guess one of the big place we've heard from customers throughout.
On your free over the course of the last several months just sort of about the instability of schedule.
Late closed then changes and everything kind of being up in the air and I'm. Just curious when you think we might see that level out to see some more stability and get back to kind of normal or if this is.
Part of the new normal going forward.
The entire Alison as Andrew what I would tell you is that we needed to be really flexible as we went into this crisis.
The airline down basically 10% within a matter of a few weeks.
And we learned a bunch of things about how flexible we can be in our process.
Ian said to run an airline of this size.
These process consistency and we need to load our schedules early for the convenience of our customers. So they can book with certainty.
And we have more or less.
This week or next return to a normal schedule load process.
We lowered our digital's 90 days in advance.
We need.
And the final is close to 90 days as possible.
During the pandemic that number was dramatically lower and that caused a level of disruption that was unfortunate.
Necessary.
And we did talk to our customers about it and we did react to to raise and we react to it.
Okay possible to make it into simple and easy to change the reservation, however of that problem should be.
<unk> very very soon if not already.
Thanks.
From CNBC, we have Leslie Josephs. Please go ahead.
Good morning, everyone.
Michael just about regional Airlines do you know the carriers that fly for you under your name are going to be subject to the same federal mandate or if not if it's under the Osha rules do you have any operational concerns about getting them into compliance in the next few weeks and then also if you have any information about how youre approaching.
Cargo just given all the supply chain issues going forward, especially before the holidays. Thanks.
Hi, Bret Hart.
What we will say is that our original carriers, we know that there are evaluating.
The facility.
The executive order.
And their business and we're in discussions with them I think it's pretty clear, where we stand with respect to.
The importance of vaccinations.
They are in the process of working through that now.
We will certainly be in the process of helping them.
And that process to the extent that we can.
Andrew do you want to perfect. Yeah. So in terms of cargo. We've obviously had a record quarter a record year, we expect that to continue well into the fourth quarter and actually beyond.
Given where the country stands in terms of the backup the ports, but also in terms of consumer demand, we're transporting things via.
Buy airplanes today that we traditionally have not.
And in talking to these higher cargo team, we expect that to continue well into next year, if not all of next year based on where demand is for these products and again, where the ports are and the services that we provide which are just I think second to non Alibaba front end.
Leslie if you looked at our numbers you can see that in our numbers every quarter.
Okay. Thank you would you add.
Regional Airlines to live here to the thing that the mandate that you have and.
And do they say no.
Just for uniformity.
Just on the plane.
No.
At present, we haven't we haven't.
As required.
Our regional carriers to adopt our same policy and you understand from a legal perspective.
We don't have the right to require them to do it.
I didn't know that.
We are focused on it.
And we're confident at the end of the day ago, you'll get to replace them.
But we have and are strongly.
Encouraging them.
Pushing them to do it but it is the right thing for them to do as well.
We are starting control.
Once again, if you do have a question. Please star one on your phone.
And from Bloomberg News, we have just been Bachman. Please go ahead.
Hi, Thanks for taking my question I wanted to go back to the earlier comment about United to be in the U S flag carrier.
And that sort of structural change that you see on the international wide.
The front and how that makes.
Long haul more profitable.
Wanted to get your thoughts on the thesis, though because it seems to rest on the idea of that.
Other carriers can't or won't add wide body capacity, if they can get some decent yields on that and I just wanted to get your thoughts on that because some of these airlines you've accused in the past are.
Widebody <unk> subsidized.
And it seems that they could add capacity if they chose to thank you.
Hey, Justin it's Andrew there's really two components one is the fleet.
And how long it takes to get wide body aircraft and configure them and put them in the year and that is.
We haven't done it here at United.
It takes a couple of years. So when you Q3 higher aircraft, it's very difficult to reverse that decision get trained up and acquire new aircraft to replace them.
It just cannot happen immediately, but secondly, and more importantly.
Is the fact that we're flying from what our seven.
Being Canadian hubs here in the United States, just represents the bulk of international travel to and from the country not only leisure business, but business regular corporate business and so we just have a structural advantage on this front.
And the largest international carrier by far we were able to successfully fly not only through our partner.
Mitch such as folks all over the world.
And you saw that with our recent announcement, including a new place like Amman, Jordan and so we're simply taking advantage of the structural.
Advantage, we have in the United that we just haven't been able to in the past properly do but now we can and we're doing so in a era of I think until.
Based on the fact that demand has been bouncing back rapidly and our competitors across the board in that regard. Many many large aircraft many of them with large business class cabins.
Okay. Thank you.
We have Chris <unk>. Please.
Mode.
Getting back to that.
Cargo and supply chain issues are you still flying any all cargo flights and are you considering any.
Purchases of freighter traditional freighter aircraft either used or new.
Go ahead.
More cargo demand.
I'll take that.
The staff we have.
Ted stops are planned to stop all cargo flights.
Brett.
As we were going through the summer because of the rebound in traffic and the lack of our Pratt <unk> Whitney Triple seven supply.
As we went through the delta various days in demand fell.
Allocate a small number of wide bodies to our cargo team and they've taken them and they are fine.
All cargo through the end of this year.
That is doing extremely well, we will likely bring that to an end.
In some time.
This year early next year all of that depends on the return to service of our Pratt and Whitney Triple Sevens.
So we do see a lot of demand on the cargo front. The team is doing a great job.
And we're going to have a record year.
And for your aircraft or is that something that youre way, even considering or.
That's just not something that you see being in the mix.
Sure.
We have a fleet of about 220 or so wide body jets.
At United Airlines, They all have large bellies with room for a lot of cargo, we just haven't seen the need.
To supplement those aircrafts with any all greater versions of those aircrafts at.
At this point in time and just from a business model perspective, we can obviously take months or years, where that makes sense or a few individual routes.
That we operate I think the second largest wide body fleets in the world.
We have a ton of belly capacity that more than meets our needs.
From the associated press, we have David Koenig. Please go ahead.
Okay. Thanks, very much Scott following up on your caveat M Tor comment earlier.
I wondered if you have any evidence that people are booking.
Two United because of your mandate.
I guess are you counting on some of your rivals struggling to have enough staff over the holidays.
Well the story I think it'd be hard to sort that out even if it was happening, but I would also say I don't want that to happen.
Because I want everyone to.
Get back to that that's the right answer for safety, that's the right answer for them.
Countries.
I hope that every airline.
We will stop backtracking and will in fact get everyone back to like United Airlines.
So that it will not be a competitive advantage for us because it is without question the right thing to do.
Is it a competitive disadvantage if they seemed to settle for less and perhaps some sort of testing alternative to vaccination.
Well look again.
Again, I hope that they will again that correct.
Other important fact that it is.
The right thing to do.
<unk>.
Unquestionably.
Operationally really really difficult to get to.
Tens of thousands of employees.
Okay. Thanks.
From Reuters, we have bracket.
Please go ahead.
Good morning, everyone.
I wanted to I have two questions what they want to.
Got it by your comments on both of them you said that you expect them to return to service in the first half of next year.
Is that euro dumps on the order has cleared the ground.
To return to service in the first half of 2022.
Hi, This is Greg.
Haven't.
Clarify that from the FAA, but we have been working tirelessly with.
With me yesterday over the past six months.
We do expect the aircraft's return to service in the first quarter of next year.
And my second question is about the.
Bottlenecks you alluded.
The supply chain.
And your comments on that please.
Can you share some color and details on these bottlenecks how are you navigating from them.
Hey, it's Gerry I'll say, we're not seeing anything different.
To what others are seeing and.
We are seeing short.
Shortages or potential shortages, we're just trying to stay ahead of it so it's not at all impacting.
The operation or the product.
Five.
It does have some impact just on costs is it just more expensive as.
As the whole world is seeing sometimes to get.
Prior to <unk>.
And from Washington Post.
Please go ahead.
Yes.
Hey, good morning.
On the question of premium increase.
And for customers.
Customers for premium products.
Are you seeing that pull out our.
Are they just kind of booking those.
Upfront.
Okay using miles for upgrades.
<unk>.
I guess I'm curious have leisure travelers.
And then like dying, but this is all along and just didn't have the chance or do they have more cash to work with now.
Do you see playing out there.
Paul.
This is Andrew speaking, we'll let this play out over time, but what we've seen over the last few months in particular is more of a willingness to spend a few extra.
Sure.
Two of premium seats in the main cabin or decline in the first class cabin or across the Atlantic we have seen.
A better rebound.
The business class cabin to our leisure oriented routes such as App in Italy. This summer than we did in the main cabin and I think people.
A lot of consumers have saved them some money during the pandemic and maybe youre expecting a little bit but it's also these are great upgrade to the product a big thing here at United.
Make sure that we have a product for all of our customers from the top of scale in terms of the Polaris down to a basic economy customer we can provide the products across that.
And that's exactly what we're doing we expect to do more of that over time by the way.
And we absolutely know that there are certain customers that want that elevated experience. While there are others that don't and we will offer a range of product types that allow us to do that.
Okay. Thanks, and then if I can slip another one in real quick how are you feeling prepared for the holidays.
Right.
Staffing wise, not just pilots and flight attendants right across the board.
Agents people to answer the phone if people have questions or problems.
How prepared are you feeling for that.
We're in good shape and customers can book with confidence to United Airlines.
Thank you we will now turn it back to Christina <unk> for closing remarks.
Thanks, everyone for joining the call today, please contact Investor Media relations.
Any questions and we look forward to talking next yes. Thank you Debra.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for joining you may now disconnect.
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Okay.
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