Q4 2021 United Airlines Holdings Inc Earnings Call

January 20, 2022

Good morning, and welcome to United Airlines Holdings' Earnings Conference call for the fourth quarter and full year 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 question.

At that time, if you have a question, please press star followed by one on your touchtone phone.

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

Your participation implies your consent to 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 Bureaus director of Investor Relations. Christina, you may begin.

Thank you Brandon. Good morning, everyone welcome to United fourth quarter and full year 2021 earnings conference call.

Quarter and full year 2021.

Yesterday, we issued our earnings release, which is available on our website ir.united.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.

Patients or belief concerning future events.

Right.

All forward looking statements are based upon information currently available to the company. A number of factors could cause actual results to differ materially from our current expectations. Please refer to our earnings release Form 10-K, and thank you and other reports filed with the SEC by United Airlines.

For a more thorough description of these factors.

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

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

President Bret Hart, Executive Vice President and Chief Commercial Officer, Andrew Nocella.

And executive Vice President an Chief Financial Officer, Gary Letterman. In addition, we have other members of the executive team on the line available.

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

Thank you, Christina, and good morning, everyone. Thanks for joining us today.

Before I get into the details of our fourth quarter and how we're thinking about the year ahead I wanted to share some brief observations about the recent developments regarding the rollout of 5G.

Mostly I want to thank the White House, Secretary [inaudible].

And the CEOs of AT&T, and Verizon, we're finding and agreeing to an approach that mostly avoided would have been severe disruption the passenger and cargo operations in this country.

This wasn't an issue created by the Airlines. Every carrier follows the rules dictated by the FAA. Since we first heard from the FAA about this issue in November, United has been 100% engaged to underscore the severe risks with the 5G rollout posed to aviation, but more importantly to bring people together and drive consensus around common sense solutions.

Around comments that solution.

While we don't have a final resolution quite yet.

I am confident we will get there. This problem has been resolved collaboratively, has been slow.

Resolved collaboratively, allowing a fulsome rollout of 5G without significant impact aviation in 40 countries around the world and we can do the same thing here in the United States.

While I wish it had happened earlier, the good news is we now have everyone engaged.

The FAA and DLT at the highest level, the equipment aircraft manufacturers airlines in the telecom. And I'm confident we will soon have a clear set of objective criteria that allow full rollout of 5G without significant impact to aviation. I'll close this part of my comments by once again thanking the administration and secretary [inaudible].

But also a particular, thank you to the CEOs of AT&T and Verizon for voluntarily agreeing to these near term restrictions near major airports. With that, I'll turn to discussing our results and outlook. Over the last year, the United team persevered through the impact of COVID, but also made incredible progress laying the foundation for the future.

Omicron has once again impacting the near term, but as we've done since March 2020, we're taking action on capacity, we remain confident in the long term projections in spite of the near term headwinds from omicron.

But before we discuss our results and outlook, I wanted to take a minute and brag about all the people of United accomplished in 2021. In spite of the historic challenges, United came together as a team to get through the worst crisis in the history of aviation and set ourselves up to be the world's leading airlines on the other side.

We saw our NPS improved by 30 points versus 2019, and introduced United Mac to grow the airline and improve the product for customers, but we also made unique real structural changes to our process and technology, which we believe is going to lead to best in class CASM ex performance. Once we have the full fleet returned to service.

I think perhaps one of the least understood industry changes is that United is expecting to exit 2022 at a CASM ex run rate below 2019, an expectation that sounds very different than most others in the industry. It is a transformational competitive change.

While we can't control the exact timing of course of COVID, we can improve the customer experience and control our costs and that puts us in a completely different competitive position to outperform in the future.

In the short term however, we're remaining responsive to the risk posed by the omicron variant. Omicron is impacting demand in the near term, but the biggest impact of omicron fueled surge in COVID cases, we've seen so far was on our people and it led to a significant disruption in our operational performance over the holidays.

As tough as this period has been particularly grateful that because of our vaccine requirement, we are no longer losing vaccinated employed.

And we still don't have any vaccinated employees hospitalized. Our vaccine requirement is truly save lives. As we look to the remainder of 2022 homochromous impacting near term demand and we're reducing our capacity as a result. Bookings continued to be strong for March and beyond that our base case remains the continued recovery in demand.

Including International business. Jerry and Andrew will give you more specifics on what we're changing this year on capacity, but the important point is we remain confident of our long term CASM.

CASM ex target in future of United. We believe and certainly hope that as a company and society, we are moving into the endemic stage of COVID, but we will continue to manage as we have throughout the crisis and once again this quarter and be responsive to what actually happened instead of what we hope will happen.

I'll close by once again thanking the United team.

They've done amazing thing since the crisis began and they've laid the foundation for United to be the world's leading airlines going forward. Now I'll hand it over to Brett.

Thanks, Scott. I'd like to start by thanking our employees for their hard work on the quarter.

On the busiest travel season start of the pandemic our team dealt with disruptions from weather events, changing international global requirements and most recently the impact from the omicron variant.

The omicron impacting both our employees and the rest of the country over the holidays, our team pulled together to serve our customers we are grateful to them.

As Scott mentioned this latest variant.

Has caused the delay in the expected recovery.

And having an impact on bookings in the first quarter. However, we remain confident that travel will rebound quickly as cases subside. We expect a strong summer and second half of '22 consistent with our expectations pre-omicron.

While Andrew will outline the changes we've made in the near term on capacity in just a moment, we are confident and committed to our 2023 and 2026 financial targets.

With our United next network plans in mind, we look forward to hiring the next generation of the United pilots.

Next week, we will host a grand opening of our United Academy Goodyear, Arizona, We're excited about the role our world class pilot training facility will play recruiting and preparing the next generation of United pilots.

I'd pilots.

In fact, we welcomed the inaugural class in December which consists of 30 students, 80% of whom are women or people of color.

In the near term, we're making sure we're fully staffed as this is critical to executing our plan as the recovery takes hold.

Library takes hold.

As difficult as the holidays, where we are returning to a normalized operation we've taken additional steps to ensure the disruptions are minimized for our customers to capacity management and incentives.

Regarding the current labor environment, while we have small pockets some hiring challenges.

They do not impact our ability to operate the mainline and are not impacting our capacity planning for 2022.

We feel confident in our ability to achieve the level of hiring at United that supports the growth we are planning in the second half of 2022 and beyond.

Despite omicron's recent impact, we've achieved the highest ever net promoter score in our history, which is undoubtedly due to the team's service improvements and technological advancements that make flying with us easier than ever.

A couple of examples.

This year more than 760000 customers have benefited from connection stable.

The percentage of customers that would miss connected in 2021 was the lowest since the merger.

Our clubs in the US are back.

And we are ready for international travel to return as well.

As this includes six Polaris lounges.

We've made it easier than ever to order onboard with our Paypal QR code.

Also, our expanded beer, wine and snack offering now available on all flights over two hours.

Jerry will provide greater detail on our 2022 costs, on our 2022 budget incorporates elevated inflationary pressures seen by the rest of the country.

And fully reflects the labor expense we expect to incur in the year.

Importantly, the changes in our fleet and mix of flying would give us the confidence that we will reach CASM ex below 2019 by the fourth quarter of this year.

Putting us on track to achieve our long term cost goals in United's next plans.

While the macro environment delayed the recovery, we continue to act on additional initiatives towards our goal of 100% green by eliminating greenhouse gas emissions by 2050. United is now the largest airline to invest in zero emission, hydrogen electric engines for regional aircraft to a new equity stake and zero [inaudible].

Zero.

A leading company focused on hydrogen electric aviation solutions.

We also announced the second round of cooperations with [inaudible].

Corporate participants and our Eco Skies Alliance program.

We believe each of these initiatives among others further solidifies United's position as the industry leader in sustainability.

With 2021 behind us, we're responding to the near term volatility areas of the business we can control.

While continuing to invest in our people and products that we plan for United next plan that will transform the airlines in the coming years.

And with that, I will now turn it over to Andrew to discuss the current envvironment.

Right.

Thanks, Brett.

Total revenue for the fourth quarter finished at the high end of our range and down 25% on 23% less capacity versus fourth quarter of '19. [Travel] in the quarter finished down 2.5% versus the same period.

<unk> in the quarter finished down two 5% versus the same period.

We're pleased to reach the high end of our Q4 revenue guidance, but the omicron variant did have around a two point negative impact on travel results and has delayed the anticipated demand and revenue recovery by a few months.

Prior omicron, we were on track to deliver close to flat unit revenues in the fourth quarter of 2019 versus our fourth quarter versus 2019.

Just as in recent quarters, our cargo operation again delivered a record quarter for United. Total cargo revenue for the quarter was up 130% in the fourth quarter of '19 and finished the full year at $2.3 billion.

Fourth quarter royalty revenue and other revenue was up 3% in the third versus the fourth quarter and 19% to $518 million.

Yeah.

Now turning to our first quarter outlook.

Leisure bookings and demand for late February and March are largely on track with our expectations.

Omicron disrupted close in leisure demand in January across most regions and cancellations did increase. Bookings and cancellations are now starting to return to normal.

Business demand fell sharply in January versus early December given business demand tends to book closer to the travel. We remain optimistic that we'll see a strong rebound as we progressed through the quarter, although that's clearly linked to the virus.

Our revenue projections assume business demand rebound by the end of February to where we were in early December are down approximately 40% versus the same period in 2019.

Leisure demand trends that we observed to travel later in the first quarter of 2022 have allowed us to manage our yield quality successfully versus our experience with the delta variant surge. As a result, we remain optimistic that omicron impact while significant, will be focused on January and February at this point.

But we can't say if there'll be additional widespread variant in the future, but we can say is that our expectation is that omicron and each possible future variant will have a smaller and smaller impact on our revenue over time as compared to the impact from the Delta variant.

We now expect total revenue in the first quarter of 2020 to be down 20% to 25% versus 1Q '19 with capacity down between 16% and 18%.

We have moderated our capacity plans in Q1, reflecting the anticipated lower demand in the near term as a result of omicron.

Lower capacity in Q1, along with a more conservative outlook results in our latest full year 2022 plan, having lower capacity than 2019. This is down from the 5% growth versus '19, we expected back in October.

We've moderated our 2022 capacity by lowering aircraft utilization and delay in the return to service of certain planes. Our grounded Pratt and Whitney seven Jets are now expected to fly again in March and then gradually reenter service fully by November.

We've also delayed the return of service of certain narrow body jets into the second half of 2022 and lowered the planned utilization levels of our regional jets for the remainder of the year addressing pilot shortages.

These changes typical mainline aircraft leased due to these changes typical mainline aircraft utilization is expected to be well below normal and so Q4 of 2022 the phasing in of this idle capacity, particularly from larger jet and with lower utilization of our case, we will have a measurable impact on our gauge.

As the Max and overall ASM for each quarter of 2022, which Jerry will detail shortly.

We also continue to expect that our international long haul flying will enter a strong period of margin improvement versus the last cycle. As we enter the second half of 2022 we expect that new capacity to Africa, India, and the Middle East will mostly offset lower capacity to Asia for the foreseeable future.

We continue to watch international demand carefully, but expect to recovery in close in demand post omicron the booking curve for the Atlantic proved shorter than usual in 2021, and we expect to have a same repeat of performance for 2022.

As of now, bookings for the Atlantic for the peak travel season are on track and we've seen some relaxation in border controls Israel in England.

We are working closely with our global partners as we build back our international network and late last year, we announced a great new partnership with Virgin Australia. United is [inaudible] Australia and we believe this partnership allows us to quickly and more profitably resume our flight schedule to Australia.

We're on track to create the best onboard product introduced in the United signature interior. We've now taken delivery of [16 737, Max Eights with just interior.] We're also making progress on our plan to modify the remainder of our narrow body jets. So that by early '25 the entire mainline fleet will have this consistent spirit look and feel.

Our future fleet will have an increased premium mix with premium seats per departure in North America up 75% by 2026. It is worth noting that in the fourth quarter of '19, we've already started to produce new records and ancillary revenue generated by seat upgrades by our leisure customers this trend of selling more premium products.

As your customers represents a meaningful amount of potential upside through our United next revenue plans and can also help cushion the impact of business traffic in the event it doesn't fully return.

As several of our largest competitors have reduced the size of their business [that Kevin] by about 10% on global long applied, we expect that to continue and as a result.

There is a structural change that we see in the long haul International service.

Late in 2021, we are pleased to be right. We were pleased to be recognized in the latest BTN survey completed by industry procurement leaders.

These leaders clearly saw and rewarded our efforts to win their business separating United from the bulk of the industry. We improved in every category and we believe these results signify the hard work, we're putting into women an ever increasing share of their corporate business, which again is import component of our United next plan.

Thanks to the entire United team. And with that, I'll hand it off to Gerry to discuss our financial results and outlook.

Thanks, Andrew. Good morning, everyone and welcome to our first call as the new year.

While we all would have preferred to be further along in the recovery, you will see from our results for 2021 and forecast for this year that we continue to make great progress and are well positioned to achieve our long term goals we've discussed with you since last June.

Turning to the numbers.

For the full year 2021, we reported a pre tax loss of $2.6 billion.

And an adjusted pre-tax loss of $5.8 billion.

For the fourth quarter of 2021, we reported pre tax loss of $845 million and an adjusted pre tax loss of $679 million.

Our CASM X increased 13% on capacity down 23% growth versus the fourth quarter of 2019, our CASM ex was within our guidance range for the quarter. It was slightly higher than the midpoint as a result of omicron related expenses.

Looking to the first quarter of 2022, there are two major factors impacting our CASM ex.

First, because the omicron, as Andrew mentioned, we are adjusting capacity downward to align with demand consistent with the agile pivoting we've done throughout the crisis.

Secondly, we currently expect that our 52 Pratt powered triple seven will mostly remain grounded through the first quarter.

This reduction in flying keeps our aircraft utilization down about 16% in the first quarter versus 2019 and does drive additional cost inefficiencies.

First quarter 2022 capacity is expected to be down between 16 and 18% with CASM ex expected to be up between 14 and 15% versus the first quarter of 2019.

The math associated with flying fewer ASM than originally expected together with the added omicron related expense is driving around three points of expected CASM ex pressure in the quarter.

By the fourth quarter of 2022, however, our base case assumption is that we are past omicron, implying that schedule with capacity up around 5% versus fourth quarter 2019.

In this scenario, our utilization reached near 2019 levels engage up about 16% versus the fourth quarter of 2019 and up 11 points versus the first quarter of this year driven by the return of the chasm and friendly Triple seven and the addition of 787 and larger 737 Max aircrafts.

Aircrafts.

These factors together with the full run rate benefit of our identified $2.2 billion and structural cost reduction, which we expect to achieve by this summer with driving material change in our CASM ex performance over the course of the year. From up 14% to 15% in the first quarter to down around 2%

in the fourth quarter of this year in each case compared to 2019.

As I mentioned, these figures represent our current base case assumption for our 2022 fine, but as Andrew outlined we are committed to aligning us.

And we will continue to be flexible given the uncertainty around the pace of recovery.

As a result of this uncertainty we expect our CASM ex results for the full year 2022 could fall anywhere in a range of scenarios.

You may recall in October, we set our planned capacity for 2022 would be up around 5% versus 2019.

With CASM ex lower than 2019.

Our outlook on CASM ex remains consistent with the prior outlook, though since we now expect our capacity for the year to be below 2019 level, we must adjust our CASM ex to take into account.

The impact of fixed cost spread over fewer ASM.

To provide some further bookend.

If capacity for the year were about flat to 2019, we expect our CASM ex will be up 2% to 3% versus 2019.

Full year 2022 capacity is 5% below 2019, we expect our CASM ex will be up about 5% versus 2019. We believe our results will land between those figures on a full year basis.

Most importantly, we expect CASM ex to improve throughout the year as our gauge on aircraft utilization materially improve in the second half and expect to end the year with CASM ex below 2019 levels as I noted earlier. Most importantly, the fourth quarter expected run rate for CASM ex will put us.

Well on track for our United next cost plans for 2023 and beyond.

Turning to fleet. We currently expect to take delivery of 53 737 Max aircraft in 8 787 aircraft during the year.

As we noted on our previous earnings calls, the 787 aircrafts were originally expected to deliver in the first half of 2021.

We now no longer expect to take the 787 aircraft until after the summer of 2022 contributing to about one five points less capacity versus our original plan.

<unk> to about one five points less capacity versus our original plan.

Given this timing we now expect our adjusted Capex in 2022 to be around $4.2 billion, plus about $1.7 billion of adjusted Capex that moved out of '21 into 2022 for a total of about $3.9 billion for the year.

To be clear. Our total adjusted Capex plan for the years 2021, and 2022 together have not changed since June of last year. There has simply been a timing shift driven by aircraft delivery delays.

Our total adjusted Capex plan for the years 2021, and 2022 together have not changed since June of last year. There has simply been a timing shift driven by aircraft delivery delays.

We continue to expect to use a mix of debt financing leases and cash to fund the acquisition of new aircraft, depending on market condition are tracking towards our United next leverage target.

Importantly, we have [inaudible] over $20 billion in liquidity, including our undrawn revolver.

Over $20 billion in liquidity, including our Undrawn revolver.

A strong cash position to continue to navigate the remainder of the crisis.

I'd like to thank my finance team as they've worked countless hours over the last two years to create and manage a flexible financial plan in response to a quickly evolving environment.

We will continue to focus on appropriately managing our capacity and rebuilding our business back efficiently.

We've observed that the impact of each variant on our business has decreased with each iteration. We continue to expect COVID-19 to become endemic in the future. We remain confident in our 2023 and 2026 United next financial targets and our trajectory to maximize earnings power for the long term in the coming years.

<unk> in the coming years.

With that, I'll pass it back to Christine to start the Q&A.

Thank you, Jerry. We will now take questions from analysts.

Please limit yourself to one question and if needed one follow up question. Brandon, please describe the procedure to ask a question.

Thanks, Christina. The question and answer session will be conducted electronically. If you'd like to ask a question. Please press star followed by one on your touchtone phone. If you'd like to be removed from the queue. Please press the pound sign or the hash key.

If you're on a speaker phone, please make sure your mute function just turned off to allow your signal to reach our equipment.

Once again, if you do have a question, please tell star one on your phone keypad.

Please hold for a moment, while assemble our queue.

From MCM partners, we have Conor Cunningham. Please go ahead.

Hey, everyone. Thanks for the time.

When we think about United and the opportunity set.

That's ahead of you. The international to international landscape is clearly what people talk about the most is the pandemic looks to sputter out. Just curious on your expectations have changed in terms of pent up demand for international.

International to international landscape is clearly what people talk about the most is the pandemic looks to sputter outcome. Just curious on your expectations have changed in terms of pent up demand for international clearly.

Clearly, Asia is going to be going to take some time, but the European countries right now are starting to quickly ease restrictions as cases decline, which is super bullish for the spring and summer demand timeframe. So just curious on how things have changed from a high level.

From your thought process.

Thanks, Scott, it's Andrew. It's a really good question and it's something we strongly believe and based on everything we've seen we've definitely pointed a lot of incremental capacity across the Atlantic for this spring and summer in anticipation of this recovery. I can tell you in fact, we're booked ahead from a passenger and revenue.

Perspective on those flights this spring and summer already.

And so we're ready to get flying. We do need to get past this latest omicron variant, but we feel really good about the future and more importantly, we kept all of our wide body jets in our fleet.

We continue to modify them with the new business class cabins. So we have a consistent product.

Across the range of our aircraft and we operate from the best gateways in the United States [inaudible]. So we do believe very strongly that there is tremendous international growth opportunity in front of US. We also us . We also believe that there has been significant structural changes.

Smaller business class cabin is coming from the United States and in fact fewer flights many of the larger [inaudible] and 747 have been retired by our competitors and this sets us up incredibly well for the future year.

I have to admit we can't be, we're very bullish about the Atlantic in particular and as you stated.

Asia is going to be slower to come back. We look forward to coming back in full force, but we have redeployed our planed for the foreseeable future to other regions of the world in anticipation of a slower recovery in Asia. So we think we have that from a revenue.

From a revenue.

[P&L] point of view under control as well, so really bullish about the future when it comes to international growth.

And United's potential in that arena, we think is superior to all of our competition.

Okay. Great and then.

When you embarked on the mid con strategies and laid out United Max loyalty was.

It was a huge component of that. And right or wrong, I think a lot of investors view airline loyalty is just one big pie. So just curious if you could talk about how new sign ups or maybe unique sign ups have been.

For the loyalty program or credit card. Or if you have any conversion figures from other airlines that United has seen as the operations improve over the years and so on.

Thanks for the time.

Sure.

We signed up 5.6 million new mileage plus members this year, which is a record for the airline.

We are really pleased by that and it shows the growth in the priority and the program that people want to be part of their program and be part of the United. So we don't think it could be any better. In terms of the credit card acquisitions, new accounts, we are up in the second half of this year versus where we were in 2019, so thats gone incredibly well as well so we didn't.

We're really optimistic about those particular numbers.

And in particularly with the new members.

It's just a few years ago, we were doing 2.5 to 3 million new members per year and now we're up to 5.6. I think it is a great tribute to United where we apply our brand our customers.

Being more and more interested in joining the mileage plus program.

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

Hey, good morning, everybody. So the strength in premium leisure is obviously, an important topic, but there is some debate as to its sustainability where consumers permanently craving.

A better flight experience.

Therefore, they will refuse to ever return to the back of the cabin or if it's just a temporary phenomenon driven by pent up demand. So to the extent that it is the former.

Are you seeing this elsewhere across the travel ribbon? Having for example, our club memberships showing commensurate strength, our new card acquisitions skewing to the Infinity card I am just wondering how broad the evidence is supporting the thesis that a large.

Segment of your consumers are truly pursuing a better overall experience.

Well, Jimmy, what I think I would say is we're going to need some time to prove that out.

I think it is somewhat debatable, we feel really good about it and the numbers have been incredibly strong our seat product upgrades in this last quarter have never been higher.

And that's even before we begin to transform into the United next fleet, which has more.

That's even before we begin to transform into the United next fleet, which has more.

Premium seats onboard the aircraft.

And we feel really strongly about segmenting, our business and giving people a choice about where they want to sit on the airplane and what experience they want.

Throughout the entire travel journey, everybody deserves that choice.

And we're going to do it. We're going to do it right. In terms of club memberships, what I would tell you is the bulk of our club memberships come through our premium card through the co brand portfolio.

It'll be hard to measure that because we introduced two new lower tiers hard here. So the numbers are skewed by our new Gateway card for example.

So it's a little bit more difficult, particularly answer that question right now.

But we've now seen this for two quarters in a row really strong premium leisure demand everything we see in the first quarter. We'd say the same is true and we also see that in the business class cabin going to and from Europe.

Where the performance there has been [good].

And the other thing I will tell you is that.

While clearly RASM has been down throughout this prices. RASM domestically in our premium cabin is almost flat.

Where is the number in total in terms of PRASM. So again, that's a remarkable number as we go through this crisis in terms of premium demand in my opinion.

Well, thank you Andrew. As a follow up to that so so a question on pricing.

It feels like the booking curve for consumers is increasingly similar to what corporate used to look like. So consumers are booking closer in but it feels like business travelers are now booking further out first is that a fair characterization and two do you think you could still.

You could still achieve pre COVID-19 corporate yields, are sufficient fare fences in place or does a further booking corporate buyer imply lower yields?

I guess, that's the question.

Some of that's TBD.

But what I would say is that this is dropping is down substantially.

It had it had improved quite a bit as we were in the quarter last year.

In the quarter last year.

So the booking curves are I think a little bit unreliable.

From where will they be two or three or four months from now. So I think we just have to wait a little bit longer than that and until demand.

And really demand comes back to some level of normalcy across all those channels.

The old calculations are just going to be a little bit differently.

What I would say is that particularly with business traffic in total business.

Our total traffic we've seen a remarkable comeback.

And we grew the year versus where we were in week one of the year for total bookings and for business bookings.

So we're well on our way and I think.

We're going to see things return to normal from a booking perspective. I would hope sometime in mid February and cancellation rates. Early this week are actually already back to.

More or less a 2019 standard.

I think things have moved dramatically just in the last 2.5, 3 weeks.

Excellent. Thank you for the clarity. Take care.

From Raymond James we have Savi [inaudible]. Please go ahead.

Hey, good morning.

Just curious on the cargo revenue side.

Cargo revenue side.

That held in well, I'm guessing better than what you would have expected earlier in 2021.

It seems to be a lot of dedicated freighter capacity coming on so I'm not sure. It seems to be making up for lost belly space I was curious.

What you expect in terms of cargo revenue trends are for this year and then maybe if there's any kind of structurally something change longer term?

Sure, I'll try to take that. I think what we're seeing is there's been a disruption in supply chains around the globe.

And to the use of air freight has increased or the need for it has increased relative to the amount of capacity available and thats caused yields to go up. As we look into Q1.

I think those trends are pretty similar and in fact, we expect our Q1 performance this year to be in excess of our Q1 performance last year, but it's still early in the quarter, obviously driven by the strong yields.

Right.

And if you talk to our cargo team. They would tell you that the supply chain disruptions. The backups at the port. These things look likely to continue to some degree for the foreseeable future as we head into 2022. So we're optimistic that cargo is going to have another great year and kudos to our entire cargo team.

Because the numbers we're putting up relative to our competition are just staggering.

Good point.

Along the lines of kind of something changing near term. The cuts.

The cuts.

To service and kind of some of the smaller markets. Smaller markets are a big push for United not long ago.

<unk> is a big push for United not long ago.

Do you see any disconnect issue resolving itself as you get into 2023 or something or is there is there kind of a need to change strategy here at least when it comes to the regional operation a small market operation?

Get into 2023 or something or is there is there kind of a need to change strategy here at least when it comes to the regional operation a small market operation.

Sure. I'll try to take that. I'm taking all the questions here I need to hand out of his questions to my colleagues.

First of all, what I would say is that as we takeaway service from small communities, we're disappointed to do that. We know the impact on these communities.

Takeaway service from small communities, we're disappointed to do that we know the impact on these communities.

And we alert them ahead of time.

And we know it's a big deal and we have already cut service to 20 communities.

In the United States.

In the last few months. Again, we know that's a really big deal.

However, we are facing the pilot shortage on a regional aircraft not on our mainline aircraft.

And we expect that pilot shortage to continue for a while.

Including for the rest of 2022.

So we do expect unfortunately, there'll be a few more communities that we will have to remove from the network. We're still working out those details and we have a lot of aircraft that we will underutilized for the foreseeable future.

But that's kind of where we are.

In terms of our business plan, when we talked about the United next business plan.

Just about seven months ago.

We'd already recognized these trends we had already planned to reduce the number of RJ is in our fleet and what's happening is an acceleration of this plan.

But from a revenue perspective. This has all been accounted for and unfortunately from our internal plan in perspective, what we're seeing on the RJ pilot shortages is an acceleration.

And what happens to the communities we serve is an acceleration.

But it is not unexpected for what we're really going to deal with over the next year or two.

That's super helpful. Thank you.

From Bernstein we have David Vernon. Please go ahead.

Hey, good morning, guys. Thanks for taking the time. Jerry, I wanted I was wondering if you could help us think about kind of the exit rate of CASM. It sounds like it's going to be much better than the start of the year because of some gauge increases.

Can you talk about sequentially, how gauges increasing and kind of that what's a good foundation on which to start building out?

A CASM outlook for 2023, because I know there is the growth we're getting sequentially on the volume recovery just trying to separate out how much of that is not sort of volume dependent how much of that is coming out of gauge.

So good question and we've been clear since last June.

One of the benefits that's really in some ways unique to United with a United next plan is the increase engaged we've been under gauged.

On the mainline and the Max order, particularly when the Max 10 start next year will help solve that problem.

<unk> help solve that problem.

So we will provide going into next year additional color on gauge.

This year just from the first core quarter to the fourth quarter, we expect.

Kind of a 11% improvement engage.

And then more going into next year, but we will continue to give you those numbers, but as we've been saying for the last six months.

Last six months.

One of the great advantages, we have and one of the reasons why we're so comfortable with our CASM guidance for next year is that as we've said, it's just math.

The advantages, we have and one of the reasons why we're so comfortable with our CASM guidance for next year is that as we've said, it's just math.

Yes.

So sequentially as we go through the quarters is there an inflection point when that gauge really kind of pops up tied to deliveries or schedule change? Yes.

So two things.

One, the Triple seven won't start impacting us until the second quarter.

And then the 8787, which are still hanging out there.

That'll be a second half as well as the 53 [inaudible].

<unk>.

53 <unk>.

Effectively all in the second half of the year, the vast majority in the second half of the year. So there is a huge difference.

Between the first half and second half on gauge.

Alright, that's super helpful. Thank you and then one last one for me.

The other Opex line kind of bumped up sequentially $225 million a quarter for the last few quarters. Are we at budget level of around one four per quarter for that other opex line? Or how should we be thinking about that number? We're getting to 80, 85% of '19 levels of cost on that line and I'm just wondering if there's structural takeout I would assume some of it's in there.

19 levels of cost on that line and I'm, just wondering if theres structural takeout I would assume some of it's in there.

What absolute number for that other Opex line should we be looking at for 2022?

4th quarter.

Yes, I think we've hit about the runway run rate within a couple of hundred million dollars.

About the runway run rate within a couple of hundred million dollars.

Okay. Thanks, a lot for the time guys.

Thanks, a lot for the time guys.

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

Thank you very much operator, hi, everybody. Thank you very much for the time.

Sure.

So oil prices have gone up over $85 and I know theres going to be a lot of fuel efficiency with the newer aircrafts that are coming in but how should we think about the way youre thinking about fuel?

The pricing.

And the lag between the two.

Sure Helane.

I'll start. Traditionally, I think we have gotten to the point we were at a high degree of confidence that fuel is a pass through.

Traditionally I think we.

<unk> gotten to the point, we were at a high degree of confidence that <unk>.

<unk> is a pass through.

And I've said that many times in the past and I continue to believe that.

During the crisis with the supply demand equation, quite our of balance. I think that that has got out of balance that as we look into.

In Q2 and beyond based on what we think some happening to demand.

And where we see supply, hopefully, those relationships go back into place and we will continue to make agile decisions on utilization of the fleet given with the price of fuel is like we always have done in the past.

So I feel like we need a little bit more time to prove back that the equation is still valid.

But we're well on our way.

Okay, and then my other question is I don't know how to think about that.

Know how to think about that.

I know Asia traffic is not coming back anytime soon but there is a lot of cargo that you can do in that market. So it makes sense to have capacity there.

But when you think about what the Chinese are doing.

I mean I feel like they are in violation of the bilateral agreements that they signed.

And I'm kind of wondering if after if part of what they're doing and not allowing you your full complement of flight.

Yeah.

Has to do with the Olympics versus them being

Yes.

Then being <unk>.

Difficult with quarantine rules and so on so that. As you think about rebuilding Asia, China is not on the list of countries beyond maybe one or two cities and you think about like the rest of southeast Asia.

So not sure who should answer that.

Well I'll start and then let Andrew talk about our specific plans.

What I'd say is on the Asia restrictive governments around the world are all doing their best to manage COVID.

Governments around the world are all doing their best to manage Covid.

As restrictions are constantly changing. They've had a different set of standards in China, different approach than some of the western.

But I don't think theres anything bigger to read into it other than different countries are all feeling their way in an uncertain environment. So I wouldn't read any kind of macro view political questions into it.

And then I'll turn it back to Andrew to talk about sort of what are plans for aircraft an timing.

Questions into it and then I'll turn it back to Andrew to talk about sort of what are plans for aircraft.

Okay.

Thank you.

The only thing I would add is that we recognize that Asia seems to be we will have a slower recovery and we have moved those aircrafts elsewhere in the world and we believe they're going to be really productive where we've moved them to.

And we look forward to resuming our full schedule to Japan and China.

At some point in the future when we can.

Okay, well, thank you very much.

From Evercore ISI, we have Duane [inaudible]. Please go ahead.

Hey, thanks so much. Good morning.

I wanted to ask you a couple of questions one just on

Change ability, which is which is probably where.

The industry was headed.

Anyway, and you can refresh our recollection there.

Obviously, we're in a weird time still. It's improving but it's a weird time.

But there is an impact on operations, and perhaps call center resources and things of that sort with respect to changeability.

Operations, and perhaps call center resources and things of that sort with respect to changeability. So.

Are you guys thinking at all about that kind of over the intermediate term again in a more normal demand environment?

Is some of the pure kind of frictionless changeability, maybe too much of a strain to support?

Well I think the way I would describe that is we've made a number of changes.

As we've dealt with this crisis, including the elimination of change fees themselves.

And that we think was the right thing to do. We should have done it years ago quite frankly.

We wish we had done it years ago, and so we don't think that's going to change.

Or at least United. We are where we are and we've adjusted our resources to make sure we can deal with that. Our customers now have the ability to make more changes than they did in the past and are doing so.

United We are where we are and we've adjusted our resources to make sure. We can deal with that our customers now have the ability to make more changes than they did in the past and are doing so.

And we're pleased to let that happen and we think it's a great feature for us.

And it's going to help us with our relative competitive stance versus other carriers in the country, which again, we needed to do long ago, It's about time and we're we're fully committed to it.

I appreciate those thoughts I wondered if there wasn't maybe.

A fair category or something like that not that you would tell me now in advance, but maybe a fair category, where it didn't make sense.

And then just a follow up to Sami's question on the regional constraints.

Sami's question on the regional constraints.

Do you have any anecdotes? I mean, some markets are going to be no longer.

Addressable, but do you have any anecdotes or markets that you've maintained where you've sort of swapped it out does it does it by default imply lower frequency.

Imply lower frequency or.

Does it push you into some new markets. If you could just talk about that more broadly maybe from a network perspective.

I don't think it pushes us into new markets, but as we've classified this there are places that have fewer flights and there are unfortunately places that have no flights.

And we continue to adjust the formula. Again, for the most part we anticipated this.

The big difference here is this is occurring at a faster pace than maybe we anticipated six months to nine months ago. So it's just accelerating our United next plan.

And where we're going to go to but there will be a communities that unfortunately don't have United service in the future and there will be communities that have fewer flights and there will be communities that are pure play to a bigger aircraft.

And that's kind of the outlook, we don't again I said it a few minutes ago.

We don't expect this to really materially improve in 2022.

And we will see where we go in 2023.

Thanks so much.

Yeah.

From Jefferies we have Sheila [inaudible]. Please go ahead.

Good morning, everyone. Thanks for the time, maybe if we could think about your United' next targets. I know they're far out.

Next targets I know theyre far out.

But how do we think about the inflationary expectations you're baking into those targets and how they've changed over the past six month?.

Okay.

Well, Sheila it's fair to say that over the last six months we've seen more inflationary pressure than we might expect a year ago.

More inflationary pressure and we might expect a year ago.

That's incorporated.

In our numbers and our guidance for this year.

[inaudible] for next year.

So we've taken that into account. And in terms of where we're seeing those inflationary pressures. We're no different I think than than anyone else. Clearly on the vendor side airport vendors, we are seeing that.

Okay.

Other suppliers like everybody else when you go to the supermarket youre seeing higher food prices, we're seeing higher food prices, but we're managing through all that. And I can tell you.

That if it becomes too expensive, we always have chicken.

Right.

It becomes too expensive, we always have chicken.

Okay.

Thank you.

From Goldman Sachs, we have Catherine O'Brien. Please go ahead.

Hey, everyone. Good morning, Thanks for the time.

So I know there are a range of outcomes on your capacity for this year, that's going to be based on demand, but should we still be thinking about international being the bigger driver as you get back to growth mode later this yea? So like if we end up with flat capacity, which is one of your booking, should we expect domestic to be down underlying that? Thanks.

Okay.

Yeah.

I will say the plans are still agile, we're going to fly less international than we expected to just a few months ago. We're also going to fly less domestic. Whether in the 100% proportion to each other, I think it's just too early to tell.

So I'm going to refrain from giving you an exact answer to that question.

I'm going to refrain from giving you an exact answer to that question.

Okay, got it. Fair enough.

And then just on the forward demand outlook. I don't want to read too much into here, where it chases. I think in the release you said, you're optimistic about spring and excited about summer.

Should we read this as you're seeing bookings come in stronger than what you're seeing for spring as consumers are just more optimistic about COVID at the time we get to the summer?

Or just would love to hear kind of like how the bookings are looking right now? Maybe is over the next four or five months.

Based on what you've got on the books today. Thanks so much.

Sure, I'll give it a try.

The first thing I'll say is that when the omicron happened.

Is that what really happened was cancellations peaked particularly for close-in travel.

And net bookings declined.

As a result of that. But the total bookings also declined as a result of that but all of that impact was really felt close in and not far out. And so we're continuing to book March for example, normally throughout the entire omicron process, including from the perspective of our yields to be blunt.

And that continues all the way to beyond March, all the way through the summer where for example, we look at the Atlantic and we're booked ahead from a passenger count and we are booked ahead from a revenue perspective, which means our RASM is obviously positive.

In the future quarters for the Atlantic.

All of that is really good but omicron did has caused the spike in near term cancellations and reduction in near term bookings, particularly for business travel.

And what I can tell you over the last few weeks, we've already seen that start to come back into line. For example in week one we were down 48% versus 2019 for total bookings in week two of this year were down 40% and now in week three week to date, we're down 25% and so we are seeing this.

Really come back pretty quickl. And the second point as I said earlier, our cancellations are also now coming back.

Into normalcy. So this really again, there's a hole in January that we can't fill because it's just too close in. And there's a bit of a hole in February as well, but March look normal at this point and definitely beyond that based on these trends and again bookings are coming back really really quickly hopefully.

We'll be back to somewhat of a normal stance or at least where we were in the middle of the Q4 quarter.

Sometime by the Middle of February .

Okay, great.

And from Deutsche Bank we have Mike Lindenberg. Please go ahead.

Hey, thanks, everyone.

Two here. One, can you just refresh us on your hiring plans for 2022, more specifically number of pilots mechanics? And how is the ramp is it spread throughout the year is it front end loaded? Thank you.

Hi, Mike.

It's Brett.

Okay.

First I'll say in the back half of this year, we were really successful in meeting a lot of our hiring goals. Obviously.

We were really successful.

Meeting or a lot of our hiring goals.

Obviously.

We think we'll have no issues in particular on the mainline next year meeting those goals. IOn terms of pilots for instance in next half of this year. We hired approximately 1200 pilots. So we think that that trend will continue into next year.

Next year meeting those goals in terms of pilots for instance.

Next half of this year.

We hired approximately 1200 pilots. So we think that that trend will continue into next year.

Overall numbers for next year.

We expect to be in line with our needs, but we haven't put out specific numbers at this point in time.

To be in line with our needs, but we havent put out specific numbers at this point in time.

Okay, great. Thanks, Bryan and then just quickly, Andrew.

When I saw the guidance through the release. The March quarter revenue sort of what you were guiding to relative to others. It looked more favorable.

Release in March quarter revenue sort of what you were guiding to relative to others. It was good it looked more favorable.

Given that the March quarter historically has been seasonally much more challenging for you than your competitors. Is that reflect.

Maybe network changes over the last year? Is it cargo driving a bigger piece ancillary all of the bonds?

Really really curious what's allowing you to kind of catch up in at least narrow the gap with your competition. Thank you.

Allowing you to kind of catch up in at least narrow the gap with your competition. Thank you.

Thanks, Mike. I will say that improving our relative results in Q1 has been one of our long term goals for many many years, obviously there's a lot going on a lot of moving pieces in Q1 of this year.

But all of those factors you just said and all of us here at United working together.

To move these things around has made an impact or really.

I wish the Q1 guidance could be dramatically higher but we are where we are but I think we're on the right path.

For long term and we're particularly we're on the right path and making our Q1 results less of a gap to our competitors. And that of course will overall help us close margin gaps in the future because we do pretty well in Q2 or Q2, and Q3, given our global long haul nature, and our east West nature here domestically.

Results less of a gap to our competitors and that of course will overall help us close margin gaps in the future because we do pretty well in Q2 or Q2, and Q3, given our global long haul nature, and our east West nature here domestically.

Great. Thank you.

From Bank of America, we have Andrew [inaudible]. Please go ahead.

Hey, good morning, everyone. Just kind of wanted to go back to the regional pilot issue and [with the sale].

I'll ask a little bit of a different question.

If the regionals are experiencing pilot shortages.

Pilot shortages.

Do you expect this to eventually, could this potentially creep into your mainline hiring plans? Particularly given.

The growth that you guys have ahead of you. And if it did creep its way in, would that be a risk to some of your longer-term CASM targets?

Maybe I'll give it a try. At this point, we've had absolutely no trouble ironing for United mainline pilot jobs.

And the second point is as we are working very hard.

To make sure that the supply of pilots coming into this great business increases and given where salaries are the career potential we're confident that's going to happen. And of course, one of the things we've done which is highlighted a lot is our aviate Academy.

We're bringing new students many of them diverse into the United Airlines World very very early in the process and so we're all working to make sure that theres plenty of pilots for the long term supply, which we think is the case, but we do have a year or more where this needs time to get back into proper balance and at this.

Point, we haven't seen any impact to our mainline hiring abilities.

I guess as a follow up to that why do you think is it easier to hire into mainline them into the regionals.

Basically pay scales. So just curious what the what that.

Disconnected.

I wouldn't.

I'll take a shot at it Andrew.

You've done a great job on the call by the way I appreciate it.

I want you to take a shot at it.

Look I think.

It's an important point and the big difference for us at the mainline is that United with great careers, there not just jobs.

Our our average.

Slide attended.

The ramp worker date agents.

Back in.

In a normal year.

At the top of the seniority scale could you contract makes a six digit income can make a six digit income with great benefit. It's one of the few jobs.

Places that their jobs left.

Where you can support a family.

The college and have great benefit that have security and and I think at the end of the day. That's the reason that we can hire at the mainline is because we create careers where people can spend their whole career here.

Instead of just.

Yeah.

What's the hourly rate today.

Okay.

Okay. Thanks, Scott.

From UBS, we have Myles Walton. Please go ahead.

I think there is a comment.

I know Scott on <unk> second quarter, Youre targeting profitable or hope to be profitable and I'm. Just curious do you think for the full year.

Your line of sight for pre tax profitability, and then maybe Scott, while you're answering that if youre answering them.

One of the first things that that Russia has done in previous instances with responsive sanctions has shut down their aerospace obviously you get some limited.

Capacity going to Asia at this point, so maybe it's not that big a deal but relative to your plan for 'twenty, two how disruptive would that be thanks.

Yeah.

So on the first question.

Tried at least on CNBC to say are we are trying to get out of the business is short term in the short term ups and downs of Covid, because we haven't been very good at it we've been really good.

The trajectory.

But it's impossible to predict what's going to happen in the very short term.

But.

If we continue on the trajectory that Andrew described where bookings went from down 48% in the first weeks down 25%. This week.

Are back on track to be profitable in both in the second third and fourth quarter.

It's probably getting into too fine a point to try to add up.

I guess is what you are asking if I add up the second third and fourth quarter are those a number that's greater than the loss in Q, that's probably too fine a point for me to have confidence in forecasting at this point.

On the Russia point, I'm, not going to speculate on that yet.

Okay.

<unk>.

As the flag carrier for the United States winds up.

Be exposed in a good way exposed to the bad way to geopolitics around the world.

And so we follow them closely and pay attention to them and have a good history of responding when something happens.

But we're like everyone keeping a close eye on the situation in Ukraine, and how it develops.

Okay. Thank you.

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

Hey, good morning.

Just just to be clear are you still reiterating that 9% pretax margin.

CASM ex down four for 'twenty, three and also the 4% to 5% capacity CAGR for next year.

Hey, Hunter, it's Jerry yet.

We are.

Confirming all of that.

Okay got it thank you and then.

Yes, if you think about the premium feature adding.

I think you said it was going to be like 60% or something like that but.

I think most of your top corporates, where tech customers flying to Asia.

You could argue that both tech and Asia are going to be the most likely sort of challenged segments to come back geographically.

Line of business, where were going to call. It how do you square that and just maybe fewer wide bodies.

So forever or is it just more of like a timing issue in your mind.

Hunter Forever is a long time, so I don't think I'm going to agree to forever, but clearly for the foreseeable future.

We anticipate having a smaller.

Footprint across the Pacific.

And those airplanes being redeployed elsewhere, where they can be more productive for the business. So thats going to continue for a while and when things change in Asia will be we'll be ready to bounce back there we have great partners in Asia, particularly in Japan.

Air China, and China So.

We're ready to go when demand returns, but it's difficult to predict.

There is no doubt, we did well in the business class cabin to Asia, but I can tell you that we did we did just did well across the Atlantic and to South America. It's one of our one of our strong suits and so we feel bullish that Asia is definitely going to be.

<unk> for the next few years from the United Airlines capacity perspective.

But we're going to redeploy that cash capacity, where it can be fruitful for the business and truthful in particular in the business class cabin and again as I said earlier, we're seeing smaller widebody jets being used by our primary competitors across the globe.

So that brings in not only less capacity in total but significantly less capacity in the business class cabin.

As you try to square the circle that has many different.

Movements to it what I would tell you is that capacity and demand is all moving and there are plenty of scenarios out there where business traffic across the Atlantic could be less than 100%, but if supply is dramatically less than 100%.

It may it should all work out.

Okay. Thank you.

Thank you. This concludes the Investor reported for Q&A at this time, we will now take questions from the media once again as a reminder, if you have a question. Please tell star one on your phone keypad.

Anybody.

Okay.

Yeah.

And from Wall Street Journal, we have Alison. Please go ahead.

Hi, Thanks, so much.

I'm just curious if youre talking about the issues with the regionals and the pilot shortage there how are you.

Are you thinking about kind of the financial health of all your regional carriers was this something they can all survive or do you anticipate.

Any consolidation or any kind of financial turmoil there.

Allison, It's Andrew I'll, let our regional carrier speak for themselves on their financial situation I, just I can't respond to that.

And I mean, I guess just.

You mentioned not having any trouble hiring pilots at the mainline level, but how about training or are you seeing any kind of logjams are delays in the training process.

Are you seeing any issues in your pipeline for mechanic.

From a training perspective.

We have our flight training center in Denver, Colorado.

I'll, let <unk> speak to it but I think things are really well under control there yeah. We're not we're not seeing any issues with respect to the training process.

And just to emphasize again, certainly not seeing any issues on the hiring side. So we don't anticipate any issues with respect to continue hiring across the board that we need to make in order to stay on plan with our mainline operation.

Thanks.

And from CNBC, we have Leslie Josephs. Please go ahead.

Hi, good morning, everyone.

There are any incentives.

You're having to offer around the country in various workgroups to attract workers and if there are any markets.

Getting.

Higher wages or signing bonuses, where are those and where do you see that trend going throughout the year.

Yes, hi, this spread hard.

We are taking a market by market and certainly we are seeing some parts of the country where.

There is some some more difficulty.

Small pockets for hiring and we're making necessary adjustments in those in those markets, but our our approaches to ticket and just that way, we we determined what needs to be done in this specific market. We're trying to maintain consistency across our organization, but we understand that the different macro and micro economic.

Economic factors at play.

And we're adjusting to those.

At this time I Wouldnt call out specific markets I mean, I think I think we're being impacted in the same way that other employers or both.

Both in our industry and quite frankly across other other industries and that information.

<unk> is pretty readily available.

Okay. Thanks.

And from Bloomberg, we have Justin Bachman. Please go ahead.

Yeah, Hi, Thanks for the time this might be a question for Jerry I'm not sure, but as far as the full year capacity plan I'm wondering if you could discuss a little bit about.

Where where the various buckets of that are coming from in terms of the regional pilot issues.

The various demand issues.

Boeing 707 delays and those sort of things being pushed back.

Could you sort of discuss which areas are contributing to that and in what ways.

So Justin it's Andrew I'll try I am not sure if I completely understand the question there are a number of.

Categories that caused us to be off from the original 5% guidance for 2022. The first one of those is demand.

And the fact that the omicron variant.

It has kind of hit the industry as you know and so we just need it.

Take them back together plan to reflect that and we've done that so when you look at the different categories of what's happening.

I don't have a slide in front of me that has the numbers that I have the slide somewhere that does.

Is that the triple seven.

52, John of aircraft those triple <unk> that are grounded normally represent about 10% of our business in total.

And so they're going to be flying in full force in Q4 this year versus fly in in full force for the first three quarters, that's a big deal.

The second one is we have delayed the return to service of a bunch of narrow bodies that we havent storage I don't I don't have the exact number but I think in Q4. It was in the neighborhood of 50 or so aircraft and in Q1.

Slightly lower than that number, but still a really significant number.

So that's also a big category in terms of the ASM Center isn't.

Third the regional jets, because they are smaller aircraft that fly shortened distances. When we measure those in terms of their impact on the capacity plan is actually quite quite small.

And then beyond that we just have lower utilization again to reflect the demand environment. So those those are three I think.

The larger buckets, unless somebody else or the category I'm missing I think that's how I'd describe that does that does that answer your question.

Yes.

That's kind of what I was hoping to hear about thanks, a lot Andrew.

From USA today, we have dawn Gilbertson. Please go ahead.

Okay.

Hi, Good morning, Andrew I know you'd rather talk about Polaris, but a broad swath of travelers out there.

On a budget and slide basic economy, I'm wondering if you could give an update on.

The trends Youre seeing in basic economy, it's been awhile. Since you released any kind of figures on like what percentage of bookings R&D sick economy, and I'm wondering whether that's changed at all since the pandemic waivers the listed.

And.

There are no longer.

Tangible.

Related to that I Wonder if you guys have any plans like delta did to extend travel credits.

Beyond the current deadline.

Good to hear your voice Don.

I think what I would say is.

Throughout the crisis, the basic percentage of tickets sold has varied significantly at United.

And today, it's somewhere in the high single digits domestically.

During the crisis, it got as low as 4% and before the crisis.

It was well over 20% and so this is this number is moving around based on all kinds of different things.

As a result, it is a as we speak today. It is a much smaller percentage of our ticket sales.

Our domestic system than it has historically been pre crisis.

And I think that's really all I can say in terms of.

The ticket we are evaluating that now and I'll have more to say about that in the future.

But our tickets are currently valid through the end of this year.

So people still have a ton of time out there to buy their credits and burn them on United Airlines.

Thank you very much.

And from TPG, we have David Slotnick. Please go ahead.

Good morning, Thanks for the question.

I have a question about the international.

Announced five new routes I think it was earlier in the fall what kind of bookings are you seeing so far in early tracking with international bookings overall or are they a little bit off from the name.

I'll take that so international bookings across the Atlantic Our FERC travel April and beyond are ahead of 2019 levels and all of our new markets are exactly at their expectations I will say that each new market has a different booking curve.

I ended on where we're going in each of those new markets is running on the booking curve, we expected, but really have not seen the virus or omicron in particular impact our long haul demand across the Atlantic.

At this point for future travel.

Okay. Thanks, and then just a follow up question to the <unk> questions from earlier.

Theres been a handful of regional drafts that have been affected and we've seen that you can say there is a couple of weeks I believe.

Fresh capital that went from <unk> to divert from San Francisco to Reno.

Do you anticipate a continued impact on the network just from the RJ issues.

Okay.

I think theres a lot yet to be determined.

There are.

Modest impact still from the rollout of <unk> theyre not nearly as significant as they were scheduled to be without the agreement that was reached.

But more to come.

It's still very real time, we will work hopefully with the telecom and the FAA through the whole process.

Further reduce the impact.

But.

Don't know the full answer yet.

Thank you, ladies and gentlemen, we will now turn it back to Christina <unk> for closing remarks.

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

Okay. Thank you ladies and gentlemen. This concludes today's conference. Thank you for joining us.

Now disconnect.

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Good morning, and welcome to United Airlines Holdings Earnings Conference call for the fourth quarter and full year 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.

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I will now turn the presentation over to your host for today's call Christina <unk> director of Investor Relations Christina you may begin.

Thank you Brandon good morning, everyone and welcome to <unk> fourth quarter and full year 2021 earnings call yesterday, we issued our earnings release, which is available on our website at IR <unk> com.

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

Forward looking statements are based upon information currently available to accompany a number of factors could cause actual results to differ materially from our current expectations. Please refer to our earnings release Form 10-K .

Q and other reports filed with the FCC by United Airlines.

For a more thorough description of these factors.

Also during the course of our comp we will discuss several non-GAAP measures.

Conciliation of these non-GAAP measures.

Comparable GAAP measures. Please see our credit facilities at the end of <unk>.

Joining us on the call today as a result and outlook are Chief Executive Officer, Scott Kirby President, Brett Hart Executive Vice President and Chief Commercial Officer, and Executive Vice President and Chief Financial Officer, Gary <unk>.

Other members of the executive team on the line available.

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

Thank you Christina and good morning, everyone. Thanks for joining us today.

Before I get into the details of our fourth quarter and how we are thinking about the year ahead I wanted to share. Some brief observations about the recent developments regarding the rollout of <unk>.

Mostly I want to thank the White House Secretary booted yet.

<unk> of AT&T or Verizon for finding and agreeing to an approach that mostly avoided would have been severe disruption to passenger and cargo operations in this country.

This wasn't an issue created by the Airlines every carrier follows the rules dictated by the FAA since we first heard from the FAA about this issue in November United has been 100% engaged to underscore the severe risks with the <unk> rollout posed to aviation, but more importantly to bring people together and drive.

This around comments it solutions.

We don't have a final resolution quite yet.

We will get there. This problem has been resolved collaborative can be has been slow.

All collaboratively, allowing a fulsome rollout of <unk> without significant impact aviation in 40 countries around the world and we can do the same thing here in the United States.

I wish it had happened earlier the good news is we now have everyone engaged.

At the highest level the equipment aircraft manufacturers airlines in the telecom and I'm confident we will soon have a clear set of objective criteria that allow full rollout of <unk> without significant impact to aviation I'll close. This part of my comment by once again thanking the administration and secretary booted yet but.

Also in particular, thank you to the Ceos of AT&T and Verizon for voluntarily agreed to these near term restrictions near major airports with that I'll turn to discussing our results and outlook over the last year, the United team persevered through the impact of Covid, but also made incredible progress laying the foundation for the future.

<unk> has once again impacting the near term.

But as we've done since March 2020, we're taking action on capacity, we remain confident in the long term projections in spite of the near term headwinds for mobile growth, but before we discuss our results and outlook I wanted to take a minute to face and brag about all the people of United accomplished in 2021.

As part of the historic challenges United came together as a team to get through the worst crisis in the history of aviation et cetera ourselves up to be the world's leading airlines on the other side, we saw our NPS improved by 30 points versus 2019 and introduced United next to grow the airline and improve the product for customers, but we also made unique.

<unk> got structural changes to our process and technology, which we believe is going to lead to best in class CASM ex performance. Once we have the full fleet returned to service.

I think perhaps one of the least understood industry changes is that United is expecting to exit 2022 at a CASM ex run rate below 2019, and expectation that sounds very different than most others in the industry. It is a transformational competitive change so while we can't control the exact timing of course of Covid.

We can improve the customer experience and control our costs and that puts us in a completely different competitive position to outperform in the future in the short term. However, we're remaining responsive to the risk posed by the <unk> <unk> is impacting demand in the near term, but the biggest impact.

Fueled surge in Covid cases, we've seen so far was on our people.

Led to a significant disruption in our operational performance over the holidays as tough as this period has been particularly grateful because of our vaccine requirement. We are no longer losing vaccinated employed to COVID-19 and we still don't have any vaccinated employees hospitalized or vaccine requirement is truly save lives.

As we look to the remainder of 2022 <unk> is impacting near term demand and we're reducing our capacity as a result bookings continue to be strong for March and beyond that our base case remains a continued recovery in demand, including international and business jet.

Jerry and Andrew will give you more specifics on what we're changing this year on capacity, but the important point is that we remain confident of the long term.

CASM ex target in future of United We believe certainly hopes that as a company and society. We are moving into the endemic stage of October , but we will continue to manage as we have throughout the crisis and once again this quarter that would be responsive to what actually happened instead of what we hope will happen I'll close by once again thanking the United team.

They've done amazing things since the crisis again.

Laid the foundation for United to be the world's leading airline going forward and now I'll hand, it over to Brett.

Thanks, Scott I'd like to start by thanking our employees for their hard work on the quarter.

On the busiest travel season since the start of the pandemic our team dealt with disruptions from weather events changing international travel requirements and most recently the impact from <unk>.

With omicron impacting both our employees on the rest of the country over the holidays, our team pulled together to serve our customers and we are grateful to them.

Scott mentioned this latest variant.

Caused the delay in the expected recovery and having an impact on bookings in the first quarter. However, we remain confident that travel will rebound quickly as cases subside, we expect a strong summer on second half of 'twenty two.

With our expectations preamble.

Andrew will outline the changes we've made in the near term on capacity in just a moment, we are confident and committed to our 2023 and 2026 financial targets.

With our United next network plans in mind, we look forward to hiring the next generation of United pilots.

Next week, we will host a grand opening of our United Aviate Academy Goodyear, Arizona, We're excited about the role our World Class pilot training facility will play with recruiting and preparing the next generation of United pilots. In fact, we welcomed the inaugural class in December which consists of 30 students.

80% of whom are women where people call it.

In the near term, we're making sure we scale. This is critical to executing our plan as the recovery takes hold.

As difficult as the holidays, where we are returning to a normalized operation we've taken additional steps to ensure the disruptions are minimized for our customers.

Has the management incentives regarding the current labor environment, while we have small pockets of hiring challenges those do not impact our ability to operate the main loan and will not impact.

As the planning for 2022.

We feel confident in our ability to achieve the level of hiring at United that supports the growth. We are planning in the second half of 2022 and beyond.

Despite <unk> recent impact we've achieved the highest ever net promoter score in our history, which is undoubtedly due to the team's service improvements.

And the logical advancements that make flying with us easier than ever.

Full of examples this year more than 760000 customers have benefited from connections.

And the percentage of customers over the misconduct of $1 21 was the lowest since the module.

Clubs in the U S our bag and.

And we are ready for international travel to return as well.

This includes six quarters lounges.

We've made it easier than ever the order onboard with our Paypal QR code also our expanded beer wine and snack offering is now available on all flights over two hours.

Gary will provide greater detail on our 2022 costs, but our 2022 budget incorporates the elevated inflationary pressures seen by the rest of the country fully reflects the labor expense, we expect to incur over the year.

Accordingly changes in our fleet and mix of flying would give us confidence that we will reach CASM ex below 2019 for the fourth quarter of this year.

US on track to achieve our long term cost goals from United next plan.

While the macro environment delayed the recovery, we continue to act on additional initiatives towards our goal of 100% green by eliminating greenhouse gas emissions by 2050.

It is now the largest airline to invest in zero emission hydrogen or electric engines for regional aircraft.

New equity stake in <unk>, a leading company focused on hydrogen electric aviation solutions.

We also announced the second round of corporations.

Corporate participants on our Eco Skies Alliance program.

We believe each of these initiatives among others.

Solidifies <unk> position as the industry leader in sustainability.

With 2021 behind Us we're.

We're responding to the near term volatility with areas of the business we can control.

While continuing to invest in our people and products that we plan for United next plan that will transform the early on in the coming years.

And with that I will now turn it over to Andrew to discuss.

Yes.

Thanks, Brett.

Total revenue for the fourth quarter finished at the high end of our range and down 25% and 23% less capacity versus fourth quarter of 19 <unk> in the quarter finished down two 5% versus the same period.

Were pleased to reach the high end of our Q4 revenue guidance, but the <unk> variant did have around a two point negative impact on <unk> results.

It has delayed the anticipated demand and revenue recovery by a few months prior to upfront we were on track to deliver close to flat unit revenues in the fourth quarter of 2019 versus our fourth quarter versus 2019.

Just as in recent quarters, our cargo operation again delivered a record quarter for United total cargo revenue for the quarter was up 130% in the fourth quarter of 19 and finished the full year at $2 3 billion.

Fourth quarter royalty revenue and other revenue was up 3% in the third versus the fourth quarter and 19% to $518 million.

Now turning to our first quarter outlook.

Bookings and demand for late February and March are largely on track with our expectations, our Amazon disrupted close in leisure demand in January across most regions and cancellations did increase bookings and cancellations are now starting to return to normal bizzell.

Business demand fell sharply in January versus early December given.

Given business demand tends to book closer to the travel we remain optimistic that we'll see a strong rebound as we progressed through the quarter, although thats clearly linked to the virus.

Our revenue projections assume business demand rebound by the end of February to where we were in early December are down approximately 40% versus the same period in 2019.

Leisure demand trends that we have reserved for travel later in the first quarter of 2022 have allowed us to manage our yield quality successfully versus our experience with the delta variant surge as a result, we remain optimistic that omicron impact while significant we will be focused on January and February at this point.

While we can't say, if there will be additional widespread variance in the future. What we can say is that our expectation is that Amazon and each possible future variant of a smaller and smaller impact on our revenue over time as compared to the impact from the Delta variant.

We now expect total revenue in the first quarter of 2020 to be down 20% to 25% versus <unk> 19 with capacity down between 16% and 18%.

We have moderated our capacity plans in Q1, reflecting the anticipated lower demand in the near term as a result, the Amazon.

Lower capacity in Q1, along with a more conservative outlook results in our latest full year 2022 plan, having lower acetate than 2019. This is down from the 5% growth versus 19, we expected back in October .

We've moderated our 2022 capacity by lower aircraft utilization and delay in the return to service of certain claims are grounded Pratt Whitney seven Jets are now expected to fly again, starting in March and then gradually reenter service fully by November .

We've also delay the return of service of certain narrow body jets into the second half of 2022 and lowered the planned utilization levels of our regional jets for the remainder of the year addressing pilot shortages.

These changes typical mainline aircraft leased to do these changes typical mainline aircraft utilization is expected to be well below normal until Q4 of 2022.

The phasing in of this idle capacity, particularly from larger jet and with lower utilization of our JV, we will have a measurable impact in our gauge as the Max and overall ASM for each quarter of 2022, which Jerry will detail shortly.

We also continue to expect that our international long haul flying will enter a strong period of margin improvement versus the last cycle as we enter the second half of 2022 we expect that new capacity to Africa, India, and the Middle East will mostly offset lower capacity to Asia for the foreseeable future.

We continue to watch international demand carefully, but expect to recovery in close in demand post Amazon the booking curve for the Atlantic prove shorter than usual in 2021, and we expect to have a same repeat of performance for 2022.

As of now bookings for the Atlantic for the peak travel season and are on track and we have seen some relaxation and border control Israel in England.

We are working closely with our global partners as we build back our international network and late last year, we announced a great new partnership with Virgin Australia, United is leading U S carrier to Australia, and we believe this partnership will allow us to quickly or more profitably resume our flight schedule.

Australia.

We're on track to create the best onboard product introduced in the United signature Interior. We've now taken delivery of 16, 737, Max Eights, which isn't carrier. We're also making progress on our plan to modify the remainder of our narrow body jets. So that by early 'twenty five the entire mainline fleet will have this consistent spirit look and feel.

Our future fleet will have an increased premium mix with premium seats per departure in North America up 75% by 2020.

It is worth noting that in the fourth quarter of 19, we've already started to produce new records and ancillary revenue generated by seat upgrades by our leisure customers. This trend of selling more premium products. The leisure customers represents a meaningful amount of potential upside.

United next revenue plans and can also help cushion the impact of business traffic in the event it doesn't fully return.

As several of our largest competitors have reduced the size of their business that Kevin by about 10% on global longer, but we expect that to continue and as a result.

There is a structural change that we see in the long haul International service.

Late in 2021.

Pleased to be right. We were pleased to be recognized in the latest Btn survey completed by industry procurement leaders.

These leaders clearly saw and rewarded our efforts to win their business separate and United from the bulk of the industry. We improved in every category and we believe these results signify the hard work, we're putting into women an ever increasing share of their corporate business, which again is import component of our United next plan.

Thanks to the entire United team and with that I'll hand, it off to Gerry to discuss our financial results and outlook.

Thanks, Andrew Good morning, everyone and welcome to our first call as the new year.

While we all would have preferred to be further along in the recovery you will see from our results for 2021 and forecast for this year that we continue to make great progress and are well positioned to achieve our long term goal. We've discussed with you since last June .

Turning to the numbers for the full year 2021, we reported a pre tax loss of $2 6 billion.

And an adjusted pretax loss of $5 8 billion.

For the fourth quarter of 2021, we reported pre tax loss of $845 million and an adjusted pre tax loss of $679 million.

Our CASM X increased 13% on capacity down 23% both versus the fourth quarter of 2019.

CASM ex was within our guidance range for the quarter. It was slightly higher than the midpoint as a result of <unk> related expenses.

Looking to the first quarter of 2022, there are two major factors impacting our CASM ex.

Because the aroma Kron as Andrew mentioned, we are adjusting capacity downward to align with demand consistent with the agile pivoting we've done throughout the crisis.

Secondly, we currently expect that our 52 Pratt powered triple seven will mostly remain grounded through the first quarter. This.

This reduction in flying keeps our aircraft utilization down about 16% in the first quarter versus 2019 and does drive additional cost inefficiencies.

First quarter 2022 capacity expected to be down between 16, and 18% with CASM ex expected to be up between 14, and 15% versus the first quarter of 2019.

The math associated with flying fewer ASM than originally expected together with the added omicron related expense is driving around three points of expected CASM ex pressure in the quarter.

By the fourth quarter of 2022, However, our base case assumption is that we are past omicron, implying a schedule with capacity up around 5% versus fourth quarter 2019.

In this scenario our utilization reached near 2019 level engage up about 16% versus the fourth quarter of 2019 and up 11 points versus the first quarter of this year driven by the return of CASM and friendly Triple seven and the addition of 787 and larger 737 Max.

Aircrafts.

These factors together with the full run rate benefit of our identified $2 $2 billion and structural cost reduction, which we expect to achieve by this summer with driving material change in our CASM ex performance over the course of the year from up 14% to 15% in the first quarter to down around two.

2% in the fourth quarter of this year in each case compared to 2019.

As I mentioned these figures represent our current base case assumptions for our 2022 fine, but as Andrew outlined we are committed to aligning us.

And we will continue to be flexible given the uncertainty around the pace of recovery.

As a result of this uncertainty we expect our CASM ex results for the full year of 2022, good fall anywhere in a range of scenarios.

You may recall in October we set our planned capacity for 2022 would be up around 5% versus 2019.

With CASM ex lower than 2019.

Our outlook on CASM ex remains consistent with this prior outlook, though since we now expect our capacity for the year to be below 2019 level, we must adjust our CASM ex to take into account.

Impact of fixed cost spread over fewer ASM.

To provide some further bookend.

If capacity for the year were about flat to 2019, we expect our CASM ex would be up 2% to 3% versus 2019 in.

For full year 2022 capacity is 5% below 2019, we expect our CASM ex will be up about 5% versus 2019, we believe our results will land between those figures on a full year basis.

Most importantly, we expect CASM ex to improve throughout the year as our gauge on aircraft utilization materially improve in the second half and expect to end the year with CASM ex below 2019 levels as I noted earlier, most importantly, the fourth quarter expected run rate for CASM ex will put us well.

On track for our United next cost planned for 2023 and beyond.

Turning to fleet. We currently expect to take delivery of 53 737, Max aircraft in eight 787 aircraft during the year.

As we noted on our previous earnings call. The 787 aircrafts were originally expected to deliver in the first half of 2021.

We now no longer expect to take the 787 aircraft until after the summer of 2022 contributing to about one five points less capacity versus our original plan.

Given this timing, we now expect our adjusted Capex in 2022 to be around $4 $2 billion plus.

Cost about $1 7 billion of adjusted Capex that moved out of 'twenty, one into 2022 for a total of about $9 billion for the full year to be clear our total adjusted Capex plan for the year is 2021 and 2022 together.

Not changed since June of last year, there has simply been a timing shift driven by aircraft delivery delays.

We continue to expect to use a mix of debt financing leases and cash to fund the acquisition of new aircraft, depending on market conditions are tracking towards our United next leverage target.

Importantly, we have.

Over $20 billion in liquidity, including our Undrawn revolver, a strong cash position, we continue to navigate the remainder of the crisis.

In closing I'd like to thank my finance team as they've worked countless hours over the last two years to create and manage a flexible financial plan in response to a quickly evolving environment.

We will continue to focus on appropriately managing our capacity and rebuilding our business back efficiently.

We've observed that the impact of each variant on our business has decreased with each iteration. We continue to expect COVID-19 to become endemic in the future. We remain confident in our 2023 and 2026, United next financial target and our trajectory to maximize earnings power for the long term.

In the coming years.

And with that I'll pass it back to Christine to start the Q&A.

Thank you Jay we will now take questions from analysts.

Yourself to one question and if needed one follow up question Brandon. Please describe the procedure to ask a question.

Kristina and the question and answer session will be conducted electronically.

I would like to ask a question. Please tell star followed by one on your Touchtone phone.

To be removed from the queue. Please press the pound side or the hedged.

The speaker phone. Please make sure your mute function just turned off to allow your signal to reach our equipment.

Again, if you do have a question. Please tell star one on your phone keypad.

Please hold for a moment, while equally assembler.

Yes.

From MCM partners, we have Conor Cunningham. Please go ahead.

Hey, everyone. Thanks for the time.

When we think about United and the opportunity set.

So how do you.

International to international landscape is clearly what people talk about the masters has the pandemic looks to sputter out.

Just curious on your expectations have changed in terms of pent up demand for international clearly.

Asia is going to be going to take some time, but the European countries right now are starting to quickly use restrictions as cases decline, which is super bullish for the spring and summer demand timeframe. So just curious on how things have changed from a high level.

From your thought process.

Thanks, Scott or Andrew It's a really good question and it's something we strongly believe and based on everything we've seen we've definitely pointed a lot of incremental capacity across the Atlantic for this spring and summer in anticipation of this recovery I can tell you in fact, we're booked ahead from a passenger and revenue.

New perspective on those flights this spring and summer already.

And so we're ready to get client, we do need to get past that latest omicron wave, but we feel really good about the future and more importantly, we kept all of our wide body jets in our fleet, we continue to modify them with the new business class cabins. So we have a consistent product.

Across the range of our aircraft and we operate in the best gateways in the United States Bar. None. So we do believe very strongly that there is tremendous international growth opportunity in front of US. We also believe that there has been significant structural changes.

Smaller business class cabins kind of instrument from the United States and in fact fewer flights many of the larger <unk> hundred <unk> and 730 Sevens have been retired by our competitors and this sets us up incredibly well for the future year.

I have to admit we can't be we're very bullish about the Atlantic in particular and as you stated.

Asia is going to be slower to come back we look forward to coming back in full force, but we have redeployed our planed for the foreseeable future to other regions of the world in anticipation of a slower recovery in Asia. So we think we have that from.

From a revenue.

P&L point of view under control as well, so really bullish about the future when it comes to international growth.

And United is potential in that arena, we think is superior to all of our competition.

Okay, Great and then when.

When you embarked on the mid con strategies and laid out.

Loyalty was what.

It was a huge component of that and no right or wrong I think a lot of investors view airline loyalty is just one big pie. So just curious if you could talk about how new sign ups are maybe unique sign ups have been.

So the loyalty program or credit card or if you have any conversion figures from other airlines that United is seen as the operations improve over the years and so on so thanks. Thanks, Thanks again for the time.

Sure.

Signed up $5 6 million, new mileage plus members this year, which is a record for the airline.

We are really pleased by that and it shows the growth in the priority in the program and people want to be part of that program and be part of the United So we don't think it could be any better in terms of the credit card acquisitions, New accounts, we are up in the second half of this year versus where we were in 2019, so thats gone incredibly well as well so we didn't.

We are really optimistic about those particular numbers.

And in particularly with the new members.

It's just a few years ago, we were doing $2 five to 3 million new members per year and now we're up to five six I think it is a great tribute to United where we apply our brand our customers.

More and more interested in joining the mileage plus program.

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

Hey, good morning, everybody. So the strength in premium leisure is obviously, an important topic, but there is some debate as to its sustainability where consumers permanently craving.

A better flight experience.

Therefore, they will refuse to ever return to the back of the cabin or if it's just a temporary phenomenon driven by pent up demand so to the extent that it is the former.

Are you seeing this elsewhere across the travel ribbon having for example, our club memberships showing commensurate strength, our new card acquisitions skewing to the Infinity card I am just wondering how broad the evidence is supporting the thesis that a large.

Segment of your consumers are truly pursuing a better overall experience.

Well, Jimmy what I, what I think I would say is we're going to need some time to prove that out I think it is.

Debatable, we feel really good about it and the numbers have been incredibly strong.

Our seed product upgrades in this last quarter have never been higher.

And.

And that's even before we begin to transform into the United next fleet, which has more.

Premium seats onboard the aircraft.

Oh really strongly about segmenting, our business and giving people a choice about where they want to sit on the airplane and what experience they want.

The entire travel journey, everybody deserves that choice.

And we're going to do it we're going to do it right in terms of club memberships, what I would tell you is the bulk of our club memberships come through our premium card through the co brand portfolio.

It'll be hard to measure that because we've introduced two new lower tiered card Nir. So the numbers are skewed by our new Gateway card for example.

Yeah.

So it's a little bit more difficult, particularly answer that question right now but.

But we've now seen this for two quarters in a row really strong premium leisure demand.

We see in the first quarter, we'd say the same is true and we also see that in the business class cabin going to and from Europe .

Where the performance there has been good.

And the other thing I will tell you is that.

Well clearly RASM has been down throughout this prices RASM domestically in our premium cabin is almost flat.

Or is the number in total in terms of PRASM. So again, that's a remarkable number as we go through this crisis in terms of premium demand in my opinion.

Well, thank you Andrew as a follow up to that so so a question on pricing it feels like the booking curve for consumers is increasingly similar to what corporate used to look like so consumers are booking closer in but it feels like business travelers are now booking further out.

First is that a fair characterization and two do you think you can still achieve.

<unk> pre COVID-19 corporate yields are sufficient fare fences in place or does a further booking corporate.

Corporate buyer imply lower yields I guess, that's the question.

Some of that's TBD.

Honest, but what I would what I would say is that business dropping is down substantially.

It had it had improved quite a bit as we were in the quarter last year.

And so the booking curves are I think a little bit unreliable.

Where will they be two or three or four months from now. So I think we just have to wait a little bit longer than that and.

Until demand.

Really demand comes back to some level of normalcy across all those channels.

The old calculations is going to be a little bit differently.

What I would say is that particularly with business traffic in total business.

Our total traffic we've seen a remarkable comeback.

Already in week three of the year versus where we were in week one of the year for total bookings and for business bookings.

So we're well on our way and I think.

We're going to see things return to normal from a booking perspective I would hope sometime in mid February and cancellation rates. Early this week are actually already back to.

More or less a 2019 standard.

I think the move dramatically just in the last two and a half III.

Excellent. Thank you for the clarity undertake care.

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

Hey, good morning.

Just curious.

Cargo revenue side.

Pardon Rowan does something better than what you would have expected earlier in 2021.

There seems to be a lot of dedicated freighter capacity coming on so I'm not sure. It is.

Seem to be making up for lost belly space I was curious if you what you expect in terms of cargo revenue trends are for this year and then maybe if there's any kind of structurally something change longer term.

Yes.

Sure I'll try to take that I think what we're seeing is there's been a disruption in supply chains around the globe.

And to the use of air freight has increased or the need for it is increase relative to the amount of capacity available and thats caused yields to go up as we look into Q1.

I think those trends are pretty similar.

And in fact, we expect our Q1 performance this year to be in excess of our Q1 performance last year, but it's still early in the quarter, obviously driven by the strong yields.

So.

And if you talk to our cargo team. They would tell you that the supply chain disruptions. The backups at the Port These things look likely to continue to some degree for the foreseeable future as we head into 2022. So we're optimistic that cargo is going to have another great year and kudos to our entire.

Entire cargo team.

The numbers, we're putting up relative to our competition are just staggering.

Yeah.

Good morning.

Along the lines of kind of a something changing near term.

The cuts too.

Key service and kind of some of the small markets.

Markets is a big push for United not long ago, you see a disconnect issue resolving itself you get into 2023 or something or is there is there kind of a need to change strategy here at least when it comes to the regional operation a small market operation.

Sure I'll try to take that I'm, taking all the questions here I need to hand out of his questions my colleagues, but.

First of all I would I would say is that as we can.

Takeaway service from small communities, we're disappointed to do that we know the impact on these communities.

And we alert them ahead of time and.

We know, it's a big deal and we've already cut service to 20 communities.

In the United States and.

In the last few months again, we know Thats, a really big deal.

We are facing a pilot shortage on our regional aircraft not on our mainline aircraft.

And we expect that pilot shortage to continue for a while.

<unk> for the rest of 2022.

But that's kind of where we are in terms of.

Our business plan, when we talked about the United next business plan.

Just about seven months ago, we had already recognize these trends we had already planned to reduce the number of RJ is in our fleet and what's happening is an acceleration of this plan, but from a revenue perspective.

This has all been accounted for and unfortunately from our internal plan in perspective, what we're seeing on the RJ pilot shortages and acceleration.

And what happens to the communities we serve is an acceleration.

But it is not unexpected for what we're really going to deal with over the next year or two.

Okay. That's super helpful. Thank you.

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

Hey, good morning, guys. Thanks for taking the time Gerry I wanted to I was wondering if you could help us think about kind of the exit rate of CASM. It sounds like it's going to be much better than the start of the year because of some gauge increases.

Can you talk about sequentially, how gauges, increasing and kind of that whats a good foundation on which to start building out.

Our CASM outlook for 2023, because I know, there's there's the growth we're getting sequentially on the volume recovery just trying to separate out how much of that is not sort of volume dependent how much of that is coming out of gauge.

Yeah.

So good question and we've been clear since last June that.

One of the benefits that's really in summary is unique to United with a United next plan is the increase engaged we've been under gauged.

On the mainline and the Max order, particularly when the Max 10 Historic next year.

<unk> help solve that problem.

So we will provide going into next year additional color on gauge.

This year just from the first core quarter to the fourth quarter, we expect.

Kind of a 11% improvement engage.

And then more going into next year, but we'll continue to give you those numbers, but as we've been saying for the last six months.

One of the great.

The advantages, we have and one of the reasons why we're so comfortable with our CASM guidance for next year is that as we've said, it's just math.

Yes, so social.

Sequentially as we go through the quarters is there an inflection point when that gets really kind of pops up tied to deliveries or reschedule of change, yes. So two things one.

On the Triple seven.

Start impacting us until the second quarter.

And then the $8 780 sevens, which are still hanging out there.

That'll be a second half as well as the.

<unk>.

53 <unk>.

Effectively all in the second half of the vast majority in the second half of the year. So there is a huge difference.

Between the first half and second half on gauge.

Alright, that's super helpful. Thank you and then one last one for me the other Opex line kind of bumped up sequentially $225 million a quarter for the last few quarters or we don't budget level of around one four per quarter for that other opex line or how should we be thinking about that number we're getting to 80, 85% of <unk>.

19 levels of cost on that line and I'm, just wondering if theres structural takeout I would assume some of it's in there.

What absolute number for that other Opex line should we be looking at for 2022.

Quarter.

Yeah.

Okay.

Yes, I think we've hit.

About the right runway run rate within a couple of hundred million dollars.

Okay.

Thanks, a lot for the time guys.

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

Thanks, very much operator, hi, everybody. Thank you very much for at that time.

Oil prices have gone up over $85 and I know theres going to be a lot of fuel efficiency with the newer aircraft that are coming in but how should we think about the way youre thinking about fuel.

The pricing and.

Lag between the two.

Sure Helane.

I'll start.

Additionally, I think we've gotten to the point, we were at a high degree of confidence that.

Fuel is a pass through.

<unk>.

I've said that many times in the past and I continue to believe that.

During the crisis with the supply demand equation quite balanced I think that that has got out of balance that as we look into it.

In Q2 and beyond based on what we think some happening to demand.

And where we see supply hopefully those relationships go back into place and we will continue to make agile decisions on utilization of the fleet, even with the price of fuel is like we always have done in the past.

So I feel like we need a little bit more time to prove back that the equation is still valid.

But we're well on our way.

Okay and then my other question is I don't.

Know how to think about that.

I know Asia traffic is not coming back anytime soon but there was a lot of cargo that you can do in that market. So it makes sense to have capacity there.

But when you think about what the Chinese are doing.

I mean I feel like they are in violation of the bilateral agreements have been signed.

And I'm kind of wondering if after if part of what Theyre doing and not allowing you your full complement of flight.

Yeah.

Has to do with the Olympics versus.

Yes.

Them being.

Difficult with quarantine rules and so on so.

So that as you think about rebuilding Asia, China is not on the list of countries beyond maybe one or two cities and you think about like the rest of southeast Asia.

So not sure who should answer that.

Well I'll start and then let Andrew talk about our specific plans.

What I'd say is on the Asia restrictive.

Governments around the world are all doing their best to manage Covid.

As restrictions are constantly changing they've had a different set of standards in China different approach than some of the western.

I don't think theres anything bigger to read into it other than different countries are all feeling their way in an uncertain environment. So I wouldn't read any kind of macro GOP.

Geopolitical.

Questions into it and then I'll turn it back to Andrew to talk about sort of what are plans for aircraft and timing.

Thank you.

The only thing I would add is that we recognize that Asia seems to be we'll have a slower recovery and we have moved those aircrafts elsewhere in the world.

We believe theyre going to be really productive, where we've moved them to and.

And we look forward to resuming our full schedule to Japan and China.

Point in the future when we can.

Okay, well, thank you very much.

From Evercore ISI, we have Duane <unk>. Please go ahead.

Hey, thanks, so much good morning.

I wanted to ask you a couple of questions one just on.

Change ability, which is which is probably where.

The industry was headed.

Anyway, and you can refresh our recollection there but.

Obviously, we're in a weird time still it's improving but it's a weird time.

But there is an impact on.

Operations, and perhaps call center resources and things of that sort with respect to changeability. So.

Are you guys thinking at all about that kind of over the intermediate term again in a more normal demand environment is.

As some of the pure kind of frictionless changeability, maybe too much of a strain to support.

Well I think the way I would describe that as we've made a number of changes.

As we've dealt with this crisis, including the elimination of change fees themselves.

And that we think was the right thing to do we should have done years ago quite frankly, we wish we had done it years ago, and so we don't think thats going to change.

Or at least we United we are where we are and we've adjusted our resources to make sure. We can deal with that our customers now have the ability to make more changes than they did in the past and are doing so.

We're pleased to let that happen and we think it's a great feature for us and.

Can help us with our relative competitive stance versus other carriers in the country, which again, we needed to do long ago, It's about time, and where we are fully committed to it.

I appreciate those thoughts I wondered if there wasn't maybe.

Fair category or something like that not that you'd tell me now in advance, but maybe a fair category, where it didn't make sense.

And then just a follow up too.

Sami's question on the regional constraints.

Do you have any anecdotes I mean, some markets are going to be no longer.

Addressable, but do you have any anecdotes or markets that you've maintained where you've sort of swapped it out does it does it by default imply lower frequency or does.

Does it push you into some new markets. If you could just talk about that more broadly maybe from a from a network perspective.

I don't think it pushes us into new markets, but as we've classified this there are places that have fewer flights and there are unfortunately places that have no flight.

We continue to adjust the formula again for the most part we anticipated this big.

Big difference here is this is occurring at a faster pace than maybe we anticipated six months to nine months ago associates accelerating our United next plan and.

And where we are going to go to but there will be a communities that unfortunately don't have United serviced in the future and there will be communities that have fewer flights and there will be communities that are pure play to a bigger aircraft.

And that's kind of the outlook, we don't again I said it a few minutes ago.

We don't expect this to really materially improve in 2022.

And we'll see where we go in 2023.

Thanks, so much.

From Jefferies, We have Sheila <unk>. Please go ahead.

Good morning, everyone. Thanks for the time, maybe if we could think about your United next targets I know they're far out.

But how do we think about the inflationary expectations, you're baking into those targets.

What's changed over the past six months.

Okay.

Well, Sheila it's fair to say that over the last six months we've seen.

More inflationary pressure and we might expect a year ago.

That's incorporated.

And our numbers and our guidance for this year.

For next year.

So we've taken that into account and in terms of where we're seeing those inflationary pressures. We're no different I think than than anyone out clearly on the vendor side airport vendors, we are seeing that.

Okay.

Their suppliers like everybody else when you go to the supermarket youre seeing higher food prices, we're seeing higher fruit, but we're managing through all that and I can tell you.

That.

Right.

It becomes too expensive, we always have chicken.

Okay.

Thank you.

From Goldman Sachs, We have Catherine O'brien. Please go ahead.

Hey, everyone. Good morning, Thanks for the time.

So I know there are a range of outcomes on your capacity for this year, that's going to be based on demand, but should we still be thinking about international being the bigger driver as you get back to growth mode. Later this year. So like if we end up with flat capacity, which is wondering if again should we expect domestic to be down underlying that.

Okay.

Yeah.

I will say the plans are still agile we are going to fly less international than we expected to just a few months ago. We're also going to fly less domestic whether in the 100% proportion to each other I think it's just too early to tell.

So I'm going to refrain from giving you an exact answer to that question.

Okay got it fair enough.

And then just on the forward demand outlook I don't want to read too much into here, where it says I think in the release you said, you're optimistic about spring and excited about summer.

Should we read this as youre seeing bookings come in stronger than what Youre seeing for spring of those consumers are just more optimistic about.

Covid at the time, we get to the summer or are just would love to hear kind of like how the bookings are looking right now maybe over the next four five months based on what you've got on the books today. Thanks, so much.

Sure I'll give it a try what.

The first thing I'll say is that when the omicron spike happened.

What really happened was cancellations peaked particularly for close in travel.

And net bookings.

Declined as a result of that the total bookings also declined as a result of that but all of that impact was really felt close in and not far out and so we're continuing to book March for example, normally throughout the entire omicron process, including from the perspective of our yields to be blunt.

And that continues all the way beyond March all the way through the summer where for example, we look at the Atlantic more booked ahead from a passenger count and we are booked ahead from a revenue perspective, which means our PRASM is obviously positive.

In the future quarters for the Atlantic.

All of that is really good with omicron did has caused the spike in near term cancellations and reduction in near term bookings, particularly for business travel.

And what I can tell you over the last few weeks, we've already seen that start to come back into line. For example in week, one we were down 48% versus 20.

2019 for total bookings in week two of this year were down 40% and now in week three week to date, we're down 25% and so we are seeing this really come back pretty quickly and the second point as I said earlier, our cancellations are also now coming back into the <unk>.

Normalcy. So this really again, there's a hole in January that we can.

Can't fill.

It's just too close in and Theres a bit of a hole in February as well, but March look normal at this point and definitely beyond that based on these trends and again bookings are coming back.

Really quickly hopefully we will be back to somewhat of a normal stance or at least where we were in the <unk>.

Middle of the Q4 quarter.

Sometime by the Middle of February .

Okay great.

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

Hey, thanks, everyone.

Here one can you just refresh us on your hiring plans for 2022, more specifically number of pilots and mechanics.

And how is the ramp is it spread throughout the year is it front end loaded. Thank you.

Hi, Mike.

Hey, Brian .

Okay.

First I'll say on that.

Back half of this year.

Were really successful in.

Meeting or a lot of our hiring goals.

Obviously.

We think we'll have no issues in particular on the mainline.

Next year meeting those goals in terms of pilots for instance.

Next half of this year.

We hired approximately 1200 pilots. So we think that that trend will continue in the next year overall numbers for next year.

We expect.

To be in line with our needs, but we havent put out specific numbers at this point in time.

Okay, great. Thanks, Bryan and then just quickly Andrew.

I saw the guidance through the <unk>.

Please the March quarter revenue sort of what you were guiding to relative to others. It was good it looked more favorable.

Given that the March quarter, historically has been seasonally much more challenging for you than your competitors is that reflect.

Network changes over the last year is it is it cargo driving a bigger piece ancillary all of the bonds.

Really really curious what.

Allowing you to kind of catch up in at least narrow the gap with competition. Thank you.

Thanks, Mike I will say that improving our relative results in Q1 has been one of our long term goals for many many years, obviously theres a lot going on a lot of moving pieces in Q1 of this year.

But all of those factors you just said and all of us here at United and working together.

Move these things around has has made has made an impact.

<unk> really.

I wish the Q1 guidance can be dramatically higher but we are where we are but I think we're on the right path.

For long term and we're particularly we're on the right path for making our Q1 results less of a gap to our competitors and that of course will overall help us close margin gaps in the future because we do pretty well in Q2 or Q2 and Q3, given our global long haul nature in our east West nature here domestically.

Great. Thank you.

From Bank of America, we have Andrew <unk>. Please go ahead.

Hey, good morning, everyone just kind of wanted to go back to the regional pilot issue limited sales escalate a little bit of a different question.

The regionals are have are experiencing power shortages.

Do you expect this to eventually could this potentially creep into your mainline hiring plans, particularly given the.

The growth that you guys have ahead of you and if it did creep its way and would that be a risk to some of your longer term CASM target.

Maybe I'll give it a try at this point, we've had absolutely no trouble iron for United mainline pilot jobs.

And the second point is as we are working very hard.

To make sure that the supply of pilots coming into this great business increases and given where salaries are the courier potential we're confident that's going to happen and of course, one of the things we've done which is highlighted a lot is our aviate Academy.

Point, we haven't seen any impact to our mainline hiring abilities.

I guess as a follow up to that why do you think is it easier to hire until mainline them into the regional or is it just.

Basically pay scales. So just curious what the split that disconnected.

I wouldn't.

I'll take a shot at it Andrew.

You've done a great job call by the way I appreciate it.

I want you to take a shot at it.

Look I think I think that's an important point.

The difference for us at the mainline is that United we create careers there not just jobs.

Our our average.

Slide attended.

Ramp worker date agents.

Back in May.

In a normal year.

Let's say you're at the top of the seniority scale could hear you.

Contract makes a six digit income can make a fixed income with great benefit. It's one of the few jobs.

Places that their jobs left.

Where you can support a family.

Kids to college and have great benefits that have security and and I think at the end of the day. That's the reason that we can hire at the mainline is because we create careers where people can spend their whole career here.

Just as I was just.

What's the hourly rate today.

Okay.

Okay. Thanks, Scott.

From UBS, we have Myles Walton. Please go ahead.

Thanks, I think there is a comment.

I know Scott on <unk> second quarter, Youre targeting profitable or hope to be profitable and I'm. Just curious do you think for the full year.

Line of sight for pre tax profitability.

Then maybe Scott why youre answering that if youre answering them.

One of the first things that that Russia did has done in previous instances with responsive sanctions has shut down their aerospace.

You got some limited.

Capacity going to Asia at this point, so maybe it's not that big a deal but relative to your plan for 'twenty, two how disruptive would that be thanks.

Yeah.

So on the first question.

Tried at least on CNBC to say are we're trying to get out of the business are short term in the short term ups and downs of Covid, because we haven't been very good at it we've been really good at that trajectory.

But it's impossible to predict what's going to happen in the very short term.

But.

If we continue on the trajectory that Andrew described where bookings went from down 48% in the first weeks down 25%. This week.

Are back on track to be profitable in both in the second third and fourth quarter.

It's probably getting into too fine a point to try to add up.

I guess is what you are asking if I add up the second third and fourth quarter are those a number that's greater than the loss in <unk>, that's probably too fine a point for me to have confidence in forecasting at this point.

On the Russia point, I'm, not going to speculate on that yes.

Okay.

<unk>.

As the flag carrier for the United States winds up.

Be exposed in a good way exposed to the bad way to geopolitics around the world.

And so we follow them closely and pay attention to them and have a good history of responding when something happens.

But we're like everyone keeping a close eye on the situation in Ukraine, and how it develops.

Okay. Thank you.

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

Hey, good morning.

Just just to be clear are you still reiterating and 9% pretax margin.

CASM ex down four for 'twenty, three and also the 4% to 5% capacity Yeager for next year.

Hey, Hunter, it's Jerry yes.

Sure.

Confirming all of that.

Okay got it thank you and then.

Yes, if you think about the premium feature adding.

I think you said it was going to be like 60% or something like that but I.

I think most of your top corporates, where tech customers flying to Asia.

You could argue that both tech and Asia are going to be the most likely sort of challenged segments to come back geographically.

Climate business, where were going to call. It how do you square that and just maybe fewer wide bodies at SFO forever or is it just more of like a timing issue in your mind.

Hunter Forever is a long time, so I don't think I'm going to agree to forever.

<unk> for the foreseeable future.

We anticipate having a smaller.

Footprint across the Pacific.

And those airplanes being redeployed elsewhere, where they can be more productive for the business. So thats going to continue.

And when things change in Asia will be we'll be ready to bounce back there we have great partners in Asia, particularly in Japan and Eric.

Air China, and China, So we're ready to go when demand returns, but it's difficult to predict.

There is no doubt, we did well in the business class cabin to Asia, but I can tell you that we did we did just as well across the Atlantic and to South America. Yeah. It's one of our one of our strong suits and so we feel bullish that Asia is definitely going to be.

<unk> for the next few years from the United Airlines capacity perspective.

But we're going to redeploy that cash capacity, where it can be fruitful for the business and fruitful in particular in the business class cabin and again as I said earlier, we're seeing smaller widebody jets being used by our primary competitors across the globe.

So that brings in not only less capacity in total but significantly less capacity in the business class cabin.

As you try to square the circle that has many different.

It may it should all work out.

Okay. Thank you.

Thank you and this concludes the Investor report of our Q&A at this time, we will now take questions from the media once again as a reminder, if you have a question. Please tell star one on your phone keypad.

Anybody.

Okay.

Yeah.

And from Wall Street Journal, we have Alison. Please go ahead.

Hi, Thanks, so much.

I'm just curious if youre talking about the issues with the regionals and pilot shortage. There how are you.

Are you thinking about kind of the financial health of all your regional carriers was this something they can all survive or do you anticipate.

Any consolidation or any kind of a financial turmoil there.

The aggregate Allison, it's Andrew I'll, let our regional carriers speak for themselves on their financial situation and I, just I can't respond to that.

And then I guess just.

You've mentioned from not having any trouble hiring pilots at the mainline level, but how about training or are you seeing any kind of lives Andrew or delays in the training process.

Or are you seeing any issues on your pipeline for mechanic.

From a training perspective.

We have our flight training center in Denver, Colorado.

I'll, let <unk> speak to it but I think things are really well under control there yeah. We're not we're not seeing any issues with respect to the trading process.

And just to emphasize again, we're certainly not seeing any issues on the hiring side. So we don't anticipate any issues with respect to hearing across the board that we need to make in order to stay on plan with our mainline operation.

Okay.

And from CNBC, we have Leslie Josephs. Please go ahead.

Hi, good morning, everyone.

There are any incentives.

You're having to offer around the country in various workgroups to attract workers and if there were any markets that are getting higher.

Higher wages or signing bonuses, where are those and where do you see that trend going throughout the year.

Yes, Hi, this is spread hard.

We are taking a market by market and certainly we are seeing some parts of the country where.

There is some some more difficulty.

Small pockets for hiring and we're making necessary adjustments in those in those markets, but our our approaches to ticket and just that way, we we determined what needs to be done in this specific market, we try to maintain consistency across our organization, but we understand it very different macro and micro.

Economic factors at play.

And we're adjusting to those.

At this time I Wouldnt call out specific markets I mean, I think I think we're being impacted in the same way that other employers or.

Both in our industry and quite frankly across other other industries and that that information.

<unk> is pretty readily available.

Okay. Thanks.

And from Bloomberg, we have Justin Bachman. Please go ahead.

Yes, hi, thanks for the time this might be a question for Jerry I'm not sure, but as far as the full year capacity plan I'm wondering if you could discuss a little bit about.

Where where the various buckets of that are coming from in terms of the regional pilot issues.

Demand issues.

Boeing 707 delays and those sort of things being pushed back.

Could you sort of discuss which areas are contributing to that and in what ways.

So Justin it's Andrew I'll try I am not sure if I completely understand the question there are a number of.

Categories that caused us to be off from the original 5% guidance for 2022. The first one of those is demand.

And the fact that the <unk> variant that has kind of hit the industry as you know and so we just we need it.

It takes them that they have the plan to reflect that and we've done that so when you look at the different categories what's happening.

I don't have a slide in front of me that has the numbers that I have the slide somewhere that does.

Is that the triple Sevens.

52, <unk> aircraft those triple seven that are grounded normally represent about 10% of our business in total.

And so they're going to be flying in full force in Q4 this year versus flying in full force for the first three quarters, that's a big deal.

Slightly lower than that number, but still a really significant number.

So that's also a big category in terms of the ASM services third.

Our regional jets, because they are smaller aircraft that fly shortened distances. When we measure those in terms of ASM their impact on the <unk>.

The plan is actually quite quite small.

And then beyond that we just have lower utilization again to reflect the demand environment. So those those are three I think the larger buckets unless somebody else or the category I'm missing I think thats, how I'd describe that does that does that answer your question yes.

Yes.

Kind of what I was hoping to hear about thanks, a lot Andrew.

From USA today, we have dawn Gilbertson. Please go ahead.

Okay.

Hi, Good morning, Andrew I know you'd rather talk about Polaris, a broad swath of travelers out there.

On a budget and fly basic economy I'm wondering if you could give an update on the.

The trends Youre seeing in basic economy, it's been a while since you released any figures on like what percentage of bookings R&D sick economy, and I'm wondering whether that's changed at all since the pandemic waivers lifted.

<unk>.

We're no longer.

Tangible.

And related to that I Wonder if you guys have any plans like delta did to extend travel credits.

Beyond the current deadline. Thank you.

Good to hear your voice Don.

<unk>.

I think what I would say is.

Throughout the crisis, the basic percentage of tickets sold has varied significantly at United.

And today, it's somewhere in the high single digits domestically.

During the crisis, it got as low as 4% and before the crisis. It was well over 20% and so this is this number is moving around based on all kinds of different things.

As a result, it is a as we speak today. It is a much smaller percentage of our ticket sales.

Our domestic system than it has historically been pre crisis.

And I think that's really all I can say in terms of.

The ticket.

Evaluating that now and I'll have more to say about that in the future.

But our tickets are currently valid through the end of this year.

So people still have a ton of time out there to buy their credits and burn them on United Airlines.

Thank you very much.

And from TPG, we have David Slotnick. Please go ahead.

Good morning, Thanks for the question.

I have a question about the international.

Announced five new routes I think it was earlier in the fall.

Kind of bookings are you seeing so far in early tracking with international bookings overall or are they a little bit off from the name.

On where we're going in each of those new markets is running on the booking curve, we expected, but really have not seen the virus or omicron in particular impact or a long haul demand across the Atlantic.

At this point for future travel.

Okay. Thanks, and then just a follow up question to the <unk> questions from earlier.

There have been a handful of regional drafts that have been affected and we've seen that even today.

A couple of weeks I believe.

Expressjet that went from that to divert from San Francisco to Reno.

Do you anticipate a continued impact on the network just from the RJ issues.

Okay.

I think theres a lot yet to be determined there are.

Modest impact from the rollout of <unk>, they are not nearly as significant as.

They were scheduled to be without the agreement that was reached.

But more to come.

Still very real time, we will work hopefully with the telecoms in the FAA through the whole process.

To reduce the impact.

But.

Don't know the full answer yet.

Thank you, ladies and gentlemen, we will now turn it back to Christina <unk> for closing remarks.

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

Okay. Thank you ladies and gentlemen. This concludes today's conference. Thank you for joining.

You may now disconnect.

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