Q4 2023 United Airlines Holdings Inc Earnings Call

January 23, 2024

Thank you.

Okay.

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Sure.

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Please stand by while I connect the call.

Please standby, while I can ask nichol.

Okay.

Christina Edwards: Good morning, and welcome to United Airlines Holdings Earning Conference Call for the fourth quarter 2023 and full year 2023. My name is Tegan, and I'll be your conference facilitator today. Following the initial remarks from management, we will open the lines for questions. At that time, you may dial pound two on your telephone keypad to enter the question queue. You'll hear a notification when your line is unmuted, at which point please then state your name, the company you represent, and your question. This call is being recorded and is copyrighted. Please note that no portion of the call may be recorded, transcribed, or rebroadcast without the company's permission. Your participation implies your consent to our recording of the 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 Edwards, Managing Director of Investor Relations. Please go ahead.

Good morning, and welcome to United Airlines Holdings, earning conference call for the fourth quarter 'twenty, two 'twenty three and full year 'twenty twenty-three my name is chicken and I'll be your conference facilitator today. Following the initial remarks from management, we will open the lines for questions at that time.

Chicken: You may dial Poland two on your telephone keypad to enter the question queue, you'll hear notification when your line is muted at which point. Please state your name. The company you represent and your question. 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.

Chicken: Participation implies your consent to our recording of the 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 Edwards managing director of Investor Relations. Please go ahead.

Christina Edwards: Thank you Ian good morning, everyone and welcome to United <unk> fourth quarter and full year 2023 earnings Conference call yesterday, we issued our earnings release, which is available on our website at IR Dot net.

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

Information in yesterday's release.

Christina Edwards: During this conference call may contain forward looking statements, which represent the company's current expectations or beliefs concerning future events and financial performance.

Christina Edwards: 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 108010Q and other reports filed with the SEC by United Airlines Building and United Airlines for a more thorough description of these factors. Unless otherwise noted, we will be discussing our financial metrics on a non-GAAP basis on this call. Please refer to the related definitions and reconciliations in our press

Christina Edwards: Forward looking statements are based on 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. Thank you other reports filed with the SEC by United Airlines.

Christina Edwards: And airlines for a more thorough description of these factors.

Christina Edwards: Unless otherwise noted.

Christina Edwards: We will be discussing our financial metrics on a non-GAAP basis on this call. Please refer to the related definitions and reconciliations in our press release.

Christina Edwards: For reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to the tables at the end of our earnings release. Joining us on the call today to discuss our results and outlook are Chief Executive Officer Scott Kirby, President Brett Hart, Executive Vice President and Chief Commercial Officer Andrew Nassel, and Executive Vice President and Chief Financial Officer Mike Luskin. In addition, we have other members of the executive team on the line available to assist this Q&A. Now, I'd like to turn the call over to Scott. Thank you, Christina. And good morning to everyone on the call today. Despite numerous geopolitical and other headwinds around the globe, 2023 really was the year that our plan for United Next came together.

Christina Edwards: A reconciliation of these non-GAAP measures the most directly comparable GAAP measures. Please refer to the tables at the end of our earnings release.

Christina Edwards: Many of us on the call today to discuss our results and outlook are Chief Executive Officer, Scott Kirby President, Brett Hart Executive Vice President and Chief Commercial Officer, Andrew Nocella, and Executive Vice President and Chief Financial Officer, Mike.

Christina Edwards: In addition, we have other members of the <unk>.

Christina Edwards: On the line available for Q&A now I'd like to turn the call are Scott. Thank you Christina and good morning to everyone on the call.

Scott Kirby: Despite numerous geopolitical and other headwinds around the globe 2043 really was the year that our plan for United that came together.

Scott Kirby: Our thesis at this time last year was that operational constraints and other factors were leading to cost convergence, and those cost pressures in turn would lead to higher revenues. That is certainly true for United, because our diversified revenue streams continue to differentiate us from other airlines. Another way of saying that is that we believe that a new link between United's CASM and RASM was being solidified. And while it might be hard to get either a CASM or RASM forecast exactly correct, we could have higher confidence in forecasting the relationship between the two, and therefore have higher confidence in our earnings and margin forecasts. And despite a year filled with events that we could have never predicted, that's exactly what happened in 2023. And so I'd like to thank the 100,000 United team members around the world who worked so hard to make that happen. And those same 100,000 people continue to deliver in the face of the huge impact on our employees and customers from the MAX 9 graph. I'm proud of our tech ops team who's taken the lead and has been working 18-hour days nonstop since January 6th, to ensure that the MAX 9 is 100% safe before we return it to service. I'd also like to thank the FAA for their professional leadership in this situation, and also acknowledge that they too are also working long hours and weekends with us in an effort to ensure that we know for sure what happens, so that we'd be confident that the remediation prevents it from ever happening again.

Scott Kirby: Our thesis at this time last year with the operational constraints other factors leading to cost conversion and those cost pressures in turn will lead to higher revenues that is certainly true for United as our diversified revenue streams continue to differentiate us from other airlines another way of saying that is that we believe the newly <unk> CASM and RASM.

Scott Kirby: But while it might be hard to get either a CASM RASM forecast exactly correct, we could have higher confidence in forecasting the relationship between the two and therefore have higher confidence in our earnings margin forecast and despite a year filled with events that we could have never predicted that's exactly what happened in 2023, and so I'd like to thank you.

Scott Kirby: 100000 team.

Scott Kirby: Team members around the world at work, so hard to make that happen.

Scott Kirby: 100000 people continued to deliver on the base and the huge impact on our employees and customers on the Max nine Greg.

Scott Kirby: Our tech honesty is taking the lead and Thats been working 18 hour days does stock since January.

Scott Kirby: Sure that the Max.

Scott Kirby: Hundred percent before we returning to service I'd also like to thank you.

Scott Kirby: For their professional leadership situation also acknowledged that they too are also working long hours and weekends with us in an effort to ensure that we know for sure what happened.

Scott Kirby: So we'd be confident that the remediation prevents it from ever happening again.

Scott Kirby: 2023 really sets the stage for what is likely to be a repeat in 2029. Financial performance is impressive, especially if you consider what analysts were expecting just one year ago. In 2023, we delivered full-year earnings per share above $10, which was in 2019.

Scott Kirby: Three really sets the stage for what is likely to be a repeat in 2020.

Speaker Change: Got it.

Speaker Change: This is impressive, especially considering the analysts were expecting just one year ago.

Speaker Change: Three we delivered full year earnings per share above $10.

Scott Kirby: within the range of our initial United Next targets of 10 to 12. I want to spend some time today examining how we got there and why we think those trends will persist in 2022.

Speaker Change: So within the range of our initial target of 10 to 12.

Tegan: Please stand by while I connect the call. Good morning, and welcome to United Airlines Holdings' earnings conference call for the fourth quarter 2023 and full year 2023. My name is Tegan, and I'll be your conference facilitator today. Following the initial remarks from management, we will open the lines for questions. At that time, you may dial pound two on your telephone keypad to enter the question queue. You'll hear a notification when your line is unmuted, at which point, please state your name, the company you represent, and your question. This call is being recorded and is copyrighted.

Speaker Change: Wanted to spend some time today examining how we got there and why we think those trends will persist in 2024.

Scott Kirby: One, we expected the operating environment to be challenging, driven by the pilot and other hiring constraints, FAA air traffic control steps, maintenance catch-up, and supply chain issues. It turned out to be even more challenging than we thought. Two, and those operating environment challenges led directly to industry capacity plans, including our own, coming down three points on average that carriers adapted to the new operating environment. Four, for United, we made changes to our schedule, and we closed out the year setting operational records. The improvements in Newark, in particular, are one of the most important accomplishments that we achieved last year. Brett will share more detail in just a moment, but the FAA waivers right-sided the airport and airspace to physical constraints that allowed us to run an operation that's performing better than ever in Newark. That's been good for our business, and it's been really good for our customers.

Speaker Change: We expect that the operating environment to be challenging driven by the pilot and other hiring constrained FAA air traffic controls that maintenance catch up and supply chain issues. It turned out to be even more challenging than we thought.

Speaker Change: And those operating environment talent led directly to industry capacity plans, including their own coming down three points on average that carriers adapted to the new operating environment.

Speaker Change: We made changes to our schedule and we closed out the year setting operational records the improvement in Newark in particular, one of the most important accomplishments that we achieved last year.

Speaker Change: I will share more detail in just a moment, but the FAA wafers right size.

Aerospace two physical constraint that allowed us to run an operation performing better than ever convert.

Tegan: Please note that no portion of the call may be recorded, transcribed, or rebroadcast without the company's permission. Your participation implies your consent to our recording of the 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 Edwards, Managing Director of Investor Relations. Please go ahead.

<unk> been good for our business has been really good for our customers.

Scott Kirby: Three, but as we predict, the challenging operating environment led to cost pressures and cost conversions in the industry. To be fair, even we at United underestimated the inflationary pressures that we would face, primarily from labor, maintenance, and supply chain issues. And that led to higher absolute chasm X than we were forecasting. But those same cost pressures are being felt across the entire industry. And a year ago when we talked, we believed the industry-wide cost pressures would wind up as a pass-through, much like fuel has been in the past. Four, and that is, in fact, exactly what happened. While industry cost pressures drove higher chasm X in United, we offset those higher-than-expected costs with higher-than-expected revenues. Five, which leads to the final point. While difficult to predict events like the fuel price spike, rising conflict in the Middle East, fires in Maui, persistent inflationary pressure, and so many other things,

Speaker Change: But as we predict the challenging operating environment, where the cost pressures and cost conversion in the industry.

Speaker Change: The bear even.

Speaker Change: Underestimated the inflationary pressures that we would face primarily labor maintenance and supply chain issues that led to higher absolute CASM that we report yet.

Speaker Change: At the same cost pressures are being felt across the entire industry and a year ago. When we thought we believe industry wide cost pressures or wind up as a pass through but I think people have been in the past.

Speaker Change: And that isn't exactly what happened while industry cost pressures drove higher CASM magazine.

Speaker Change: We offset those higher than expected costs with higher than expected revenues.

Speaker Change: Which leads to the final point, while difficult to predict the fuel price by rising costs, but in the middle East buyers in Malaga system in place pressure. So many other things.

Christina Edwards: Please refer to our earnings release form 10-10-10-Q and other reports filed with the SEC by United Airlines and United Airlines Group for a more thorough description of these factors. Unless otherwise noted, we will be discussing our financial metrics on a non-GAAP basis on this call. Please refer to the related definitions and reconciliations in our press release. For reconciliation of these non-GATT measures to the most directly comparable GATT measures, please refer to the tables at the end of our earnings release.

Scott Kirby: It makes it difficult to predict United's full year 2023 CASM and RASM 12 months in advance. The tightening connection at United between CASM and RASM meant that we achieved our initial $10 to $12 EPS range, despite those multiple headwinds around the field.

Speaker Change: It makes it difficult to predict guidance full year 2023, CASM and RASM 12 months in advance the time of any connection at United between CASM and RASM meant that we achieved our initial 10 to $12 EPS range, despite multiple headwinds around the field.

Scott Kirby: The link between RASM and CASM, combined with the success of United Next, was what made 2023 such a successful and important year in our history. And we expect 2024 to follow a similar path for the same reasons. This is just the new normal. The operational challenges remain. It will be years before the FAA is back to full staffing. We're still overlapping new labor agreements, which show up in our CASM. And the supply chain challenges aren't going away anytime soon. That means capacity will continue to ratchet down out of necessity, and cost convergence will continue. But revenues will adjust to the new cost reality, and you can expect United to maintain and grow EPS in March.

Speaker Change: Between RASM and CASM combined with the success of <unk>.

<unk> great.

Speaker Change: A successful and important year in our history and we expect 2024 to follow a similar path for the same reasons. This is just the new normal the operational challenges revert it will be years, where the FAA is back to full staffing, we're still overlapping new labor agreement, which show that our cab and the supply chain challenges.

Christina Edwards: Joining us on the call today to discuss our results and outlook are Chief Executive Officer Scott Kirby, President Brett Hart, Executive Vice President and Chief Commercial Officer Andrew Nocella, and Executive Vice President and Chief Financial Officer Mike Leskinen. In addition, we have other members of the executive team on the line available to assist with Q&A. Now, I'd like to turn the call over to Scott.

Speaker Change: Going away anytime soon that means capacity will continue to ratchet down out of necessity and cost convergence will continue but revenues will adjust to the new cost reality and you can expect the United to maintain and grow EPS and margins.

Scott Kirby: Thank you, Christina, and good morning to everyone on the call today. Despite numerous geopolitical and other headwinds around the globe, 2023 really was the year that our plan for United NEXT came together. Our thesis at this time last year was that operational constraints and other factors were leading to cost convergence, and those cost pressures, in turn, would lead to higher revenues. That is certainly true for United, as our diversified revenue streams continue to differentiate us from other airlines. Another way of saying that is that we believe that a new link between United's Chasm and RASM is being solidified. And while it might be hard to get either a Chasm or RASM forecast exactly correct, we could have higher confidence in forecasting the relationship between the two, and therefore have higher confidence in our earnings and margin forecasts. And despite a year filled with events that we could never have predicted, that's exactly what happened in 2023. And so I'd like to thank the 100,000 United team members around the world who worked so hard to make that happen.

Scott Kirby: Two and a half years ago, we laid out our United Next Growth Strategy. In 2023, we demonstrated that the planet is working almost exactly as we expected and the future is bright. There have been and there will be more bumps in the road. But we continue to feel confident about our ability to grow earnings and margin over the long term because of the tighter connection between United's costs and United's revenue.

Speaker Change: Two and half years ago, we laid out our growth strategy.

Speaker Change: In 2023, we demonstrated plant is working almost exactly as we expected in the future as Brian there have been and there will be more bumps in the road.

Speaker Change: We continue to feel confident about our ability to grow earnings and margin over the long term because of the tighter connection between United has cost us revenue.

Christina Edwards: Looking ahead to 2024, the United Next plan is working, and no airline is better in the position to capitalize on industry and macroeconomic trends than United. And we're continuing to move aggressively to capitalize on emerging opportunities. We'll have more to share with you at our investor day later this spring. In the meantime, we're focused on delivering another great year for our employees and customers and our shareholders. And with that, I'll hand it over to Brett.

Speaker Change: Looking ahead in 2020 for the <unk> plant is working at no airline is better positioned to capitalize on industry and macroeconomic trends.

Speaker Change: And we're continuing to move aggressively capitalize on emerging opportunities well have more to share with you at our Investor Day. Later this spring in the meantime, we're focused on delivering another great year for our employees customers and our shareholders and with that I'll hand, it over to Brett.

Scott Kirby: And those same 100,000 people continue to deliver in the face of a huge impact on our employees and customers from the MAX 9 ground. I'm proud of our TechOps team who's taken the lead and has been working 18-hour days nonstop since January 6th to ensure that the MAX 9 is 100% safe before we return it to service. I'd also like to thank the FAA for their professional leadership in this situation and also acknowledge that they, too, are working long hours and weekends with us in an effort to ensure that we know for sure what happened so that we can be confident that remediation prevents it from ever happening again. 2023 really sets the stage for what is likely to be a repeat of 2020.

Brett Hart: Thank you, Scott, and good morning. As of Saturday, January 6th,

Brett Hart: Thank you Scott and good morning as of Saturday January six Boeing 737, Max nine aircraft has been grounded we are currently the largest operator of the block.

Brett Hart: Boeing 737 MAX 9 aircraft has been grounded. We are currently the largest operator of the...

Brett Hart: The aircraft representing approximately 8% of our capacity in the first quarter.

Brett Hart: The type B.

Brett Hart: Aircraft, representing approximately 8% of our.

Brett Hart: Nasty in the first quarter.

Brett Hart: Our financial guidance assumes that United's 79 MAX 9 aircraft is grounded in the month of January . I echo Scott's gratitude for all of you at United who worked so hard to care for us.

Brett Hart: Our financial guidance assumes that United 79, Max nine aircraft grounded.

Speaker Change: <unk> I Echo Scotts gratitude.

Speaker Change: United who worked so hard here.

Speaker Change: Travel plans were affected by the grounding of our Max nine fleet.

Brett Hart: Travel plans were affected by the grounding of our MAX 9 fleet. I'm also extremely proud of our tech ops team. We've worked carefully to ensure the safety of our MAX 9 aircraft before we start flying them again.

Speaker Change: I'm also extremely proud of our tech ops team.

Scott Kirby: United Financial Performance is impressive, especially if you consider we're an analyst we were expecting just one year ago. In 2023, we delivered a full year earnings per share above $10, which was within the range of our initial United Next targets of 10 to 12. I want to spend some time today examining how we got there and why we think those trends will persist in 2020. We expected the operating environment to be challenging, driven by pilot and other hiring constraints, FAA error traffic control status, maintenance catch-up, and supply chain issues. It turned out to be even more challenging than we thought.

Speaker Change: Carefully to ensure the safety of our Max nine aircraft before we start flying them again.

Brett Hart: 2023 was a year of growth and restoration.

Speaker Change: 2023 was a year of growth in restoration.

Brett Hart: And we closed out the year with strong, record-breaking operational results, carrying a record 171 million customers.

Speaker Change: <unk> out the year with strong record breaking operational results carrying a record 171 million customers.

Brett Hart: The fourth quarter consolidated customer D0, A0, and misconnect rating were the best for any quarter in our history. Not only did we set company records for the quarter, but we also ran record setting operations during our busiest time of the year over Thanksgiving and Christmas.

Speaker Change: The fourth quarter consolidated customer D zero zero and misconduct.

Speaker Change: All the best for any quarter in our history.

Speaker Change: Not only did we set company records for the quarter, but we also rents record setting.

Speaker Change: <unk> during our busiest time of the year over Thanksgiving and Christmas.

Scott Kirby: 2. And those operating environment challenges led directly to industry-capacity plans, including our own, coming down three points on average as carriers adapted to the new operating environment. For United, we made changes to our schedule, and we closed out the year setting operational records. The improvements in Newark, in particular, are one of the most important accomplishments that we achieved last year. Brett will share more detail in just a moment, but the FAA waivers restricted the airport and airspace to physical constraints and allowed us to run an operation that performed better than ever in Newark. That's been good for our business, and it's been really good for our customers. 3.

Brett Hart: Thanksgiving and the entire fourth quarter had the highest NPS scores in our post-pandemic history.

Speaker Change: Thanks, giving and the entire fourth quarter had the highest NPS scores and our post pandemic history.

Brett Hart: We wrapped up the year with our lowest ever cancel rate for the month of December .

Speaker Change: We wrapped up the year with our lowest ever cancel rate for the month of December.

Speaker Change: One of the largest challenges United and all airlines flying to and from New York have historically faced more flights and air Traffics.

Brett Hart: One of the largest challenges United and all airlines flying to and from New York have historically faced more flights than air traffic.

Brett Hart: than the air traffic system can handle is now being addressed thanks to proactive intervention by the FAA.

Speaker Change: And the air traffic system can handle it now being addressed.

Speaker Change: Proactive intervention by the FAA.

Brett Hart: Newark, United's largest hub, has been operating with the best reliability on record since the FAA mandated that flight activity be consistent with the airspace and runway limitations of no more than 77 operations per hour this fall.

Speaker Change: Work United's largest hub.

Been operating with the best reliable reliability on record since the FAA mandated that flight activity to be consistent with the aerospace and runway limitations, but no more 77 operations per hour. This fall.

Scott Kirby: But, as we predicted, the challenging operating environment led to cost pressures and cost convergence in the industry. To be fair, even we at United underestimated the inflationary pressures that we would face primarily from labor, maintenance, and supply chain issues. And that led to higher absolute capital impacts than we were forecasting. But those same cost pressures are being felt across the entire industry. And a year ago when we talked, we believed the industry-wide cost pressures would wind up as a pass-through, much like fuel has been in the past. And that is, in fact, exactly what happened. While industry cost pressures drove higher capital impacts in technology, we offset those higher-than-expected costs with higher-than-expected revenues. 5.

Christina Edwards: For United, that meant we reduced flight activity from Newark by about 10%. Expect to continue with those cuts for the remainder of 2024.

Speaker Change: For United that meant we reduced flight activity from Newark by about 10% expect to continue with those cuts for the remainder of 2024.

Christina Edwards: Our customers and every passenger flying from New York are now benefiting

Speaker Change: Our customers in every passenger flying from New York are now benefiting <unk>.

Christina Edwards: And the cascade of delays that historically would flow across the United States from New York airspace has significantly improved.

Speaker Change: The cascade of delays that historically would flow across the United States from New York Aerospace has significantly improved.

Christina Edwards: Our customer D0 from Newark, the company records 76% in Q4 of 2023. We expect this level of performance to continue as long as the FAA continues to mandate that flight operations remain at 77 or fewer operations per hour going forward.

Speaker Change: Our customer D zero from Newark, The company record, 76% in Q4 of 2023, and we expect this level of performance to continue as long as the FAA continues to mandate. The flight operations remain at 77 or fewer operations per hour going forward.

Christina Edwards: United plans to continue to upgauge our Newark flying to ensure that there is plenty of capacity available for our customers, even with fewer flights.

Speaker Change: We plan to continue to update our Newark flying to ensure that there is plenty of capacity available for our customers.

Speaker Change: With fewer flights.

Christina Edwards: 2023 was also a banner year for employee recruiting, hiring, and retention at United.

Scott Kirby: Which leads to the final point. While it is difficult to predict events like the fuel price spike, rising conflict in the Middle East, fires in Maui, persistent inflationary pressure, and so many other things, it makes it difficult to predict United's full-year 2023 CASM and RASM 12 months in advance. The tiny connection at United between CASM and RASM meant that we achieved our initial $10 to $12 EPS range despite the multiple headwinds around the globe. The link between RASM and CASM, combined with the success of UnitedNext, was what made 2023 such a successful and important year in our history. And we expect 2024 to follow a similar path for the same reasons. This is just the new normal.

Speaker Change: 2023 was also a banner year for employee recruiting hiring and retention at United.

Scott Kirby: On the heels of hiring more than 21,000 people in 2022,

Speaker Change: On the heels of hiring more than 21000 people in 2022.

Scott Kirby: We hired another 16,000 aviation professionals to our airline last year.

Speaker Change: We hired another 16000 aviation professionals to our airline last year.

Scott Kirby: We hire the best of the best.

Speaker Change: We hire the best of the best.

Scott Kirby: skill and talent of our employees played a big role in our operational performance outperformance.

Speaker Change: The skill and talent of our employees play a big role in our operational performance outperformance in the second half of the year are.

Scott Kirby: second half of the year.

Scott Kirby: our record-breaking customer scores during the holidays, and our overall financial performance as an airline in 2023.

Speaker Change: Our record breaking customer scores during the holidays and our overall financial performance as an airline and 2023.

Scott Kirby: We're a better, more successful airline because our people.

Speaker Change: We are a better more successful airline because of our people.

Scott Kirby: And I'm proud of the way we've gone about growing our team.

Speaker Change: And I am proud of the way, we've gone about growing our team.

Speaker Change: I am happy to announce we will be paying our eligible employees to $81 million in profit sharing next month.

Brett Hart: I'm happy to announce we will be paying our eligible employees $81 million in profit sharing next month.

Scott Kirby: The operational challenges remain, and it will be years before the FAA is back to full staffing. We're still overlapping new labor agreements, which show up in our CASM. And the supply chain challenges aren't going away anytime soon. That means capacity will continue to ratchet down out of necessity, and cost convergence will continue. But revenues will adjust to the new cost reality, and you can expect United to maintain and grow EPS in March. Two and a half years ago, we laid out our UnitedNext growth strategy. In 2023, we demonstrated that the plan is working almost exactly as we expected, and the future is bright.

Brett Hart: is five times higher than 2022 and over two times higher than the average of the last 10 years.

Speaker Change: This is five times higher than 2022 and over two times higher than the average over the last 10 years.

Brett Hart: Our team, beating heart of this airline.

Speaker Change: <unk>, beating heart of this airline.

Brett Hart: sharing these impressive results today without

Speaker Change: Sharing these impressive results to date without them that I will pass it over to Andrew.

Anne: With that, I will pass it over to Anne.

Speaker Change: Okay.

Anne Smith: Thank you, Brett.

Thanks, Brett.

Scott Kirby: As Scott mentioned, cough pressures led to healthy revenue trends in the quarter with stellar performance over the holidays. Subtle revenues of the quarter increased 9.9% on a 14.7% increase in capacity. Consolidated trabzim was down 4.2%, and prabzim was down 3.3% for the quarter.

Andrew P. Nocella: As Scott mentioned pressures led to healthy revenue trends in the quarter stellar performance over the holidays total revenue.

Andrew P. Nocella: The increased nine 9% on a 14, 7% increase in capacity consolidated <unk> was down four 2% in PRASM was down three 3% for the quarter.

Anne Smith: Domestic demand was strong in the quarter and present results for slightly negative year of a year. Nice improvement from the third quarter.

Andrew P. Nocella: Domestic demand was strong in the quarter and PRASM results were slightly negative year over year nice improvement from the third quarter Atlantic PRASM.

Brett Hart: There have been, and there will be more bumps in the road, but we continue to feel confident about our ability to grow earnings and margin over the long term because of the tighter connection between United's cost and its revenue. Looking ahead to 2024, the United Next plan is working, and no airline is better positioned to capitalize on industry and macroeconomic trends than United, and we're continuing to move aggressively to capitalize on emerging opportunities. We'll have more to share with you at our investor day later this spring. In the meantime, we're focused on delivering another great year for our employees, customers, and our shareholders. And with that, I'll hand it over to Brett.

Anne Smith: Atlantic PRASM growth in Q4 of positive 3.8% was consistent with Q3 year-over-year growth of 4%. We also experienced a small but measurable demand weakness period across core Europe in Q4 triggered by the conflict in Israel, but that is now moderated.

Andrew P. Nocella: <unk> growth in Q4, a positive three 8% was consistent with Q3 year over year growth of 4%. We also experienced a small but measurable demand weakness period across for Europe in Q4 triggered by the comp, but in Israel, but that has now moderated.

Anne Smith: United increased Asia-Pacific flying by 82% in the quarter. Krasn was down 11.6% year-over-year. In the quarter, we increased flying to China from four weekly flights to twice daily, amongst many other changes. We've now fully restored our capacity to pre-COVID levels across the Pacific.

Andrew P. Nocella: United increased Asia Pacific declined by 82% in the quarter PRASM was down 11, 6% year over year in the quarter, we increased flying to China from four weekly flights to twice daily amongst many other changes we've now fully restored our capacity to pre COVID-19 levels across the Pacific.

Anne Smith: Latin American unit revenues decreased by 11.6% in the quarter, pressured by record industry capacity levels and heavy fare discounting.

Latin American unit revenues decreased by 11, 6% in the quarter pressured by record industry capacity levels and heavy fare discounting.

Anne Smith: Cargo revenues continue to adjust to their new steady-state post-pandemic state. For 2023, cargo revenues were 1.5 billion, 31% lower than 2022. Almost all the revenue changes due to yields, not volume.

Andrew P. Nocella: Cargo revenues continued to adjust to their new city State post pandemic post pandemic state for.

Brett Hart: Thank you, Scott, and good morning. As of Saturday, January 6th, all Boeing 737 MAX 9 aircraft have been grounded.

Andrew P. Nocella: For 2023 cargo revenues were $1 5 billion, 31% lower than 2022.

Andrew P. Nocella: All the revenue changes due to yields not volumes.

Brett Hart: The aircraft represented approximately 8% of our capacity in the first quarter. Our financial guidance assumes that United's 79 MAX 9 aircraft will be grounded in the fall of January. I echo Scott's gratitude for all the United employees who worked so hard here for us. Travel plans were affected by the grounding of our MAX 9 fleet.

Anne Smith: MILEAGE PLUS.

Andrew P. Nocella: Mileage plus.

Anne Smith: Worship and.

Andrew P. Nocella: For shipping.

Anne Smith: Turning to our outlook for the first quarter, we expect TRASM and Q1 to be approximately flat year over year, which is a nice sequential improvement versus the past few quarters.

Andrew P. Nocella: Turning to our outlook for the first quarter, we expect <unk> in Q1 to be approximately flat year over year, which is a nice sequential improvement versus the past few quarters.

Anne Smith: Domestic demand remains strong with increases in business traffic volumes year-over-year in addition to stronger price than thus far this year, and we expect domestic year-over-year browsing to be positive for the quarter. We see the best yield growth current on tickets purchased within a week of departure.

Domestic demand remains strong with increases in business traffic volumes year over year. In addition to stronger pricing. Thus far this year and we expect domestic year over year PRASM to be positive for the quarter, we see the best yield growth and current on tickets purchased within a week of departure.

Brett Hart: I'm also extremely proud of our tech ops team, carefully ensuring the safety of our MAX 9 aircraft before we start flying them again. 2023 was a year of growth and restoration. We close out the year with strong, record-breaking operational results, carrying a record 171 million customers. The fourth quarter consolidated customer D0, A0, and misconnect rate were the best for any quarter in our history. Not only did we set company records for the quarter, but we also ran record-setting operations during our busiest time of the year, Thanksgiving and the entire fourth quarter, had the highest NPS scores in our post-pandemic history.

Anne Smith: Bookings and yields for Atlantic Fly in early 2024 are also strong, and we expect these trends to continue into the second and third quarters. Service to Tel Aviv will resume as soon as it's safe for our customers and crew, but no sooner than February 15th.

Bookings and yields for Atlantic line. In early 2024 are also strong and we expect these trends to continue into the second and third quarters service to Tel Aviv will resume as soon as it's safe for our customers and crew, but no sooner than February 15.

Anne Smith: We also saw a nice step up in London Heathrow business demand in recent weeks, which has helped an Atlantic result in Q1 to date when combined with lower United capacity to London. We remain focused on slow growth across the Atlantic for 2024.

Andrew P. Nocella: We also saw a nice step up in London Heathrow business demand in recent weeks, which is helping Atlantic results in Q1 to date, when combined with lower United capacity to London.

Andrew P. Nocella: We remain focused on slow growth across the Atlantic for 2024.

Anne Smith: Asia Pacific growth remains above normal as we head into Q1. We continue to absorb the incremental Asia Pacific capacity added in 2023. We expect all of United's new Asia capacity to produce strong margin results as we head into Q2 and Q3.

Andrew P. Nocella: Asia Pacific growth remains above normal as we head into Q1, we continue to absorb the incremental Asia Pacific capacity added in 2023, we expect all of United's New Asia capacity to produce strong margin results as we head into Q2 and Q3.

Brett Hart: We wrapped up the year with our lowest ever cancel rate for the month of December. One of the largest challenges United and all airlines flying to and from New York have historically faced, more flights than air traffic, and the air traffic system can handle it now, thanks to proactive intervention by the FAA. Newark, United's largest hub, has been operating with the best reliability on record since the FAA mandated that flight activity be consistent with the airspace and runway limitations of no more than 77 operations per hour this fall.

Latin American RASM is expected to remain negative for Q1 year over year, a trend that's likely to continue into Q2.

Anne Smith: Latin American RASM is expected to remain negative for Q1 year-over-year, a trend that's likely to continue into Q2.

Anne Smith: FAA imposed industry capacity limitations on New York for virtually all of 2024, and San Francisco for most of 2024 will limit capacity from either airport. We've prioritized international growth over domestic at both hubs. We're optimistic that the demand will catch up with supply in 2024 in these two United Hubs that will lag the recovery elsewhere.

FAA imposed industry capacity limitations on Europe for virtually all of the 2024 in San Francisco for most of 2024 will limit capacity from either airport.

Andrew P. Nocella: We've prioritized international growth over domestic at both hubs are.

Andrew P. Nocella: Optimistic that the demand will catch up with supply in 2024, and these two United hubs that have lagged the recovery elsewhere.

Anne Smith: In summary, we expect strong unit revenue performance on domestic and Atlantic capacity in early 2024, with weaker results in Asia as we absorb 2023 growth, and in Latin America due to record industry capacity growth levels.

Andrew P. Nocella: In summary, we expect strong unit revenue performance on domestic and Atlantic capacity in early 2024 with weaker results in Asia as we absorbed 2023 growth and in Latin America due to record industry capacity growth levels.

Brett Hart: That meant we reduced flight activity from Newark by about 10%, and we expect to continue with those cuts for the remainder of 2024. Our customers and every passenger flying from New York are now benefiting, and the cascade of delays that historically would flow across the United States from New York airspace has significantly improved. For example, our customer D0 from Newark, the company records 76% in Q4 2023. We expect this level of performance to continue as long as the FAA continues to mandate that flight operations remain at 77 or fewer operations per hour going forward. United plans to continue to upgrade our Newark flying to ensure that there is plenty of capacity available for our customers, even with fewer flights. 2023 was also a banner year for employee recruiting, hiring, and retention at United, on the heels of hiring more than 21,000 people in 2022. We hired another 16,000 aviation professionals to our airline last year. We hire the best of the best.

Anne Smith: While we expect international RASMs will grow slower than domestic for a period, we also expect that international Hawaiian will have materially higher margins for United versus domestic in 2024, just less of a gap than in 2023.

Andrew P. Nocella: While we expect international RASM will grow slower than domestic for a period. We also expect that international client will have materially higher margins for United versus domestic Tony in 2012, or just less of a gap than in 2023.

Anne Smith: We at United have, I think, created a really very durable commercial model that has diversified our revenue streams and our network and largely decommoditized our product versus just about every other airline in the U.S., maybe for the exception of one. Our commercial strategies result in unfair levels at United adjusted not only for changes in prices of fuel, but also for the cost inputs at United, allowing us to overcome the inflationary cost pressures larger than we expected in 2023. You can see this in our relative revenue performance quarter to quarter.

We at United have I think created a really very durable commercial model that has diversified our revenue streams in our network and largely de commoditize, our product versus just about every other airline in the U S. Maybe for the exception of one our commercial strategies, resulting in fare levels that United adjusted not only for changes in prices.

Andrew P. Nocella: But also for the cost inputs at United, allowing us to overcome the inflationary cost pressures larger than we expected in 2023, you can see this in our relative revenue performance quarter to quarter.

Scott Kirby: United's unique hub system in the largest U.S. cities and the network we have built over decades from these hubs underpins our outlook and gives United access to revenues and profitable flying others simply do not have or have not been able to replicate. The United Next fleet growth in recent years has allowed us to unlock the true value in our hub system.

United unique hub system in the largest U S cities and the network. We have built over decades from these hubs underpins our outlook and gives you <unk> access to revenues and profitable client others simply do not have or have not been able to replicate the United next fleet growth in recent years has allowed us to unlock the true value in our hub system.

Andrew P. Nocella: Which you can see from our results.

Scott Kirby: which you can see from our results today.

Brett Hart: Skill and talent of our employees played a big role in our operational performance outperformance in the second half of the year, our record-breaking customer scores during the holidays, and our overall financial performance as an airline in 2023. We're a better, more successful airline because of our people, and I'm proud of the way we've gone about growing our team. I'm happy to announce we will be paying our eligible employees $81 million in profit sharing next month.

Andrew P. Nocella: Today.

Scott Kirby: Unique aircraft cabin and capacity plans continue to be a driver of our strong revenue performance, particularly as demand for premium products remains elevated. For example, domestic premium revenue grew 13% year-over-year in Q4, over double the rate of coach, another data point validating our strategy. While we remain focused on monetizing our growing premium capacity, we also remain committed to basic economy. Domestic basic economy revenue was up nearly 20% in the fourth quarter versus last year.

Andrew P. Nocella: <unk> unique aircraft cabin and capacity plans continued to be a driver of our strong revenue performance, particularly as demand for premium products remains elevated for example, domestic premium revenue grew 13% year over year in Q4 over double the rate of coach another data point validating our strategy.

Andrew P. Nocella: While we remain focused on monetizing our growing premium capacity. We also remain committed to basic economy domestic basic economy revenue was up nearly 20% in the fourth quarter versus last year.

Andrew P. Nocella: This is five times higher than 2022 and over two times higher than the average of the last ten years, a keen, beating heart of the Zero Line, sharing these impressive results today without, And with that, I will pass it over to Andrew. Thanks for... As Scott mentioned, cost pressures led to healthy revenue trends in the quarter with stellar performance over the holidays. Total revenues in the fourth quarter increased 9.9% on a 14.7% increase in capacity. However, consolidated Trabzon was down 4.2%, and Prazen was down 3.3% for the quarter.

Scott Kirby: Correcting gauge deficits at United remains a key component of the future. We continue to believe we can add gauge to domestic flying while maintaining strong unit revenues. Since 2019, United has increased its North American gauge by 22% while also leading in BRASM growth.

Andrew P. Nocella: Correct engage deficits at United remains a key component of the future. We continue to believe we can add gauge to domestic flying while maintaining strong unit revenues since 2000.

Andrew P. Nocella: 19, United has increased its north American gauged by 22%, while also leading in PRASM growth.

Scott Kirby: For 2024, we intend to focus much of our domestic growth in our mid-con hubs in Washington Dulles as we add significant levels of new connectivity. This connectivity change is why we have confidence in the RASMs being accretive in 2024.

Andrew P. Nocella: For 2024, we intend to focus much of our domestic growth in our mid con hubs in Washington, Dulles as we had significant levels of new connectivity. This connectivity changes why we have confidence in the RASM as being accretive in 2024.

Scott Kirby: Diversified revenue streams across our global network remain key to our relative success as we implement our United Next plans. United's global network is a key structural advantage we will focus on in the coming years, and it differentiates it.

Andrew P. Nocella: Diversified revenue streams across our global network remain key to our relative success as we implement our United next plans United's Global network is a key structural advantage, we will focus on in the coming years.

Andrew P. Nocella: Domestic demand was strong in the quarter, and PRASMA results were slightly negative year-over-year, a nice improvement from the third quarter. Atlantic prasm growth in Q4 of positive 3.8% was consistent with Q3 year-over-year growth of 4%. We also experienced a small but measurable demand weakness period across poor Europe in Q4, triggered by the conflict in Israel, but that is now moderated. United increased Asia-Pacific flying by 82% in the quarter. Traveling was down 11.6% year over year.

Andrew P. Nocella: And it differentiates us with that I wanted to say, thanks to the entire United team and hand, it over to Mike to discuss our financial results Mike.

Michael J. Linenberg: With that, I wanted to say thanks to the entire United team and hand it over to Mike to discuss our financial results. Mike?

Michael Donald Leskinen: Thanks, Andrew. And thank you to the whole United team for closing up the year on a high note, both operational and financial.

Mike: Thanks, Andrew and thank you to the whole United team for closing out the year on a high note both operationally and financially.

Mike: I'm proud to report that in 2023, we delivered pre-tax income of $4.3 billion, a more than $3.2 billion improvement over 2022.

Mike: I am proud to report that in 2023, we delivered pre tax income of $4 3 billion.

Mike: But more than $3 2 billion improvement over 2022.

Mike: It delivered earnings per share of $10.05 within our initial guidance range of $10 to $12 and well ahead of consensus expectations.

Mike: We delivered earnings per share of $10 five within our initial guidance range of 10 to $12 and well ahead of consensus expectations of about $6 at the beginning of the year.

Andrew P. Nocella: In the quarter, we increased flying to China from four weekly flights to twice daily, amongst many other changes. We've now fully restored our capacity to pre-COVID levels across the Pacific. Latin American unit revenues decreased by 11.6% in the quarter, pressured by record industry capacity levels and heavy fare discounting.

Mike: OF ABOUT $6 AT THE BEGINNING OF THE YEAR. WE ACHIEVED THIS DESPITE SIGNIFICANT INDUSTRY HEADWINDS AND OPERATIONAL CONSTRAINTS THAT LED TO LOWER CAPACITY.

Mike: We achieved this despite significant industry headwinds and operational constraints global overcapacity.

Andrew: For the fourth quarter, we delivered pre-tax income of $845 million and earnings per share of $2.

Mike: For the fourth quarter, we delivered pretax income of $845 million and earnings per share of $2. <unk> ahead of consensus and above the high end of our guidance range.

Anne Smith: Ahead of consensus and above the high end of our guidance

Anne Smith: Strong operational performance, robust revenue trends, and a decrease in fuel prices supported these results.

Mike: Strong operational performance robust revenue trends and a decrease in fuel prices supported these results.

Andrew P. Nocella: Cargo revenues continue to adjust to their new steady state post-pandemic state. For 2023, cargo revenues were $1.5 billion, 31% lower than 2022, but almost all the revenue changes were due to yields, not volume. PILOGUE PLUS, for shipping.

Anne Smith: Fourth quarter CASMAX was up 4.9%, as we did not operate flight totality for the full

Mike: Fourth quarter CASM ex was up four 9% as we did not operate <unk> for the full quarter.

Anne Smith: Additionally, affected with the fourth quarter, we are now classifying certain commissions that hadn't been classified as a contraband as distribution.

Mike: Additionally, effective with the fourth quarter, we are now classifying certain commissions that had been classified as contra revenue.

Andrew P. Nocella: Turning to our outlook for the first quarter, we expect TRASM and Q1 to be approximately flat year-over-year, which is a nice sequential improvement versus the past few quarters. Domestic demand remains strong with increases in business traffic volumes year-over-year in addition to higher prices than thus far this year, and we expect domestic year-over-year plasma to be positive for the quarter. We see the best yield growth currently on tickets purchased within a week of departure. Bookends and yields for Atlantic Fly in early 2024 are also strong, and we expect these trends to continue into the second and third quarters. Service to Tel Aviv will resume as soon as it's safe for our customers and crew, but no sooner than February 15. We also saw a nice step up in London Heathrow business demand in recent weeks, which is good news for health and Atlantic results in Q1 to date when combined with lower United capacity to London. We remain focused on slow growth across the Atlantic for 2024.

Mike: Distribution expense.

Michael Donald Leskinen: This has no impact on net income or cash flow.

Mike: This has no impact on net income or cash flow.

Michael Donald Leskinen: This change added one point to our year-on-year fourth quarter CASAmax, and increased fourth quarter year-on-year unit revenue by 0.2%.

Mike: This change added one point to our year on year fourth quarter, CASM ex and increased fourth quarter year on year unit revenue by <unk> six points.

Michael Donald Leskinen: The change will also result in an approximate one-point headwind to year-on-year CASMAX and an approximate 0.6-point increase in RASM through the end of the third quarter of the

Mike: The change will also result in an approximate one point headwind to year on year cosmetics and approximate <unk> six point increase in RASM through the end of the third quarter of this year.

Michael Donald Leskinen: Underlying unit costs trended favorably during the quarter as a completion factor came in better than planned due to our strong operational performance

Mike: Underlying unit costs trended favorably during the quarter as our completion factor came in better than planned due to our strong operational performance.

Michael Donald Leskinen: Compared to 2019, our relative performance on CASMAX was near the top of the industry

Mike: Impaired to 2019, our relative performance on CASM ex was near the top of the industry.

Scott Kirby: As Scott outlined, delivering strong relative cost performance remains critical to the successful execution of the United

Mike: As Scott outlined delivering strong relative cost performance remains critical to the successful execution of the United There.

Scott Kirby: We have always asserted that costs that are borne by the entire industry are passed along in prices with a lag.

Mike: We are all into sort of the costs that are borne by the entire industry are passed along in prices with a lag.

Jessica: Historically, this relationship has been clear with Jessica.

Mike: Historically this relationship has been clear with jet fuel prices.

Michael Donald Leskinen: More recently, the relationship has been clear for both higher labor and higher maintenance costs as well.

Mike: More recently the relationship has been clear for both higher labor and higher maintenance costs as well.

Scott Kirby: Notably, our unit costs in 2023 were up 17.8% versus 2019.

Mike: Notably our unit costs in 2023 were up 17, 8% versus 2019.

Scott Kirby: compared to ultra low cost carriers, unit costs that are expected to be up 25% on

Mike: Compared to ultra low cost carriers unit costs that are expected to be up 25% on average.

Andrew P. Nocella: Asia-Pacific growth remains above normal as we head into Q1. We continue to absorb the incremental Asia-Pacific capacity added in 2023. We expect all of United's new Asian capacity to produce strong margin results as we head into Q2 and Q3. Latin American Razzum is expected to remain negative for Q1 year-over-year, a trend that's likely to continue into Q2. FAA imposed industry capacity limitations on New York for virtually all of 2024 and San Francisco for most of 2024 will limit capacity from either airport.

Anne Smith: that more than seven-point cost convergence in costs occurred simultaneous with an emerging preference for United Products.

Mike: That more than seven point cost convergence and costs occurred simultaneous with an emerging preference for United product.

Anne Smith: the top-tier operational reliability that EI provides.

Mike: The top tier operational reliability it provides.

Scott Kirby: The result is unsurprising. Our margins have dramatically and structurally improved and we're only in the early innings of that.

Mike: The result is unsurprisingly, our margins have dramatically and structurally improve <unk>.

Mike: Only in the early innings of that journey.

Scott Kirby: For the first quarter of 2024, we expect a loss per share between negative 35 cents and negative 85.

Mike: For the first quarter of 2024, we expect a loss per share between negative 35 and negative 85.

Scott Kirby: While our core costs remain on track, our first quarter CASMAX faces a few head

Mike: While our core costs remain on track, our first quarter CASM ex faces a few headwinds.

Andrew P. Nocella: We've prioritized international growth over domestic growth at both hubs. We're optimistic that demand will catch up with supply in 2024 in these two united hubs that have lagged the recovery elsewhere. In summary, we expect strong unit revenue performance on domestic and Atlantic capacity in early 2024, with weaker results in Asia as we absorb 2023 growth and in Latin America due to record industry capacity growth levels. While we expect international RASMs to grow slower than domestic for a period, we also expect that international flying will have materially higher margins for United versus domestic in 2024, just less of a gap than in 2023. We at United have, I think, created a really, very durable commercial model that has diversified our revenue streams and our network and largely decommoditized our product versus just about every other airline in the U.S., maybe with the exception of one.

Michael Donald Leskinen: First, the cancellations of the MAX 9 flights have reduced first quarter capacity

Mike: First the cancellations of the Max nine flights have reduced first quarter capacity.

Michael Donald Leskinen: Due to the close in nature of these cancellations, most of our expenses are fixed.

Mike: Due to the close of the nature of these cancellations most of our expenses are fixed.

Michael Donald Leskinen: And we also encourage additional interruptions.

Mike: And we also incurred additional interrupted trip expenses, we expect the combination of these items were increased CASM ex by approximately three points.

Michael Donald Leskinen: We expect a combination of these items will increase CASMAC by approximately 3%.

Michael Donald Leskinen: Second, as we mentioned, the contra revenue reclassification and distribution expense is the 1.3%.

Mike: Second as we mentioned that the contra revenue reclassification into distribution expense as a one point headwind.

Michael Donald Leskinen: Third, the impact of new labor agreements as they annualize adds an additional three to four

Mike: Third the impact of new labor agreements as they annualize adds an additional 3% to four points.

Michael Donald Leskinen: And for.

Mike: Sure.

Michael Donald Leskinen: A higher volume of engine events and continued supply chain challenges lead to another one point of CASMAC's headwinds.

Mike: A higher volume of engine events and continued supply chain challenges leads to another one point of CASM ex.

Speaker Change: While the first two items I mentioned are United Specific headwinds, labor and maintenance are an industry-wide issue, and the primary drivers are the cost conversions that Scott described earlier.

Mike: While the first two items I mentioned are United specific headwinds labor and maintenance or an industry wide issue and the primary drivers of the cost convergence that Scott described earlier.

Speaker Change: Most importantly, we're confident that the pace of inflation in our costs will continue to be favorable versus our historically lower-cost competitors.

Mike: Most importantly, we are confident that the pace of inflation in our costs will continue to be favorable versus our historically lower cost competitors.

Speaker Change: Building off of our 2023 momentum, we expect full-year 2024 earnings per share to be between $9 to $11.

Mike: Building off of our 2023 of them at them, we expect full year 2024 earnings per share to be between 9% to $11.

Andrew P. Nocella: Our commercial strategies result in unfair levels at United, and not only for changes in the price of fuel but also for the cost inputs at United, allowing us to overcome the inflationary cost pressures larger than we expected in 2023. You can see this in our relative revenue performance quarter to quarter. United's unique hub system in the largest U.S. cities and the network we have built over decades from these hubs underpins our outlook and gives United access to revenues and profitable flying others simply do not have or have not been able to replicate.

Speaker Change: We are encouraged by the trends we're seeing, and our United Next plan is working well.

Mike: We are encouraged by the trends, we're seeing in our United next plan is working well.

Speaker Change: This is our guidance, but I'd be remiss if I didn't point out that our internal targets are higher.

Mike: This is our guidance I'd be remiss, if I didn't point out that our internal targets are higher.

Speaker Change: We plan to update our longer-term financial targets at our upcoming investments.

Mike: Plan to update our longer term financial targets at our upcoming Investor day.

Speaker Change: Looking ahead, we intend to take a different approach to guide

Mike: Looking ahead, we intend to take a different approach to guidance.

Speaker Change: As demonstrated in 2023 and just recently with the max grounding, we operate in a dynamic industry.

Mike: Demonstrated in 2023, and just recently with the Max grounding, we operate in a dynamic industry.

Scott Kirby: With the no excuses philosophy, we intended to take United off the detailed quarterly metrics shortly after I joined and led the investor relations team.

Mike: With no excuses philosophy, we intended to take United off the detailed quarterly metrics. Shortly after I joined in light of the Investor Relations team.

Scott Kirby: The pandemic interrupted those

Mike: The pandemic interrupted those plans, but now that we're past the crisis and as we deliver on our earnings per share targets, you should expect us to remove <unk> CASM ex and capacity guidance and focus on earnings per share.

Scott Kirby: But now that we're past the crisis, and as we deliver on our Earnings Per Share targets, you should expect us to remove TRASM, CASMX, and Capacity Guidance and focus on Earnings

Andrew P. Nocella: The United Next fleet growth in recent years has allowed us to unlock the true value in our hub system, which you can see from our results today. Unique aircraft cabin and capacity plans continue to be a driver of our strong revenue performance, particularly as demand for premium products remains elevated. For example, domestic premium revenue grew 13% year-over-year in Q4, over double the rate of coach, another data point validating our strategy. While we remain focused on monetizing our growing premium capacity, we also remain committed to the basic economy. Domestic basic economy revenue was up nearly 20% in the fourth quarter compared to last year.

Scott Kirby: We've provided RASM and TRASM the first quarter, but this is likely the last time we will do so for a quarter.

Mike: We've provided RASM in the first quarter, but this is likely the last time, we will do so for a quarter.

Scott Kirby: We will continue to provide fulsome commentary on the trends impacting our

Mike: We will continue to provide fulsome commentary on the trends impacting our business and we will continue to be transparent with reviews of the longer term future for both United in the industry that we're managing this business towards.

Scott Kirby: And we will continue to be transparent with our views of the longer-term future for both United and the industry that we're managing this business.

Scott Kirby: You will earn your confidence by delivering bottom line

Mike: We will earn your confidence by delivering bottom line results.

Scott Kirby: Shifting gears to the fleet.

Mike: Shifting gears to the fleet.

Brett Hart: In the fourth quarter, we took delivery of 20 Boeing MAX and four Airbus A321s.

Mike: In the fourth quarter, we took delivery of 20, Boeing Max and for Airbus <unk> hundred 21 aircraft.

Brett Hart: Looking ahead to 2024, we have a total of 107 aircraft scheduled to deliver.

Mike: Looking ahead to 2024, we have a total of 170 aircrafts scheduled scheduled to deliver.

Brett Hart: 31 of those being maxed out.

Mike: 31 of those being Max nine.

Brett Hart: It is unrealistic at this time to believe all of those aircraft will deliver as currently

Mike: It is unrealistic at this time, we believe all of those aircraft will deliver as currently planned.

Brett Hart: We also have 277 MAX 10 aircraft on order through the remainder of the decade and an additional 200 options for MAX 10 aircraft.

We also have 277, Max 10 aircrafts on order through the remainder of the decade and an additional 200 auctions for Max 10 aircrafts.

Brett Hart: We are monitoring Boeing's air progress toward certification in the Mexican coast

Mike: We are monitoring monitoring <unk> progress towards certification of the Mexican closely.

Brett Hart: At this time, our current aircraft delivery schedule would lead to a total capex of approximately $9 billion in 2024.

Mike: At this time, our current aircraft delivery schedule would lead to a total capex of approximately $9 billion in 2024.

Andrew P. Nocella: Correcting gauge deficits at United remains a key component of the future. We continue to believe we can add gauge to domestic flying while maintaining strong unit revenues. Since 2019, United has increased its North American gauge by 22 percent, while also leading EMPRASM growth. For 2024, we intend to focus much of our domestic growth on our MidCon hubs in Washington, Dulles, as we add significant levels of new connectivity.

Brett Hart: But given the MAC-9 grounding and the continued supply chain issues, there's a downward bias toward 2021.

Mike: But given the masonite grounded and the continued supply chain issues.

Mike: Downward bias towards 2020 for spin.

Brett Hart: We also expect a reduction in orders and deliveries from Boeing in 2025.

We also expect a reduction in orders and deliveries from Boeing in 2025.

Brett Hart: This will require reworking of our fleet plan and we will share the details when that work

Mike: This will require working over fleet plan and we will share the details with network is complete.

Brett Hart: Turning to the balance sheet, we ended the quarter with $16.1 billion in liquidity, including our underrun revolver.

Mike: Turning to the balance sheet, we ended the quarter with $16 1 billion in liquidity, including our Undrawn revolver.

Brett Hart: Our adjusted net debt to EBITDA was 2.9 times consistent with our leverage target of less than three times provided

Mike: Our adjusted net debt to EBITDAR was two nine times consistent with our leverage target of less than three times provided at the start of the year.

Andrew P. Nocella: This connectivity change is why we have confidence in the RASMs being accretive in 2024. Diversified revenue streams across our global network remain key to our relative success as we implement our UnitedNext plans. United's global network is a key structural advantage we will focus on in the coming years, and it differentiates us. With that, I wanted to say thanks to the entire United team and hand it over to Mike to discuss our financial results. Mike.

Brett Hart: Managing the business towards positive free cash flow will be a top priority for our team over the coming year.

Managing the business towards positive free cash flow will be a top priority for our team over the coming years.

Brett Hart: Our stock is deeply undervalued, trading at less than four times earnings, despite the fact that we delivered 19.5% revenue growth and realized significant structural improvement in relative profitability in 2023.

Mike: Our stock is deeply undervalued trading at less than four times earnings. Despite the fact that we delivered 19, 5% revenue growth.

Mike: And realized significant structural improvement relative profitability in 2023.

Brett Hart: But we also understand that generating free cash flow consistently

Mike: But we also understand the generating free cash flow consistently EBIT, while we execute our United next strategy is an important component to increasing our valuation.

Brett Hart: Even while we execute our United Next strategy, it's an important component to increasing our valuation.

Brett Hart: 2023 marks the first full year of the United

Mike: 2023 marked the first full year with index plan were thrown some curveballs, but we adapted quickly and exited the year stronger than ever.

Brett Hart: We were thrown some curveballs, but we adapted quickly and exited the year stronger than ever.

Brett Hart: It's clear that when customers are given a choice, they are choosing United.

Mike: Clear that when customers are given a choice they're choosing United.

Michael Donald Leskinen: Thanks, Andrew, and thank you to the whole United team for closing up the year on a high note, both operational and financial. I'm proud to report that in 2023 we delivered pre-tax income of $4.3 billion, a more than $3.2 billion improvement over 2022. We delivered earnings per share of $10.05, within our initial guidance range of $10-12 and well ahead of consensus expectations of about $6 at the beginning of the year.

Brett Hart: You can see it clearly in our revenue and margin performance relative to the industry.

Mike: You can see it clearly in our revenue and margin performance relative to the industry.

Brett Hart: Finally, I'm happy to announce we will be hosting an Investor Day on May 1st in Chicago.

Mike: Finally, I'm happy to announce we will be hosting an investor day on May <unk> in Chicago.

Brett Hart: We plan to provide an update on our progress with the United Next Plan and introduce some of the unique United tailwinds that will drive continued margin expansion and sustainable free cash flow.

Mike: We plan to provide an update on our progress with <unk> and introduce some of the United tailwind that will drive continued margin expansion and sustainable free cash flow.

Brett Hart: I'm encouraged by our results and our relative momentum, and I'm looking forward to delivering another solid year for our employees, customers, and shareholders.

Mike: I'm encouraged by our results in a relative momentum and im looking forward to delivering another solid year for our employees customers and shareholders.

Christina Edwards: With that, I'll pass it over to Christina to start.

With that I will pass it over to Kristina to start the Q&A.

Christina: Thanks, Mike. We will now take questions from the analyst community. Please limit yourself to one question and, if needed, one follow-up question. Deegan, please describe the procedure to ask the question.

Thanks, Mike we will now take questions from the analysts please limit yourself to one question and if needed one follow up question. Steven Please describe the procedure to ask a question.

Michael Donald Leskinen: We achieved this despite significant industry headwinds and operational constraints that led to lower capacity. For the fourth quarter, we delivered pre-tax income of $845 million and earnings per share of $2, ahead of consensus and above the high end of our guidance. Strong operational performance, robust revenue trends, and a decrease in fuel prices supported these results. Fourth quarter CASMX was up 4.9% as we did not operate plate fatality for the full quarter. Additionally, beginning with the fourth quarter, we are now classifying certain commissions that hadn't been classified as contraband as distribution expenses. This has no impact on net income or cash flow.

Christina: Thank you. The question and answer session will be conducted electronically. If you would like to ask a question, please press pound two on your telephone keypad to be entered in the question queue. Please hold for a moment while we assemble our queue.

Steven: Thank you the question and answer session will be conducted electronically. If you would like to ask a question. Please press pound too on your telephone keypad to be entered in the question queue. Please hold for a moment, while we assemble our queue.

Steven: Alright, we will go to the first caller in queue.

Christina Edwards: All right, we will go to the first caller in queue, Ravi Shankar from Morgan Stanley .

Steven: Ravi Shanker from Morgan Stanley.

Ravi Shanker: Ravi, your line is unmuted.

Ravi Shanker: Bobby Your line is muted.

Ravi Shanker: Yes.

Ravi Shanker: Thanks. Morning, everyone. So maybe, Scott, you said at the start that you saw pressure on your 2023 capacity, and I think you kind of went through your order book and said there's downward pressure there expected as well. Does this want to make you look at the long-term United Next Growth plans and kind of what can be practically achieved in the coming years? Is that something you can expect during the investor day?

Bobby: Thanks, Good morning, everyone.

Bobby: Maybe.

Bobby: Scott you said at the start that you saw pressure on your 2023 capacity and I think you went through your order book and said there is downward pressure there I expected as well.

Bobby: Just want to make you look at the long term, United and its growth plans and kind of what.

Bobby: What can be practically achieved in the coming years is that something you can expect that during the investor day.

Speaker Change: Hey, Ravi this is Mike.

Ravi Shanker: Hey, Robbie, this is Mike. Look, the reality is that with the max grounding, this is the kind of straw that broke the camel's back with,

Ravi Shanker: Look the reality is that with the.

Ravi Shanker: The Max grounding. This is the kind of straw that broke the camel's back with.

Michael Donald Leskinen: believing that the MAX 10 will deliver on the schedule we had hoped

Ravi Shanker: Believing that the Max 10, we will deliver on the schedule we had hoped for.

Michael Donald Leskinen: This change added one point to our year-on-year fourth quarter CASMAX and increased fourth quarter year-on-year unit revenue by 0.2%. The change will also result in an approximate 1-point headwind to Gary-Eureka's CAS and an approximate 0.6-point increase in rather through the end of the third quarter. Underlying unit costs trended favorably during the quarter as a completion factor came in better than planned due to our strong Compared to 2019, our relative performance on Casimax was near the top of the industry. As Scott outlined, delivering strong relative cost performance remains critical to the successful execution of the United Act. We have always asserted that costs that are borne by the entire industry are passed along in prices with a lag. Historically, this relationship has been clear with Jessica.

Mike: And so we're working through an alternate plan. We do expect our growth rate to slow in coming years. The United Next plan is firmly on track. It will take a little longer to get there. And we're working on alternate plans to see how much higher we can elevate the growth with the MAX-10 out. Now, we're still counting on Boeing, and we're monitoring the MAX-10 closely, and we're rooting and we're doing everything we can to help that aircraft get certified. It's a great aircraft. But we can't count on it, and so we're working on alternate plans.

Ravi Shanker: So were working through an alternate plan, we do expect our growth rate to slow in coming years.

Ravi Shanker: United Next plan is firmly on track it will take a little longer to get there.

Ravi Shanker: And we're working on alternative plans to see how much higher we can elevate the growth with the Max 10.

Ravi Shanker: We're still counting ongoing and we're monitoring the Max 10 closely and we're rooting and we do everything we can to help that aircraft get certified it's a great aircraft, but we cant count on it and so we're working on ultimate plan. The details we'll share when we have them.

Mike: The details we'll share when we have them. I hope we'll have more by the first quarter conference call, and we'll certainly have a wholesome update for you by our main person investor.

Ravi Shanker: I hope, we'll have more by the by the first quarter Conference call. We will certainly have a fulsome update for you by our May Investor day.

Speaker Change: Very helpful and maybe as a quick follow up I think you guys had said.

Mike: very helpful and maybe a quick follow-up i think you guys said uh asia uh can be a pretty decent kind of as it comes back uh i think you guys were profitable on the china routes prior to the pandemic correct me if i'm wrong do you think asia margins can be better than before and is that a temporary demand catch-up or do you think uh that's sustainable in the new normal

Speaker Change: Asia can be a pretty decent going up as it comes back.

Speaker Change: I think you guys were profitable on a China or <unk> prior to the pandemic correct me if I'm wrong do you think agi margins can be better than before and is that a temporary demand catch up or do you think that's sustainable kind of in the new normal.

Michael Donald Leskinen: More recently, the relationship has been clear for both higher labor and higher maintenance costs as well. Notably, our unit costs in 2023 were up 17.8% versus 2019, compared to ultra-low-cost carriers, unit costs that are expected to be up 25% on. That more than 7-point cost convergence in costs occurred simultaneous with an emerging preference for United Products. The result is unsurprising.

Scott Kirby: As we rebuilt Asia, we definitely wanted to rebuild it so it had sustainably higher margins than it did pre-pandemic. And we've gone about that, I think, very carefully. We're back to our pre-pandemic size, which is nice at this point. And China was profitable for us pre-pandemic, although it was not our highest margin flying, to be fair. As we bring it all back, our goal is to make sure that the Asia-Pacific entity produces margins that are similar to that across the rest of our global network. And I think that at least in 2023, Asia-Pacific is well ahead. I do expect things to move around a bit, particularly as more China flights come back online. But I think we're particularly bullish about what Asia looks like going forward. We added a lot of capacity in the quarter. We are absorbing it. And we expect in Q2 and Q3, that capacity is going to do very well. So we're very bullish about the long-term. Prospects in Asia post-pandemic.

Speaker Change: Yes.

Speaker Change: As we rebuilt Asia, we definitely wanted to rebuild it stood at sustainably higher margins than it did pre pandemic and we've gone about that I think very carefully.

Speaker Change: We're back to our pre pandemic size, which is nice at this point and China was profitable for us.

Speaker Change: Pre pandemic, although it was not our highest margin clients.

Speaker Change: <unk> air as we bring it all back our goal is to make sure that the Asia Pacific entity produces margins that are similar to that across the rest of our global network and I think.

Speaker Change: At least in 2023 Asia Pacific as well ahead I do expect.

Speaker Change: If things move around a bit, particularly as more China flights come back online, but I think we're particularly bullish about what Asia. It looks like going forward. We added a lot of capacity in the quarter. We are absorbing it and we expect in Q2 and Q3 that capacity is going to do very well. So we're very bullish about the long.

Michael Donald Leskinen: Our margins have dramatically and structurally improved, and we're only in the early innings of that journey. For the first quarter of 2024, we expect a loss per share between negative 35 cents and negative 85. While our core costs remain on track, our first quarter CASMAX faces a few headwinds. First, the cancellations of the MAX 9 flights have reduced first-quarter capacity. Due to the close in nature of these cancellations, most of our expenses are fixed, and we also encourage additional interruption... We expect the combination of these items will increase CASMX by approximately 3%. Second, as we mentioned, the contra revenue, reclassification, and distribution expense is the 1.5%. Third, the impact of new labor agreements as they annualize as an additional three to four and more, higher volumes of engine events, and continued supply chain challenges lead to another one point of Chasm X headwinds. While the first two items I mentioned are United Pacific headwinds, labor and maintenance are an industry-wide issue and the primary drivers of the cost Building off of our 2023 momentum, we expect full-year 2024 earnings per share to be between $9 and $11.

Speaker Change: Term prospects in Asia post pandemic.

Scott Kirby: All right. We'll go to the next caller in queue, Jamie Baker from J.P. Morgan Stanley .

Speaker Change: We'll go to the next caller in queue, Jamie Baker from J P. Morgan Stanley.

Jamie N. Baker: Your line is unmuted.

Jamie N. Baker: Your line is muted.

Jamie N. Baker: Fair enough. Good morning everybody. First one for Andrew. So you said the 20% revenue increase for basic economy. What can you tell us about the composition of that growth? Is some percentage Mileage Plus members trading down? Is some percentage stimulation of brand new demand from scratch? Is some percentage share shift from LMAs? I guess the simpler question is who's driving the growth?

Jamie N. Baker: Fair enough.

Jamie N. Baker: Good morning, everybody.

Jamie N. Baker: First one for Andrew So you say the 20% revenue increase for basic economy. What can you tell us about the composition of that growth is some percentage mileage plus members trading down.

Percentage stimulation of brand new demand from scratch seven percentage of share shift from <unk> I guess the simpler question is who is driving the growth.

Andrew P. Nocella: I think it's largely a share shift, Jamie. You know, we developed Bixit Economy numerous years ago now and have been refining how we sell it, how we distribute it, and that product. And it's an important product in our lineup. You know, we do focus a lot on premium, but we know we need to be competitive across the whole range of needs that our customers have in our hubs, and that required a competitive basic economy product that we can do profitably. And as we look at the data, we think the biggest change here is as we've increased our gauge, we've been able to attract more and more market share across the board. But in particular, we've been able to attract more of it from some of the low-cost carriers out there. So we're really pleased with this development, and it's given us every indication that we should continue to push forward. As our gauge increases, we'll be able to more effectively take on that traffic and grow our share base even more.

Speaker Change: I think it's largely share shift Jamie.

Speaker Change: We delegate to the coming numerous years ago, now and had been refining how we sell it how we distribute it in that product.

Speaker Change: And it's an important product in our lineup, we do focus a lot on premium.

Speaker Change: But we know we need to be competitive across a whole range of needs that our customers have in our hubs and that required the competitive basic economy product that we can do profitably and as we look at the data. We think the biggest change here is as we've increased our gauge we've been able to attract more and more market share across the board but in.

Michael Donald Leskinen: We are encouraged by the trends we are seeing, and our UnitedNext plan is working well. This is our guidance, but I'd be remiss if I didn't point out that our internal targets are higher. We plan to update our longer-term financial targets in our upcoming investments. Looking ahead, we intend to take a different approach to guidance. As demonstrated in 2023 and just recently with the MAX grounding, we operate in a dynamic industry. With the No Excuses philosophy, we intended to take United off the detailed quarterly metrics shortly after I joined and led the investor relations team.

Speaker Change: We've been able to attract more of it from some of the <unk>.

Speaker Change: Low cost carriers out there. So we're really pleased with this development and its given US every indication that we should continue to push forward is there a gauge increases we will be able to more effectively take on that traffic in and grow our share base even more.

Jamie N. Baker: Okay, thanks for that. And then for Mike, it was a couple of years ago, in fact, it might have been almost two years to the day,

Speaker Change: Okay. Thanks for that and then for Mike.

Speaker Change: It was a couple of years ago and in fact that might've been like almost two years to the day.

Jamie N. Baker: that there were press reports that you or United was looking at monetizing a portion of MileagePlus, and then things subsequently went pretty quiet on that front.

Speaker Change: There were press reports that you are United was looking at monetizing a portion of mileage plus and then things subsequently went pretty quiet on that front. So a couple of questions first as loyalty as important to United as it is to Delta Delta.

Michael Donald Leskinen: The pandemic interrupted those, but now that we're past the crisis, and as we deliver on our earnings per share targets, you should expect us to remove TRASM, CASMX, and incapacity guidance and focus on earnings. We've provided RASM and TRASM for the first quarter, but this is likely the last time we will do so for our next quarter. We will continue to provide fulsome commentary on the trends impacting us, and we will continue to be transparent with our views of the longer-term future for both United and the industry in which we're managing this business. We'll earn your confidence by delivering bottom-line results. Shifting gears to the fleet. In the fourth quarter, we took delivery of 20 Boeing MAX and four Airbus A321As. Looking ahead to 2024, we have a total of 107 aircraft scheduled to be delivered. 31 of those being maxed out.

Mike: So a couple of questions. You know, first is, is loyalty as important to United as it is to Delta? You know, Delta at Leighton.

Speaker Change: So hard into this topic on its calls and second any thoughts on how United or the broader industry might get investors to value. This cash flow at a higher multiple.

Mike: so hard into this topic on its calls and second any thought

Mike: on how United or, you know, the broader industry might get investors to value this cash flow at a higher multiple? And if the answer is no, I'm happy to see the floor.

Speaker Change: And if the answer is no I'm happy to see the Florida.

Mike: Thanks, Mike.

Speaker Change: Thanks, Mike.

Speaker Change: Jamie Thank you.

Mike: Jamie, thank you, appreciate the question.

Speaker Change: The question.

Jamie: This is something I'm very passionate about. Mileage Plus is a crown jewel in the businesses we have here at United Airlines.

Speaker Change: This is something I'm very passionate about.

Speaker Change: Mileage plus is our crown jewel.

Speaker Change: The businesses, we have here at United Airlines.

Jamie: We've made some significant progress.

Speaker Change: We've made some significant progress.

Jamie: towards growing that business. We have a new leader in Richard Nunn.

Speaker Change: <unk> is growing that business.

Speaker Change: Have a new leader and Richard none.

Jamie: We have significant projects underway around data and how we can...

Speaker Change: We have <unk>.

Speaker Change: <unk>.

Speaker Change: Projects underway around data.

Speaker Change: And how we can.

Richard Nunn: create a better customer experience, and modify that data simultaneously.

Speaker Change: Create a better customer experience and monetize that data simultaneous.

Richard Nunn: And you can expect a very fulsome update on the May 1st Investor Day.

Speaker Change: And you can expect a very fulsome update on the <unk> first investor day.

Michael Donald Leskinen: It is unrealistic at this time to believe all of those aircraft will deliver as currently planned. We also have 277 MAX 10 aircraft on order through the remainder of the decade and an additional 200 options for MAX 10 aircraft. We are monitoring Boeing's progress toward certification of the MaxiTank Coastal. At this time, our current aircraft delivery schedule would lead to a total capex of approximately $9 billion in 2024. But given the Max-9 railing and the continued supply chain issues, there is a downward bias toward 2020. We also expect a reduction in orders and deliveries from Boeing in 2025. This will require a reworking of our fleet plan, and we will share the details when that happens. Turning to the balance sheet, we ended the quarter with $16.1 billion in liquidity, including our undrawn revolvers.

Richard Nunn: We do have ideas on how to bring the market's attention.

Speaker Change: We do have ideas on how to bring the market pension.

Richard Nunn: to the value in the higher premium multiple that those earnings should trade at.

Speaker Change: To the value and the higher premium multiple that those earnings should trade at.

Richard Nunn: And we have several options. And we'll share more when we're ready to share more.

Speaker Change: We have several options and we will share more when when we're ready to share more but.

Richard Nunn: We've discussed some of those, but some of those have been written about in the analyst reports, and if the value is not recognized in our shares, we will take action to highlight that value.

Speaker Change: We've discussed some of those some of those have been written about in analyst reports.

Speaker Change: And if the value is not recognized in our shares we will take action two to highlight that value.

Richard Nunn: in your

Speaker Change: In the near future.

Alright, we will go to the next caller in queue, Michael Lindenberg from Deutsche Bank, Michael Your line is on mute it.

Richard Nunn: All right, we'll go to the next caller in queue, Michael Linenberg from Deutsche Bank. Michael, your line is unmuted.

Michael J. Linenberg: Sorry, one moment please.

Michael J. Linenberg: Michael, your line is unmuted.

Michael J. Linenberg: Michael Your line is muted.

Michael Donald Leskinen: Our adjusted net debt to EBITDAR was 2.9 times, consistent with our leveraged target of less than three times provided at the start of the year. Managing a business towards positive free cash flow will be a top priority for our team over the coming years. Our stock is deeply undervalued, trading at less than four times earnings despite the fact that we delivered 19.5% revenue growth and realized a significant structural improvement in relative profitability in 2023, but we also understand the importance of generating free cash flow consistency. Even while we execute our UnitedNext strategy, it's an important component to increasing our valuation. 2023 marks the first full year of United... We were thrown some curveballs, but we adapted quickly and exited the year stronger than ever. It's clear that when customers are given a choice, they're choosing United.

Michael J. Linenberg: Oh, hey, can you guys hear me now?

Michael: Hey can you guys hear me now.

Michael J. Linenberg: Yes.

Michael: Yes.

Michael J. Linenberg: Just getting back to, I guess, Scott, on the issue with the MAX-10, at least fortunately in the case of United, you do have a choice. You're a very large operator of the Airbus product as well as the Boeing narrowbody product. As we think about the issues with supply chain and constraints across the OEM space, is there at some point where you're thinking that, given the size of United, that it would be

Michael: Oh great.

Michael: Just getting back to I.

Michael: I guess Scott on the issue with the Max 10 at least Fortunately in the case of United You do have a choice.

Michael: You're a very large operator of the Airbus product as well as the Boeing narrow body product as we think about the issues with supply chain and constraints across the OEM space is there at some point, where youre thinking that given the size of the United that it would be.

Scott Kirby: prudent to consider a wide body from another another OEM. You know, right now it looks like the 787 is the future for United from a wide body perspective, but you still have that E350 order out there. Has your thinking on that changed? Thanks.

Michael: Prudent to consider.

Michael: Wide body from another another OEM right now it looks like the 787 is the future for United from a widebody perspective, but you still have that <unk> hundred 50 order out there has your thinking on that changed.

Mike: Hey Mike, thanks for the question.

Hey, Mike Thanks for the question.

Michael Donald Leskinen: You can see it clearly in our revenue and margin performance relative to the industry. Finally, I'm happy to announce we will be hosting an Investor Day on May 1st in Chicago. We plan to provide an update on our progress with the UnitedNEXT plan and introduce some of the unique United tailings that will drive continued margin expansion and sustainable free cash flow. I'm encouraged by our results and our relative momentum, and I'm looking forward to delivering another solid year for our employees, customers, and shareholders. With that, I will pass it over to Christina to start.

Mike: Thank you.

Mike: The A350 is an incredible aircraft. We have a significant order book for 787s right now, and we have a mix of 777 aircraft. Some are relatively older, and a sub-fleet is quite young. As we look into the 2030s,

Speaker Change: The <unk> hundred 50 is the incredible aircraft, we have a significant order book for 780 Sevens right now and we have a mix of triple seven aircraft some are relatively older.

Speaker Change: <unk> is quite young.

Speaker Change: As we look into 2030.

Mike: The A350 is an aircraft that we are looking at. We don't have any new news to share with you today, but the timing will be that early part of the next decade.

Speaker Change: <unk> hundred 50.

Speaker Change: <unk> hundred 50 is an aircraft that we are looking at we don't have any new news to share with you today.

Speaker Change: But but the timing would be that early part of the next decade.

Christina Edwards: Thanks, Mike. We will now take questions from the analyst community. Please limit yourself to one question and, if needed, one follow-up question.

Mike: Great. And then just a quick follow-up back to what Jamie brought up on basic economy, the 20% increase is obviously pretty significant. But last quarter, you were up 50%. And the question is, is that just a function of a more difficult comp, or did you actively pull back on inventory of basic economy just given the surge that we've seen on the cost side? And back to your point about trying to maintain that gap between CAS and RASM. Thanks for taking my question.

Speaker Change: Great and then just quick follow up follow up back to what Jamie brought up on basic economy, the 20% increases obviously pretty significant but last quarter you were up 50% and the question is is that just a function of a more difficult comp or did you actively pulled back on.

Tegan: Deegan, please describe the procedure to ask a question. Thank you. The question and answer session will be conducted electronically. If you would like to ask a question, please press pound two on your telephone keypad to be entered into the question queue.

Speaker Change: On inventory of basic economy, just given the surge that we've seen on the cost side and back to your point about sort of trying to maintain that gap between CASM RASM. Thanks for taking my question.

Tegan: Please hold for a moment while we assemble our queue. All right, we will go to the first caller in queue, Ravi Shanker from Morgan Stanley. Ravi, your line is unmuted.

Mike: Yes, Andrew. No, we didn't pull back on it for that reason. And remember, these are year-over-year comps, so you have to consider the math of what we did last year. We're very bullish about basic. We're also very bullish about premium. And the point is, is we have a really great diversified revenue stream across all of our cabins as we try to decommoditize our product. We are really hopeful that we'll continue to drive increasing volumes in basic. It seems to be having the appropriate P&L effect at United and competitive effect across industry. So it's something we want to do more of, not less of. And so you should expect...

Speaker Change: Thanks, Andrew No we didn't pull back on it for that reason and remember these are year over year comps do you have to consider the math of.

Ravi Shanker: Thanks for a good morning, everyone. So maybe, Scott, you said at the start that you saw pressure on your 2023 capacity. And I think you kind of went through your order book and said there's downward pressure there expected as well. Does this want to make you look at the long-term UnitedNext growth plans and kind of what can be practically achieved in the coming years? Is that something you can expect during the investor meeting? Hey Ravi, this is Mike.

Speaker Change: What we did last year were very bullish about basic we're also very bullish about the premium end point is is we have a really great diversified revenue stream across all of our cabin as we try to <unk> our product.

Speaker Change: We are really hopeful that we will continue to drive increasing volumes and basic it seems to be having the appropriate P&L effect at United and competitive effect across the industry.

Speaker Change: Something we want to do more of not less of and so you should expect that.

Scott Kirby: Look, the reality is that with the Max grounding, this is the kind of straw that broke the camel's back with believing that the MAX 10 will deliver on the schedule we had hoped for. And so we're working through an alternate plan. We do expect our growth rate to slow in the coming years. The UnitedNX plan is firmly on track.

Mike: We'll go to the next caller in queue, Connor Cunningham from Milius Research. Connor, your line is unmuted.

Speaker Change: We will go to the next caller in queue Conor Cunningham from Melius Research your line is unmated.

Connor Cunningham: Hi, everyone. Thank you. I'm a little confused on the comment on the link between CASM and RASM. I would have thought that would have been the case before, so I'm just trying to understand what's changed. Is that you're being better at predicting outcomes, or is it really more of an industry comment that you're trying to drive home here? Thank you.

Conor Cunningham: Hi, everyone. Thank you.

Conor Cunningham: Little confused on the comment between them on the link between CASM and RASM I would've thought that would've been the case before so I'm just trying to understand what's changed that you are being like just better at predicting outcomes or is it really more of an industry comment that youre trying to drive home here. Thank you.

Michael Donald Leskinen: It will take a little longer to get there, and we're working on alternate plans to see how much higher we can accelerate the growth with the MAX-10 out. Now we're still counting on Boeing, and we're monitoring the MAX-10 closely, and we're routing, and we're doing everything we can to help that aircraft get certified. It's a great aircraft.

Connor Cunningham: It's really an industry comment. In the past, if United had, if an airline, including United, had chasms going up while others had chasms going down, the prices...

Speaker Change: It's really an industry comment in the past if United had if an airline.

Speaker Change: Had CASM going up while others had CASM going down.

Speaker Change: The prices.

Speaker Change: Prior to the lowest common denominator.

Connor Cunningham: price to the lowest common denominator. So it's an industry comment, just like fuel. Anything that affects the whole industry is a pass-through. If it affects one airline, it's not, but if it affects all airlines, it's a pass-through. That was, we were sitting in this room a year ago, and maybe we didn't do it articulately, but that was the point we were trying to make, and that is exactly what happened, and it is what's going to happen going forward.

Michael Donald Leskinen: But we can't count on it, and so we're working on alternatives. The details we'll share when we have them. I hope we'll have more by the first quarter conference call. And we'll certainly have a wholesome update for you by our May 1st investigation. Very helpful.

So it is an industry comment as industry, just like fuel anything that affects the whole industry is a pass through.

Speaker Change: It affects one airline it is not because it affects all airlines in the past that was we were sitting in this room a year ago.

Ravi Shanker: And maybe a quick follow up. I think you guys said Asia can be pretty decent as it comes back. I think you guys were profitable on the China route prior to the pandemic. Correct me if I'm wrong.

Speaker Change: And maybe we didn't do it articulately, but that was the point, we were trying to make and that is exactly.

Speaker Change: What happened and it is what's going to happen going forward.

Connor Cunningham: Okay, appreciate that. And then it was a little unclear on the prepared remarks.

Speaker Change: Okay I appreciate that and then it was a little unclear on the prepared remarks.

Connor Cunningham: I'm just trying to does your outlook for costs include accruals for open labor contracts and just what are the risks that you see that to the to the cost plan in 2024 Thank you.

Speaker Change: I'm just trying to does your outlook for costs include accruals for open labor.

Andrew P. Nocella: Do you think Asia's margins can be better than before? And is that a temporary demand catch-up? Or do you think that's sustainable in the new normal? As we rebuilt Asia, we definitely wanted to rebuild it so it had sustainably higher margins than it did pre-pandemic. And we've gone about that, I think, very carefully. We're back to our pre-pandemic size, which is nice at this point. And China was profitable for us pre-pandemic, although it was not our highest-margin flying, to be fair.

Speaker Change: Tracts and just what are the risks that you see.

Speaker Change: So the cost plan in 2024, thank you.

Connor Cunningham: Hey, Connor, this is Mike. We include our expectations for all labor agreements in our

Speaker Change: Hey, Conor this is Mike we include our expectations for all labor agreements and our ratings.

Speaker Change: Alright, we will go to the next caller in queue.

Connor Cunningham: All right, we'll go to the next caller in queue.

Mike: Catherine O'Brien from Goldman Sachs, your line is unmuted.

Catherine O'brien from Goldman Sachs. Your line is limited.

Catherine O'brien: Hey, good morning, everyone. Thanks, so much for the time.

Catherine O'brien: I might stick with the cost side just following on on <unk> quickly here.

Catherine O'brien: Is your low single digit ex Max impact CASM X guide for the first quarter.

Catherine O'brien: Do we think about the puts and takes through year end versus that level of CASM ex inflation.

Jamie N. Baker: As we bring it all back, our goal is to make sure that the Asia-Pacific entity produces margins that are similar to that across the rest of our global network. And I think, at least in 2023, Asia-Pacific will be well ahead. I do expect things to move around a bit, particularly as more Chinese flights come back online. But I think we're particularly bullish about what Asia looks like going forward. We added a lot of capacity in the quarter. We are absorbing it, and we expect in Q2 and Q3 that capacity is going to do very well. So very bullish about the long-term prospects in Asia post-pandemic. All right, we'll go to the next caller in queue, Jamie Baker from J.P. Morgan Stanley. Your line is unmuted.

Catherine O'brien: Before today I was originally assuming growth would decelerate over the course of the year, but the CASM ex.

Catherine O'brien: Comp C's so you know each quarter in my model ended up looking pretty similar on a year-over-year basis You know X max impact in the one cue is that a fair way to think about it? Or is there more lumpiness than that that I'm missing and then I guess just to put a finer point on one question Does one cue and full your EPS include any flight attendant accrual? Thanks so much for the time

<unk> so each quarter in my model ended up looking pretty similar on a year over year basis.

Speaker Change: Ex Max impact and the <unk> is that a fair way to think about it or is there more lumpiness than that that I'm missing and then I guess just to put a finer point on one question.

Speaker Change: Does <unk> and full year EPS include any flight attendant accrual. Thanks, so much for the time.

Mike: Okay, let me take the last question first. We include our expectations for labor agreements in our

Speaker Change: So can you let me take the last question first we include our expectations for the labor agreements in our guidance we will stop.

Scott Kirby: Full stop. Regarding chasm trends in Q2 and 3 and 4, you would expect the max headwind to go away. We do think we're getting closer to seeing that aircraft fly again. You would see some United-specific tailwinds with some gauge increase, although with

Speaker Change: Regarding.

Speaker Change: Regarding CASM trends in Q2, and three and four.

Speaker Change: You would expect the Max headwind to go away.

Jamie N. Baker: Fair enough. Good morning, everybody. First one for Andrew.

Speaker Change: Do you think we're getting closer to seeing that aircraft fly again, you would see some united specific tailwind.

Jamie N. Baker: So you said the 20% revenue increase for basic economy. What can you tell us about the composition of that growth? Is it, you know, with some percentage of mileage plus members trading down? Is it, you know, stimulation of brand new demand from scratch? Is some percentage share shift from LMAs? I guess the simpler question is, who's driving the growth?

Speaker Change: With some gauge increase although with.

Catherine O'brien: slowing deliveries, that gauge increase in 24 will be less than we would have expected.

Speaker Change: Slowing deliveries that gauge increase in 2004, we will be less than we would have expected you will see continued pressure from labor of about three to four points, that's an industry headwind for CASM ex not unique to United We expect it will lead to higher <unk> to offset but you should.

Scott Kirby: You will see continued pressure from labor of about three to four points. That's an industry headwind for CASMAX, not unique to United. We expect it will lead to higher TRASM to offset, but you should continue to see that. We will lap the majority of that as we enter into the fourth quarter.

Speaker Change: You need to see that we will lap the majority of that as we enter into the fourth quarter.

Speaker Change: And then maintenance headwind of about a point, that's going to be lumpy quarter to quarter. As I say here today, I think it's about a point in each of the quarters this year. At some point, the supply chain will fix itself in aerospace, but we don't see that today, and I think it probably takes well beyond 2024. So you should think about, to summarize, you should think about the labor and maintenance headwinds as being...

Speaker Change: And then maintenance headwind of about a point, that's going to be lumpy quarter to quarter as I sit here today I think it's about one point in each of the quarters. This year at some point the supply chain, we will fix itself in aerospace, but we don't see that today and I think it probably picks well beyond 2024. So you should think about to.

Andrew P. Nocella: And as we look at the data, we think the biggest change here is that as we've increased our gauge, we've been able to attract more and more market share across the board. But in particular, we've been able to attract more of it from some of the low-cost carriers out there. So we're really pleased with this development, and it's given us every indication that we should continue to push forward. As our gauge increases, we'll be able to more effectively take on that traffic and grow our share base even more. OK, thanks for that. And then, for Mike, it was a couple of years ago.

Speaker Change: You should think about the labor and maintenance headwinds as being persistent.

Speaker Change: Got it. Very clear. And maybe just sticking with you, Mike, you know, the $9 billion CapEx figure, that's tied to your contractual commitments, unless I've got that wrong. You know, even as of your last 10Q before the max grounding, you were expecting 17% less aircraft in the contractual amount. I'm guessing there's probably more downside risk that today, given what's going on with the max. But, you know, in order of magnitude, does that delta between expected and contractual deliveries largely foot how we should think about downside risk on a dollar basis versus that $9 billion?

Speaker Change: Got it very clear.

Speaker Change: And maybe just sticking with you Mike.

Mike: <unk> $9 billion Capex figure that's tied to your contractual Clinton itself I've got that wrong.

Mike: Even of even as of your last 10-Q before the Max grounding you were expecting youre expecting 17% less aircraft in the contractual amount.

I'm guessing, there's probably more downside risk that today, given what's going on with the Max but in order of magnitude does that delta between expected and contractual deliveries largely foot. How we should think about downside risk on a dollar basis versus that $9 billion.

Jamie N. Baker: In fact, it might have been almost two years to the day that there were press reports that you were you know United Airlines was looking at monetizing a portion of Mileage Plus, and then you know things subsequently went pretty quiet on that front. So a couple of questions, you know. First, is loyalty as important to United Airlines as it is to Delta? You know, Delta, at least... so hard into this topic on its calls, and second, any thoughts? on how United or, you know, the broader industry might get investors to value this cash flow to hire multiple? And if the answer is no, I'm happy to cede the floor.

Mike: that delta between contractual and expected is growing.

Mike: The delta between contractual and expected is growing.

Speaker Change: And we don't know exactly where it's settled yet. That's what we're working through now.

And we don't know exactly where it settled yet that's what we're working through now.

Mike: And we are working working on an alternate strategy strategy to mitigate some of the loss and growth. But, but, yes, if you're thinking about CapEx coming below 9Million this year, and the trajectory for maybe lower than what you would expect CapEx in 25 and beyond. That's how you that's how you.

Mike: We are working.

Mike: Working on an alternate strategy strategy to mitigate some of the loss in growth.

Mike: But yes, as youre thinking about capex coming below $9 billion this year and the trajectory for maybe lower than what you would expect the capex in 'twenty five and beyond.

Michael Donald Leskinen: Thanks, bye. Jamie, thank you. I appreciate the question. This is something I'm very passionate about.

Mike: That's how you should think about.

Michael Donald Leskinen: Mileage Plus is a crown jewel in the businesses we have here at United Airlines. We've made some significant progress towards growing that business. We have a new leader in Richard Nunn.

Speaker Change: Alright, well go to the next caller in queue.

Mike: All right, we'll go to the next caller in Cuba.

Mike: Scott Group from Wolf Research. Scott, your line is unmuted.

Speaker Change: Scott Group from Wolfe Research Scott Your line isn't muted.

Scott: Hey, Thanks, good morning so.

Scott H. Group: Hey, thanks. Good morning. So, Mike, I totally get your message that the plan is fluid and flexible. But, you know, as it stands today, I'm just wondering, do you think RASM is going to be positive this year? And then, you know, maybe just, can you help us just think about shaping the year a little bit? So, if I look at last year, right, a pretty massive second quarter and then moderation in the second half of the year. Are you thinking a similar shape or maybe more back halfway to any color there would be helpful?

Jamie N. Baker: We have significant projects underway around data and how we can create a better customer experience and modify that data simultaneously, and you can expect a very fulsome update on May 1st Investor Day. We do have ideas on how to bring the market to tension, to value, and to the higher premium multiple that those earnings should trade at, and we have several options, and we'll share more when we're ready to share more. We've discussed some of those, but some of those have been written about in analyst reports, and if the value is not recognized in our shares, we will take action to highlight that value. Alright, we'll go to the next caller in queue, Michael Linenberg from Deutsche Bank. Michael, your line is unmuted. Sorry, one moment please.

Scott: Mike I totally get your message that the plan is fluid and flexible but.

Scott: As it stands today I'm just wondering do you think RASM is going to be positive. This year and then maybe just can you help us just think about shaping the year a little bit. So if I look at last year right, a pretty massive second quarter and then moderation in the second half of the year are you thinking a similar shape or maybe more.

Scott: Back half weighted any color there would be helpful.

Michael Donald Leskinen: Scott, I'll kick it off and say yes, we think TRASM for the year will be positive, but the

Speaker Change: Scott I'll kick it off and say, yes, we've been <unk> for the year it will be positive, but the details will come from Andrew.

Mike: Well, we're not given exact guidance here other than, you know, we're very bullish on the year. I think I laid out a business case where domestic is starting the year incredibly strong. I think we've laid out a business case for where we're going to do it, you know, with transatlantic capacity. And I do expect Asia capacity to step down materially as we head into Q2 and then Q3, which is obviously going to bolster those numbers, too. So I remain bullish on the year.

Andrew P. Nocella: Well, we're not giving exact guidance here other than we're very bullish on the year I think I laid out a business case, where domestic.

Andrew P. Nocella: It certainly are incredibly strong.

Andrew P. Nocella: I think we've laid out a business case for where we're going to do with Trans Atlantic capacity.

Andrew P. Nocella: And I do expect Asia capacity to step down materially as we head into Q2, and then Q3, which is obviously going to bolster those numbers too. So I remain bullish on the year.

Michael J. Linenberg: Michael, your line is unmuted. Oh, hey. Can you guys hear me now?

Michael J. Linenberg: Yeah. Oh, great. Just getting back to, I guess, Scott, on the issue with the Max 10, at least fortunately, in the case of United, you do have a choice. You're a very large operator of the Airbus product, as well as the Boeing narrowbody product. As we think about the issues with the supply chain and constraints across the OEM space, is there some point where you're thinking that, given the size of United, it would be prudent to consider a widebody from another OEM? You know, right now it looks like the 787 is the future for United from a widebody perspective, but you still have that E350 order out there. Has your thinking on that changed? Thanks. Hey Mike, thanks for the question. The A350 is an incredible aircraft.

Mike: Mike, I don't know if you had any thoughts on shaping the year for us, if you have any color. And then maybe just my other follow-up just for Andrew, just on the point about domestic and international margins converging a little bit this year. I just want to make sure I'm understanding this right. Is this domestic getting better and international –

Speaker Change: Mike I don't know if you had any thoughts on shaping the year for us. If you have any color and then maybe just my other follow up just for Andrew just on the point about domestic and international margins.

Speaker Change: <unk> a little bit this year, maybe just I just wanted to make sure I'm understanding is this.

Speaker Change: This domestic getting better in international.

Michael Donald Leskinen: a little less good, or is it they're both improving, but domestic's improving more? Just any additional color there would be great. Thank you. Look, I think we're seeing, I hate to say the word exceptional, but we're seeing really good strength in domestic right now, and I expect that's going to narrow the gap. International margins are well ahead of domestic margins in 2023, and they'll continue to be well ahead of domestic margins in 2024, but I do think that gap will narrow a bit based on the RASM outlook that I'm looking at, again, which is pretty darn good for domestic.

Speaker Change: Little less good or is that they are both improving but domestics improving more just any any additional color there would be great. Thank you well look I think we're seeing.

Speaker Change: The word exceptional, but we're seeing really good strength in domestic right now and I expect that's going to narrow the gap international margins are well ahead of domestic margins in 2023, and we will continue to be well ahead of domestic margins in 2024.

Michael Donald Leskinen: We have a significant order book for 787s right now. We have a mix of 777 aircraft. Some are relatively older, and a sub-fleet is quite young.

Speaker Change: But I do think that gap will narrow a bit based on the RASM outlook that I'm looking at again, which is pretty darn good for domestic.

Michael Donald Leskinen: As we look into the 2030s, the A350 is an aircraft that we are looking at. We don't have any new news to share with you today, but the timing will be in the early part of the next decade. Great.

Andrew: Maybe I'll take the seasonal shaping as well. You know, we're working very diligently to make Q1 a more profitable quarter for United. I think we were well on our way prior to the max grounding. Obviously, if you take that out, you can use that to update the estimates as to where we would have been in Q1. We made a lot of changes to how we fly in Q1, and we didn't talk about all those details. But when I look at our RASM strength, particularly in domestic, I am now confident that all those changes had the desired effect as we continue to build and make sure that in the future, Q1 can – well, it won't ever be our best quarter, to be blunt, that it will be a much better relative quarter. But our global network, you know, I have to say, in Q2 and Q3 really stands out, and we expect it to be stellar again over those six months.

Speaker Change: Yes, maybe I'll take the seasonal shaping.

Speaker Change: As well, we're working very diligently to make Q1, a more profitable quarter for United.

Michael J. Linenberg: And then just a quick follow-up to what Jamie brought up on basic economy, the 20% increase is obviously pretty significant, but last quarter you were up 50%. And the question is, is that just a function of a more difficult comp, or did you actively pull back on inventory of basic economy just given the surge that we've seen on the cost side? And back to your point about sort of trying to maintain that gap between CAS and RASM. Thanks for taking my question. Yes, Andrew.

Speaker Change: We are well on our way prior to the Max grounding, obviously, if you take that out you can use that to update the estimates as to where we would've been in Q1, we made a lot of changes to how we fly in Q1, and we didn't talk about all those details, but when I look at our RASM trends, particularly in domestic.

Speaker Change: Now confident that all of those changes had the desired effect as we continue to build and make sure that in the future Q1, while it won't ever be our best quarter to be blunt.

Andrew P. Nocella: No, we didn't pull back on it for that reason. And remember, these are year-over-year comps, so you have to consider the math of what we did last year. We're very bullish about basic materials. We're also very bullish about premium materials. And the point is, we have a really great diversified revenue stream across all of our cabins as we try to decommoditize our product. We are really hopeful that we'll continue to drive increasing volumes in basic. It seems to be having the appropriate P&L effect at United and competitive effect across the industry. So it's something we want to do more of, not less of. And so you should expect... We'll go to the next caller in queue, Connor Cunningham from Helios Research. Connor, your line is unmuted.

Speaker Change: It'll be a much better relative quarter, but our global network, we have to say in Q2, and Q3 really stands out and we expect it to be stellar again over those six months.

Andrew: in 2024.

Speaker Change: In 2024.

Andrew: Scott, if you're specifically asking about the shape of our quarterly earnings through the year, it's gonna look like a normal seasonal pattern, albeit with a slightly bigger loss in the first quarter

Speaker Change: If you're specifically asking about the shape of our quarterly earnings through the through the year.

Speaker Change: Look like a normal seasonal pattern, albeit with a slightly bigger loss in the first quarter due to the Max nine grounded.

Scott Kirby: All right, we'll go to the next caller in queue, Helene Becker of Cowan.

Speaker Change: Hi, we'll go to the next caller in queue Helane Becker of Cowen.

Okay.

Helane Becker: Helane your line is muted.

Helane Becker: Elaine, your line is unmuted.

Helane Becker: Great thanks very much. So here's my two questions. The first question is as you think about 2026 margins and maybe you'll update us on May 1st, how do we bridge from the roughly 8%

Helane Becker: Great. Thanks very much.

Connor Cunningham: Hi everyone, thank you. I'm a little confused about the comment about the link between Chasm and RASM. I would have thought that would have been the case before, so I'm just trying to understand what's changed.

Helane Becker: So here's my two questions. The first question is as you think about 'twenty 'twenty six margins and maybe update us on may 1st how do we bridge from the roughly 8%.

Scott Kirby: Is it that you're being better, like just better at predicting outcomes, or is it really more of an industry comment that you're trying to drive home here? Thank you. It's really an industry comment. In the past, if United had, if an airline, including United, had a chasm going up while others had chasms going down, the prices, And, as we all know, the price of the lowest common denominator. So it's an industry comment. It's just like fuel.

Helane Becker: at year end 23 to say 12 to 14%.

Helane Becker: Year end 'twenty, three to say, 12% to 14% in 2026.

Helane Becker: in 2026.

Elaine Smith: Elaine, thanks for the question. And we will update our longer-term margin targets at Investor Day. But the tailwinds that we expect from the United Next strategy, from the gauge, from the connectivity, from the preference to fly United, we have proven. It used to be, you know, it was a strategy on a piece of paper. We have proven that it's working. And so as we think about 24, deliveries being a little less, but 25 and 26, re-accelerating into that United Next strategy, we see just continued momentum.

Speaker Change: Alright, Thanks for the question and we will update our longer term margin targets at Investor Day.

Speaker Change: But the tailwind that we expect from the United next strategy from the gain from the connectivity from the preference to fly United We have proven it used to be a strategy.

Speaker Change: Proven that it's working and so as we think about 'twenty four deliveries being a little less but 25 and 26.

Speaker Change: Re accelerating into that next strategy, we see we see just continued momentum and so as for the specific level of 12% to 14% and facing we're going to have to update you on may one, but the strategy is working and we're very confident in an upward trajectory to both earnings and margin.

Scott Kirby: Anything that affects the whole industry is a pass through. If it affects one airline, it's not, but if it affects all airlines, it's a pass through. That was when we were sitting in this room a year ago.

Elaine: And so as for the specific level of 12 to 14% of pacing, we're gonna have to update you on May 1st. But the strategy is working and we're very confident in an upward trajectory to both

Connor Cunningham: Maybe we didn't do it articulately, but that was the point we were trying to make. And that is exactly what happened, and that is what's going to happen going forward. Okay, I appreciate that. And then it was a little unclear in the prepared remarks.

Elaine Smith: Okay. And then just for my follow-up, I think United Next targets, and obviously you'll update them again, I suppose, $25 billion of adjusted net debt as of the end of last year, less than $18 billion for 2026. But the other thing is, how should we think about financing? Let's just say $9 billion is off the table for this year. Let's bring it down to $6 or $7 billion plus debt paid down. How should we think about you getting to your target leverage over the next one to three years, given the CapEx program?

Speaker Change: Okay, and then just for my follow up.

Speaker Change: You're I think United next targets and obviously, we'll update them again I suppose.

Speaker Change: <unk> 5 billion of adjusted net debt as at the end of last year unless.

Michael Donald Leskinen: Does your outlook for costs include accruals for open labor contracts? And just what are the risks that you see to the cost plan in 2024? Thank you. Hey, Connor. This is Mike.

Speaker Change: Less than $18 billion for 2026, but the other thing is how should we think about financing.

Speaker Change: Now, let's just say $9 billion is off the table for this year, let's bring it down to six or $7 billion.

Michael Donald Leskinen: We include our expectations for all labor agreements in our, All right, we'll go to the next caller in queue. Catherine O'Brien from Goldman Sachs. Your line is unmuted. Hey, good morning everyone. Thanks so much for the time.

Speaker Change: Plus debt pay down like how should we think about you getting to your target leverage over the next one to three years.

Speaker Change: Given the Capex program, which.

Catherine O'brien: I might stick with the cost side, just following on Connor's quickly here. You know, versus your low single-digit X max impact CASMX guide for the first quarter, how do we think about the puts and takes through year end versus that level of CASMX inflation? Before today, I was originally assuming, you know, growth would decelerate over the course of the year, but CASMX. Tom Cees.

Speaker Change: Might be 7 billion this year, but it might be nine or eight or $10 billion 25 or 26.

Speaker Change: Thank you for watching! See you next time! Thanks for watching!

Scott Kirby: Yeah, let me try to give you a high level view and Elaine, and we can dig into more details.

Yes, let me try to give you a high level view plain and we can dig into more details in the near future.

Elaine Smith: But as I sit here today and I think about the changes in CapEx related to the delay in delivery,

Speaker Change: Sit here today, and I think about the changes in capex related to the delay in deliveries.

Catherine O'brien: So, you know, each quarter in my model ended up looking pretty similar on a year-over-year basis. You know, X max impact in the 1Q, is that a fair way to think about it? Or is there more lumpiness than that that I'm missing?

Elaine Smith: I expect free cash to cover our cap back

I expect free cash to cover our Capex in most years, if not all years.

Elaine Smith: In most years, if not all

Elaine Smith: And as far as additional pay down of the balance sheet, we would expect that as our margins grow into that low double digit,

Speaker Change: And as far as additional pay down of the balance sheet.

Catherine O'brien: And then I guess just to put a finer point on one question, does 1Q and full year EPS include any flight attendant accrual? Thanks so much for the time. Okay, let me take the last question first. We include our expectations for labor agreements in our. Thank you. Slowing deliveries, that gauge increase in 24 will be less than we would have expected, you will see continued pressure from labor of about three to four points that's an industry headwind for CASMX not unique to United we expect it will lead to higher TRASM to offset but you should continue to see that we will lap the majority of that as we enter into the fourth quarter, And then maintenance headwind of about a point, that's going to be lumpy quarter to quarter.

Speaker Change: We would expect that as our margins grow into that low double digit.

Speaker Change: Thank you for joining us today.

Speaker Change: Low teen area that free cash flow.

Speaker Change: We'll be quite positive, allowing us to pay down that debt the pacing will be dependent on how much that capex profile changes and how quickly we get to what we think of that long run.

Speaker Change: Long run higher level.

Speaker Change: Martin.

Speaker Change: All right, we'll go to the next caller in queue, Duane Fettigworth from Evercore.

Martin: Alright, well go to the next caller in queue Duane.

Duane: Birth from Evercore.

Duane Pfennigwerth: Dwayne, your line is unmuted.

Duane: Your line is muted.

Duane Pfennigwerth: Good morning. Just a couple for me. On international inbound, basically international point of sale to the U.S., as you look across your network, how recovered is international inbound? How do you think about that growth of that demand set in 2024? And are there any markets that stick out from a recovery headroom potential?

Duane: Hey, Good morning, just a couple for me on international inbound basically international pointed out of the U S. As you look across your network how recovered.

Michael Donald Leskinen: As I say here today, I think it's about a point in each of the quarters this year. At some point, the supply chain will fix itself in aerospace, but we don't see that today, and I think it probably takes well beyond 2024. So you should think about, to summarize, you should think about the labor and maintenance headwinds as being.

Duane: International inbound how do you think about that growth of that demand set.

In 2024 and are there any markets that stood out from a recovery headroom potential.

Duane Pfennigwerth: Sure, Dwayne. It's Andrew. What I would say is during the entire recovery, U.S. outbound has been a stronger component of the traffic really across the board, across the entire globe, and that continues today. You know, I think origin Europe , particularly core Europe , Germany, continues to trail as well as Japan and Australia. And so we'll continue to monitor that. But the U.S. consumer has made up the difference in most regions of the world quite effectively and has resulted in very strong, you know, results over the last year. So, you know, I think the outlook is strong. But when the inbound customer profile starts to rebound. I think that's just further upside in the future. Hasn't happened consistently across the globe yet, but we'll see what 2024 brings.

Duane: Sure Duane it's Andrew what I would say is during the entire recovery U S. Outbound has been a stronger component of the traffic really across the board across the entire globe.

Catherine O'brien: And maybe just sticking with you, Mike, the $9 billion CapEx figure that's tied to your contractual commitments, unless I've got that wrong. You know, even as of your last 10Q before the Max grounding, you were expecting 17% fewer aircraft than the contractual amount. I'm guessing there's probably more downside risk than today given what's going on with the Max.

Speaker Change: And that continues today.

Speaker Change: I think origin, Europe, particularly core Europe, Germany continues to trail as well as Japan, and Australia, and so we'll continue to monitor that but the U S consumer has.

Michael Donald Leskinen: But you know, in order of magnitude, does that delta between expected and contractual deliveries largely determine how we should think about downside risk on a dollar basis versus that $9 billion? That delta between contractual and expected is growing, and we don't know exactly where it's settled yet. That's what we're working through now, and we are working on an alternate strategy to mitigate some of the loss and growth. But yes, if you're thinking about CapEx coming below nine million this year and the trajectory for maybe being lower than what you would expect CapEx in 25 and beyond, that's how you do it. Alright, we'll go to the next caller in queue. Scott Group from Wolf Research.

Speaker Change: <unk> made up the difference in most regions of the world quite effectively and has resulted in very strong.

Speaker Change: <unk> over the last year, so I think the outlook is strong.

Speaker Change: The inbound customer profile starts to rebound I think thats just further upside in the future Hasnt happened.

Speaker Change: Distantly across the globe, yet, but we'll see what 2024 brings.

Duane Pfennigwerth: Okay, just following up there, any specific markets, maybe a San Francisco, Asia Inbound, you know, any more kind of bullish recovery thoughts there?

Speaker Change: Okay. Just just following up there any specific markets, maybe a San Francisco Asia inbound.

Any more kind of bullish recovery thoughts there.

Andrew: You know, San Francisco is going to be very unique. Over the next six to nine months, there's a significant amount of runway construction going on in San Francisco that has dramatically limited our ability to fly there. It's also consistent with a slower recovery in that city. So, I think that is actually probably okay. But you will see us fly a much reduced domestic schedule in San Francisco. The international flying continues to be very strong. But the smaller domestic schedule, combined with where we are in the recovery, I think it's going to be just fine for San Francisco in terms of a profit contribution. And San Francisco Asia continues to perform exceedingly well.

Speaker Change: San Francisco is going to be very unique over the net.

Speaker Change: Six to nine months, there is a significant amount of runway construction going on in San Francisco that is dramatically limited our ability to fly there. It's also consistent with a slower recovery in that city.

Speaker Change: So I think that is actually probably okay, but you will see us fly a much reduced domestic schedule in San Francisco The international flying continues to be very strong, but the smaller domestic schedule combined with where we are in the recovery I think it's going to be.

Scott H. Group: Scott, your line is unmuted. Hey, thanks. Good morning.

Scott H. Group: So, Mike, I totally get your message that the plan is fluid and flexible. But, you know, as it stands today, I'm just wondering, do you think RASM is going to be positive this year? And then, you know, maybe you could help us just think about shaping the year a little bit. So if I look at last year, right, a pretty massive second quarter and then moderation in the second half of the year, are you thinking a similar shape or maybe more back halfway down? Any color there would be helpful.

Speaker Change: Just fine for San Francisco in terms of profit contribution and San Francisco Asia continues to perform.

Speaker Change: Seasonally well.

Speaker Change: I will go the next caller includes that will be Andrew <unk> from Bank of America.

Andrew: All right, we'll go to the next caller in clue. That will be Andrew Diderot from Bank of America. Andrew, your line is unmuted.

Speaker Change: Andrew Your line is muted.

Andrew P. Nocella: Hey, good morning, everyone.

Andrew P. Nocella: Andrew I guess, you mentioned this a little bit in your prepared remarks, but.

Andrew P. Nocella: We've been hearing and seeing some data on corporate travel and getting a bit better as well.

Scott H. Group: Scott, I'll kick it off and say, yes, we think the outlook for the year will be positive, but the details... Well, we're not given exact guidance here, other than, you know, we're very bullish on the year. I think I laid out a business case where domestic is starting the year incredibly strong. I think we've laid out a business case for where we're going to do this with transatlantic capacity. And I do expect Asia capacity to step down materially as we head into Q2 and then Q3, which is obviously going to bolster those numbers, too. So I remain bullish on the year. Mike, I don't know if you have any thoughts on shaping the year for us, if you have any color.

Andrew P. Nocella: Can you maybe dig in and speak to maybe any particular markets or verticals, where you see.

Andrew P. Nocella: Any sort of outsized corporate growth have you seen this corporate growth sort of broadening out to make it maybe at a more sustainable level today than at other points in the recovery.

Andrew P. Nocella: Sure.

Andrew G. Didora: Sure. We've all sat on calls and predicted the recovery of business traffic more times than I can count over the last few years. And I will say Q4 was okay. It wasn't spectacular in any way. But as we started January in the new budget season for all of our big corporate clients, we did notice a significant step up. So it's really early. It's only been a few weeks, and I hesitate to say, oh, my gosh, it's fixed, because it's still well behind where it should have been relative to GDP growth, of course. But look, it's a really nice step up. We're seeing close to yield gains as well that result from that. And I think that's one of the reasons our domestic browse amount look is as strong as it is. And so hopefully that continues. At the end of the quarter, of course, we'll report on that and let you know how it looks. But at least for the first two weeks of January . We've gotten off to a really strong start, and it gives us increasing signs that this is going to be, I think, a very good year.

<unk>.

Andrew P. Nocella: All said on calls and predicted the recovery of our business traffic more times than I can count over the last few years.

Andrew P. Nocella: And I will say Q4 was okay. It wasn't.

Andrew P. Nocella: It wasn't spectacular in any way, but as we started January and the new budget season for all of our big corporate clients. We did notice a significant step up so it's really early it's only been a few weeks and I hesitate to say Oh, my gosh, it's fixed because it's still well behind where it should be relative.

Andrew P. Nocella: And then maybe just my other follow-up, just for Andrew, just on the point about domestic and international margins converging a little bit this year, maybe just, I just want to make sure I'm understanding this right, is this domestic getting better and international, a little less good or is it they're both improving but domestics improving more just any any additional color there would be great thank you look i think we're we're seeing um i hate to say the word exceptional but we're seeing really good strength in domestic right now and i expect that's going to narrow the gap uh international margins are well ahead of domestic margins in 2023 and they'll continue to be well ahead of domestic margins in 2024 uh but i do think that gap will will narrow a bit uh based on the rasm outlook that i'm looking at again which is pretty darn good for for domestic and maybe I'll take the seasonal shape in as well. You know, we're working very diligently to make Q1 a more profitable quarter for United. I think we were well on our way prior to the max ground.

Andrew P. Nocella: <unk> to GDP growth of course.

Andrew P. Nocella: But look it's a really nice step up we're seeing close in yield gains as well that result from that and I think thats one of the reasons our domestic RASM outlook is as strong as it is.

Andrew P. Nocella: And so hopefully that continues at the end of the quarter of course, we'll report on that and let you know how it looks but at least for the first two weeks of January has gotten off to a really strong start and it gives us.

Andrew P. Nocella: Increasing signs that this is going to be I think a very good year.

Andrew G. Didora: Got it. That's helpful. And then for a second question, Mike, you have obviously a lot of talk on the call just on your future free cash flow potential. Just when you're looking at your free cash flow, when do you anticipate you'll become a cash taxpayer? Thank you.

Speaker Change: Got it that's helpful. And then my second question, Mike, Yes, obviously, a lot of talk on the call just on your Rio.

Speaker Change: Future free cash flow potential.

Speaker Change: When you're when you're looking at your free cash flow. When do you anticipate you will become a cash taxpayer. Thank you.

Speaker Change: Yes.

Michael Donald Leskinen: Andrew, I think it's a few years off still. Let me get with my treasurer, Pam Hendry,

Speaker Change: Andrew I think it's a few years off still.

Speaker Change: With my Treasurer, Jim Hendry.

Andrew G. Didora: follow up with you on the precise year. It does depend on

Speaker Change: Follow up with you on the precise year it does depend on our.

Mike: are, it does depend on how CapEx moderates

Speaker Change: Depending on how Capex moderates.

Andrew: And it depends on that profitability, but it's still

Speaker Change: And it depends on the profitability, but it is still a few years off.

Scott H. Group: And obviously, if you take that out, you can use that to update the estimates as to where we would have been in Q1. We made a lot of changes to how we fly in Q1, but we didn't talk about all those details.

Andrew: All right, we'll go to the next caller in queue. That would be Brennan Oglenski.

Speaker Change: Alright, we will go to the next caller in queue that'd be Brendan O Glinski from Barclays. Please go ahead Brandon Your line is.

Brandon R. Oglenski: Barclays, please go ahead. Brandon, your line is reviewed.

Helane Becker: But when I look at the RAS and the strength, particularly in domestic, I am now confident that all those changes had the desired effect as we continue to build and make sure that in the future, Q1 won't ever be our best quarter, to be blunt, but it'll be a much better relative quarter. But our global network, you know, I have to say, in Q2 and Q3 really stands out. And we expect it to be stellar again over those six months in 2024. Scott, if you're specifically asking about the shape of our quarterly earnings through the year, they're going to look like a normal seasonal pattern, albeit with a slightly bigger loss in the first quarter due to the, Alright, we'll go to the next caller in queue, Helane Becker of Cowan. Helane, your line is unmuted.

Brandon R. Oglenski: Hey, good morning. And thanks for taking my question. I'll just keep it to one here at the end of the call. But maybe Scott or Mike, I mean, you know, coming back to the context that your stock is trading like three or four times PE, probably for the second year here. And also giving you guys credit, because I know a lot of us didn't think you could hit those United Next targets, you know, so many years out. But you are guiding to roughly, you know, flat margins at the midpoint this year. And I think what investors are worried about is, you know, things you can control, or at least perceived control, like costs that, you know, are going up for the industry here. Is this just a continued view that United is going to decouple from industry trends where you're going to be able to drive a margin premium? And I guess, what can you give investors confidence that that is the path forward here? Thank you.

Speaker Change: Hey, good morning, and thanks for taking my question I'll, just keep it to one here at the end of the call.

Speaker Change: But maybe Scott or Mike I mean coming back to the context that your stock is trading like three or four times p/e probably for the second year here and also giving you guys credit because I know a lot of US didn't think you could hit those United next targets.

Speaker Change: Many years out, but you are guiding to roughly flat margins at the midpoint. This year and I think what investors are worried about things you can control or at least perceived control like costs that are going up for the industry here.

Speaker Change: Is this just a continued view that United is going to decouple from industry trends, where youre going to be able to drive a margin premium and I guess, what what can you give investors confidence that that is the path forward here. Thank you.

Speaker Change: Thanks Brendan.

Scott Kirby: Thanks, Brendan.

Speaker Change: Look I think that it's a structural change in the industry and we see kind of evidenced this year and I think eventually the investment community, we will see it as well, but there is an industry that has operated as a commodity industry.

Scott Kirby: Look, I think that it's a structural change in industry, and we see a ton of evidence in this here, and I think eventually in the ethnic community we'll see it as well. But there is an industry that has operated as a commodity industry, and United and one of our legacy peers have clearly differentiated ourselves from that.

Helane Becker: Great, thanks very much. So here's my two questions. The first question is, as you think about 2026 margins, and maybe you'll update us on May 1st, how do we bridge from the roughly 8% at year-end 23 to say 12 to 14 percent in 2026. Elaine, thanks for the question. And we will update our longer-term margin targets at Investor Day, but the tailwinds that we expect from the UnitedNext strategy, from the gauge, from the connectivity, from the preference to fly United, we have proven, it used to be, you know, it was a strategy on a piece of paper, we have proven that it's working. And so as we think about 24 deliveries being a little less, but 25 and 26 of re-accelerating into And as for the specific level of 12% to 14% pacing, we're going to have to update you on May 1st.

Speaker Change: United and one of our legacy peers have clearly differentiate ourselves from the pack and that's leading customers to choose to acquire airlines leading to the majority if not all of the revenue growth in the industry accruing to those two airlines and that has happened happening simultaneous.

Brendan: And that's leading customers to choose to fly our airlines. It's leading to the majority, if not all, of the revenue growth in the industry accruing to those two airlines.

Scott Kirby: And that is happening simultaneous with cost convergence.

Speaker Change: With cost convergence.

Scott Kirby: That cost convergence, the whole reason that the low-cost carriers existed is because they had lower costs. Those lower costs no longer exist.

Speaker Change: Cost convergence the whole reason that the low cost carriers existed was four.

Speaker Change: Because it had lower cost those lower costs no longer exists.

Scott Kirby: So that creates, I think, a permanent,

Speaker Change: Does that create I think a permanence to be higher margin, a sustainability to that higher margin and where that settles.

Scott Kirby: to the higher margin, a sustainability to that higher margin. And where that settles, the jury's still out exactly where that settles. But it is higher and more stable and more resilient. And that is not recognized by the capital market.

Speaker Change: We still need the jury's still out exactly where that is but it is higher and more stable and more resilient.

Helane Becker: But the strategy is working, and we're very confident in an upward trajectory for both. Okay, and then just for my follow-up, you know, you're, I think, united next targets, and obviously you'll update them again, I suppose, $25 billion of adjusted net debt as of the end of last year, less than $18 billion for 2026. But the other thing is, how should we think about financing, let's just say $9 billion is off the table for this year, let's bring it down to $6 or $7 billion, plus debt paydown, like how should we think about you getting to your target leverage over the next one to three years, given the CAFX program?

Speaker Change: That is not recognized by the capital markets today.

Scott Kirby: Thank you.

Speaker Change: Thank you.

Scott Kirby: All right, we're going to go to our next caller in queue, David Bernstein from

Speaker Change: All right, we're going to go to our next caller in queue, David Bernstein from.

Speaker Change: Yeah.

Scott Kirby: Sorry, Dave Vernon from Bernstein. Thank you.

David Bernstein: Alright, David Vernon from Bernstein. Thank you.

Good good afternoon. Good morning, Thanks for taking my question, So Andrew I'd like to get some help from you. If you can in terms of helping that.

David Vernon: Good afternoon or good morning. Thanks for taking the question. So, Andrew, I'd like to get some help from you, if you can, in terms of helping to think through how some of the negative margin capacity that's going to be forced out of the industry is going to impact your fare ladder. You know, beyond the upward pressure sort of general vagueness, I'm just trying to, like, understand, you know, if we see a bunch of basic capacity rationalized because some of these negative margin unbundled carriers have to take capacity out, is that – how is that going to impact sort of basic fares versus economy fares? Anything you could give us to help translate that impact of capacity shift into, you know, what sort of impact it's going to have on your fare ladder would be really helpful.

To think through how.

David Bernstein: Some of the negative margin capacity, that's going to be forced out of the industry is going to impact your fair ladder.

David Bernstein: The upward pressure sort of general vagueness I'm, just trying to understand if we see a bunch of base capacity rationalized because some of these negative.

Helane Becker: You know, it might be $7 billion this year, but it might be nine or eight or 10, five. Let me try to give you a high-level view, Helane, and we can dig into more detail later. But as I sit here today, and I think about the changes in CapEx related to the delay in delivery. I expect free cash to cover our cat-back in most years, if not all, and as far as additional pay down of the balance sheet, we would expect that as our margins grow into that low double-digit range. Thank you all. All right, we'll go to the next caller in queue. Duane Pfennigwerth from Evercore.

David Bernstein: Margin unbundled carriers have to take capacity out is that how is that going to impact sort of basic fares versus economy fares anything you could give us to help translate that impact of capacity shift into.

David Bernstein: What sort of impact it's going to have on your fair ladder would be really helpful.

Andrew: I mean, I think that's probably a lot more detail than I can do on a conference call, to be honest. But, you know, just generally, you know, unproductive capacity has been leaving the system. I think that's been good for the system and good for United. And so we'll manage RRM like we normally do to take advantage of all of the opportunities. But I just want to reiterate that, you know, our choice to diversify our revenues at the top with Polaris and at the bottom with Basic Economy is not something we're going to be giving up on. The Basic Economy is an important part of the airline. It is what our customers want. We will continue to provide choice, and we expect to provide more and more of it as our gauge increases. The competitive dynamics are what they are. I can't predict them. I only really can talk for United, and we'll obviously maximize our returns and do the right thing. But, again, the diversified revenue streams that we're putting out there are really working for us. Across not only the fare ladder, but our geographic dispersion of our fly-in. And so we couldn't be more pleased with our revenue results quarter after quarter, by the way, not just in Q4 and not just last year, and the outlook we have. This industry is dynamic. It's always changing. We'll change with it. But it is, I think, a good time to be at United Airlines and be an investor in United Airlines.

Speaker Change: I mean, I think thats, probably a lot more detail than I can do on a conference call to be honest, but just generally.

Duane Pfennigwerth: Duane, your line is unmuted. Good morning, just a couple of questions on international inbound, so basically international point of sale to the US. As you look across your network, how recovered is international inbound? How do you think about the growth of that demand set in 2024? And are there any markets that stick out from a, you know, recovery headroom potential? Sure, Duane. It's Andrew.

David Bernstein: Unproductive capacity has been leaving the system I.

David Bernstein: I think thats good for the system and good for United.

And so we'll manage our RM like we normally do to take advantage of all of the opportunities, but I just want to reiterate that.

David Bernstein: Our choice to diversify our revenues at the top with Polaris and at the bottom of basic economy is not something we're going to be given up on the basic economy is an important part of the airline.

Andrew P. Nocella: What I would say is during the entire recovery, U.S. outbound has been a stronger component of the traffic, really across the board, across the entire globe. And that continues today. You know, I think origin Europe, particularly core Europe, Germany, continues to trail, as well as Japan and Australia.

Is what our customers want we will continue to provide choice and we expect to provide more and more of it as our gauge increases the competitive dynamics are what they are I can't I can't predict the mentally really can talk for United and we'll obviously maximize our returns and do the right thing, but again the diversified revenue streams that we're putting out there.

Duane Pfennigwerth: And so we'll continue to monitor that. But the U.S. consumer has made up the difference in most regions of the world quite effectively and has resulted in very strong results over the last year. So, you know, I think the outlook is strong. But when the inbound customer profile starts to rebound, I think that's just further upside in the future. It hasn't happened consistently across the globe yet, but we'll see what 2024 brings. Okay, just following up, are there any specific markets, maybe San Francisco, Asia Inbound, you know, any more kind of bullish recovery thoughts there? You know, San Francisco is going to be very unique over the next six to nine months. There's a significant amount of runway construction going on in San Francisco that has dramatically limited our ability to fly there. It's also consistent with a slower recovery in that city, so I think that is actually probably okay.

David Bernstein: Are really working for us across not only the fare ladder, but our geographic dispersion of our clients and so we couldnt be more pleased with our revenue results.

David Bernstein: After quarter by the way not just in Q4 and not just last year and the outlook we have.

David Bernstein: This industry is dynamic it's always changing will change with it but it is I think a good time to be at United Airlines and be in industrial and United Airlines.

David Vernon: And are you seeing any sort of benefit yet from some of that capacity rationalization as you look forward into the forward bookings, or do you think that's something that's going to develop as we get through the year?

David Bernstein: And are you seeing any sort of benefit yet from from some of that capacity rationalization as you look forward into the.

David Bernstein: Forward bookings or do you think that something is going to develop as we get through the year.

Andrew: Look, I think our outlook for Q1 for domestic PRASM says it all.

David Bernstein: Look.

David Bernstein: I think our outlook for Q1 for domestic PRASM says it all.

David Bernstein: Okay.

Andrew: Bye.

David Bernstein: Okay.

Andrew: We will now switch to the media portion of the call. If you would like to ask a question as a member of the media, you may dial pound two on your telephone keypad. You'll hear a notification when your line is unmuted, at which point please instate your question.

David Bernstein: We will now switch to the media portion of the call if you'd like to ask a question as a member of the media you may dial pound too on your telephone keypad, you'll hear notification. When your line is on mute at which point. Please state your question.

Andrew: Again, dialing pound two on your telephone keypad will indicate that you wish to ask a question.

David Bernstein: Dialing pound two on your telephone keypad will indicate that you wish to ask a question.

Andrew P. Nocella: But you will see us fly a much reduced domestic schedule in San Francisco. The international flying continues to be very strong. But the smaller domestic schedule, combined with where we are in the recovery, I think it's going to be just fine for San Francisco in terms of a profit contribution. And San Francisco, Asia continues to perform exceedingly well. All right, we'll go to the next caller in queue. That will be Andrew Didora from Bank of America. Andrew, your line is unmuted. Hey, good morning, everyone.

David Bernstein: Yeah.

Speaker Change: I'll go the first caller in queue, David Slotnick of the points Guy. Please go ahead.

Andrew: All right, we'll go to the first caller in queue, David Flotnick of The Points Guy. Please go ahead.

David Slotnick: Hi, good morning. Thanks for the question. Um, I know you talked about London and about slower growth across the Atlantic. Um, I was wondering if we could talk about it more from a consumer perspective. You know, there's been some talk just about all the capacity across the Atlantic next summer. Do you see any impact on ticket prices? Do you see them going down or up? Just give it all that? Thanks.

David Slotnick: Hi, good morning, Thanks for the question.

David Slotnick: I know, you've talked about London and about slower growth across the Atlantic.

David Slotnick: I was wondering if you can talk about it more from a consumer perspective.

David Slotnick: It's been some talk just about all the capacity across the Atlantic next summer.

David Slotnick: Do you see any impact on the ticket prices do you see them going down or up just given all of that thanks.

David Slotnick: Hey, David. You know, what I would tell you is that we're prepared for an incredibly strong summer. We, as I've said numerous times, we decided to go slow this year. We tilted more of our capacity, particularly in Q1, to Southern Europe . And that's probably what I would say the biggest change is what we see with the consumers, that destinations in Spain and Italy have become more year-round destinations than seasonal. And that is new post-pandemic. And we're reacting to it and moving more and more capacity out of Northern Europe , out of London Heathrow or Germany and into Southern Europe . And we'll probably do more of that again next year. In terms of the price points, I'm not going to exactly predict that at this point. We don't normally talk about pricing. But I would just say we expect a really strong summer across the Atlantic. Our capacity is not growing materially. And we think that's going to really allow us to get all of the capacity we've added over the last few years to be mature and incredibly and solidly profitable in 2024.

Speaker Change: Hey, David what I would tell you is that we are prepared for an incredibly strong summer.

Andrew G. Didora: So, Andrew, I guess you mentioned this a little bit in your prepared remarks, but, you know, we've been hearing and seeing some data on corporate travel getting a bit better as well. Could you maybe dig in and, you know, speak to maybe any particular markets or verticals where you see some, you know, any sort of outsized corporate growth? And have you seen this corporate growth sort of broadening out to make it, you know, maybe at a more sustainable level today than at other points in the recovery? Sure, you know, we've all sat on calls and predicted the recovery of business traffic more times than I can count over the last few years. And I will say Q4 was okay. It wasn't spectacular in any way.

As I've said numerous times, we decided to go slow this year, we've tilted more of our capacity, particularly in Q1 to southern Europe.

Speaker Change: And that's probably what I would say the biggest changes what we see with the consumers that destinations in Spain, and Italy have become more year round destination than seasonal and that his new post pandemic and we're reacting to it and moving more and more capacity out of northern Europe out of London, Heathrow, or Germany and into southern Europe, and we will probably do more.

Speaker Change: More of that again next year.

Speaker Change: In terms of the price points I am not going to exactly predict that at this point, we don't really talk about pricing, but I would just say, we expect a really strong summer across the Atlantic our capacity is not growing materially.

Speaker Change: And we think thats going to really allow us to get all of the capacity. We've added over the last few years to be mature and incredibly and solidly profitable in 2024.

Andrew P. Nocella: But as we started January in the new budget season, for all of our big corporate clients, we did notice a significant step up. So it's really early. It's only been a few weeks.

David Slotnick: All right. We'll go to the next caller in queue. That will be Rajesh Singh from Reuters. Please go ahead, Rajesh. Your line is unmuted.

Speaker Change: I will go to the next caller in queue that will be Rodriguez sang from Reuters. Please go ahead Roger your line is muted.

Rajeev Lalwani: uh thanks for the opportunity uh hi scott uh you made some comments on cnbc this morning that max grounding broke the camel's back uh do you have confidence in boeing's current leadership that it will be able to fix its problems some people have called the leadership into question and have faulted it for all the quality problems so do you have confidence in the current leadership

Rodriguez: Well thanks, Bob.

Andrew G. Didora: And I hesitate to say, oh, my gosh, it's fixed, because it's still well behind where it should be relative to GDP growth, of course. But look, it's a really nice step up. We're seeing close to yield gains as a result of that, and I think that's one of the reasons our domestic browsing outlook is as strong as it is. And so, hopefully, that will continue at the end of the quarter. Of course, we'll report on that and let you know how it looks. But at least for the first two weeks of January, we've gotten off to a really strong start, and it gives us increasing signs that this is going to be, I think, a very good year. I got it.

Rodriguez: You made some comments on CNBC this morning.

Rodriguez: Regarding global Mcdonalds box.

Rodriguez: Do you have confidence in Boeing's current player that it won't be able to fix this problem from people, who will have the ability to second quest.

Rodriguez: Question, Paul for all the quality problems. So do you have confidence in the current leadership.

Scott Kirby: Boeing has a storied history and thousands of great people. They're one of the best engineering. They're one of the best technology companies in history. They're, you know, they've been a great American company, their biggest exporter. I have, you know, they're going through a rough patch right now, but I believe that Boeing is across the board from top to bottom, is committed to changing and fixing it. I'm encouraging them to do it even faster. And it is going to impact United in the near term because of some of the challenges they've had. But there are great people there, and they will get it together. And we are their biggest.

Rodriguez: Hello.

Rodriguez: As a storied history.

Rodriguez: Great people are one of the best engineering, there one of the best technology companies.

Rodriguez: History.

Rodriguez: They've been a great American company their biggest quarter.

Andrew P. Nocella: That's helpful. And then my second question, Mike, you obviously have a lot of talk on the call about your future free cash flow potential. When you're looking at your free cash flow, when do you anticipate you'll become a cash taxpayer?

Rodriguez: Have.

Rodriguez: They're going through a rough patch right now, but I believe that.

<unk> is across the board from top to bottom is committed to changing in fixed.

Encouraging them to do it even faster.

Michael Donald Leskinen: Thank you. Andrew, I think it's still a few years off. Let me get with my treasurer, Pam Hendry, and follow up with you on the precise year. It does depend on, are, it does depend on how CapEx moderates, and it depends on that profitability, but it's still. Alright, we'll go to the next caller in queue, that would be Brandon Oglenski. Barclays, please go ahead. Brandon, your line is open.

Rodriguez: And it is going to impact United in the near term because because of some of the challenges they've had but they are great people there and they will get together and we are the biggest.

What will be a critical times. We're also their biggest cheerleader theres no. One that has a bigger supporter that once boeing to succeed outside ability than me.

Scott Kirby: We'll be a critic at times. We're also their biggest cheerleader. There's no one that's a bigger supporter that wants Bowie to succeed outside of Bowie than me. And I'll do everything I can to help them.

Rodriguez: And I'll do everything I can to help.

Scott Kirby: Just one clarification Scott about your comments about Max 10. Some people are Misconstruing it as that you are planning to cancel the order. Can you clarify your comments about Max 10?

Rodriguez: Just wanted to get some call it about your comments about Max and some people are.

Brandon R. Oglenski: Hey, good morning, and thanks for taking my question. I'll just keep it to one here at the end of the call. But maybe Scott or Mike, I mean, you know, coming back to the context that your stock is trading like three or four times PE, probably for the second year in a row, and also giving you guys credit because I know a lot of us didn't think you could hit those United Next targets, you know, so many years out. But you are guiding to roughly flat margins at the midpoint this year. And I think what investors are worried about is, you know, things you can control, or at least perceived control, like costs that, you know, are going up for the industry here.

Rodriguez: Pulling it back you were planning to cancel Dogger can you clarify your comments about maxton.

Scott Kirby: We are not canceling the order. We are taking it out of our internal plans and so we're taking it out of our internal plans and we'll be working on what that means exactly with Boeing but Boeing is not going to be able to meet their contractual deliveries on at least many of those airplanes.

Rodriguez: We are not cancelling the order we are taking it out of our internal plans.

And.

Rodriguez: So we're taking it out of our internal plans.

Rodriguez: We will be working on what that means exactly with Boeing.

Rodriguez: He is not going to be able to meet their contractual deliveries on at least many of those airplanes.

Scott Kirby: Um, and, um,

Rodriguez: And.

Scott Kirby: I'll just leave it at that.

Rodriguez: I'll just leave it at that.

Scott Kirby: Is this just a continued view that United is going to decouple from industry trends where you're going to be able to drive a margin premium? And, I guess what, what can you give investors confidence that that is the path forward here? Thank you.

Scott Kirby: And that is all the time we have for questions today. I will now turn the call back over to Christina Edwards for closing remarks.

Rodriguez: And that is all the time, we have for questions. Today I will now turn the call back over to Cristina Edwards for closing remarks.

Scott Kirby: Thanks for joining the call today. Please contact Investor and Media Relations if you have any further questions, and we look forward to talking to you next quarter.

Cristina Edwards: Thanks for joining the call today, please contact investor or media relations. If you have any further questions and we look forward to talk to you next quarter.

Scott Kirby: Thanks Brandon. Look, I think that it's a structural change in the industry, and we see a ton of evidence this year, and I think eventually the deaf community will see it as well, but there is an industry that has operated as a commodity industry, and United and one of our legacy peers have clearly differentiated themselves, and that's leading customers to choose to fly our airlines. It's leading to the majority, if not all, of the revenue growth in the industry accruing to those two airlines, and that is happening simultaneous with cost convergence. That cost convergence, the whole reason that the low-cost carriers existed was because they had lower costs. Those lower costs no longer exist, so that creates, I think, a permanent higher margin, a sustainability to that higher margin. And where that settles, the jury's still out exactly where that settles.

Cristina Edwards: Right.

Brandon R. Oglenski: But it is higher, and more stable, and more resilient, and that is not recognized by the capital market. Thank you. All right, we're going to go to our next caller in queue, David Bernstein from. Sorry, Vernon from Bernstein. Thank you. Good afternoon or good morning.

Scott Kirby: The host has ended the conference. Thank you for using Bespoke Conferencing.

Cristina Edwards: The House has ended the conference.

Thank you for using <unk> conferencing.

David Vernon: Thanks for taking the question. So Andrew, I'd like to get some help from you, if you can, in terms of helping to think through how some of the negative margin capacity that's going to be forced out of the industry is going to impact your fare ladder, you know, beyond the upward pressure sort of general vagueness. I'm just trying to, understand, you know, if we see a bunch of basic capacity rationalized because some of these negative margin unbundled carriers have to take capacity out, how is that going to impact sort of basic fares versus economy fares? Anything you could give us to help translate that impact of capacity shift into, you know, what sort of impact it's going to have on your fare ladder would be really helpful. I mean, I think that's probably a lot more detail than I can do on a conference call, to be honest. But, you know, just generally, you know, unproductive capacity has been leaving the system.

Andrew P. Nocella: I think that's been good for the system and good for United. And so we'll manage our RM like we normally do to take advantage of all of the opportunities. But I just want to reiterate that, you know, our choice to diversify our revenues at the top with Polaris and at the bottom with the basic economy is not something we're going to give up on. The basic economy is an important part of the airline.

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Cristina Edwards: [music].

Cristina Edwards: Yes.

Cristina Edwards: Yeah.

Cristina Edwards: [music].

Andrew P. Nocella: It is what our customers want. We will continue to provide choice, and we expect to provide more and more of it as our gauge increases. The competitive dynamics are what they are. I can't, I can't predict them.

Cristina Edwards: Okay.

Andrew P. Nocella: I only can talk for United, and we'll obviously maximize our returns and do the right thing. But again, the diversified revenue streams that we're putting out there are really working for us across not only the fare ladder but our geographic dispersion of our flying. And so we couldn't be more pleased with our revenue results quarter after quarter, by the way, not just in Q4 and not just last year and the outlook we have. This industry is dynamic. It's always changing.

Cristina Edwards: Yes.

Cristina Edwards: [music].

Yes.

Cristina Edwards: Okay.

[music].

Cristina Edwards: Yes.

Tom.

Cristina Edwards: Yes.

Andrew P. Nocella: We'll change with it. But it is, I think, a good time to be at United Airlines and be an investor in United Airlines. And are you seeing any sort of benefit yet from some of that capacity rationalization as you look forward into the forward bookings? Or do you think that's something that's going to develop as we get through the year?

Cristina Edwards: Okay.

Yes.

Cristina Edwards: Okay.

Okay.

Andrew P. Nocella: Look, I think our outlook for Q1 for domestic problems says it all. We will now switch to the media portion of the call. If you would like to ask a question as a member of the media, you may dial pound two on your telephone keypad. You'll hear a notification when your line is unmuted, at which point, please state your question. Again, dialing pound two on your telephone keypad will indicate that you wish to ask a question. All right, we'll go to the first caller in queue, David Slotnick of The Points Guy. Please go ahead.

Cristina Edwards: [music].

Cristina Edwards: Okay.

Cristina Edwards: Yes.

Cristina Edwards: [music].

Cristina Edwards: Okay.

Cristina Edwards: [music].

David Slotnick: Hi, good morning. Thanks for the question. I know you talked about London and about slower growth across the Atlantic, but I was wondering if you could talk about it more from a consumer perspective.

Cristina Edwards: Okay.

Okay.

Cristina Edwards: Yes.

[music].

Cristina Edwards: Okay.

Cristina Edwards: [music].

Cristina Edwards: Okay.

Cristina Edwards: Thanks.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: Yes.

Cristina Edwards: Sure.

Cristina Edwards: Yes.

Okay.

Cristina Edwards: Hum.

Cristina Edwards: Sure.

Cristina Edwards: Yes.

Cristina Edwards: [music].

David Slotnick: You know, there's been some talk about all the capacity across the Atlantic next summer. Do you see any impact on ticket prices? Do you see them going down or up? Just given all that? Thanks. Hey David.

Scott Kirby: © transcript Emily Beynon © transcript Emily Beynon © transcript Emily Beynon © transcript Emily Beynon © transcript Emily Beynon

Cristina Edwards: Okay.

Cristina Edwards: [music].

Cristina Edwards: Yes.

Cristina Edwards: [music].

Okay.

Cristina Edwards: Okay.

Cristina Edwards: Thank you.

Cristina Edwards: [music].

Cristina Edwards: Okay.

Cristina Edwards: [music].

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: Yes.

Cristina Edwards: [music].

Cristina Edwards: Okay.

Okay.

Cristina Edwards: Okay.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: Sure.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: <unk>.

Cristina Edwards: Okay.

Cristina Edwards: [music].

Cristina Edwards: Alright.

Cristina Edwards: Okay.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: Sure.

Cristina Edwards: Yes.

Andrew P. Nocella: You know, what I would tell you is that we're prepared for an incredibly strong summer. We, as I've said numerous times, have decided to go slow this year. We tilted more of our capacity, particularly in Q1, to southern Europe. And that's probably what I would say the biggest change we see with the consumer is that destinations in Spain and Italy have become more year-round destinations than seasonal, and that is new post-pandemic, and we're reacting to it and moving more and more capacity out of northern Europe, out of London Heathrow or Germany, and into southern Europe. And we'll probably do more of that again next year. In terms of price points, I'm not going to exactly predict that at this point. We don't normally talk about prices.

Cristina Edwards: Okay.

Cristina Edwards: [music].

Cristina Edwards: Yes.

Cristina Edwards: Sure.

Cristina Edwards: Okay.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Okay.

Cristina Edwards: Okay.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: Alright.

Cristina Edwards: Yes.

Cristina Edwards: [music].

Cristina Edwards: Okay.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: [music].

Scott Kirby: Thank you.

Andrew P. Nocella: But I would just say we expect a really strong summer across the Atlantic. Our capacity is not growing materially, and we think that's going to really allow us to get all of the capacity we've added over the last few years to be mature and incredibly and solidly profitable in 2024. All right, we'll go to the next caller in queue. That will be Rajesh Singh from Reuters.

Scott Kirby: © transcript Emily Beynon © transcript Emily Beynon © transcript Emily Beynon

Cristina Edwards: Yes.

Cristina Edwards: Sure.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: [music].

Cristina Edwards: Yes.

Cristina Edwards: Okay.

[music].

Rajeev Lalwani: Please go ahead Rajesh, your line is unmuted. Thanks for the opportunity. Hi Scott, you made some comments on CNBC this morning that Max Grounding broke the camel's back. Do you have confidence in Boeing's current leadership that it will be able to fix its problems? Some people have called the leadership into question and blamed it for all the quality problems.

Cristina Edwards: Okay.

Okay.

Cristina Edwards: Okay.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Rajeev Lalwani: So do you have confidence in the current leadership? Boeing has a storied history and thousands of great people. They're one of the best engineering, and one of the best technology companies in history. They're, you know, they've been a great American company. They're the biggest exporter.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: Sure.

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: [music].

Scott Kirby: I have, you know, they're going through a rough patch right now, but I believe that Boeing is, across the board, from top to bottom, committed to changing and fixing it. I'm encouraging them to do it even faster. And it is going to impact United in the near term because of some of the challenges they've had. But they're great people there, and they will get it together. And we are their biggest... will be a critic at times, but we're also their biggest cheerleader. There's no one that's a bigger supporter that wants Bowie to succeed outside of Bowie than me.

Emily Beynon: © transcript Emily Beynon

Okay.

Cristina Edwards: Yes.

Cristina Edwards: [music].

Cristina Edwards: Yes.

Cristina Edwards: Okay.

Cristina Edwards: Good morning, and welcome to United Airlines Holdings' Earnings Conference call for the fourth quarter 2023, and full year 2023. My name is Tegan and I'll be your conference facilitator today. Following the initial remarks from management, we will open the lines for question.

Scott Kirby: And I'll do everything I can to help. Just one clarification, Scott, about your comments about MaxTen. Some people are misconstruing it as that you are planning to cancel the order. Can you clarify your comments about MaxTen? We are not canceling the order. We are taking it out of our internal plans, and we'll be working on what that means exactly with Boeing, but Boeing isn't going to be able to meet their contractual deliveries on at least many of those airplanes. And I'll just leave it at that. And that is all the time we have for questions today.

Tegan: At that time, you may dial pound two on your telephone keypad to enter the question queue Youll hear notification. When your line is muted at which point. Please state your name. The company you represent and your question. This call is being recorded and is copyrighted. Please note that no portion of the call may be recorded transcribed or rebroadcast without the company's permission.

Tegan: Your participation implies your consent to our recording of the 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 Edwards managing director of Investor Relations. Please go ahead.

Christina Edwards: Thank you Dan Good morning, everyone and welcome to United <unk> fourth quarter and full year 2020 earnings Conference call yesterday, we issued our earnings release, which is available on our website at <unk> Dot net.

Scott Kirby: I will now turn the call back over to Christina Edwards for closing remarks. Thanks for joining the call today. Please contact Investor and Media Relations if you have any further questions and we look forward to talking to you next quarter. The host has ended the conference. Thank you for using Bespoke Conferencing. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Thanks for watching!

Christina Edwards: Information in yesterday's release may during this conference call may contain forward-looking statements, which represents the company's current expectations or beliefs concerning future events and financial performance.

Christina Edwards: Information in yesterday's release 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.

Tegan: Good morning, and welcome to United Airlines Holdings' earnings conference call for the fourth quarter 2023 and full year 2023. My name is Tegan, and I'll be your conference facilitator today. Following the initial remarks from management, we will open the lines for questions. At that time, you may dial pound two on your telephone keypad to enter the question queue. You'll hear a notification when your line is unmuted. At which point, please state your name, the company you represent, and your question. This call is being recorded and is copyrighted.

Christina Edwards: 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 10-8-10-Q and other reports filed with the SEC by United Airlines and United Airlines for a more thorough description of these factors. Unless otherwise noted, we will be discussing our financial metrics on a non-GAAP basis on this call. Please refer to the related definitions and reconciliations in our press release.

Christina Edwards: 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 expectation.

Christina Edwards: Back to our earnings release form eight thank you and other reports filed by the airlines.

Christina Edwards: Your lines for a more thorough description of these factors.

Christina Edwards: Unless otherwise noted.

Christina Edwards: We will be discussing our financial metrics on a non-GAAP basis on this call.

Please refer to the related definitions and reconciliations in our press release.

Christina Edwards: For reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to the tables at the end of our earnings release. Joining us on the call today to discuss our results and outlook are Chief Executive Officer Scott Kirby, President Brett Hart, Executive Vice President and Chief Commercial Officer Andrew Nassela, and Executive Vice President and Chief Financial Officer Mike Leskinen. In addition, we have other members of the executive team on the line available to assist this Q&A. Now, I'd like to turn the call over to Scott. Thank you, Christina. And good morning to everyone on the call today. Despite the numerous geopolitical and other headwinds around the globe, 2023 really was the year that our plan for United Next came together.

Christina Edwards: A reconciliation of these non-GAAP measures the most directly comparable GAAP measures. Please refer to the tables at the end of our earnings release.

Christina Edwards: Please note that no portion of the call may be recorded, transcribed, or rebroadcast without the company's permission. Your participation implies your consent to our recording of the 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 Edwards, Managing Director of Investor Relations. Please go ahead.

Christina Edwards: US on the call today to discuss our results and outlook are Chief Executive Officer, Scott Kirby President, Brett Hart Executive Vice President and Chief Commercial Officer, Andrew Anthem, and Executive Vice President and Chief Brands Officer, Mike.

Speaker Change: In addition, we have other members.

Speaker Change: On the line of Bill Katz with Q&A now I'd like to turn the call are Scott. Thank you Christina and good morning to everyone on the call today.

Christina Edwards: Thank you, Tegan. Good morning, everyone, and welcome to United's fourth quarter and full year 2023 earnings conference call. Yesterday, we issued our earnings release, which is available on our website at ir.united.gov. Information in yesterday's release may or may not contain forward-looking statements, which represent the company's current expectations or beliefs concerning future events and financial fulfillment. All forward-looking statements are based on information currently available to the company. However, a number of factors could cause actual results to differ materially from our current expectations. Please refer to our earnings release form 10-10-10-Q and other reports filed with the SEC by United Airlines and United Airlines Group for a more thorough description of these factors. Unless otherwise noted, we will be discussing our financial metrics on a non-GAAP basis on this call. Please refer to the related definitions and reconciliations in our press release. For reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to the tables at the end of our earnings release.

Scott: Despite numerous geopolitical and other headwinds around the globe 2023 really was a year that are planned for <unk> came together.

Scott Kirby: Our thesis at this time last year was that operational constraints and other factors were leading to cost convergence, and those cost pressures in turn would lead to higher revenues. That is certainly true for United, as our diversified revenue streams continue to differentiate us from other airlines. Another way of saying that is that we believe that a new link between United's CASM and RASM is being solidified. And while it might be hard to get either a CASM or RASM forecast exactly correct, we can have higher confidence in forecasting the relationship between the two. And therefore, have higher confidence in our earnings and margin forecasts. And despite a year filled with events that we could have never predicted, that's exactly what happened in 2023. And so, I'd like to thank the 100,000 United team members around the world who worked so hard to make that happen. And those same 100,000 people continue to deliver in the face of a huge impact on our employees and customers from the MAX 9 ground. I'm proud of our tech ops team who's taken the lead and has been working 18-hour days nonstop since January 6th to ensure that the business is doing well. And I'd also like to thank the FAA for their professional leadership in this situation and also acknowledge that they too are also working long hours and weekends with us in an effort to ensure that we know for sure what happened so that we'd never, so we'd be confident that the remediation prevents it from ever happening again.

Scott: Our thesis at this time last year with the operational constraints other factors leading to cost conversion and those cost pressures in turn will lead to higher revenues that is certainly true for United as our diversified revenue streams continue to differentiate us from other airlines another way of saying that is that we believe the new link between your guidance CASM and RASM of <unk>.

And while it might be hard to get either a CASM or RASM forecast exactly correct, we could have higher confidence in forecasting the relationship between the two and therefore have higher confidence in our earnings margin forecast and despite a year filled with events that we could have never predicted that's exactly what happened in 2023, and so I'd like to think that.

Scott: 100000 team members around the world and work so hard to make that happen and those things are 100000 people continued to deliver in the face of a huge impact on our employees and customers and the Max line graph I'm proud of our Tech ops team is taking the lead and Thats been working 18 hour days does stock since January.

Scott: To ensure that the <unk> is 100% safe before we returning to serves I'd also like to thank them for.

Scott: For their professional leadership in those situations also acknowledged that they too are also working long hours and weekends with us in an effort to ensure that we know for sure what happened. So that we so we can be confident that the remediation prevents it from ever happening again.

Scott Kirby: Joining us on the call today to discuss our results and outlook are Chief Executive Officer Scott Kirby, President Brett Hart, Executive Vice President and Chief Commercial Officer Andrew Nocella, and Executive Vice President and Chief Financial Officer Mike Leskinen. In addition, we have other members of the executive team on the line available for this Q&A. Now, I'd like to turn the call over to Scott.

Scott Kirby: 2023 really sets the stage for what is likely to be a repeat in 2020. United financial performance is impressive, especially if you consider what analysts were expecting just one year ago. In 2023, we delivered a full-year earnings per share above $10, which was a significant increase.

Scott: Three really sets the stage for what is likely to be a repeat in 2020.

Speaker Change: Got it.

Speaker Change: This is impressive, especially considering recorded analysts were expecting just one year ago in.

Speaker Change: 2023, we delivered full year earnings per share above $10, which was.

Scott Kirby: within the range of our initial United Next targets of 10 to 12. I want to spend some time today examining how we got there and why we think those trends will persist in 2020.

Speaker Change: Within the range of our initial target of 10 to 12 I want to spend some time today to examine how we got there and why we think the trends will persist in 2024.

Scott Kirby: One, we expected the operating environment to be challenging, driven by the pilot and other hiring constraints, FAA air traffic control steps, maintenance catch-up, and supply chain issues. It turned out to be even more challenging than we thought. Two, and those operating environment challenges led directly to industry capacity plans, including our own, coming down three points on average that carriers adapted to the new operating environment. For United, we made changes to our schedule, and we closed out the year setting operational records. The improvements in Newark, in particular, are one of the most important accomplishments that we achieved last year. Brett will share more details in just a moment, but the FAA waivers right-sided the airport and airspace to physical constraints have allowed us to run an operation that's performing better than ever in Newark. That's been good for our business, and it's been really good for our customers.

We expect that the operating environment to be challenging driven by the pilot other hiring constraints FAA air traffic controls that maintenance catch up and supply chain issues. It turned out to be even more challenging than we thought and those operating environment talent led directly to industry capacity plans, including our own.

Scott Kirby: Thank you, Christina, and good morning to everyone on the call today. Despite numerous geopolitical and other headwinds around the globe, 2023 really was the year that our plan for United Next came together. Our thesis at this time last year was that operational constraints and other factors were leading to cost convergence, and those cost pressures, in turn, would lead to higher revenues. That is certainly true for United as our diversified revenue streams continue to differentiate us from other airlines. Another way of saying that is that we believe that a new link between United's Chasm and RASM is being solidified. And while it might be hard to get either a Chasm or RASM forecast exactly correct, we can have higher confidence in forecasting the relationship between the two, and therefore have higher confidence in our earnings and margin forecasts. And despite a year filled with events that we could never have predicted, that's exactly what happened in 2023. And so I'd like to thank the 100,000 United team members around the world who worked so hard to make that happen.

Speaker Change: Coming down three points on average that carriers adapted to the new operating environment, our United We made changes to our schedule and we closed out the year setting operational records the improvements in Newark in particular, one of the most important accomplishments that we achieved last year, Brett will share more details in just a moment, but the FAA waivers right sized here.

Speaker Change: And aerospace to physical constraints that allowed us to run an operation that performing better than ever consumer that's been good for our business has been really good for our customers.

Scott Kirby: Three, but as we predict, the challenging operating environment led to cost pressures and cost convergence in the industry. To be fair, even we at United underestimated the inflationary pressures that we would face, primarily from labor, maintenance, and supply chain issues. And that led to higher absolute chasm X than we were forecasting. But those same cost pressures are being felt across the entire industry. And a year ago when we talked, we believed that industry-wide cost pressures would wind up as a pass-through, much like fuel has been in the past. Four, and that is, in fact, exactly what happened. While industry cost pressures drove higher chasm X than United, we offset those higher-than-expected costs with higher-than-expected revenues. Five, which leads to the final point. While difficult to predict events like a fuel price spike, rising conflict in the Middle East, fires in Maui, persistent inflationary pressure, and so many other things,

Speaker Change: But as we predict the challenging operating environment, where the cost pressures and cost convergence in the industry to be fair even.

Speaker Change: Underestimated the inflationary pressures that we would face primarily from labor maintenance and supply chain issues that led to higher absolute CASM Max than we were forecasting.

Speaker Change: Those same cost pressures are being felt across the entire industry and a year ago. When we talk we believe the industry wide cost pressures or wind up as a pass through but I think people have been in the past.

Scott Kirby: And those same 100,000 people continue to deliver in the face of the huge impacts on our employees and customers from the MAX 9 ground. I'm proud of our tech ops team who's taken the lead and has been working 18-hour days non-stop since January 6th to ensure that the MAX 9 is 100% safe before we return it to service. I'd also like to thank the FAA for their professional leadership in this situation and also acknowledge that they, too, are working long hours and weekends with us in an effort to ensure that we know for sure what happened so that we can be confident that the remediation prevents it from ever happening again.

Speaker Change: And that is in fact, exactly what happened while industry cost pressures drove higher Hasnt magazine, Jonathan we offset those higher than expected costs with higher than expected revenues.

Speaker Change: Which leads to the final point, while difficult to predict the fuel price Spike rising conflict in the middle East buyers in Malaga system placement pressure. So many other things.

Scott Kirby: It makes it difficult to predict United's full-year 2023 CASM and RASM 12 months in advance. The tightening connection at United between CASM and RASM meant that we achieved our initial $10 to $12 EPS range, despite those multiple headwinds around the field.

That makes it difficult to predict the guidance full year 2023, CASM and RASM 12 months in advance the time of any connection at United between CASM and RASM meant that we achieved our initial 10 to $12 Aps range, despite multiple headwinds around the field.

Scott Kirby: 2023 really sets the stage for what is likely to be a repeat of 2029 in financial performance as present, especially if you consider what analysts were expecting just one year ago. In 2023, we delivered a full-year earnings per share above $10, which was within the range of our initial United Next targets of 10 to 12. I want to spend some time today examining how we got there and why we think those trends will persist in 2020. On the one hand, we expected the operating environment to be challenging, driven by pilot and other hiring constraints, FAA air traffic control status, maintenance catch-up, and supply chain issues. It turned out to be even more challenging than we thought.

Scott Kirby: The link between RASM and CASM, combined with the success of United Next, was what made 2023 such a successful and important year in our history. And we expect 2024 to follow a similar path for the same reasons. This is just the new normal. The operational challenges remain. It will be years before the FAA is back to full staff. We're still overlapping new labor agreements, which show up in our CASM. And the supply chain challenges aren't going away anytime soon. That means capacity will continue to ratchet down out of necessity, and cost convergence will continue. But revenues will adjust to the new cost reality, and you can expect United to maintain and grow EPS in March.

Speaker Change: Between RASM and CASM combined with the success of your guidance.

Speaker Change: May 2023.

Speaker Change: Such a successful and important year in our history and we expect 2024 to follow a similar path for the same reasons. This is just the new normal the operational challenges revert it will be years, where the FAA is back to full staffing, we're still overlapping new labor agreement, which show up in our cap and the supply chain challenges.

Speaker Change: Not going away anytime soon that means capacity will continue to ratchet down out of necessity and cost convergence will continue but revenues will adjust to the new cost reality and you can expect the United just maintain and grow EPS and margins.

Scott Kirby: Two and a half years ago, we laid out our United Next Growth Strategy. In 2023, we demonstrated that the planet is working almost exactly as we expected, and the future is bright. There have been, and there will be more, bumps in the road. But we continue to feel confident about our ability to grow earnings and margin over the long term because of the tighter connection between United's costs and United's revenues.

Speaker Change: Two and half years ago, we laid out our <unk> growth strategy.

Speaker Change: In 2023, we demonstrated plant is working almost exactly as we expected in the future and Bryan there have been and there will be more bumps in the road.

Scott Kirby: Two, and those operating environment challenges led directly to industry-capacity plans, including our own, coming down three points on average as carriers adapted to the new operating environment. For United, we made changes to our schedule, and we closed out the year setting operational records. The improvements in Newark, in particular, are one of the most important accomplishments that we achieved last year.

Speaker Change: We continue to feel confident about our ability to grow earnings and margin over the long term because of the tighter connection between United cost Immunize revenue.

Scott Kirby: Looking ahead to 2024, the United Next plan is working, and no airline is better in position to capitalize on industry and macroeconomic trends than United. And we're continuing to move aggressively to capitalize on emerging opportunities. We'll have more to share with you at our investor day later this spring. In the meantime, we're focused on delivering another great year for our employees and customers and our shareholders. And with that, I'll hand it over to Brett.

Speaker Change: Looking ahead in 2020 for the <unk> plant is working at no airline is better positioned to capitalize on industry and macroeconomic trends.

Brett Hart: Thank you, Scott, and good morning. As of Saturday, January 6th,

Brett Hart: Thank you Scott and good morning as of Saturday January six Boeing 737, Max nine aircraft has been grounded we are currently the largest operator of the block.

Scott Kirby: Brett will share more details in just a moment, but the FAA waivers restricted the airport and airspace to physical constraints and allowed us to run an operation that's performing better than ever in Newark. That's been good for our business, and it's been really good for our customers.

Brett Hart: Boeing 737 MAX 9 aircraft has been grounded. We are currently the largest operator of the...

Brett Hart: The aircraft representing approximately 8% of our capacity in the first quarter.

Brett Hart: The type B.

Brett Hart: Aircraft, representing approximately 8% of our.

Brett Hart: <unk> in the first quarter.

Brett Hart: Our financial guidance assumes that United's 79 MAX 9 aircraft is grounded in the fall of January . I echo Scott's gratitude for all of you at United who worked so hard to care for us.

Scott Kirby: But, as we predicted, the challenging operating environment led to cost pressures and cost conversions in the industry. To be fair, even we at United underestimated the inflationary pressures that we would face, primarily from labor, maintenance, and supply chain issues. And that led to higher absolute cash impacts than we were forecasting. But those same cost pressures are being felt across the entire industry. And a year ago when we talked, we believed industry-wide cost pressures would wind up as a pass-through, much like fuel has been in the past. And that is, in fact, exactly what happened. While industry cost pressures drove higher cash-in-tax economies, we offset those higher-than-expected costs with higher-than-expected revenues. 5.

Brett Hart: Our financial guidance assumes that United 79, Max nine aircraft grounded.

Speaker Change: <unk> I Echo Scotts gratitude.

Speaker Change: United who worked so hard.

Speaker Change: Travel plans were affected by the grounding of our Max nine fleet and.

Speaker Change: I'm also extremely proud of our tech ops team.

Speaker Change: Working carefully to ensure the safety of our Max nine aircraft before we start flying them again.

Brett Hart: 2023 was a year of growth and restoration.

Speaker Change: 2023 was a year of growth in restoration, and we closed out the year with strong record breaking operational results carrying a record 171 million customers.

Brett Hart: And we closed out the year with strong, record-breaking operational results, carrying a record 171 million customers.

The fourth quarter consolidated customer D zero zero and misconduct.

Speaker Change: We're the best for any quarter in our history.

Speaker Change: Not only did we set company records for the quarter, but we also ramps record setting.

Speaker Change: <unk> during our busiest time of the year over Thanksgiving and Christmas.

Scott Kirby: Which leads to the final point. While difficult to predict events like the fuel price spike, rising conflict in the Middle East, fires in Maui, and persistent inflationary pressure, so many other things that make it difficult to predict United's full-year 2023 CASM and RASM 12 months in advance. The timing connection at United between CASM and RASM meant that we achieved our initial $10 to $12 EPS range despite the multiple headwinds around the globe. The link between Rasmussen and CASM, combined with the success of United Next, was what made 2023 such a successful and important year in our history. And we expect 2024 to follow a similar path for the same reasons. This is just the new normal.

Brett Hart: Thanksgiving and the entire fourth quarter had the highest NPS scores in our post-pandemic history.

Speaker Change: Thanks, giving and the entire fourth quarter had the highest NPS scores and our post pandemic history.

Brett Hart: We wrapped up the year with our lowest ever cancel rate for the month of December .

Speaker Change: We wrapped up the year with our lowest ever cancel rate for the month of December.

Brett Hart: one of the largest challenges United and all airlines flying to and from New York have historically faced, more flights than air traffic.

Speaker Change: One of the largest challenges United and all airlines flying to and from New York have historically faced more flights and air Traffics.

Brett Hart: than the air traffic system can handle is now being addressed thanks to proactive intervention by the FAA.

Speaker Change: The air traffic system can handle it now being addressed thanks to proactive intervention by the FAA.

Scott Kirby: Newark, United's largest hub, has been operating with the best reliability on record since the FAA mandated that flight activity be consistent with the airspace and runway limitations of no more than 77 operations per hour this fall.

Speaker Change: Work United's largest hub that's been operating with the best reliability reliability on record since the FAA mandated that flight activity to be consistent with the aerospace and runway limitations, but no more 77 operations per hour. This fall.

Scott Kirby: The operational challenges remain, and it will be years before the FAA is back to full staffing. We're still overlapping new labor agreements, which show up in our CASM, and the supply chain challenges aren't going away anytime soon. That means capacity will continue to ratchet down out of necessity, and cost convergence will continue. But revenues will adjust to the new cost reality, and you can expect United to maintain and grow EPS in March. Two and a half years ago, we laid out our UnitedNext growth strategy. In 2023, we demonstrated that the plan is working almost exactly as we expected, and the future is bright. There have been, and will be, more bumps in the road.

Scott Kirby: For United, that meant we reduced flight activity from Newark by about 10%. Expect to continue with those cuts for the remainder of 2024.

Speaker Change: The United that meant we reduced flight activity from Newark by about 10%, we expect to continue with those cuts for the remainder of 2024.

Scott Kirby: Our customers and every passenger flying from New York are now benefiting

Speaker Change: Our customers in every passenger flying from New York are now benefiting.

Scott Kirby: And the cascade of delays that historically would flow across the United States from New York airspace has significantly improved.

Speaker Change: And the Cascade of delays that historically would flow across the United States from New York Aerospace has significantly improved.

Scott Kirby: Our customer D0 from Newark, the company records 76% in Q4 of 2023. We expect this level of performance to continue as long as the FAA continues to mandate that flight operations remain at 77 or fewer operations per hour going forward.

Scott Kirby: But we continue to feel confident about our ability to grow earnings and margin over the long term because of the tighter connection between United's costs and United's revenue. Looking ahead to 2024, the United Next plan is working, and no airline is better positioned to capitalize on industry and macroeconomic trends than United, and we're continuing to move aggressively to capitalize on emerging opportunities. We'll have more to share with you at our investor day later this spring. In the meantime, we're focused on delivering another great year for our employees, customers, and our shareholders. And with that, I'll hand it over to Brett.

Scott Kirby: United plans to continue to upgauge our Newark flying to ensure that there is plenty of capacity available for our customers, even with fewer flights.

Speaker Change: <unk> planned to continue to upgrade our Newark flying to ensure that there is plenty of capacity available for our customers.

Speaker Change: With fewer flights.

Scott Kirby: 2023 was also a banner year for employee recruiting, hiring, and retention at United.

Speaker Change: 2023 was also a banner year for employee recruiting hiring and retention at United.

Brett Hart: on the heels of hiring more than 21,000 people in 2022,

Speaker Change: On the heels of hiring more than 21000 people in 2022.

Brett Hart: We hired another 16,000 aviation professionals to our airline last year.

Speaker Change: We hired another 16000 aviation professionals to our airline last year.

Brett Hart: We hire the best of the best.

Speaker Change: We hire the best of the best.

Brett Hart: skill and talent of our employees played a big role in our operational performance outperformance.

Speaker Change: The skill and talent of our employees play a big role in our operational performance outperformance in the second half of the year.

Brett Hart: second half of the year.

Brett Hart: Thank you, Scott, and good morning. As of Saturday, January 6, all Boeing 737 MAX 9 aircraft have been grounded.

Brett Hart: our record-breaking customer scores during the holidays, and our overall financial performance as an airline in 2023.

Speaker Change: Our record breaking customer scores during the holidays and our overall financial performance as an airline and 2023.

Brett Hart: We're a better, more successful airline because our people.

Speaker Change: We are a better more successful airline because of our people.

Brett Hart: And I'm proud of the way we've gone about growing our team.

Speaker Change: And I am proud of the way, we've gone about growing our team.

Brett Hart: I'm happy to announce we will be paying our eligible employees $81 million in profit sharing next month.

Speaker Change: I am happy to announce we will be paying our eligible employees to $81 million in profit sharing next Mark. This is five times higher than 2022 and over two times higher than the average over the last 10 years for <unk>.

Brett Hart: is five times higher than 2022 and over two times higher than the average of the last 10 years.

Brett Hart: I'm also extremely proud of our tech ops team who are working carefully to ensure the safety of our MAX 9 aircraft before we start flying them again. 2023 was a year of growth and restoration. We close out the year with strong, record-breaking operational results, carrying a record 171 million customers. The fourth quarter consolidated customer D0, A0, and misconnect ratings were the best for any quarter in our history. Not only did we set company records for the quarter, but we also ran record-setting operations during our busiest time of the year, Thanksgiving and the entire fourth quarter, had the highest NPS scores in our post-pandemic history.

Brett Hart: are keen to be a part of this airline.

Speaker Change: <unk>, the beating heart of this airline.

Brett Hart: sharing these impressive results today without

Speaker Change: Sharing these impressive results today without them.

Brett Hart: With that, I will pass it over to Anne.

Speaker Change: That I will pass it over to Andrew.

Anne Smith: Thanks, Brett.

Andrew: Thanks, Brett.

Scott Kirby: As Scott mentioned, crop pressures led to healthy revenue trends in the quarter with stellar performance over the holidays. Total revenues of the fourth quarter increased 9.9% on a 14.7% increase in capacity. Consolidated trabzim was down 4.2%, and prabzim was down 3.3% for the quarter.

Andrew: As Scott mentioned pressures led to healthy revenue trends in the quarter stellar performance over the holidays total revenue.

Andrew: Nine 9% on a 14, 7% increase in capacity consolidated <unk> was down four 2% in PRASM was down three 3% for the quarter.

Anne Smith: Domestic demand was strong in the quarter and proud results for slightly negative year of a year. Nice improvement from the 3rd quarter.

Andrew: Mystic demand was strong in the quarter and PRASM results were slightly negative year over year nice improvement from the third quarter.

Anne Smith: Atlantic PRASM growth in Q4, a positive 3.8%, was consistent with Q3 year-over-year growth of 4%. We also experienced a small but measurable demand weakness period across core Europe in Q4, triggered by the conflict in Israel, but that is now moderated.

Andrew: Atlantic PRASM growth in Q4, a positive three 8% was consistent with Q3 year over year growth of 4%. We also experienced a small but measurable demand weakness period across for Europe in Q4 triggered by the conflict in Israel, but that has now moderated.

Scott Kirby: United increased Asia-Pacific flying by 82% in the quarter. PRAZM was down 11.6% year-over-year. In the quarter, we increased flying to China from four weekly flights to twice daily, amongst many other changes. We've now fully restored our capacity to pre-COVID levels across the Pacific.

United increased Asia Pacific declined by 82% in the quarter PRASM was down 11, 6% year over year in the quarter, we increased flying to China from four weekly flights to twice daily amongst many other changes we've now fully restored our capacity to pre COVID-19 levels across the Pacific.

Scott Kirby: Latin American unit revenues decreased by 11.6% in the quarter, pressured by record industry capacity levels and heavy fare discounting.

Latin American unit revenues decreased by 11, 6% in the quarter pressured by record industry capacity levels and heavy fare discounting.

Scott Kirby: Cargo revenues continue to adjust to their new steady-state post-pandemic state. For 2023, cargo revenues were $1.5 billion, 31% lower than 2022. Almost all the revenue changes due to yields, not volume.

Andrew: Cargo revenues continued to adjust to their new steady state post pandemic post pandemic state for.

Andrew: For 2023 cargo revenues were $1 5 billion, 31% lower than 2022.

All the revenue changes due to yields not volumes.

Scott Kirby: MILEAGE PLUS.

Andrew: Violence plus.

Scott Kirby: and

Andrew: For shipping.

Scott Kirby: Turn into our outlook for the first quarter, we expect TRASM and Q1 to be approximately flat year over year, which is a nice sequential improvement versus the past few quarters.

Andrew: Turning to our outlook for the first quarter, we expect <unk> in Q1 to be approximately flat year over year, which is a nice sequential improvement versus the past few quarters.

Scott Kirby: Domestic demand remains strong with increases in business traffic volumes year-over-year in addition to stronger price than thus far this year, and we expect domestic year-over-year browsing to be positive for the quarter. We see the best yield growth current on tickets purchased within a week of departure.

Andrew: Domestic demand remains strong with increases in business traffic volumes year over year. In addition to stronger pricing. Thus far this year and we expect domestic year over year PRASM to be positive for the quarter, we see the best yield growth and current on tickets purchased within a week of departure.

Scott Kirby: Bookings and yields for Atlantic Fly in early 2024 are also strong, and we expect these trends to continue into the second and third quarters. Service to Tel Aviv will resume as soon as it's safe for our customers and crew, but no sooner than February 15th.

Andrew: Bookings and yields for Atlantic Flying in early 2024 are also strong and we expect these trends to continue into the second and third quarters service to Tel Aviv will resume as soon as it's safe for our customers and crew, but no sooner than February 15.

Scott Kirby: We also saw a nice step up in London Heathrow business demand in recent weeks, which has helped in Atlantic results in Q1 to date when combined with lower United capacity to London. We remain focused on slow growth across the Atlantic for 2024.

Andrew: We also saw a nice step up in London Heathrow business demand in recent weeks. She is helping Atlantic results in Q1 to date, when combined with lower United capacity to London, We remain focused on slow growth across the Atlantic for 2024.

Scott Kirby: Asia-Pacific growth remains above normal as we head into Q1. We continue to absorb the incremental Asia-Pacific capacity added in 2023. We expect all of United's new Asia capacity to produce strong margin results as we head into Q2 and Q3.

Andrew: Asia Pacific growth remains above normal as we head into Q1, we continued to absorb the incremental Asia Pacific capacity added in 2023, we expect all of United's New Asia capacity to produce strong margin results as we head into Q2 and Q3.

Brett Hart: The skill and talent of our employees played a big role in our operational performance outperformance in the second half of the year, our record-breaking customer scores during the holidays, and our overall financial performance as an airline in 2023. We're a better, more successful airline because of our people, and I'm proud of the way we've gone about growing our team. I'm happy to announce we will be paying our eligible employees $81 million in profit sharing next month.

Scott Kirby: Latin American RASM is expected to remain negative for Q1 year-over-year, a trend that's likely to continue into Q2.

Andrew: Latin American RASM is expected to remain negative for Q1 year over year, a trend that's likely to continue into Q2.

Scott Kirby: FAA imposed industry capacity limitations on New York for virtually all of 2024 and San Francisco for most of 2024 will limit capacity from either airport. We've prioritized international growth over domestic at both hubs. We're optimistic that the demand will catch up with supply in 2024 in these two United Hubs that will lag the recovery elsewhere.

Andrew: FAA imposed industry capacity limitations on New York for virtually all of 2024 in San Francisco for most of 2024 will limit capacity from either airport, we've prioritized international growth over domestic at both hubs are.

Brett Hart: This is five times higher than 2022, and over two times higher than the average of the last 10 years. Thank you for sharing these impressive results with us today. And with that, I will pass it over to Andrew.

Andrew: Optimistic that the demand will catch up with supply in 2024, and these two United hubs that have lagged the recovery elsewhere.

Scott Kirby: In summary, we expect strong unit revenue performance on domestic and Atlantic capacity in early 2024, with weaker results in Asia as we absorb 2023 growth, and in Latin America due to record industry capacity growth levels.

Andrew: In summary, we expect a strong unit revenue performance on domestic and Atlantic capacity in early 2024 with weaker results in Asia as we absorbed 2023 growth and in Latin America due to record industry capacity growth levels.

Andrew P. Nocella: Thanks, Brad. As Scott mentioned, cost pressures led to healthy revenue trends in the quarter, with stellar performance over the holidays. Total revenues in the fourth quarter increased 9.9% on a 14.7% increase in capacity. Consolidated TRASM was down 4.2%, and PRASM was down 3.3% for the quarter.

Scott Kirby: While we expect international RASMs will grow slower than domestic for a period, we also expect that international flying will have materially higher margins for United versus domestic in 2024, just less of a gap than in 2023.

While we expect international RASM will grow slower than domestic for a period. We also expect that international client will have materially higher margins for United versus domestic Tony in 'twenty, two or just less of a gap than in 2023.

Scott Kirby: We at United have, I think, created a really very durable commercial model that has diversified our revenue streams and our network and largely decommoditized our product versus just about every other airline in the U.S., maybe for the exception of one. Our commercial strategies result in fair levels at United adjusting not only for changes in prices of fuel, but also for the cost inputs at United, allowing us to overcome the inflationary cost pressures larger than we expected in 2023. You can see this in our relative revenue performance quarter to quarter.

Andrew: We at United have I think created a really very durable commercial model that has diversified our revenue streams in our network and largely D. Commoditize, our product versus just about every other airline in the U S. Maybe for the exception of one our commercial strategy is resulting in fare levels that unite adjusted not only for changes in prices.

Andrew P. Nocella: Domestic demand was strong in the quarter, and plasma results were slightly negative year over year, a nice improvement from the third quarter. Atlantic Prasm growth in Q4 of positive 3.8% was consistent with Q3 year-over-year growth of 4%. We also experienced a small but measurable demand weakness period across poor Europe in Q4, triggered by the conflict in Israel, but that is now moderated. United increased Asia-Pacific flying by 82% in the quarter. Traveling was down 11.6% year over year.

Andrew: But also for the cost inputs at United, allowing us to overcome the inflationary cost pressures larger than we expected in 2023, you can see this in our relative revenue performance quarter to quarter.

Andrew: United unique hub system in the largest U S cities and the network. We have built over decades from these hubs underpins our outlook and gives United access to revenues and profitable flying others simply do not have or have not been able to replicate the United next fleet growth in recent years has allowed us to unlock the true value in our hub system.

Scott Kirby: which you can see from our results today.

Andrew: Which you can see from our results.

Andrew: Today.

Scott Kirby: Unique aircraft cabin and capacity plans continue to be a driver of our strong revenue performance, particularly as demand for premium products remains elevated. For example, domestic premium revenue grew 13% year-over-year in Q4 over double the rate of coach, another data point validating our strategy. While we remain focused on monetizing our growing premium capacity, we also remain committed to basic economy. Domestic basic economy revenue was up nearly 20% in the fourth quarter versus last year.

Andrew: <unk> unique aircraft cabin and capacity plans continued to be a driver of our strong revenue performance, particularly as demand for premium products remains elevated for example, domestic premium revenue grew 13% year over year in Q4 over double the rate of coach another data point validating our strategy.

Andrew P. Nocella: Cargo revenues continue to adjust to their new city-state post-pandemic state. For 2023, cargo revenues were $1.5 billion, 31% lower than 2022, but almost all the revenue changes were due to yields, not volume. Mileage plus, for shipping.

Andrew: While we remain focused on monetizing our growing premium capacity. We also remain committed to basic economy domestic basic economy revenue was up nearly 20% in the fourth quarter versus last year.

Scott Kirby: Correcting gage deficits at United remains a key component of the future. We continue to believe we can add gage to domestic flying while maintaining strong unit revenues. Since 2019, United has increased its North American gage by 22% while also leading in BRASM growth.

Andrew: Correct engage deficits at United remains a key component of the future. We continue to believe we can add gauge to domestic flying while maintaining strong unit revenues. Since June 2019, United has increased its north American gauged by 22%, while also leading in PRASM growth.

For 2024, we intend to focus much of our domestic growth in our mid con hubs in Washington, Dulles as we had significant levels of new connectivity. This connectivity changes why we have confidence in the RASM as being accretive in 2024.

Diversified revenue streams across our global network remain key to our relative success as we implement our United next planned United's Global network is a key structural advantage, we will focus on in the coming years and it differentiates us with that I wanted to say, thanks to the entire United team and hand, it over to Mike to discuss our financial results Mike.

Scott Kirby: And it differentiates

Mike: With that, I wanted to say thanks to the entire United team and hand it over to Mike to discuss our financial results. Mike?

Michael Donald Leskinen: Thanks, Andrew, and thank you to the whole United team for closing up the year on a high note, both operational and financial.

Andrew: Yes.

Mike: Thanks, Andrew and thank you and the whole United team for closing up the year on a high note both operationally and financially.

Mike: I'm proud to report that in 2023, we delivered pre-tax income of $4.3 billion, a more than $3.2 billion improvement over 2022.

Mike: Proud to report that in 2023, we delivered pre tax income of $4 $3 billion or more than $3 2 billion improvement over 2022.

Mike: We delivered earnings per share of $10.05 within our initial guidance range of $10 to $12 and well ahead of consensus expectations.

Mike: We delivered earnings per share of $10 five within our initial guidance range of 10 to $12 and well ahead of consensus expectations of about $6 at the beginning of the year.

Mike: Of about 6 dollars at the beginning of the year.

Mike: We achieved this despite significant industry headwinds and operational constraints that led to lower capacity.

Mike: We achieved this despite significant industry headwinds and operational constraint deliberate overcapacity.

Mike: For the fourth quarter, we delivered pre-tax income of $845 million and earnings per share of $2.

Mike: For the fourth quarter, we delivered pretax income of $845 million and earnings per share of $2. <unk> ahead of consensus and above the high end of our guidance range.

Mike: ahead of consensus and above the high end of our guidance

Mike: Strong operational performance, robust revenue trends, and a decrease in fuel prices supported

Mike: Strong operational performance robust revenue trends and a decrease in fuel prices supported these results.

Mike: Fourth quarter CASMAX was up 4.9%, as we did not operate flight to television for the full

Mike: Fourth quarter CASM ex was up four 9% as we did not operate <unk> for the full quarter.

Mike: Additionally, affected with the fourth quarter, we are now classifying certain commissions that haven't been classified as contraband as distribution expenses.

Mike: Additionally, effective with the fourth quarter, we are now classifying certain commissions that had been classified as contra revenue.

Mike: Distribution expense.

Mike: This has no impact on net income or cash flow.

Mike: This change added one point to our year-on-year fourth quarter CASAmax and increased fourth quarter year-on-year unit revenue by 0.2%.

Mike: This change added one point to our year on year fourth quarter, CASM ex and increased fourth quarter year on year unit revenue by <unk> six points.

Mike: The change will also result in an approximate one-point headwind to year-on-year CASMAX and an approximate 0.6-point increase in RASM through the end of the third quarter.

Mike: The change will also result in an approximate one point headwind to year on year cosmetics, and an approximate <unk> six point increase in RASM through the end of the third quarter of this year.

Mike: Underlying unit costs trended favorably during the quarter as a completion factor came in better than planned due to our strong operational performance.

Mike: Underlying unit costs trended favorably during the quarter as our completion factor came in better than planned due to our strong operational performance.

Mike: Compared to 2019, our relative performance on CASMAX was near the top of the industry

Mike: Compared to 2019, our relative performance on CASM ex was near the top of the industry.

Scott Kirby: As Scott outlined, delivering strong relative cost performance remains critical to the successful execution of United Nations.

Mike: As Scott outlined delivering strong relative cost performance remains critical to the successful execution of United There.

Scott Kirby: We have always asserted that costs that are borne by the entire industry are passed along in prices that are lax.

Mike: We are all into sort of the costs that are borne by the entire industry are passed along in prices with a lag.

Scott Kirby: Historically, this relationship has been clear with Jessica.

Mike: Historically this relationship has been clear with jet fuel prices more recently the relationship has been clear for both higher labor and higher maintenance costs as well.

Scott Kirby: More recently, the relationship has been clear for both higher labor and higher maintenance costs as well.

Scott Kirby: Notably, our unit costs in 2023 were up 17.8% versus 2019.

Mike: Notably our unit costs in 2023 were up 17, 8% versus 2019.

Scott Kirby: compared to ultra-low-cost carriers, unit costs that are expected to be up 25% on.

Mike: Compared to ultra low cost carriers unit costs that are expected to be up 25% on average.

Andrew P. Nocella: Our commercial strategies result in unfair levels at United Adjust and not only for changes in the price of fuel but also for the cost inputs at United, allowing us to overcome inflationary cost pressures larger than we expected in 2023. You can see this in our relative revenue performance quarter to quarter. United's unique hub system in the largest U.S. cities and the network we have built over decades from these hubs underpins our outlook and gives United access to revenues and profitable flying others simply do not have or have not been able to replicate.

Scott Kirby: that more than seven-point cost convergence in costs occurred simultaneous with an emerging preference for United Products.

Mike: That more than seven point cost convergence and costs occurred simultaneous with an emerging preference for United product.

Scott Kirby: top-tier operational reliability the EI provides.

With top tier operational reliability it provides.

Scott Kirby: The result is unsurprising. Our margins have dramatically and structurally improved. And we're only in the early innings of that journey.

The result is unsurprisingly, our margins dramatically and structurally improve.

Mike: And we're only in the early innings of that.

Mike: Gary.

Scott Kirby: For the first quarter of 2024, we expect a loss per share between negative 35 cents and negative 85.

Mike: For the first quarter of 2024, we expect a loss per share between negative 35 and negative 85.

Scott Kirby: While our core costs remain on track, our first quarter CAS MAX faces a few head

Mike: While our core costs remain on track, our first quarter CASM ex faces a few headwinds.

Scott Kirby: First, the cancellations of the MAX 9 flight have reduced first quarter capacity

Mike: First the cancellations of the Max nine flights have reduced first quarter capacity.

Scott Kirby: Due to the close in nature of these cancellations, most of our expenses are fixed.

Mike: Due to the close and nature of these cancellations most of our expenses are fixed.

Scott Kirby: And we also encourage additional interruptions

Mike: And we also incurred additional interrupted trip expenses, we expect the combination of these items were increased CASM ex by approximately three points.

Connor Cunningham: We expect a combination of these items will increase CASMAC by approximately 3%.

Connor Cunningham: Second, as we mentioned, the contra revenue reclassification and distribution expense

Mike: Second as we mentioned that the contra revenue reclassification in distribution expense as a one point headwind.

Connor Cunningham: Third, the impact of new labor agreements as they annualize adds an additional three to four points.

Mike: Third the impact of new labor agreements as they annualize adds an additional three to four points.

Connor Cunningham: And 4th.

Mike: And for <unk>.

Connor Cunningham: higher volume of engine events and continued supply chain challenges lead to another one point of CASMAC's headwind.

Mike: A higher volume of engine events and continued supply chain challenges lead to another one point of CASM ex.

Andrew P. Nocella: Correcting gauge deficits at United remains a key component of the future. We continue to believe we can add gauge to domestic flying while maintaining strong unit revenues. Since 2019, United has increased its North American gauge by 22 percent, while also leading M-PRASM growth. For 2024, we intend to focus much of our domestic growth on our MidCon hubs in Washington, Dulles, as we add significant levels of new connectivity.

Connor Cunningham: While the first two items I mentioned are United Specific headwinds, labor and maintenance are an industry-wide issue, and the primary drivers are the cost conversions that Scott described earlier.

Connor Cunningham: Most importantly, we're confident that the pace of inflation in our costs will continue to be favorable versus our historically lower cost competitors.

Mike: Most importantly, we are confident that the pace of inflation in our costs will continue to be favorable versus our historically lower cost competitors.

Connor Cunningham: Building off of our 2023 momentum, we expect full-year 2024 earnings per share to be between $9 to $11.

Mike: Building off of our 2023 of them and we expect full year 2024 earnings per share to be between 9% to $11.

Connor Cunningham: We are encouraged by the trends we're seeing, and our United Next plan is working well.

Mike: We are encouraged by the trends, we're seeing in our Nymex plan is working well.

Connor Cunningham: This is our guidance, but I'd be remiss if I didn't point out that our internal targets are higher.

Mike: This is our guidance I'd be remiss, if I didn't point out that our internal targets are higher.

Connor Cunningham: We plan to update our longer-term financial targets at our upcoming investments.

Mike: We plan to update our longer term financial targets at our upcoming Investor day.

Connor Cunningham: Looking ahead, we intend to take a different approach to guidance.

Mike: Looking ahead, we intend to take a different approach to guidance.

Connor Cunningham: As demonstrated in 2023 and just recently with the max grounding. We operate in a dynamic industry.

Mike: As demonstrated in 2023, and just recently with the Max grounding, we operate in a dynamic industry.

Michael Donald Leskinen: Thanks, Andrew, and thank you to the whole United team for closing out the year on a high note, both operational and financial. I'm proud to report that in 2023 we delivered pre-tax income of $4.3 billion, a more than $3.2 billion improvement over 2022. We delivered earnings per share of $10.05, within our initial guidance range of $10-12 and well ahead of consensus expectations of about $6 at the beginning of the year.

Scott Kirby: With the no excuses philosophy, we intended to take United off the detailed quarterly metrics shortly after I joined and led the investor relations team.

Mike: With no excuses philosophy, we intended to take United off the detailed quarterly metrics. Shortly after I joined in light of the Investor Relations team.

Scott Kirby: The pandemic interrupted those

Mike: Vivek interrupted those plans, but now that we're past the crisis and as we deliver on our earnings per share targets, you should expect us to remove <unk> CASM ex and capacity guidance and focus on earnings per share.

Scott Kirby: But now that we're past the crisis, and as we deliver on earnings per share targets, you should expect us to remove TRASM, CASM-X, and capacity guidance and focus on earnings per share.

Scott Kirby: We've provided RASM and TRASM for the first quarter, but this is likely the last time we will do so for a quarter.

Mike: We've provided RASM in the first quarter, but this is likely the last time, we will do so for a quarter.

Michael Donald Leskinen: We achieved this despite significant industry headwinds and operational constraints that led to lower capacity. For the fourth quarter, we delivered a pre-tax income of $845 million and earnings per share of $2, ahead of consensus and above the high end of our guidance. Strong operational performance, robust revenue trends, and a decrease in fuel prices supported these results. Fourth quarter CASMX was up 4.9% as we did not operate any flight fatalities for the full quarter. Additionally, beginning with the fourth quarter, we are now classifying certain commissions that hadn't been classified as a contrabassist as distribution Experts. This has no impact on net income or cash flow.

Scott Kirby: We will continue to provide fulsome commentary on the trends impacting our

Mike: We will continue to provide fulsome commentary on the trends impacting our business and we will continue to be transparent with their views of the longer term future for both United and the industry that we're managing this business towards.

Scott Kirby: and we will continue to be transparent with our views of the longer-term future for both United and the industry that we're managing this business.

Scott Kirby: We'll earn your confidence by delivering bottom line

We will earn your confidence by delivering bottom line results.

Scott Kirby: Shifting gears to the fleet.

Mike: Shifting gears to the fleet.

Scott Kirby: In the fourth quarter, we took delivery of 20 Boeing MAX and four Airbus A321s.

Mike: In the fourth quarter, we took delivery of 20, Boeing Max and for Airbus <unk> hundred 21 aircraft.

Scott Kirby: Looking ahead to 2024, we have a total of 107 aircraft scheduled to deliver.

Mike: Looking ahead to 2024, we have a total of 107 aircrafts scheduled scheduled to deliver <unk>.

Scott Kirby: 31 of those being maxed out.

Mike: 31 of those being Max nine.

Scott Kirby: It is unrealistic at this time to believe all of those aircraft will deliver as currently

Mike: It is unrealistic at this time, we believe all of those aircraft will deliver as currently planned.

Scott Kirby: We also have 277 MAX 10 aircraft on order through the remainder of the decade and an additional 200 options for MAX 10 aircraft.

Mike: We also have 277, Max 10 aircraft on order through the remainder of the decade and an additional 200 auctions for Max 10 aircrafts.

Scott Kirby: We are monitoring Boeing's air progress towards certification of the Maxine Coast

Mike: We are monitoring monitoring <unk> progress towards certification of the maxing closely.

Scott Kirby: At this time, our current aircraft delivery schedule would lead to a total capex of approximately $9 billion in 2024.

Mike: At this time, our current aircraft delivery schedule would lead to a total capex of approximately $9 billion in 2024.

Scott Kirby: But given the MAC-9 grounding and the continued supply chain issues, there's a downward bias towards 2025.

Mike: But given the Max nine grounded and the continued supply chain issues.

Mike: Downward bias towards 2024 spend.

Scott Kirby: We also expect a reduction in orders and deliveries from Boeing in 2025.

Mike: We also expect a reduction in orders and deliveries from Boeing in 2025.

Scott Kirby: This will require reworking of our fleet plan, and we will share the details when that works

Mike: This will require a reworking of our fleet plan and we will share the details with network is complete.

Scott Kirby: Turning to the balance sheet, we ended the quarter with $16.1 billion in liquidity, including our underrun revolver.

Mike: Turning to the balance sheet, we ended the quarter with $16 1 billion in liquidity, including our Undrawn revolver.

Scott Kirby: Our adjusted net debt to EBITDA was 2.9 times, consistent with our leverage target of less than three times provided at the start of the year.

Mike: Our adjusted net debt to EBITDAR was two nine times consistent with our leverage target of less than three times provided at the start of the year.

Scott Kirby: Managing the business towards positive free cash flow will be a top priority for our team over the coming year.

Mike: Maintenance in the business towards positive free cash flow will be a top priority for our team over the coming years.

Scott Kirby: Our stock is deeply undervalued, trading at less than four times earnings, despite the fact that we delivered 19.5% revenue growth and realized significant structural improvement in relative profitability in 2023.

Mike: Our stock is deeply undervalued trading at less than four times earnings. Despite the fact that we delivered 19, 5% revenue growth.

Mike: And realized significant structural improvement relative profitability in 2023.

Scott Kirby: But we also understand that generating free cash flow consistently

Mike: But we also understand the generating free cash flow consistently EBIT, while we execute our United next strategy is an important component to increasing our valuation.

Scott Kirby: Even while we execute our United Next strategy, it's an important component to increasing

Scott Kirby: 2023 marks the first full year of the United

Mike: 2023 marked the first full year for United next plan were thrown some hurdles, but we adapted quickly and exited the year stronger than ever.

Scott Kirby: We were thrown some curveballs, but we adapted quickly and exited the year stronger than ever. It's clear that when customers are given a choice, they are choosing United.

Mike: Clear that when customers are given a choice they're choosing United.

Scott Kirby: You can see it clearly in our revenue and margin performance relative to the industry.

Mike: You can see it clearly in our revenue and margin performance relative to the industry.

Scott Kirby: Finally, I'm happy to announce we will be hosting an Investor Day on May 1st in Chicago.

Mike: Finally, I'm happy to announce we will be hosting an investor day on May <unk> in Chicago with.

Scott Kirby: We plan to provide an update on our progress with the United Next Plan and introduce some of the unique United tailwinds that will drive continued margin expansion and sustainable free cash flow.

Mike: We plan to provide an update on our progress with <unk> and introduce some of the United tailwind that will drive continued margin expansion and sustainable free cash flow.

Scott Kirby: I'm encouraged by our results and our relative momentum, and I'm looking forward to delivering another solid year for our employees, customers, and shareholders.

Mike: I'm encouraged by our results and our relative momentum and I'm looking forward to delivering another solid year for our employees customers and shareholders.

Michael Donald Leskinen: Third, the impact of new labor agreements as they annualize as an additional three to four points, and more, higher volumes of engine events, and continued supply chain challenges lead to another one point of Chasm X headwind. While the first two items I mentioned are United Pacific headwinds, labor and maintenance are an industry-wide issue, and they're primary drivers of the cost conversions that Scott described earlier. Most importantly, we're confident that the pace of inflation in our costs will continue to be favorable versus our historically lower cost competitors. Building off of our 2023 momentum, we expect full year 2024 earnings per share to be between $9 and $11.

Mike: With that I will pass it over to Kristina to start the Q&A.

Kristina: Thanks, Mike we will now take questions from the analysts please limit yourself to one question and if needed one follow up question. Steven Please describe the procedure to ask a question.

Steven: Alright, we will go to the first caller in queue.

Steven: Ravi Shanker from Morgan Stanley.

Ravi Shanker: Ravi Your line is muted.

Ravi Shanker: Yeah.

Ravi Shanker: Thanks, Good morning, everyone.

Michael Donald Leskinen: We are encouraged by the trends we are seeing, and our UnitedNext plan is working well. This is our guidance, but I'd be remiss if I didn't point out that our internal targets are higher. We plan to update our longer-term financial targets in our upcoming investments. Looking ahead, we intend to take a different approach to guidance. As demonstrated in 2023 and just recently with the MAX grounding, we operate in a dynamic industry. With the no excuses philosophy, we intended to take United off the detailed quarterly metrics shortly after I joined and led the investor relations team.

Ravi Shanker: So maybe.

Ravi Shanker: Scott you said at the start that you saw pressure on your 2023 capacity and I think you went through your order book and said there is downward pressure there I expected as well.

Scott: Doug I just want to make you look at the long term United next growth plans and kind of what.

Scott: What can be practically achieved in the coming years is that something you can expect during the investor day.

Speaker Change: Hey, Ravi this is Mike.

Ravi Shanker: Look the reality is that with the.

Ravi Shanker: The Max grounding. This is the kind of straw that broke the camel's back with.

Michael Donald Leskinen: The pandemic interrupted those, but now that we're past the crisis and as we deliver on our earnings per share targets, you should expect us to remove TRASM, CASMX, and capacity guidance and focus on earnings. We've provided RASM and TRASM for the first quarter, but this is likely the last time we will do so for a quarter. We will continue to provide fulsome commentary on the trends impacting us, and we will continue to be transparent with our views of the longer-term future for both United and the industry as we manage this business together. We'll earn your confidence by delivering bottom-line results. Shifting gears to the fleet, in the fourth quarter, we took delivery of 20 Boeing MAX and 4 Airbus A321. Looking ahead to 2024, we have a total of 107 aircraft scheduled to deliver, with 31 of those being maxed out.

Ravi Shanker: Believing that the Max 10, we will deliver on the schedule we had hoped for.

Ravi Shanker: So were working through an alternate plan, we do expect our growth rate to slow in coming years.

Ravi Shanker: United Next plan is firmly on track it will take a little longer to get there.

Ravi Shanker: And we're working on alternative plans to see how much higher we can elevate the growth with the Max 10, now we're still counting ongoing and we're monitoring the Max 10 closely and we're rooting and we do everything we can to help that aircraft get certified it's a great aircraft, but we cant count on it and so we're working on ultimate plan to detail.

Speaker Change: <unk> will share when we have them.

Speaker Change: I hope, we'll have more by the by the first quarter conference call and we will certainly have a fulsome update for you by our May Investor day.

Speaker Change: Very helpful and maybe as a quick follow up I think you guys had said.

Michael Donald Leskinen: It is unrealistic at this time to believe all of those aircraft will deliver as currently planned. We also have 277 MAX 10 aircraft on order through the remainder of the decade and an additional 200 options for MAX 10 aircraft. We are monitoring Boeing's progress toward certification of the Maxing Coast. At this time, our current aircraft delivery schedule would lead to a total capex of approximately $9 billion in 2024. But given the MAC 9 grounding and the continued supply chain issues, there is a downward bias to our 2020 forecast. We also expect a reduction in orders and deliveries from Boeing in 2025. This will require a reworking of our fleet plan, and we will share the details when that happens. Turning to the balance sheet, we ended the quarter with $16.1 billion in liquidity, including our undrawn revolvers.

Asia can.

Speaker Change: Can be a pretty decent going up as it comes back.

Speaker Change: I think you guys were profitable on a China or <unk> prior to the pandemic correct me if I'm wrong do you think Asia margins can be better than before and is that a temporary demand catch up or do you think that's sustainable kind of in a new normal.

Speaker Change: It's Andrew as we rebuilt Asia, we definitely wanted to rebuild it stood at sustainably higher margins than it did pre pandemic and we've gone about that I think very carefully.

Speaker Change: We're back to our pre pandemic size, which is nice at this point and China was profitable for us.

Pre pandemic, although it was not our highest margin climbed to the air.

Speaker Change: As we bring it all back our goal is to make sure that the Asia Pacific entity produces margins that are similar to that across the rest of our global network and I think that's.

Michael Donald Leskinen: Our adjusted net debt to EBITDAR was 2.9 times, consistent with our leverage target of less than three times provided at the start of the year. Managing a business towards positive free cash flow will be a top priority for our team over the coming years. Our stock is deeply undervalued, trading at less than four times earnings despite the fact that we delivered 19.5% revenue growth and realized a significant structural improvement in relative profitability in 2023. But we also understand that generating free cash flow consistently is challenging. Even while we execute our UnitedNext strategy, it's an important component to increasing our valuation. 2023 marked the first full year of United Nexus. We were thrown some curveballs, but we adapted quickly and ended the year stronger than ever. It's clear that when customers are given a choice, they are choosing United.

Speaker Change: At least in 2023 Asia Pacific as well ahead I do expect.

Speaker Change: If things move around a bit, particularly as more China flights come back online, but I think we're particularly bullish about what Asia looks like going forward, we added a lot of capacity in the quarter.

Speaker Change: We're absorbing it and we expect in Q2 and Q3 that capacity is going to do very well. So we're very bullish about the long term prospects in Asia post pandemic.

Speaker Change: We'll go to the next caller in queue, Jamie Baker from J P. Morgan Stanley.

Jamie N. Baker: Your line is muted.

Jamie N. Baker: Fair enough good.

Jamie N. Baker: Good morning, everybody.

Speaker Change: First one for Andrew So you say the 20% revenue increase for basic economy. What can you tell us about the composition of that growth is some percentage mileage plus members trading down.

Speaker Change: Some percentage stimulation of brand new demand from scratch seven percentage share shift from <unk> I guess the simpler question is who is driving the growth.

Speaker Change: I think it's largely a share shift Jamie.

Speaker Change: We develop in the coming numerous years ago, now and had been refining how we sell it how we distribute it in that product.

Speaker Change: And it's an important product in our lineup, we do focus a lot on premium.

Christina Edwards: Thanks, Mike. We will now take questions from the analyst community. Please limit yourself to one question and, if needed, one follow-up question.

Speaker Change: We've been able to attract more of it from some of the <unk>.

Tegan: Please hold for a moment while we assemble our queue. All right, we will go to the first caller in queue, Ravi Shanker from Morgan Stanley. Ravi, your line is unmuted.

Speaker Change: Low cost carriers out there. So we're really pleased with this development and its given US every indication that we should continue to push forward as our gauge increases will be able to more effectively take on that traffic in and grow our share base even more.

Speaker Change: Okay. Thanks for that and then for Mike.

Speaker Change: It was a couple years ago and in fact that might have been like.

Speaker Change: Two years to the day.

Michael Donald Leskinen: Look, the reality is that with the Max grounding, this is the kind of straw that broke Campbell's back when he believed that the MAX 10 would deliver on the schedule we had hoped for. And so we're working through an alternate plan. We do expect our growth rate to slow in the coming years. The United Next plan is firmly on track.

Speaker Change: So hard into this topic on its calls and second any thoughts on how United or the broader industry might get investors to value. This cash flow at a higher multiple.

Speaker Change: And if the answer is no im happy to see the Florida. Thanks.

Speaker Change: Thanks, Mike.

Speaker Change: Jamie Thank you.

Michael Donald Leskinen: It will take a little longer to get there, and we're working on alternate plans to see how much higher we can accelerate the growth with the MAX 10 out. Now, we're still counting on Boeing, and we're monitoring the MAX 10 closely, and we're routing, and we're doing everything we can to help that aircraft get certified. It's a great aircraft.

Speaker Change: I appreciate the question.

This is something I'm very passionate about.

Speaker Change: Mileage plus is our crown jewel.

Speaker Change: In businesses, we have here at United Airlines.

We've made some significant progress.

Speaker Change: Towards growing that business.

Speaker Change: We have a new leader in Richard none.

Michael Donald Leskinen: But we can't count on it, and so we're working on alternate plans. The details we'll share when we have them.

Speaker Change: We have <unk>.

Speaker Change: <unk>.

Speaker Change: Projects underway around data and how we can.

Michael Donald Leskinen: I hope we'll have more by the first quarter conference call, and we'll certainly have a wholesome update for you by our May 1st investment. Very helpful.

Speaker Change: Create a better customer experience and monetize that data simultaneous.

Speaker Change: And you can expect a very fulsome update on the May 1st Investor Day.

Speaker Change: We do have ideas on how to bring the market's attention.

Speaker Change: To the value and the.

Speaker Change: And the higher premium multiple that those earnings should trade at.

Speaker Change: And we have several options and we will share more when when we're ready to share more.

Speaker Change: We've discussed some of those some of those have been written about in analyst reports and if the value is not recognized in our shares we will take action two to highlight that value in the future in the near future.

Speaker Change: Okay.

Speaker Change: Alright, we'll go to the next caller in queue, Michael Lindenberg from Deutsche Bank, Michael Your line is muted.

Michael J. Linenberg: Sorry, one moment please.

Michael J. Linenberg: Michael Your line isn't muted.

Michael J. Linenberg: Hey can you guys hear me now.

Michael J. Linenberg: Yes.

Michael J. Linenberg: Great.

Michael J. Linenberg: Just getting back to.

Michael J. Linenberg: I guess Scott on the issue with the Max 10 at least Fortunately in the case of United You do have a choice you're a very large operator of the Airbus product as well as the Boeing narrow body product as we think about the issues with supply chain and constraints across the OEM space.

Michael J. Linenberg: At some point, where youre thinking that given the size of United that it would be.

Michael J. Linenberg: Prudent to consider.

Speaker Change: Wide body from another another OEM right now it looks like the 787 is the future for United from a wide body perspective, but you still have that <unk> hundred 50 order out there has your thinking on that changed.

Jamie N. Baker: Fair enough. Good morning, everybody. First one for Andrew.

Speaker Change: Hey, Mike Thanks for the question.

Speaker Change: Yes.

Speaker Change: The <unk> hundred 50 is the incredible aircraft, we have a significant order book for 780 Sevens right now and we have a mix of triple seven aircraft some are relatively older.

Speaker Change: <unk> is quite young.

Speaker Change: As we look into 2000 <unk>.

Speaker Change: <unk> hundred 50 <unk>.

Speaker Change: <unk> hundred 50 is an aircraft that we are looking at we don't have any new news to share with you today.

Speaker Change: But.

Speaker Change: Timing will be that early part of the next decade.

Speaker Change: Great and then just quick follow up follow up back to Jamie.

Speaker Change: Jamie brought up on basic economy that 20% increases obviously pretty significant.

Speaker Change: Last quarter, you were up 50% and the question is is that just a function of a more difficult comp or did you actively pull back on inventory of basic economy, just given the surge that we've seen on the cost side and back to your point about sort of trying to maintain that gap between CASM RASM. Thanks for.

Speaker Change #100: Taking my question.

Speaker Change #101: Thanks, Andrew No we didn't pull back on it for that reason and remember these are year over year comps do you have to consider the math of what we did last year were very bullish about basic we're also very bullish about the premium end point is is we have a really great diversified revenue stream across all of our cabin as we try to <unk> our product.

Jamie N. Baker: And then for Mike, it was a couple of years ago, in fact, it might have been almost two years to the day, that there were press reports that you were, you know, United Airlines was looking at monetizing a portion of Mileage Plus, and then you know things subsequently went pretty quiet on that front. So a couple of questions, you know. First, is loyalty as important to United as it is to Delta? You know, Delta, at least... so hard into this topic on its calls. And second, any thoughts? on how United or, you know, the broader industry might get investors to value this cash flow to hire multiple. And if the answer is no, I'm happy to cede the floor.

Speaker Change #101: We're really hopeful that we will continue to drive increasing volumes and basic.

Speaker Change #101: It seems to be having the appropriate P&L effect at United and competitive effect across the industry.

Speaker Change #101: So it's something we want to do more of not less of them. So you should expect that.

Speaker Change #102: We will go to the next caller in queue Conor Cunningham from Melius Research your line is muted.

Hi, everyone. Thank you.

Conor Cunningham: Im a little confused on the comment between them on the link between CASM and RASM I would've thought that would've been the case before so I'm just trying to understand what's changed.

Michael Donald Leskinen: Thanks, bye. Jamie, thank you. I appreciate the question. This is something I'm very passionate about.

Conor Cunningham: Youre being like just better at predicting outcomes or is it really more of an industry comment that you are trying to drive home here. Thank you.

Speaker Change #103: It's really an industry comment in the past.

Speaker Change #103: <unk> had.

Speaker Change #103: Airline.

Speaker Change #103: Had CASM going up while others had CASM going down.

Speaker Change #103: The prices.

Michael Donald Leskinen: We have significant projects underway around data and how we can create a better customer experience and modify that data simultaneously, and you can expect a very wholesome update on May 1st Investor Day. We do have ideas on how to bring the market to tension. Our guests are Jamie Baker, David Shepardson, David Renner, Jesse Mano, and Daryl Genovesi, and we have several options, and we'll share more when we're ready to share more.

Speaker Change #103: Prior to the lowest common denominator.

Speaker Change #103: So it's an industry comment as industry, just like fuel anything that affects the whole industry is a pass through.

Speaker Change #103: It affects one airline its not but if it affects all airlines in the past that was we were sitting in this room a year ago.

Speaker Change #103: And maybe you didn't do it articulately, but that was the point we were trying to make.

Speaker Change #103: That is exactly what.

Speaker Change #103: What happened and it is what's going to happen going forward.

Speaker Change #104: Okay I appreciate that and then it was a little unclear on the prepared remarks.

Speaker Change #104: I'm just trying to does your outlook for costs include accruals for open labor contracts and just what are the risks that you see.

Michael J. Linenberg: We've discussed some of those, but some of those have been written about in analyst reports, and if the value is not recognized in our chairs, we will take action to highlight that value in New York. All right, we'll go to the next caller in queue, Michael Linenberg from Deutsche Bank. Michael, your line is unmuted. Sorry, one moment please.

Speaker Change #104: So the cost plan in 2024, thank you.

Speaker Change #104: Hey, Conor this is Mike we include our expectations for all labor agreements in our guidance.

Speaker Change #105: Alright, we will go to the next caller in queue.

Catherine O'brien from Goldman Sachs. Your line is limited.

Catherine O'brien: Hey, good morning, everyone. Thanks, so much for the time.

Michael J. Linenberg: Michael, your line is unmuted. Oh, hey, can you guys hear me now? Yeah. Oh, great. Just getting back to, I guess, Scott, on the issue with the Max 10, at least fortunately, in the case of United, you do have a choice. You're a very large operator of the Airbus product, as well as the Boeing narrowbody product. As we think about the issues with the supply chain and constraints across the OEM space, is there at some point where you're thinking that, given the size of United, it would be prudent to consider a widebody from another OEM?

Catherine O'brien: I might stick with the cost side just following on on Congress quickly here.

Catherine O'brien: Is your low single digit ex Max impact CASM X guide for the first quarter.

Catherine O'brien: We think about the puts and takes through year end versus that level of CASM ex inflation.

Catherine O'brien: Before today I was originally assuming growth would decelerate over the course of the year, but the CASM ex.

Catherine O'brien: So each quarter in my model ended up looking pretty similar on a year over year basis.

Catherine O'brien: Smacks impact on the <unk> is that a fair way to think about it or is there more lumpiness than that that I'm missing and then I guess just to put a finer point on one question.

Catherine O'brien: Does <unk> and full year EPS include any flight attendant accrual. Thanks, so much for the time.

Michael Donald Leskinen: You know, right now, it looks like the 787 is the future for United from a widebody perspective, but you still have that E350 order out there. Has your thinking on that changed? Thanks. Hey Mike, thanks for the question. The A350 is an incredible aircraft.

Speaker Change #106: So Keith let me take the last question first we include our expectations for labor agreements in our guidance, we will stop.

Speaker Change #106: Regarding rigor.

Keith: Regarding CASM trends in Q2, and three and four.

Keith: You would expect the Max headwind go away.

Michael Donald Leskinen: We have a significant order book for 787s right now. We have a mix of 777 aircraft. Some are relatively older, and a sub-fleet is quite young.

Keith: Do you think we're getting closer to seeing that aircraft fly again, you would see some united specific tailwind.

Keith: With some gauge increase although with.

Slowing deliveries that gauge increase in 2004, we will be less than we would have expected you will see continued pressure from labor of about 3% to four points, that's an industry headwind for CASM ex not unique to United We expect that will lead to higher <unk> to offset but you should.

Michael Donald Leskinen: As we look into the 2030s, the A350 is an aircraft that we are looking at. We don't have any new news to share with you today.

Michael J. Linenberg: But the timing would be in the early part of the next decade. Great. And then just a quick follow-up to what Jamie brought up on basic economy, the 20% increase is obviously pretty significant, but last quarter you were up 50%. And the question is, is that just a function of a more difficult comp, or did you actively pull back on inventory of basic economy just given the surge that we've seen on the cost side? And back to your point about sort of trying to maintain that gap between CASM and RASM. Thanks for taking my question. Andrew, no, we didn't pull back on it for that reason.

Keith: You need to see that we will lap the majority of that as we enter into the fourth quarter.

Keith: And then maintenance headwind of about a point thats going to be lumpy quarter to quarter as I sit here today I think it's about one point in each of the quarters. This year at some point the supply chain, we will fix itself in aerospace, but we don't see that today and I think it probably picks well beyond 2024. So you should think about to summarize.

Keith: You should think about the labor and maintenance headwinds as being persistent.

Speaker Change #108: Got it very clear.

Andrew P. Nocella: And remember, these are year-over-year comps, so you have to consider the math of what we did last year. We're very bullish about Basic. We're also very bullish about premium, and the point is, we have a really great diversified revenue stream across all of our cabins as we try to decommoditize our product. We are really hopeful that we'll continue to drive increasing volumes in basic. It seems to be having the appropriate P&L effect at United and competitive effect across the industry. So it's something we want to do more of, not less of. And so you should expect. We'll go to the next caller in queue, Connor Cunningham from Helios Research.

Speaker Change #109: And maybe just sticking with you Mike.

Mike: <unk> 9 billion Capex figure that's tied to your contractual Clinton itself I've got that wrong.

Even of even as of your last 10-Q before the Max grounding you were expecting youre expecting 17% less aircraft in the contractual amount.

Speaker Change #110: I'm guessing, there's probably more downside risk that today, given what's going on with the Max but in order of magnitude does that delta between expected and contractual deliveries largely foot. How we should think about downside risk on a dollar basis versus that $9 billion.

Speaker Change #110: <unk> built a between contractual and expected is growing and we don't know exactly where it settled yet that's what we're working through now.

Connor Cunningham: Connor, your line is unmuted. Hi everyone, thank you. I'm a little confused about the comment about the link between Chasm and RASM.

Speaker Change #110: And we are working.

Speaker Change #110: Working on an alternative strategy strategy to mitigate some of the loss in growth.

Scott Kirby: I would have thought that would have been the case before, so I'm just trying to understand what's changed. Is it that you're being better, like just better at predicting outcomes, or is it really more of an industry comment that you're trying to drive home here? Thank you. It's really an industry comment. In the past, if United had, if an airline, including United, had a chasm going up while others had chasms going down, the prices would go to the lowest common denominator. So it's an industry comment; it's just like fuel. Anything that affects the whole industry is a pass-through. If it affects one airline, it's not, but if it affects all airlines, it's a pass-through.

But yes, as youre thinking about capex coming below $9 billion this year and the trajectory for maybe lower than what you would expect capex in 'twenty five and beyond.

Speaker Change #110: That's how you should think about.

Speaker Change #111: Alright, we will go to the next caller in queue.

Speaker Change #111: Scott Group from Wolfe Research Scott Your line is muted.

Scott: Hey, Thanks, good morning so.

Scott: Mike.

Scott: Totally get your message that the plan is fluid and flexible but.

Scott: As it stands today I'm just wondering do you think RASM is going to be positive. This year and then maybe just can you help us just think about shaping the year a little bit. So if I look at last year, we had a pretty massive second quarter and then moderation in the second half of the year are you thinking a similar shape or maybe more.

Connor Cunningham: That was, we were sitting in this room a year ago, and maybe we didn't do it articulately, but that was the point we were trying to make. And that is exactly what happened, and that is what's going to happen going forward. Okay, appreciate that. And then it was a little unclear in the prepared remarks.

Michael Donald Leskinen: I'm just trying to figure out, does your outlook for costs include accruals for open labor contracts? And just what are the risks that you see to the cost plan in 2024? Thank you. Hey, Connor. This is Mike.

Scott: Back half weighted any color there would be helpful.

Speaker Change #112: Scott I'll kick it off and say, yes, we've been traveling for the year it will be positive, but the details will come from Andrew.

Andrew: Well, we're not giving exact guidance here other than we're very bullish on the year I think I laid out a business case, where it's domestic.

Andrew: Certainly our incredibly strong I think we've laid out a business case for where we're going to do it with trans Atlantic capacity.

Andrew: And I do expect Asia capacity to step down materially as we head into Q2, and then Q3, which is obviously going to bolster those numbers too. So I remain bullish on the year.

Catherine O'brien: I might stick with the cost side, just following on Connor's quickly here. You know, versus your low single-digit X max impact CASMX guy for the first quarter, how do we think about the puts and takes through year end versus that level of CASMX inflation? You know, before today, I was originally assuming, you know, growth would decelerate over the course of the year, but CASMX. Tom Sees, so you know each quarter in my model ended up looking pretty similar on a year-over-year basis. You know X max impacting the 1Q, is that a fair way to think about it? Or is there more lumpiness than that that I'm missing?

Speaker Change #113: Mike I don't know if you had any thoughts on shaping the year for us. If you have any color and then maybe just my other follow up just for Andrew just on the point about domestic and international margins.

Speaker Change #113: Converging a little bit this year, maybe just I just wanted to make sure I'm understanding is this is.

Speaker Change #113: Is this domestic getting better in international.

Speaker Change #113: A little less good or is that they are both improving but domestics improving more just any any additional color there would be great. Thank you well look I think we're seeing I hate to say the word exceptional but we're seeing really good strength in domestic right now and I expect that's going to narrow the gap international margins are well ahead of domestic margins in 2023.

Catherine O'brien: And then I guess just to put a finer point on one question: does 1Q and full year EPS include any flight attendant accrual? Thanks so much for your time. Okay, let me take the last question first. We include our expectations for labor agreements in our, full stop. Regarding chasm trends in Q2, and Q3, and Q4, you would expect the max headwind to go away. But we do think we're getting closer to seeing that aircraft fly again. You would see some United specific tailwinds with some gauge increase. Although, with

Speaker Change #113: And we will continue to be well ahead of domestic margins in 2024.

Speaker Change #113: But I do think that gap will narrow a bit based on the RASM outlook that I'm looking at again, which is pretty darn good for domestic.

Speaker Change #114: Yes, maybe.

Speaker Change #114: Maybe I'll take the seasonal shaping as.

Speaker Change #114: As well, we're working very diligently to make Q1, a more profitable quarter for United.

We are well on our way prior to the Max grounding, obviously, if you take that out you can use that to update the estimates as to where we would've been in Q1, we made a lot of changes to how we fly in Q1, and we didn't talk about all those details, but when I look at our RASM trends, particularly in domestic.

Michael Donald Leskinen: Thank you all for joining us today. You will see continued pressure from labor of about three to four points. That's an industry headwind for CASMX, not unique to United. We expect it will lead to higher trasm to offset, but you should continue to see that we will lap the majority of that as we enter into the fourth quarter. And then maintenance headwind of about a point. That's going to be lumpy quarter to quarter. As I say here today, I think it's about a point in each of the quarters this year. At some point, the supply chain will fix itself in aerospace, but we don't see that today, and I think it probably will take well beyond 2024. So you should think about, to summarize, you should think about the labor and maintenance headwinds as being I got it very clear.

Speaker Change #114: Now confident that all of those changes had the desired effect as we continue to build and make sure that in the future Q1, while it won't ever be our best quarter to be blunt.

Speaker Change #114: It'll be a much better relative quarter, but our global network I have to say in Q2, and Q3 really stands out and we expect it to be stellar again over those six months.

Speaker Change #114: In 2024.

Speaker Change #114: If you're specifically asking about the shape of our quarterly earnings through the through the year.

Speaker Change #114: It's going to look like a normal seasonal pattern, albeit with a slightly bigger loss in the first quarter due to the Max nine ground it.

Speaker Change #115: We will go to the next caller in queue Helane Becker of Cowen.

Catherine O'brien: And maybe just sticking with you, Mike, the $9 billion CAPEX figure that's tied to your contractual commitments, not that I've got that wrong. You know, even as of your last 10Q before the max grounding, you were expecting 17% fewer aircraft in the contractual amount. I'm guessing there's probably more downside risk than today given what's going on with the max. But you know, in order of magnitude, does that delta between expected and contractual deliveries largely foot how we should think about downside risk on a dollar basis versus that $9 billion? The delta between contractual and expected is growing, and we don't know exactly where it's settled yet. That's what we're working through now, and we are working on an alternate strategy to mitigate some of the losses and growth. But yes, if you're thinking about CapEx coming below nine million this year and the trajectory for maybe lower than what you would expect CapEx in 25 and beyond, that's how you do it. All right, we'll go to the next caller in the queue. Scott Group from Wolf Research.

Speaker Change #115: Okay.

Scott.

Helane Becker: Helane your line is muted.

Helane Becker: Great. Thanks very much.

Helane Becker: So here's my two questions. The first question is as you think about 2026 margins and maybe update us on may 1st how do we bridge from the roughly 8% at.

Helane Becker: At year end 'twenty, three to say, 12% to 14% in 2026.

Speaker Change #116: Alright, Thanks for the question and we will update our longer term margin targets at Investor Day.

Speaker Change #116: But the tailwind that we expect from the United next strategy from the gain from the connectivity from the preference to fly United We have proven it used to be it was a strategy on paper, we've proven that it's working and so as we think about 'twenty four deliveries being a little less but 25% in 2006.

Speaker Change #116: Accelerating into that next strategy, we see we see just continued momentum and so as for the specific level of 12% to 14% and facing we're going to have to update you on may one, but the strategy is working and we're very confident in an upward trajectory to both earnings and margin.

Scott H. Group: Scott, your line is unmuted. Hey, thanks. Good morning.

Speaker Change #117: Okay, and then just for my follow up.

You're I think United next targets and obviously, we'll update them again I suppose 2000.

Speaker Change #117: <unk> 5 billion of adjusted net debt as of the end of last year.

Speaker Change #117: Less than $18 billion for 2026, but the other thing is how should we think about financing.

Speaker Change #117: Now, let's just say $9 billion is off the table for this year, let's bring it down to six or $7 billion.

Speaker Change #117: Plus debt pay down like how should we think about you getting to your target leverage over the next one to three years.

Scott H. Group: Scott, I'll kick it off and say, yes, we think TRASM for the year will be positive, but the details... Well, we're not giving exact guidance here, other than, you know, we're very bullish on the year. I think I laid out a business case where domestic is starting the year incredibly strong. I think we've laid out a business case for where we're going to do it, you know, with transatlantic capacity. And I do expect Asia capacity to step down materially as we head into Q2, and then Q3, which is obviously going to bolster those numbers too. So I remain bullish on the year. Mike, I don't know if you have any thoughts on shaping the year for us, if you have any color.

Speaker Change #117: Given the Capex program, which.

Speaker Change #117: Might be 7 billion this year, but it might be nine or eight or $10 billion 25 or 26.

Speaker Change #118: Yes, let me try to give you a high level view plain and we can dig into more details in the near future, but as I sit here today and I think about the changes in capex related to the delay in deliveries.

Speaker Change #118: I expect free cash to cover our Capex in most years, if not all years.

Speaker Change #118: And as far as additional pay down of the balance sheet.

Speaker Change #118: We would expect that as our margins grow into that low double digit.

Scott H. Group: And then maybe just my other follow-up, just for Andrew, just on the point about domestic and international margins converging a little bit this year, maybe just, I just wanna make sure I'm understanding straight. Is this domestic getting better and international? a little less good or is it they're both improving but domestics improving more just any any additional color there would be great thank you look i think we're we're seeing um i hate to say the word exceptional but we're seeing really good strength in domestic right now and i expect that's going to narrow the gap uh international margins are well ahead of domestic margins in 2023 and they'll continue to be well ahead of domestic margins in 2024 uh but i do think that gap will will narrow a bit uh based on the razzmouse outlook that i'm looking at again which is pretty darn good for for domestic, Yeah, maybe I'll take the seasonal shaping as well. You know, we're working very diligently to make Q1 a more profitable quarter for United. I think we were well on our way prior to the max grounding.

Speaker Change #118: Low teen area that free cash flow.

Speaker Change #118: We will be quite positive, allowing us to pay down that debt the pacing will be dependent on how much that capex profile changes and how quickly we get to what we think of that long run.

Speaker Change #118: Long run higher level of Martin.

Speaker Change #119: Alright, well go to the next caller in queue Duane <unk>.

Duane: Birth from Evercore.

Duane: Your line is muted.

Duane: Hey, Good morning, just a couple for me on international inbound basically international pointed out of the U S. As you look across your network how recovered.

Duane: International inbound how do you think about that growth of that demand set in.

Duane: In 2024 and are there any markets that stepped out from a recovery headroom potential.

Sure Duane it's Andrew what I would say is during the entire recovery U S. Outbound has been a stronger component of the traffic really across the board across the entire globe.

Andrew P. Nocella: Obviously, if you take that out, you can use that to update the estimates as to where we would have been in Q1. We made a lot of changes to how we fly in Q1, and we didn't talk about all those details.

Duane: And that continues today.

Speaker Change #120: I think origin, Europe, particularly core Europe, Germany continues to trail as well as Japan, and Australia, and so we'll continue to monitor that but the U S consumer.

Scott H. Group: But when I look at the arousal strength, particularly in domestic, I am now confident that all those changes had the desired effect. As we continue to build and make sure that in the future, Q1 can, well, it won't ever be our best quarter, to be blunt, but it will be a much better relative quarter. But our global network, you know, has to say in Q2 and Q3 really stands out, and we expect it to be stellar again, over those six months, in 2024. Scott, if you're specifically asking about the shape of our quarterly earnings through the year, it's going to look like a normal seasonal pattern, albeit with a slightly bigger loss in the first quarter due to the, Alright, we'll go to the next caller in queue, Helane Becker of Cowan. Helane, your line is unmuted.

Speaker Change #120: He's made up the difference in most regions of the world quite effectively and has resulted in very strong.

Speaker Change #120: Results over the last year, So I think the outlook is strong.

Speaker Change #120: But when the inbound customer profile starts to rebound I think thats just further upside in the future hasnt happened consistently across the globe, yet, but we'll see what 2024 brings.

Speaker Change #120: Okay. Just just following up there any specific markets, maybe a San Francisco Asia inbound.

Speaker Change #120: Any any more kind of bullish recovery thoughts there.

Speaker Change #120: San Francisco is going to be very unique over the next.

Six to nine months, there is a significant amount of runway construction.

Speaker Change #120: Going on in San Francisco that is dramatically limited our ability to fly there.

Speaker Change #120: Also consistent with a slower recovery in that city.

Speaker Change #120: I think that is actually probably okay, but you will see us fly a much reduced domestic schedule in San Francisco The international flying continues to be very strong, but the smaller domestic schedule.

Helane Becker: Great, thanks very much. So here's my two questions. The first question is, as you think about 2026 margins, and maybe you'll update us on May 1st, how do we bridge from the roughly 8% at year-end 23 to say 12 to 14 percent in 2026. Elaine, thanks for the question. And we will update our longer-term margin targets at Investor Day, but the tailwinds that we expect from the UnitedNext strategy, from the gauge, from the connectivity, from the preference to fly United, we have proven. It used to be, you know; it was a strategy on a piece of paper.

Speaker Change #120: And what where we are in the recovery I think it is going to be.

Speaker Change #120: Just fine for San Francisco in terms of our profit contribution in San Francisco Asia continues to perform exceedingly.

Exceedingly well.

Speaker Change #121: I will go over the next caller includes that will be Andrew <unk> from Bank of America Andrew.

Speaker Change #121: Andrew Your line is muted.

Speaker Change #121: Yes.

Andrew: Hey, good morning, everyone.

Andrew: So Andrew I guess, you mentioned this a little bit in your prepared remarks, but.

Andrew: We've been hearing and seeing some data on corporate travel getting a bit better as well.

Helane Becker: We have proven that it's working. And so as we think about 24 deliveries being a little less, but 25 and 26 of re-accelerating into that UnitedNext strategy, we see just continued momentum. And so as for the specific level of 12% to 14% pacing, we're going to have to update you on May 1st.

Can you maybe dig in and speak to maybe any particular markets or verticals, where you see.

Andrew: Any sort of outsized corporate growth have you seen this corporate growth sort of broadening out to make it maybe at a more sustainable level today than at other points in the recovery.

Helane Becker: But the strategy is working, and we're very confident in an upward trajectory for both. Okay, and then just for my follow-up, you know you're I think united next targets and, obviously, you'll update them again I suppose, 25 billion of adjusted net debt as of the end of last year, less than 18 billion for 2026, but the other thing is how should we think about financing, let's just say 9 billion is off the table for this year, let's bring it down to 6 or 7 billion plus debt paydown, like You know, it might be seven billion this year, but it might be nine or eight or 10, five. Let me try to give you a high-level view, Helane, and we can go into more detail later.

Andrew: Sure.

Andrew: <unk>.

Andrew: All sat on calls and predicted the recovery of our business traffic more times than I can count over the last few years.

Andrew: And I will say Q4 was okay. It wasn't.

Andrew: It wasn't spectacular in any way, but as we started January and the new budget season for all of our big corporate clients. We did notice a significant step up so it's really early it's only been a few weeks and I hesitate to say Oh, my gosh, it's fixed because it's still well behind where it should be relative.

Andrew: <unk> to GDP growth of course.

Andrew: But look it's a really nice step up we're seeing close in yield gains as well that result from that and I think thats one of the reasons our domestic RASM outlook is as strong as it is.

Andrew: And so hopefully that continues at the end of the quarter of course, we'll report on that and let you know how it looks but at least for the first two weeks of January we have gotten off to a really strong start and it gives us.

Helane Becker: But as I sit here today and think about the changes in CapEx related to the delay in delivery, I expect free cash to cover our cap back in most years, if not all, and as far as additional pay down of the balance sheet, we would expect that as our margins grow into that low double-digit nope, HERE IS THE BOOT, LIKE AND SUBSCRIBE, All right, we'll go to the next caller in queue. Duane Pfennigwerth from Evercore.

Andrew: The increase in signs that this is going to be I think a very good year.

Speaker Change #122: Got it that's helpful. And then my second question, Mike, Yes, obviously, a lot of talk on the call just on your.

Speaker Change #122: Future free cash flow potential.

When you're when you're looking at your free cash flow. When do you anticipate you will become a cash taxpayer. Thank you.

Speaker Change #122: Sure.

Speaker Change #123: Andrew I think it's a few years off still.

Duane Pfennigwerth: Duane, your line is unmuted. Hey, good morning. Just a couple of questions on international inbound, so basically international point of sale to the US. As you look across your network, how recovered is international inbound? How do you think about the growth of that demand set in 2024? And are there any markets that stick out from a, you know, recovery headroom potential? Sure, Duane, it's Andrew.

Speaker Change #124: With my Treasurer, Jim Hendry.

Speaker Change #124: Follow up with you on the precise here it does depend on.

Speaker Change #124: It does sort of depend on how capex moderates.

Speaker Change #124: And it depends on the profitability, but it is still a few years off.

Speaker Change #125: Alright, we will go to the next caller in queue that will be Brandon <unk> from Barclays. Please go ahead Brandon Your line is.

Brandon: Hey, good morning, and thanks for taking my question I'll, just keep it to one here at the end of the call.

Andrew P. Nocella: What I would say is during the entire recovery, US outbound has been a stronger component of the traffic, really across the board, across the entire globe. And that continues today. I think origin Europe, particularly core Europe, Germany, continues to trail as well as Japan and Australia.

Speaker Change #127: But maybe Scott or Mike I mean coming back to the context that your stock is trading like three or four times p/e probably for the second year here and also giving you guys credit because I know a lot of US didn't think you could hit those United next targets. So many years out but you are guiding to roughly flat margins at the midpoint this share.

Duane Pfennigwerth: And so we'll continue to monitor that. But the US consumer has made up the difference in most regions of the world quite effectively and has resulted in very strong results over the last year. So I think the outlook is strong, but when the inbound customer profile starts to rebound, I think that's just further upside in the future. It hasn't happened consistently across the globe yet, but we'll see what 2024 brings. Okay, just following up, are there any specific markets, maybe San Francisco, Asia Inbound, you know, any more kind of bullish recovery thoughts there? You know, San Francisco is going to be very unique over the next six to nine months. There is a significant amount of runway construction going on in San Francisco that has dramatically limited our ability to fly there. It's also consistent with a slower recovery in that city. So I think that is actually probably okay.

Speaker Change #127: What investors are worried about is things you can control or at least perceived control like costs that are going up for the industry here.

Speaker Change #127: Is this just a continued view that United is going to decouple from industry trends, where youre going to be able to drive a margin premium and I guess what.

Speaker Change #127: What can you give investors confidence that that is the path forward here. Thank you.

Speaker Change #128: Thanks Brendan.

Speaker Change #128: Look I think that due to a structural change in the industry and we see kind of evidenced this year and I think eventually the investment community will see it as well, but there is an end to.

Speaker Change #128: This is an industry that has operated as a commodity industry.

Speaker Change #128: <unk>.

Speaker Change #128: United and one of our legacy peers have clearly differentiate ourselves from the pack and that's leading customers to choose to acquire airlines is leading to the majority if not all of the revenue growth in the industry accruing to those two airlines and that has happened happening simultaneous with <unk>.

Cost convergence not cost convergence the whole reason that the low cost carrier has existed.

Speaker Change #128: Sure.

Speaker Change #128: Because it had lower costs those lower costs no longer exist and so that creates I think a permanence to the higher margin a sustainability to that higher margin and where that settles.

Speaker Change #128: We still the jury is still out exactly where that subs, but it is higher and more stable and more resilient.

And that is not recognized by the capital markets today.

Speaker Change #129: Thank you.

Speaker Change #130: All right, we're going to go to our next caller in queue, David Bernstein from.

David Bernstein: Sorry, David Vernon from Bernstein. Thank you.

David Vernon: Good good afternoon. Good morning, Thanks for taking my question, So Andrew I'd like to get some help from you. If you can in terms of helping to.

David Vernon: To think through how.

David Vernon: Some of the negative margin capacity, that's going to be forced out of the industry is going to impact your fair ladder.

David Vernon: The upward pressure sort of general vagueness I'm, just trying to understand.

David Vernon: I understand if we see a bunch of base capacity rationalized because some of these negative.

David Vernon: Margin on bundled carrier apt to take capacity out is that how is that going to impact sort of basic fares with economy fares.

Andrew P. Nocella: But as we started January in the new budget season, for all of our big corporate clients, we did notice a significant step up. So it's really early. It's only been a few weeks.

Speaker Change #132: You could give us to help.

Speaker Change #132: Translate that impact of capacity shift into.

Speaker Change #132: What sort of impact it's going to have on your fair ladder it would be really helpful.

Speaker Change #133: I mean, I think thats, probably a lot more detail than I can do on a conference call to be honest, but just generally.

Speaker Change #133: Unproductive capacity has been leaving the system.

Speaker Change #133: I think thats good for the system and good for United.

Speaker Change #133: And so we'll manage our RM like we normally do to take advantage of all of the opportunities, but I just wanted to reiterate that our.

Andrew P. Nocella: And so, hopefully, that will continue at the end of the quarter. Of course, we'll report on that and let you know how it looks. But at least for the first two weeks of January, we've gotten off to a really strong start, and it gives us increasing signs that this is going to be, I think, a very good year. Got it. That's helpful. And then my second question, Mike, you obviously have a lot of talk on the call about your future free cash flow potential. Just when you're looking at your free cash flow, when do you anticipate you'll become a cash taxpayer?

Our choice to diversify our revenues at the top of the Polaris and at the bottom of basic economy is not something we're going to be given up on the basic economy is an important part of the airline.

Speaker Change #133: Is what our customers want we will continue to provide choice and we expect to provide more and more of it as our gauge increases the competitive dynamics are what they are I can't I can't predict the mentally really can talk for United and we'll obviously maximize our returns and do the right thing, but again the diversified revenue streams that we're putting out there.

Speaker Change #133: Are really working for us across not only the fare ladder, but our geographic dispersion of our flying into we couldnt be more pleased with our revenue results quarter after quarter by the way not just in Q4 and not just last year and the outlook we have.

Speaker Change #133: This industry is dynamic it's always changing will change with it but it is I think a good time to be at United Airlines and be an industry in the United Airlines.

Speaker Change #133: And are you seeing any sort of benefit yet from from some of that capacity rationalization as you look forward into the.

Speaker Change #133: Forward bookings or do you think that that's something that's going to develop as we get through the year.

Brandon R. Oglenski: And thanks for taking my question. I'll just keep it to one here at the end of the call. But maybe Scott or Mike, I mean, you know, coming back to the context that your stock is trading like three or four times PE, probably for the second year in a row, and also giving you guys credit because I know a lot of us didn't think you could hit those United Next targets, you know, so many years out. But you are getting to roughly flat margins at the midpoint this year. And I think what investors are worried about is, you know, things you can control, or at least perceived control, like costs that, you know, are going up for the industry here. Is this just a continued view that United is going to decouple from industry trends where it will be able to drive a margin premium? And I guess what, what can you give investors confidence that that is the path forward here? Thank you. Thanks, Brandon.

Speaker Change #133: Hello.

Speaker Change #133: I think our outlook for Q1 for domestic PRASM says it all.

Speaker Change #133: Okay.

Speaker Change #133: We will now switch to the media portion of the call if you'd like to ask a question as a member of the media you may dial pound two on your telephone keypad, you'll hear notification. When your line is on mute at which point. Please state your question.

Speaker Change #133: Again dialing pound two on your telephone keypad will indicate that you wish to ask a question.

Speaker Change #133: Okay.

Speaker Change #134: I will go to the first caller in queue, David Slotnick of the points Guy. Please go ahead.

David Slotnick: Hi, good morning, Thanks for the question.

David Slotnick: You talked about London, and about slower growth across the Atlantic.

David Slotnick: I was wondering if you could talk about it more from a consumer perspective.

Scott Kirby: Look, I think that it's a structural change in the industry, and we see a ton of evidence this year, and I think eventually the technical community will see it as well, but there is an industry that has operated as a commodity industry, and United and one of our legacy peers have clearly differentiated themselves, and that's leading customers to choose to fly our airlines. It's leading to the majority, if not all, of the revenue growth in the industry accruing to those two airlines, and that is happening simultaneously with cost convergence. That cost convergence, the whole reason that low-cost carriers exist was because they had lower costs. Those lower costs no longer exist. So that creates, I think, a permanent sustainability of that higher margin. And where that settles, you know, we still, the jury's still out exactly where that settles.

It's been some talk just about all the capacity across the Atlantic at next summer.

David Slotnick: Do you see any impact on ticket prices, you see them going down or up just given all of that thanks.

Speaker Change #135: Hey, David what I would tell you is that we're prepared for an incredibly strong summer.

Speaker Change #135: We as I've said numerous times, we decided to go slow this year, we've tilted more of our capacity, particularly in Q1 to southern Europe, and that's probably what I would say the biggest changes what we see what the consumer's debt destinations in Spain, and Italy had become more year round destination than seasonal and that is new.

Speaker Change #135: Post pandemic, and we're reacting to it and moving more and more capacity out of northern Europe out of London, Heathrow, or Germany and into southern Europe, and we'll probably do more of that again next year in terms of the price points I am not going to exactly predict that at this point, we don't really talk about pricing, but I would just say we expect.

Speaker Change #135: Really strong summer across the Atlantic our capacity is not growing materially.

Speaker Change #135: And we think thats going to really allow us to get all of the capacity. We've added over the last few years, keeping mature and incredibly and solidly profitable in 2024.

Scott Kirby: But it is higher and more stable and more resilient, and that is not recognized by the capital margin. Thank you. All right, we're going to go to our next caller in queue, David Bernstein from. David Vernon from Bernstein. Good afternoon or good morning.

Speaker Change #136: I will go to the next caller in queue that will be Rodriguez sang from Reuters. Please go ahead Roger your line is muted.

Rodriguez: Well thanks, Bob.

Rodriguez: Hi.

Rodriguez: You made some comments on CNBC this morning, Bob.

Rodriguez: Max grounding Mcdonald's box.

Bob: Do you have confidence in Boeing's current player that it won't be able to fix that problem from people, who will have the ability to second.

Bob: Question on <unk>.

Paul for all the quality problems. So do you have confidence in the current leadership.

Bob: Boeing has.

Bob: A storied history.

Thousands of Great people are one of the best engineering, there one of the best technology companies.

Bob: The history.

Bob: They've been a great American company there.

Bob: Quarter.

Andrew P. Nocella: Anything you could give us to help translate that impact of capacity shift into, you know, what sort of impact it's going to have on your fare ladder would be really helpful. I mean, I think that's probably a lot more detail than I can do on a conference call, to be honest. But, you know, just generally, unproductive capacity has been leaving the system.

Bob: Have.

Bob: They're going through a rough patch right now, but I believe that.

Bob: It is across the board from top to bottom is committed to changing in fixed.

Bob: Encouraging them to do it even faster.

Bob: And it is going to impact United in the near term because because of some of the challenges they've had.

Bob: Great people, there and they will.

Bob: Other than we are their biggest.

Andrew P. Nocella: I think that's been good for the system and good for United. And so we'll manage our RM like we normally do to take advantage of all of the opportunities. But I just want to reiterate that, you know, our choice to diversify our revenues at the top of Polaris and at the bottom of the basic economy is not something we're going to give up on. The basic economy is an important part of the airline.

But it will be a critical times. We're also their biggest cheerleader theres no. One that has a bigger supporter that one's ability to succeed outside.

Bob: Outside of Boyd than me.

Bob: I'll do everything I can to help.

Bob: Just wanted to get some let's call it about your comments about Max and some people are.

Bob: Considering that you are planning to cancel an order can you clarify your comments about maxton.

Bob: We are not cancelling the order we are taking it out of our internal plans.

Bob: And.

Bob: So we're taking it out of our internal plans.

Andrew P. Nocella: I only can talk for United, and we'll obviously maximize our returns and do the right thing. But again, the diversified revenue streams that we're putting out there are really working for us across not only the fare ladder but our geographic dispersion of our flying. And so we couldn't be more pleased with our revenue results quarter after quarter, by the way, not just in Q4, not just last year, and the outlook we have. This industry is dynamic. It's always changing.

Bob: We will be working on what that means exactly with Boeing but.

Bob: But we are not going to be able to meet their contractual deliveries on at least many of those airplanes.

Bob: And.

Bob: So let's leave it at that.

Bob: Okay.

Bob: And that is all the time, we have for questions. Today I will now turn the call back over to Cristina Edwards for closing remarks.

Cristina Edwards: Thanks for joining our call today, please contact Investor and media Relations do you have any further questions and we look forward to talking next quarter.

Andrew P. Nocella: Look, I think our outlook for Q1 for domestic browsing says it all. We will now switch to the media portion of the call. If you would like to ask a question as a member of the media, you may dial pound two on your telephone keypad. You'll hear a notification when your line is unmuted. At which point, please state your question. Again, dialing pound two on your telephone keypad will indicate that you wish to ask a question.

David Slotnick: All right, we'll go to the first caller in queue, David Slotnick from The Points Guy. Please go ahead. Hi, good morning.

David Slotnick: Thanks for the question. I know you talked about London and about slower growth across the Atlantic, but I was wondering if you could talk about it more from a consumer perspective.

David Slotnick: You know, there's been some talk about all the capacity across the Atlantic next summer. Do you see any impact on ticket prices? Do you see them going down or up, just given all that? Thanks. Hey David.

Rajeev Lalwani: But I would just say we expect a really strong summer across the Atlantic. Our capacity is not growing materially, and we think that's going to really allow us to get all of the capacity we've added over the last few years to be mature and incredibly and solidly profitable in 2024. All right, we'll go to the next caller in queue. That will be Rajesh Singh from Reuters.

Rajeev Lalwani: Please go ahead Rajesh, your line is unmuted. Thanks for the opportunity. Hi Scott, you made some comments on CNBC this morning that match grounding broke the camel's back. Do you have confidence in Boeing's current leadership that it will be able to fix its problems? Some people have called the leadership into question and fought it for all the quality problems. So do you have confidence in the current leadership? Boeing has a storied history and thousands of great people. They're one of the best engineering companies; they're one of the best technology companies in history. They're, you know, they've been a great American company, their biggest exporter. I have, you know, they're going through a rough patch right now, but I believe that Boeing, across the board from top to bottom, is committed to changing and fixing it.

Rajeev Lalwani: I'm encouraging them to do it even faster. And it is going to impact United in the near term because of some of the challenges they've had. But they're great people there, and they will get it together. And we are their biggest critics at times. We're also their biggest cheerleaders. There's no one that's a bigger supporter that wants Bowie to succeed outside of Bowie than me.

Scott Kirby: And I'll do everything I can to help. Just one clarification, Scott, about your comments about MaxTen. Some people are misconstruing it as that you are planning to cancel the order. Can you clarify your comments about MaxTen? We are not canceling the order. We are taking it out of our internal plans, and so we're taking it out of our internal plans, and we'll be working on what that means exactly with Boeing, but Boeing's not going to be able to meet their contractual deliveries on at least many of those airplanes. Let's leave it at that.

Scott Kirby: And that is all the time we have for questions today. I will now turn the call back over to Christina Edwards for closing remarks. Thanks for joining us today. Please contact Investor and Media Relations if you have any further questions, and we look forward to talking to you next quarter.

Q4 2023 United Airlines Holdings Inc Earnings Call

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