Q3 2024 United Airlines Holdings Inc Earnings Call

Good morning and welcome to United Airlines Holdings, earnings conference call for the third quarter, 2020-4. My name is Kristina and I will be your conference facilitator today.

Following the initial remarks for a management, we will open the lines for questions. At that time, if you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw that question, again, press star 1.

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.

Speaker Change: Your participation implies your consent to our recording of this call. If you do not agree with these terms, simply drop off the line. I will now turn the presentation over to your host for today's call, Kristina Edwards, Managing Director of Investor Relations. Please go ahead.

Speaker Change: Thank you, Kristina. Good morning, everyone. And welcome to United's third quarter 2024 earnings conference call.

Kristina Edwards: Yesterday, we issued our earnings release, which is available on our website at IR.unite.com

Speaker Change: Information in yesterday's release and the remarks made during this conference call, making change forward looking statements, which represents the company's current expectations. All forward looking statements are based upon information currently available to the company.

Speaker Change: A number of these factors could cause actual results to differ materially from our current expectations.

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

Speaker Change: Last other wife noted, we will be discussing our financial metrics on a non-gap basis on this call. Please refer to the related definitions and reconciliation in our press release. Our reconciliation is the non-gap measures to the most direct, direct, directly, comfortable, get measures. Please refer to the tables at the end of our earnings release.

Speaker Change: Join us on the call today to discuss a results in Outlook, our chief executive officer, Scott Kirby

Speaker Change: President Brett Hart, Executive Vice President and Chief Customer Officer, Linda Jojo, Executive Vice President and Chief Commercial Officer, Andrew Nocella, and Executive Vice President and Chief Financial Officer, Michael Leskinen.

Speaker Change: In addition, we have other members of the Executive Team Amaline available to assess with the students.

Speaker Change: and now I'd like to call, turn the call over to God.

Speaker Change: Alright, thanks Kristina and good morning everyone. Before we start, I want to acknowledge the devastation that has occurred in the southeast through the severe hurricanes that impacted the region.

Speaker Change: The United team has been working overtime to get our customers and employees safely in and out of the impact of areas. We've also raised hurricane relief funds and transported humanitarian aid to the region.

Speaker Change: Training to the quarter, the inflection we spoke about in our last call has happened and we're seeing unprofitable capacity begin to exit the market leading to the expected domestic yield improvement.

Speaker Change: We once again delivered a solid quarter, and I want to thank the United Team for taking care of our customers and producing these strong results all while strengthening the culture of the safety of our customers and employees first.

Speaker Change: Today's results are another proof point of what we've been outlining was going to happen on these calls for several years now, both at United and in the industry more broadly, so how have we gotten here?

Speaker Change: Over the last several years, United has worked hard to improve the customer experience.

Speaker Change: That starts with a great culture and great people that are proud to be a part of the United and want you, our customers to feel the same way. Over a multi-year period, we've also made significant product investments that are important to our customers like New aircraft, with feedback screens and power in every seat, expanding clubs, and the fastest Wi-Fi in the industry with Starlink.

Speaker Change: The United is also the clear innovation leader in global aviation and our technology is now without question the best of any airline in the world and by a wide margin.

Speaker Change: One of the most common comments I get from customers now is about how much better the United App is than any other airline.

Speaker Change: But, no investment is the more important than the almost $10 billion investment we've made in our people over the last four years. During this time, we also reached industry-leading contracts with four of our five major workgroups.

Speaker Change: We're currently in federal mediation with the AFA. We're committed to reaching the same kind of agreement for our flight attendants.

Speaker Change: But we knew that doing all of that following COVID would be difficult. We could have just hoped that the world would revert pre-COVID norms. That's allowed us to be consistently ahead of the curve and often move opposite the consensus and we've been consistently right.

Speaker Change: All of these actions and investments combined with our United next plan have propelled the United to a leadership position, operationally, financially, for our customers employees.

Speaker Change: All these actions position United provide benefits to all of our stakeholders. Financial Estables, Secure, Careers for our People, Improved Experience for Customers, and now that we've done those two things, we can return value to our shareholders.

Speaker Change: This success has led to our strong financial results that have facilitated our ability to restore our balance sheet and position us to take the next step into litifying our leadership position in the industry.

Speaker Change: Our Board of Directors is approved at one and a half billion share repurchase program. Michael going to the details about our capital allocation framework, but this is a critical next step for United as we work to create value for all of our stakeholders.

Speaker Change: We're proud of our current results and excited about the innovation that we have ahead for customers. We're also glad to see that the industry inflection point which we've been predicting has actually happened. We've lived that all sets you nine out of to expand margin in the years to come. With that, I'll hand it to Brett.

Brett Hart: Thank you Scott and good morning. I'd also like to thank the United Team for closing out the summer on a high note.

Brett Hart: This quarter was the busiest third quarter in company history, setting the company records for the most ever passengers carried the legit life fourth and Labor Day holidays.

Brett Hart: and for the highest number of customers carried in a day at 552,000 in July. Despite record numbers of passengers.

Brett Hart: and challenging weather across our network. We rank the first in on-time departure and second in all in-time arrival amongst major U.S. Airlines, the third quarter, with the best on-time departure in the months of August and September.

Brett Hart: These results are a testament to the investments we have made in our operations, resources, and tools to bolster the durability and resilience of our operation.

Brett Hart: These investments along with what we've learned from operating and challenging geographies.

Brett Hart: has further improved our recovery during weather and irregular operations events.

Brett Hart: In addition, our safety measures have only become stronger this year with additional investments in our people and technology.

Brett Hart: This year we launched training for our pilots focused on safety and professionalism.

Brett Hart: and more we'll be rolled out next year.

Brett Hart: We added additional safety resources across the operation.

Brett Hart: and we are investing in new technology that will make it easier for employees to engage with our safety programs.

Brett Hart: Running a safe and reliable operation is the backbone of this airline, and one of the many contributors to the success of our business.

Brett Hart: Investing in the customer experience has also been key to widening our competitive advantage. Our NPS scores continue to reflect the benefit from these investments.

Brett Hart: Our third quarter NPS was up 5 points versus the same period last year and it's up 24 points versus 2019 year today.

Brett Hart: These results would not have been possible without the vision and leadership of our executive vice president and chief customer officer, Linda Jojo.

Brett Hart: Last month, Linda shared the news that she will retire at the end of this year. In her 10 years, Linda let a team that revolutionized air travel and has enabled so many of our industry-leading customer innovations.

Brett Hart: These innovations have continued to set united apart and have delivered real value to our brand and our business.

Brett Hart: But the most lasting element of her legacy is likely to be the impact that she had on our culture. And as well known, across the company, her commitment to mentoring the next generation of leaders at United, especially women.

Brett Hart: Countless people, men and women, across the airline, not just on her team, have benefited from Linda's wisdom and her willingness to generously share it. Relief ship will not be easily replaced, but a certainly an example will aim to follow.

Speaker Change: Now that I have thoroughly embarrassed her, let me hand it off to Linda to talk about the changes she has seen at United in her 10 years.

Linda Jojo: Thanks, Brett.

Linda Jojo: We believe that United has the best hub city, the best network, and the best people. But to create an airline that customers choose to fly, we need to deliver a great customer experience.

Linda Jojo: That's why, over the last decade, we've invested over $14 billion in technology to help our employees work more efficiently and deliver outstanding service.

Linda Jojo: We believe these investments give united a unique competitive advantage, further strengthening our brand and foster a culture of innovation that's hard to match.

Linda Jojo: For example, one of the first decisions we made when I joined United was to issue iPhones to our flight attendants.

Linda Jojo: Once these devices were in our employees' hands, it unlocked a new way of thinking for both our frontline and our digital technology teams.

Linda Jojo: These devices now help our flight attend and deliver more personalized service from recognizing someone's birthday to offer an in-the-moment care to sharing connecting gate information.

Linda Jojo: Building the stronger connections with our customers and drive our higher NPS scores along the way.

Linda Jojo: We've also moved to a paperless flight deck, issued iPads to our technicians.

Linda Jojo: Upgrading our contact center, crew scheduling and airport tools, resulting in more efficient aircraft turns and better crew communication, especially during a regular operation.

Linda Jojo: This culture of innovation combines with our investments in our technology infrastructure, enabled us to launch dozens of industry-first capabilities for our customers and employees.

Linda Jojo: For example, we launched Connection Saber more than five years ago, saving the day for over 3 million customers since then.

Linda Jojo: This is a customer benefit, still not copied by other airlines.

Linda Jojo: Like Stop, I'm very proud of our app. If you've been nearly 90% of our customers on the day of travel, where they can save up to 30 minutes at the airport.

Linda Jojo: And when things don't go as planned, we take steps to automatically re-bub you, and we've introduced new features like allowing customers to list stand-by for earlier flights, and access to hotel and meal vouchers.

Linda Jojo: Our self-service success rates in the app have doubled since making these changes, which translates the customer's getting on their way faster, and our employees freed up to assist those customers who need more help.

Linda Jojo: Our patented agent on-demand technology gives customers the option to text, talk, or video call, a live agent from the United App, and enables our teams to collaborate across airports, aligning our people resources to where they're needed most.

Linda Jojo: During a recent storm in Houston, over 7,000 customers got help from live-united airport agents, already on duty in other airports who were not impacted by the storm.

Linda Jojo: Our pace of innovation continues.

Linda Jojo: So far this year we've allowed customers to be automatically moved to a preferred seat.

Linda Jojo: Craneth of flight filters of travelers can confirm an aircraft can accommodate their wheelchair. Expanded live activities to Apple Watch and signed the industry's largest deal with Starland for Inflight Wi-Fi.

Linda Jojo: The Starlink announcement was a full circle moment for me.

Linda Jojo: Finding a way to improve in flight-wise by has been a year's long challenge.

Linda Jojo: And like when we gave iPhones to our flight attendants nearly a decade ago, I think this will completely transform the onboard experience.

Linda Jojo: and Waves, we probably can't imagine today.

Linda Jojo: and that's why I can't wait to see what the team will do next.

Linda Jojo: I'll now hand it over to Andrew to talk about the revenue environment.

Andrew Nocella: and it's been an exciting decade as United thanks to Linda.

Andrew Nocella: The United, we take great pride in our leaving rats and results over the last few years. Our segmentation strategies, multiple product choices from basic to bleris, and network capacity deployment decisions have a created strong relative margin-free united versus others.

Andrew Nocella: Elimination of change fees and the swapping out of single-class RJs from mainland jets has been very positive for United and negative for our competitors.

Andrew Nocella: Turning to our third quarter revenue results. United's top line revenue grew 2.5% year of year to 14.8 billion. On 4.1% more capacity versus a third quarter or 23.

Andrew Nocella: The piloted in tourism was down 1.6% year over a year, aligned with our expectations of a challenge in domestic industry to pass into the dynamic in July.

Andrew Nocella: As expected, we reached the domestic inflection point. The domestic housing was slightly positive in August and September of year, which was a material improvement from earlier in the quarter where it was down 4%.

Andrew Nocella: The United's domestic capacity in 2024 was shaped with the expectation that the industry would remove unprofitable capacity in earnest in Q4.

Andrew Nocella: As a result, the United expanded slower than most during the first three quarters of the year. When capacity dynamics were less favorable, but importantly, our time and was right, tilting our growth to the quarter or the industry conditions would be the best.

Andrew Nocella: Networking Business Model changes due to large financial losses by others are resulted in an improving domestic and near Latin America price and yield environment. We expect more of the same in 2025.

Andrew Nocella: A-A-A-A-A

Andrew Nocella: The time in our rigorous push to Europe in 2022 and 2023 proved to be spot on with the recovery and demand post-pandemic. This year we allowed capacity added in 2022 and 2023 to mature great and good razzom results. We enter Q4 with momentum across the Atlantic as razzom growth was strongest as we exited Q3 at plus 4%.

Andrew Nocella: We've got pretty good at knowing when and where to grow and just as importantly knowing when and where not to grow.

Andrew Nocella: While our Asia Pacific network is solidly profitable, Asia Rasmum was challenged in the quarter as we continue to face China and South Pacific Headwind driven by simply returning into a more denomeralized revenue environment. The United expanded Asia capacity by 27% you are revered from Q3.

Andrew Nocella: and 50% in the last 12 months.

Andrew Nocella: Pivoted in capacity across the network remains of focus as we enter Q4. We're in the process of recalliating underperforming nearby capacity in our warm operation to create new revenue pools and connectivity in Tokyo.

Andrew Nocella: The United's Plan is in a growth, will moderate to 7% in Q4 and further again in 2025. We plan to return to a more typical Pacific growth rate once our post-pandemic network is fully restored.

Andrew Nocella: But stronger year of a year of performance expected across the Atlantic, and the Pacific in Q4, the United is also seeing a much better global year of year rather than outlook, versus Q3.

Andrew Nocella: We remain bullish about the long-term growth prospects of our global long-off line. The structural shift in profitability is evident in two of the three international entities that united so far in 2024.

Andrew Nocella: We're optimistic that the performance to Latin America will improve in the coming quarters as the region to see and significantly significant capacity rationalization by low margin airlines.

Andrew Nocella: The United Network Health remains strong, all United hubs and all four entities produce profits in Q3, produce profits year to date, and produce profits over the last 12 months.

Andrew Nocella: Corporate demanding celebration was night to see in September across all regions, and it's expected to continue in the Q4. Contracted corporate reviews were up 13% in September, at 95% of 2019 revenues, which is 13. higher than July and August.

Andrew Nocella: United has centered in the largest business markets as corporate demand expands to expect a material tailwind. Load factor from managed business was down nearly two and a half points and Q3 still, first is 2019, and we look forward to the slowest steady gains as we enter 2020-25.

Andrew Nocella: We've seen eight of the top 10 biggest post-pandemic corporate revenue book in days since the start of September, including the biggest day in the United history.

Andrew Nocella: We're having the United Supreme Union cabins this up 2% in Q3, premium cabins, and rather than main cabin and all entities during the quarter. Other than their in-depth spectrum, basic economy arranged an important product for volumes up 21% year or a year.

Andrew Nocella: Milis Leskinen, who is up on 11% at our Connected Media Business continues to spool up as we invest in technology and CPAC screens to create new high-marchen rugby streams.

Andrew Nocella: Acted membership and mileage plus is up 13% year every year, and holders of her credit card have reached a new penetration record with credit card to spend reaching new records up 9% year every year, showing flyers increasingly engaged with all united as to offer.

Andrew Nocella: I'll end with a quick view of the revenue set up for early 2025.

Andrew Nocella: Much of the revenue challenges we have seen in Q3 were in weak yields for domestic leisure customers who book travel far out As we look into Q1, we're selling these very same ticket to fields that are much higher We believe Q1 yield strength will be possible due to the significant schedule changes, and business model changes that will continue to be implemented by low-morgan airlines

Andrew Nocella: While there's still a bunch of noise in Q4 due to the multiple calendarships that make the positive magnitude of the domestic revenue pivot a bit difficult to see for some, the environment is improving rapidly just as we anticipated.

Andrew Nocella: In addition to the positive yield, these are yields of expecting Q1, we're clearly seeing an acceleration of returned office policies which are derived in corporate traffic revenue growth and an accelerated level in creating a great setup for 2025. Further, as I said earlier, Asia, Unit Revenue is a clearly pivoted Q4.

Speaker Change: Thanks to the entire team for job well done, but that I'll turn it over Mike to discuss our financial results.

Mike: Thanks, Andrew, and thank you to the United Team for another solid quarter. In the third quarter, we delivered a pre-tax margin of 9.7% in earnings per share of $3.33.

Mike: Above the high end of a guidance range, despite challenges from the crowd strike outage and suspension of our flights to Tel Aviv in a month.

Mike: Revenue trends improved across most geographies as industry capacity rationalized.

Mike: All while we see, all while we saw, I really think you're precious.

Mike: Customers continue to choose United as we invest in our hard product, our people and a resilient operation.

Mike: Turning the cost in the quarter, Kazimax was up to 6.5% on 4.1% Cassidy Grove versus the third quarter of last year. We've affected Kazimax to be pressured in the quarter with lower capacity growth.

Mike: This was further amplified with an approximately one-point reduction in capacity from CrowdStrike and Suspension until we've been among.

Mike: As we look to the fourth quarter, we expect some unit cost and grooming as labor headwinds moderate and our capacity growth steps back up. We expect that our cost will remain pressured from previous capacity where the reductions in both our domestic and atlantic schedules and delivered delivery delays from airbush in Boeing.

Mike: As we look ahead to Kazimax in 2025, we expect to see tailwinds from better utilization and firmer capacity plans assuming OEM delivery delays moderate.

Mike: We expect to continue to see pressure from our labor agreements of around 2-3 points, which should have been industry headwind as well.

Mike: For the fourth quarter, we expect our aims per share to be between $2.50 and $3.

Mike: Turning to the fleet, in the quarter we took delivery of 17 Boeing Maxi aircraft in 3a321 neo aircraft.

Mike: In the fourth quarter, we expect to take the delivery of 19-air body aircraft and 3-wide body aircraft.

Mike: Our estimate accounts for our current assessment of the impact of delays at both Airbus and Boeing. With these deliveries, we now expect four-year adjusted capital expenditures to be less than 6.5 billion.

Mike: on Capital Education.

Mike: Our United Nations Plan is working and the airline industry is in the midst of a positive transformation.

Mike: A decommoditization of our customers are choosing united based on the wide selection of products from premium international seats, to flexible travel for domestic business travelers, and basic economy for a price-sensitive customers.

Mike: Our investments have solidified a leading position for us in the industry.

Mike: As our strategy has worked, our relative profitability has improved materially.

Mike: But our stock hasn't kept up.

Mike: We believe there's tremendous value in our shares and now have the balance sheet and free cash flow to opportunistically repurchase those shares.

Mike: Our Board of Directors has approved a $1.5 billion share repurchase program that we intend to execute beginning this quarter and through out 2025.

Mike: This program will be funded by free cash flow generation as we expect our profitability to improve.

Mike: It's imperative that we balance our priorities of investing in the business and consistently returning value to our shareholders while also leveraging.

Mike: Our current net leverage is 2.7 times and we are targeting below 2 times in the next few years.

Mike: In parallel with this new buyback authorization, I'm happy to share that we've already repurchased approximately $82 million of shares. There were issues when a portion of the warrants originally granted to the U.S. Treasury under the CARES Act and payroll support program were exercised during the quarter.

Mike: The repurchase of just over 2 million shares fully offset the delusion associated with these exercise words.

Mike: The shares were purchased at an average price of $39.99.

Mike: We are delivering on our financial commitments and expected deliver on our EPS guidance for the second year in a row. We are greatly encouraged by our third quarter performance and the progress we made to positively differentiate our product, increase tourism, improve our balance sheet, and now return cash to shareholders.

Mike: The future at United Airlines is incredibly bright.

Speaker Change: With that, I'll pass it over to Kristina to start the Q&A.

Kristina Edwards: Thanks, Mike. We'll now take questions from the analyst community. Please limit yourself to one question and if needed one follow-up question. Krista, please describe the procedure to ask a question.

Speaker Change: Thank you. The question in answer session will be conducted electronically. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw that question, again press star 1. Please hold for a moment while we assemble our queue. And the first question comes from Connor cutting him with Maliya's research. Please go ahead.

Speaker Change: Everyone, thank you. A question I get a pretty awesome from investors is just how you plan to capitalize on an evolving industry backdrop in 25. Many of your competitors are making.

Speaker Change: Significance changes the network and product. When you take a step back, where do you see the biggest opportunity in the U.S. domestic market next?

Speaker Change: Thank you.

Speaker Change: I'll try to say, you know, we're focused on United and, you know, are outlook and you continue to, you know, the United next plan. So there's a lot of opportunity. You know, I think first of all, we're going to continue to build connectivity in our mid-Con hubs week.

Speaker Change: Had that as one of our north stars for a long time, we'll continue to do that.

Speaker Change: But we're also going to continue to invest in the customer to make our product one that they choose more and more often, and we continue to see market share games related to that, and then I think the last point I would say is particularly from a corporate point of view, we see corporate traffic accelerating, that's united to bread and butter, we've been waiting for that to happen for a while, it's particularly important in Q1, and we think it's going to happen in Q1, and that creates a great set of for us, so we're going to stay focused on building products that customers want to buy, we're going to stay focused on building our high yield share to go forward, and building connectivity, and of course building our global network, which is done incredibly well over the last few years.

Speaker Change: Okay, great. Thank you. And then maybe just sticking with our going back to the United Next, you know, when you first played that play in 2021, obviously a lot has changed.

Speaker Change: We worked your forecast and double digit pre-tax margin by 26. I was just curious if you could update us on your thought process and how you get to that double digit margin. You've obviously done a very good job with pivoting and driving margins relative to others, but just any thoughts there would be would be helpful. Thank you.

Speaker Change: Sure. For the past couple of years, we've been describing an industry evolution that we were confident would lead that higher margins. We anticipate that we'd reach an inflection point that would kick off a multi-year run that looked a lot like the 2012-2014 for airline earnings and investors. For some history, in 2011, each of Delta United and Southwest had pretext margins between 3 and 4%. In 2011, each of Delta United and Southwest had pretext margins between 3 and 4%. For some history, in 2011, each of Delta United and Southwest had pretext margins between 3 and 4%.

Speaker Change: South West committed to low growth until their road can a certain target and they lived up to that commitment for the next three years. Three years later, their margins had expanded by nine points, so the network carriers had expanded by an average of about eight points.

Speaker Change: That all happened even while the ULCCs were growing 15 to 20% per year. Fast forward to today. Southwest and one other airline, one of the large airlines, start with margins that are actually even lower in absolute than they were in 2011 and relative margins that are significantly worse than they were in 2011. In response, Southwest is, once again, made a long-term capacity commitment at the same time that the ULCCs may not even survive much less growth 15 to 20%. [inaudible]

Speaker Change: And while we've been predicting this scenario would happen, it's no longer theoretical. It happened in mid-August. The only question now is how much margins expand compared to what happened in the 2012-2014 time period. I suppose you can have a reasonable debate about whether it will be the same, eight to nine points for something less, but regardless, there's likely going to be a meaningful expansion of margins in each of the next three years. [inaudible]

Speaker Change: Your next question comes from the line of David Vernon from Bernstein. Please go ahead.

David Vernon: Hey, good morning, I had a question on sort of the International Expansion. This sounds like a differentiated strategy that sort of leans into the idea of longer lust. Can you talk a little bit about the rationale here and maybe your process for picking out a loop, Greenland, Deb, the system versus any other city. And what kind of impacts, seasoning some of these newer routes that are kind of undiscovered country, they have on results for next year. Thank you.

Speaker Change: Well, thanks for the question, you know, we spend a lot of time debating how and where we'll grow. And this announcement is clearly caught the attention of a lot of people, most importantly, our customers. And I think it's a very exciting announcement, but the backdrop for the announcement.

Speaker Change: is the fact that United Airlines simply has the best global gateways in the business. And those global gateways allow us to fly successfully to a broad range of destinations.

Speaker Change: We heavily fly into our partner hubs.

Speaker Change: which is the traditional model in our business, but we're also able to do just as well financially outside of our partner hubs.

Speaker Change: And so we look across the globe, we look for new destinations, we look for hot destinations.

Speaker Change: and Destinations of Most Importantly, we can make money in.

Speaker Change: We had a really good track record in this, very little of what we've added over the last few years we have cancelled.

Speaker Change: And so as we look forward, we look for those new destinations. And at the end of the day, Greenland has got a lot of attention, but it is only to 737s per week. So it's impact on our system will be small. But it's impact on United, our brand and our customer profile and sign ups from mileage plus will be great. And there's so much more possible on this front than even I thought was possible five or six years ago.

Speaker Change: as the United Next Plan builds the connectivity. As our global hubs are just in these great cities with high volumes of cargo, high volumes of leisure traffic, and most importantly, high volumes of business traffic, we just have a lot to unlock out there. We'll do it very carefully. We'll make sure we're growing properly, but expect more to come on this run.

Speaker Change: Alright, thanks for that, and then maybe just as a brief follow-up on the wide body situation, you know, the Boeing's announced they're going to have a bit delayed at the triple 7X. How do you think that's going to affect sort of supply demand as you're looking out in a couple of years as the delays in that production platform for the next generation of wide body?

Speaker Change: So, you know, we talked about this many times, even in the middle of the pandemic, we thought there was a structural shift in global capacity. A lot of A-380s and other wide bodies are grounded and many of those aircraft remain grounded. Although airlines were bringing some back, there's no doubt about that. The fact is that the production lines for wide-body aircraft probably will not keep up with demand over the next three to five years based on everything we see. And that in turn I think creates a better setup for the global long-home network. We obviously remain bullish on it based on our announcement last week. And we'll do it pretty late, but we think the setup is pretty good and the triple-7X appears to be delayed yet again.

Speaker Change: David, and this is Mike. I'll just pile on. You know, we're more focused on the 787 delays as you might expect us to be. And, you know, we're rooting for Boeing and they are certainly making some smart decisions. We would applaud their, at least a rumor decision to raise some equity in the capital markets to stabilize the business. But as we see delays on the 787s, we would expect that, you know, there's a bias downward in catbacks, if those delivery delays continue. And, you know, we're going to have a lot of money. We're going to have a lot of money. We're going to have a lot of money.

Speaker Change: Here next question comes from the line of Andrew DeDoria with Bank of America. Please go ahead.

Speaker Change: Hi, good morning, everyone. Kind of piggybacking off of that last question. Maybe Scott or Mike, it means bigger picture. What do you see as the implications across your company from the Boeing strike? And then Mike just kind of following up on your last answers. Is it reasonable to expect something in the lower end of your $79 billion cap X range next year just given everything we know from a production perspective? Thank you.

Speaker Change: We'll all start big picture that might give you the cap-back answers I, what I care about with Bowie is the long term

Speaker Change: We're trying to build the best airline in the history of aviation for the long term and I'm very focused on the long term.

Speaker Change: and I am actually encouraged with Boeing. My cardee refers to, but the challenge at Boeing.

Speaker Change: has formed to my view for decades then that the...

Speaker Change: Cultural Challenge, where they focused on short-term profitability and short-term stock price at the expense of what made Boeing great, which is building great products for great engineering and great quality reliability, safety and duty count on.

Speaker Change: and I think Keller Burke is pivoting the company back to their roots. I think the all the employees of Boeing will rally around that. To me the biggest news in the last couple of decades really about the willingness to sell equity.

Speaker Change: That's making the right long-term decision regardless of what the street thinks about it in the short term. So I applaud them for doing that as a long-term customer. It's the right thing to do for their shareholders long-term also. And so I'm encouraged with the changes that they're making. The strike is in a lot of ways a cultural legacy of the same issues that have happened over the past couple of decades. David, David, David, David.

David: Dewey, Nick Bowie, great, and be part of a great company that's one of the most important companies in the world, and so they'll ultimately work through this. It's going to be, we're going to have to wear airplanes in the near term, then we would have been hoping for, but our eye is focused on the long term, wanting to get through it and build a company that can work the long term, and then I think we're a really good set.

Speaker Change: Let me be clear. The aircraft we have on order with Boeing and Airbus based on the profitability that you're seeing in our results for the third quarter, based off our forward expectation for profitability. We want those aircraft and we want them as soon as Boeing can complete them and deliver them.

Speaker Change: That said, pragmatically, as these delays are unlikely to be resolved quickly, we would expect we do have a downward bias to capex, expect it to stay within that range and we'll get more precise guidance on the January call when we normally would, but you're correct to assume downward bias based on production delays.

Speaker Change: Great thanks for the answers that's all I had.

Speaker Change: Here next question comes from the line of James Baker with JP Morgan. Please go ahead.

James Baker: So, a couple of Andrews, looking back at this past summer, the elevated capacity of these associated pressure on yields, I'm sympathetic, I guess, for lack of a better term, that several of your competitors through as much capacity at the peak as they could.

James Baker: Particularly airlines that are struggling for even the cantist taste of profitability. I know a lot can change between now and next summer.

James Baker: Clint, shouldn't we assume that maybe this is the new normal? So, you know, as LMAs continue to struggle, they'll just throw as much capacity at the peaks. So those peaks become a little bit softer, off peaks become firmer, you know, more than the seasonal trends that we've seen in the past. Any thoughts on that?

Speaker Change: I didn't know you were so sympathetic to me. Well, I just kind of get their logic. I mean, it obviously didn't help, but no, I'm not claiming to be a chair or anything.

Speaker Change: I'm not an expert on their business model, though, then their business models are clearly struggling and they are changing them as rapidly as they can. However, it is hard to change the E.

Speaker Change: and it's hard to change your spot that quickly.

Speaker Change: Adam.

Speaker Change: Of course, they did exactly what you described. I think I went through the stages of grief on what you do. I'm just pushing a couple of quarters of golf, quarter to go and I think that is one of the stages of grief.

Speaker Change: You wind up a airline that has this complete imbalance of utilization, where you have unproductive uses for a majority of aircraft for six or seven months per year. And I'm not sure that financial model works either. We'll have to wait and see. The point of all that is there's an incredible amount of unprofitable capacity in the United States marketplace. Thank you very much.

Speaker Change: We've seen that exit in at a rapid pace starting in mid-August that continues in the next year and my expectation is that will continue at the same time that international remains strong, that business traffic which is our bread and butter remains strong and we can march towards higher margins as Scott talked about as this evolution occurs. So I remain foolish that where we are right now is only getting better and the changes we've seen so far are only actually the tip of the iceberg because the models just don't work in that way in my mind that you can work for six months and not the other six months.

Speaker Change: That's helpful, and then on the 20, I think you said 21% rise in basic economy volumes. So my ability to track basic economy supply is obviously limited. I'm assuming you track it internally, can you comment on how your basic economy inventory...

Speaker Change: Compares with that of Delta and American and with growth of this magnitude, I mean, the United didn't tend to essentially become the largest supplier of this count capacity, you know, domestically down the road, although, you know, by some measures, perhaps that's already been achieved.

Speaker Change: Well, if our intent is to expand our margins to be really clear, our intent is to offer our full range of products to customers particularly in our hubs that want everything from basic to polaris and we will pivot the amount of capacity we offer in all those categories based on expanding our margins. But we have come to the firm conclusion that our basic and offered in a substantial amount of volume is good to unite it is profitable for united and is bad for our competitors.

Speaker Change: and so we are continuing to do what's good for United. It expanded, I think it's in the neighborhood of 15 to 16% of our domestic passenger volume.

Speaker Change: Right now, as we grow our gauge with lower marginal cost, I think it could go higher as we go forward. But again, we'll pivot and do what's right for the bottom line at the end of the day. But I would say that the experiment was basic, which was this experiment seven, eight or nine years ago, is a solid home run and has changed the business dramatically to our benefit.

Speaker Change: Okay, totally great. Thank you everybody. Take care.

Speaker Change: Here next question comes from the line of Tom Fitzgerald with TD Cowin. Please go ahead.

Tom Fitzgerald: Hi everyone, thanks very much for the time. Would you help us understand that the sizing of the contribution from mileage plus and connective media on margin expansion 2025?

Speaker Change: I don't think we're prepared to do that today. My knowledge plus is, you know, a jewel in our business and has not been focused on enough.

Speaker Change: Over the last few years, and we took a different path about a year ago when we hired Richard Nunn. We took a different path as we invest in the technology there. That investment in technology is going to do a lot of things for our business first and foremost. It's going to allow us to personalize service to our customers in a way that I don't think any airline has done. Of course, Starlink is a core part of that, which obviously was just recently announced. So we'll have a lot more to fan this, but it is going to be material. It's going to spool up a certain next year, but I'm not going to give you the details today on that, but it's pretty substantial. Tom, I'm going to give you a little bit of detail. And that is that in 25, this is an investment phase. We're going to, it's going to not be.

Tom Fitzgerald: Losing Money. We'll make a little bit of money on it in 25, but this really starts to accelerate in 26 and beyond. So as you think about modeling 25, though, I've got a ton of momentum in the core business. I wouldn't layer a bunch of mileage plus connective revenue on in 2025. I do expect we'll be giving more and more disclosure, so you can model this on your own. You don't have that information at this time, but I'm committed to getting you more information to allow you to model it for yourself.

Tom Fitzgerald: And I'll just bring up one other point. I was going to bring up one other point. You know, the program is doing incredibly well. And again, we don't talk about it enough and we should. But revenue from the premier population in the quarter was up 9%. And that drove a majority of the revenue growth at the airline. And so our premier members are heavily engaged with us. As I said earlier, they hold the credit card in record numbers and they're spending record amounts on their credit card. But the fact that the premier population base is doing that much more revenue on a base that is actually close to flat because we...

Tom Fitzgerald: Make sure that we can deliver benefits to all of our premier members and we held the level of premier members flat. The program is doing incredibly well.

Speaker Change: That's all we really hope for. Thanks so much for the information. Would you like to elaborate a little bit on what the customer reaction on tick and active has been and then maybe some of the early reactions on brands that are advertising on the platform. Thanks again for the time everyone.

Speaker Change: I think our activities today have been rather small, there's been no customer action that I could to be called.

Speaker Change: Here next question comes from the line of Scott Group with Wolf Research. Please go ahead.

Speaker Change: Hey, thanks, good morning. So, when I look at third quarter, Casm X is up about six, Rasm is down about one. When do you think we see an inflection with Rasm up more than Casm? I don't think it's fourth quarter, but if you have any color on Q4, and ultimately I guess, do you have confidence that we see that in 25 with Rasm up more than Casm? So, Rasm, Rasm, Rasm, Rasm, Rasm, Rasm

Speaker Change: It's got a meaningful answer that simply in 25 we would expect that in flexion.

Speaker Change: We're not going to give you guidance on the, you know, quarter by quarter at this time as we traditionally wouldn't, but we absolutely expect that inflection in the calendar year 2025. I shared my prepare remarks, the kind of some pacing of Casamax, but let me repeat for clarity, Q3, I expect will be the peak for Casamax.

Speaker Change: We expect Kazmeck to decline into the fourth quarter and to decline further into 2025.

Speaker Change: We're going to work aggressively to cut all the costs that we should to run an efficient operation. And so, you know, I'm committed to that personally and the team's working hard to make sure we run a very, very efficient operation. At the same time, we're going to continue to invest in the customer.

Speaker Change: Because we're not focused on Kazimax as a metric at United, we're focused on driving profitability. And through Noc's QC's philosophy, we've been really good at delivering on bottom line earnings per share growth, and we're committed to continuing to do that, and we have the right balance of cutting the cost that are around efficiency, but adding the cost that are driving customers to increasingly choose United.

Speaker Change: helpful and just a follow-up maybe just some directional color on your razzum expectations for Q4 positive negative flat and then some of their differences in their pin the regions would be helpful. Thank you.

Speaker Change: Well, I want to answer that question, but I will give you another hint. So January , and I'm going to talk about Q1, because I can't. January is currently 77 days from the start of the month and 107 days from the end of the month. At this same point, domestic yields were down 9% in July , down 2% in September , and up 3% in January . And so the yield environment is just looking good. We're only booked. We're not booked. We're not booked.

Unknown Executive: At this same point domestic yield, we're down 9% in July, down 2% in September, and up 3% in January. And so the yield environment is just looking good, really booked to small percentage of our book and curve for January.

Unknown Executive: But I just want to say that Q1 is shaping up well, as the price and environment look better. The capacity is obviously different across the industry, and business traffic continues to rebound. But.

Speaker Change: to a small percentage of our both incurred for January, but I just want to say that Q1 is shaping up well as the price and environment. It looks better, the path to these, obviously, different across the industry and business traffic, continues to rebound.

Operator: Your next question comes from the line of Duane Fennigwerth with Evercore ISI. Please go ahead.

Speaker Change: but but

Speaker Change: Your next question comes from the line of terrain, Fenningworth with Evercore ISI. Please go ahead.

Duane Pfennigwerth: Hey, thank you. Good morning.

Unknown Executive: Domestically, are there any regions that stick out in terms of recovery?

Speaker Change: Hey, thank you. Good morning. Domestically, are there any regions that stick out in terms of recovery? Specifically, as it relates to corporate, are you seeing any signs of recovery and lagging west coast markets like San Francisco?

Unknown Executive: Specifically, as it relates to corporate, are you seeing any signs of recovery and lagging West Coast markets like San Francisco?

Unknown Executive: I would be the opposite to the coastal hubs that are stronger than the interior hubs in the corporate bucket. Professional services, financial services, and tech are growing fastest, where energy and a few other things are growing slow. But all verticals are growing in corporate traffic. Looks good, but the coastal hubs are much stronger than the interior hubs at this point.

Speaker Change: I would be the opposite to the coastal hubs that are stronger than the interior hubs in the corporate bucket, professional services, financial services and tech are growing fastest, where energy.

Speaker Change: and a few of the things are growing slow, but all verticals are growing in corporate traffic looks good, but the coastal hubs are much stronger than in interior hopes at this point.

Unknown Executive: Great. And then Mike touched on it. And I think it came up in a couple of questions, but just contrasting the setup on the kind of step up and growth in 2025 or the step up and capex in 2025. Versus prior years, where it was a little bit of a placeholder given OEM constraints.

Speaker Change: Great, and then Mike touched on it, and I think it came up in a couple of questions, but just contrasting the setup on the kind of step-up and growth in 2025, or the step-up in CAPEX in 2025, versus prior years where it was a little bit of a placeholder, given OEM constraints. Does the setup feel different now? Looking into 2025, I know you recast and de-rith some of your deliveries, but is your confidence higher into 2025 growth, or about the same than it was this time last year into 2024? Thank you.

Unknown Executive: It does the setup feel different now looking into 2025. I know you recast and and de-risk some of your deliveries, but as your confidence, you know, higher into 2025 growth or, you know, or about the same. Then it was this time last year into 2024.

Unknown Executive: Thank you.

Unknown Executive: I think you're asking me about capex expectations in 2025. Okay, capex and really growth just that it was, you know, in prior years it was a placeholder at this point in time given OEM constraints. And you have a better view into how those, you know, work out than we do on the outside. I'm just wondering if the confidence is any higher now into your plan growth than it has been in prior years.

Speaker Change: He's doing I think you're asking me about

Speaker Change: CapExpectations in 25.

Speaker Change: CapEx and really growth just that it was, you know, in prior years it was a placeholder at this point in time given OEM constraints and you have a better view into how those, you know, work out than we do on the outside. I'm just wondering if the confidence is any higher now into your plan growth than it has been in prior years. Let me try to let me try to be responsive. We've been very clear about a range of CapEx at $79 billion and as we sit here today, given the strike at Boeing, given other delays, we'd expect there to be a downward bias within the range.

Unknown Executive: Let me try to, let me try to be responsive. We've been very clear about a range of capex of $79 billion.

Unknown Executive: And as we sit here today, given the strike at Boeing, given other delays, we'd expect there to be a downward bias within the range for capex in 2025. Now separately, there's a relationship, but separately thinking about capacity in 2025.

Speaker Change: for CapEx in 2025. Now, separately, there's a relationship, but separately, thinking about capacity in 2025. We're not going to give guidance for CapEx in 25 at this point, but you can trust us. You should expect we have a ruined bed trust that we're going to fly to CapEx into maximizes profitability pre-initid.

Unknown Executive: We're not going to give guidance for capacity in 25 at this point. But you can trust us. You should expect we have earned that trust that we're going to fly the capacity to maximize this profitability for United.

Unknown Executive: Okay. Thank you.

Sheila Kahiglu: Here, next question comes from the line of Sheila Kahiglu with Jeffries. Please go ahead.

Speaker Change: Okay, thank you.

Speaker Change: Here next question comes from the line of Sheila Kahiglu with Jeffries. Please go ahead.

Sheila Kahiglu: Good morning, everyone, and congrats on a great quarter. We touched on this a little bit, but maybe we could cast it a little bit more on the domestic rasm, down point eight, in Q3, from 1.9 and Q2. It doesn't seem like much, but Andrew, I think you just gave a little bit of color on how July was and how August trended. It seems a much bigger step improvement. So maybe can you talk about what drove that? Was it how much was capacity, how much was corporate, how much was share gain in economy, any details you could provide?

Sheila Kahiglu: All Tribe and...

Speaker Change: Was, you know, a lot of things. I will say that September was dramatically better than July. July was clearly the low point for the year in terms of the year of your razzum. We saw games really in all the entities.

Speaker Change: Page, you know, but September , again, was much better. We expect a specific market to also improve as it had in the Q4. Business traffic, you know, was up, I think, about 6% in the whole quarter, but was up 13% in September to give you an idea of the school up. So, we exited the quarter with some really, I think, you know, much better performance. And we were hopeful that performance translates into good quality earnings in Q4 and beyond. Hopefully, hopefully that did that answer your question.

Speaker Change: A little bit, maybe I could follow up on the Q1 comments then you made with the bookings being so strong but only minimally booked. So how do we think about what drove that strength into Q1 and how you're seeing that? Is it like where is that strength coming from? Is it different than what you saw on the Q3 September performance?

Speaker Change: I don't have it by geography, but what we are seeing is that there's just a much better pricing environment for leisure yields that book very early in the book and curve, and we attribute that to changes in capacity, the elimination of unprofitable capacity, better business book, and all those very slim at this point, and changes of business models of the low margin airlines. All of these factors are leading to what we anticipate will be a much stronger environment in 2025 for United Airlines.

Speaker Change: Great, thank you.

Speaker Change: Here next question comes from the line of Brandon Oglensky with Barkley's, please go ahead.

Speaker Change: Hey, good morning, and congrats on retirement, Linda, and and congrats to the team on, you know, a pretty strong three-two outcome here with all the headwinds that you had. Mike, I really like the no excuses attitude here, the Sherry purchase definitely a vote of confidence. I guess can you help investors because we understand the CapEx dynamics next year, but longer term, you know, you guys are going to be in this range of $79 billion that is a little elevated compared to others, but how integral is that spending and the investments maybe even outside the aircraft fleet into achieving that double digit, you know, margin target.

Speaker Change: Hi, Brandon. I appreciate the question. It's something to think about a lot in the finance department these days at United. You know, CapEx is elevated. That refreshing of the fleet, the growth of the fleet has been absolutely integral, though, to the United Next Strategy. The gauge increase from the narrow bodies, that's frankly what's driving our ability to provide basic economy, which is creating a competitive dynamic that is just fundamentally reshaping the industry. So they are intertwined. That said, as the strategy progresses and our margins expand, I am focused on free cash flow conversion.

Speaker Change: And in the near term, in the next two or three years, we're focused on a free cash flow conversion target of 50 percent. We're not going to manage perfectly in every individual year, but over the next three years, I would use 50 percent as a target. Later in the decade, I am aiming higher, I think 70 to 75 percent longer term than that. You know, I think there's opportunity. But near term, think about 50 percent. And later in the decade, think about a target of 70 percent. 75 percent for free cash conversion.

Speaker Change: Mike, I appreciate that. It's actually very helpful. And that's within the context of that $79 billion outlook on cat-backs for the next few years, right? $79 billion remains the target for the next few years. And we'll give you an update to that in the future. But for the next few years, $79 billion remains the target. And let me say for the third time, that has a downward bias next year. The next few years, $79 billion remains the target. And that has a downward bias next year.

Speaker Change: Thank you.

Speaker Change: Here next question comes from the line of Mike Lindinberg with Deutsche Bank. Please go ahead.

Speaker Change: Oh, yeah, hey, good morning, everyone. And, you know, obviously keeping with your no excuses, mantra, I thought it was interesting that there was nothing in the release as it related to crowd strike. I know Mike, you called out one point of chasm, but at the end of the day, you did cancel. I want to say it was like either 25 or 2600 flights on United and its partners. What was the revenue impact or is it just with your booking tools, your ability to reaccomodate, maybe better than others, that the revenue hit maybe was not as much as, you know, even worth reporting. . . . .

Speaker Change: Hey, Mike, you know, Scott and Andrew, if they want to provide some detail, obviously they can.

Speaker Change: But Healthy Businesses, Healthy Industrials, Healthy Businesses.

Speaker Change: Don't make excuses about crowds, drag, don't make excuses about weather.

Speaker Change: We build into our guidance, the expectation there will be one act of God in a quarter that impacts the business in a negative way And if that impact ends up not being so large, then we can be, you know, coming at the hand or beat our guidance

Speaker Change: If you have a series of events in a quarter or a massive event, then of course, you're not always going to hit your guidance. But I think it's just basic setting of targets in a way that expects it not always to be a perfectly sunny day.

Speaker Change: and I'll actually use this to expand on cultural philosophy that I think is really important here at United.

Speaker Change: When I was a kid at the United States Air Force Academy, the best thing I learned was no excuses, man, no excuses sir. It's hard. It's easy to point to the things that aren't your fault, but don't feel like they're your fault.

Speaker Change: That was one of your basic answers and we have tried to get that philosophy and still throughout United. What that means is it forces you to constantly get better. It's easy to have an NBA and a cubicle somewhere or come in at 9 a.m. on Monday in a precondition office and calculate how much some of that outside of your control cost. And it's right, it's not that it's wrong.

Speaker Change: Um...

Speaker Change: But then that's the end of the story. If you have no excuses, mantra, and you don't allow people to even go calculate those numbers, it forces people to go find innovation, creative ways to get better and better and better so that you can overcome those things when they happen. And we've said it a few times on this call. We are the innovation leader in the airline industry around the globe and second place is far behind. [inaudible]

Speaker Change: and the no excuses philosophy is a big part of that. It forces us to do things that we wouldn't otherwise do if we let ourselves just look at the calendar or look at the bad things that happened and write those off. So I think it's a really important cultural point that the team has on both the revenue side and the cost side. And I'm proud of the team for taking it to heart, our chief operating officer is in the room Toby, and he says it differently but great. He says we're talking about things like the weather, or it may not be our fault but it is our responsibility. And that's the attitude we have here at United.

Speaker Change: Great. Thanks for that Scott, Mike. And then just Andrew, I'm just on, you know, looking more towards the smaller cities in your network during COVID, I want to say there was probably 30 or 40 markets that you had pulled out of because of the pilot issue. It now feels like that that's been alleviated somewhat. When I think about, you know, your competitive mode and some of those markets you serve, you were the only game in town. I know Mike has mentioned, you know, some rasm or, excuse me, some chasm pressure in 2025, maybe related to some additional regional offline. I suspect that maybe some of those markets are coming back online, anything that you can add to that. Thanks for taking my questions.

Speaker Change: Sure, Mike, it's briefly, you know, the RJ network, well, of course, the RJ flyin'.

Andrew Nocella: Hes pulled back up to his new run rate in Q4, and that has, you know, has come back online a little bit quicker than we anticipated at the beginning of the year and they are smaller aircraft and they do pressure chasm. We also think they help grab them in profitability, which is of course why we've done it. We are back to full utilization on the RJ's at our new run rate fleet. We announced the deal, I think last week for 11, CRJ 550's with Sky West, that aircraft has been, you're actually much better than expected for United, so we're glad to be able to expand that, which allows us to better serve these smaller communities. But I also don't think there's a large scale change coming at United and how we serve these smaller communities are our plan over the long run.

Andrew Nocella: R.J. is slightly less scheduled depth with lower frequency with aircraft that are bigger that have lower unit cost. We said that we united next a number of years ago. We continue down that road and down that philosophy. So expect the RJ fleet to still be around and do this thing, but it'll become a smaller and smaller percentage of the business and we will serve these smaller communities with a mixture of RJs and mainline jets and have the lowest cost possible in this business. We will continue down that road and down that road and down that road and down that road.

Speaker Change: Great, thank you.

Speaker Change: Here next question comes from the line of Steve Trent, with City, please go ahead.

Steve Trent: Good morning, everyone and thanks very much for taking my question. Linda Best wishes to you on your retirement. I wanted to ask, you know, very good trajectory in terms of reduced leverage. Could you give us some high level view on how this could dub tail with your credit strategy, maybe investment grade rating on the horizon?

Speaker Change: Hey Steve, I appreciate that question. As our margin expands and our leverage decreases, we expect we will have investment grade metrics.

Speaker Change: and we're going to work very hard to earn the trust of the credit rating agencies to get investment grade ratings to go along with those metrics. But two times, less than two times net debt with margins that are double-digit, with an industry structure that is more resilient, with united as the leader within that industry, that's an investment grade company.

Speaker Change: That makes a lot of sense and I can appreciate that. And just one other quick question. You guys have some great partnerships with names like Copa and some of your Star Alliance fellows. Do anticipate a fair bit of long-term growth coming from these partnerships or are we really going to think about organic drivers to the world? Thank you.

Speaker Change: I'll take that. You know, our partnership's are incredibly important to us and we do have the marquee names across the globe with great hubs that we fly into.

Speaker Change: However, our approach to growth is balanced, you know, as I said earlier, we have the ability to grow profitably in our partner hubs, but we also have the ability to grow just as profitably outside of our partner hubs.

Speaker Change: We do incredibly well to lend a teacher, for example, which is not a partner hub for us.

Speaker Change: And so I would expect a balanced approach to this, again with the idea of expanded margins, but we will look to expand into new regions of the world that I think are uniquely supportable by habit hubs that are in New York, in Washington DC, and San Francisco in particular. Those hubs just simply unlock the ability to fly to places like Marrakesh or Greenland, or other places that we've recently added to the map. So international is an important part of the United, we're clearly the largest of the big three flying overseas, we expect that to continue, but most importantly, we have really good margins, at least cross to those big entities today, and we look to expand those margins.

Speaker Change: and gone forward.

Speaker Change: Thank you very much.

Speaker Change: We will now switch to the media portion of the call. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.

Speaker Change: We will pause for a moment to compile this Q&A roster.

Speaker Change: Here first question comes from the line of Leslie Joseph, please go ahead.

Leslie Joseph: Hi, good morning, everybody. I just wanted to ask around the election, I know one of your competitors talks about, you know, decline maybe a week before or a week after. Can you talk a little bit about what you're seeing? And then also in this quarter, seeing some really, really low fares to Europe , kind of across the board, across airlines and destinations. And can you talk a little bit about that? What's the man trends you're seeing? And if this is just kind of a, maybe a function of a lot of capacity and maybe people traveled already, or what kind of what to play there. Thanks.

Speaker Change: I don't know who he is.

Speaker Change: Your next question comes from the line of Mary Schlanggenstein with Bloomberg. Please go ahead.

Mary Schlanggenstein: Hi, thank you. I wanted to see if you could go back a little bit in some of your comments about the outlook for Asia and China and how that might be changing and whether United plans to add back any additional China U.S. around anytime soon.

Speaker Change: Sure, Mary, you know what I'd say, and I said this in the past, China is just completely different for United Today than it was pre-pandemic, we used to fly, I think roughly 10 flights a day to China, and I think those days are gone, the demanded measurements just entirely different. We just recently resumed Los Angeles to Shanghai, and we're bringing that up to Delhi, so it'll bring us to three daily flights, and I really don't anticipate, based on the demand we're seeing, a lot more than that, anytime soon, it's just a completely different world. The situation on terms of the ratham, which I was talking about earlier is, as we've gone back to what is now a full schedule to China, we're back to, you know,

Speaker Change: What I would describe as normal rathms and those rathms came down significantly from during the pandemic time period where just flying a few flights per week. And so that has had a negative impact on our year-over-year rathms results across the Pacific for a number of quarters. However, that comes to an end in Q4 and in Q1 when we lap back completely. And therefore the rathms impact, the negative rathms impact of China will dissipate. And we see this pivot that starts in Q4 and hopefully continues into next year. Thank you for your time.

Speaker Change: Thanks, and can you give us an idea of the load factor on your China flights?

Speaker Change: I don't have that in front of me, but not high enough

Speaker Change: Thank you.

Speaker Change: Here next question comes from the line of Rajesh Singh with Reuters. Please go ahead.

Speaker Change: Hi, everyone. How's the question about boys described? When did it start affecting the United should you? Secondly, how did it present in Clark recently said that chapter 11 is looming on the horizon for boys? Will you share that view and have you done any contingency planning around that possibility?

Speaker Change: It's hard to hear all of that, but we're not anticipating the outcome you described.

Speaker Change: And do you expect to remember this, so I could start having an impact on your schedule?

Speaker Change: All it already does is that's immediate when the aircraft have stopped delivering. But as I said in my earlier comments, we have we're encouraged that Boeing is focused on the long term. We wanted focused on the long term. I talked to Kelly as recently as yesterday and appreciate his focus on the long term, and that's what we care about. I had a short-term impact, but I think Boeing is positioning themselves for a strong turnaround in the long term.

Speaker Change #100: Thank you.

Speaker Change #101: That concludes our question and answer session, and I will now turn the call back over to Kristina Edwards for closing remarks.

Kristina Edwards: Thanks for sending. Thanks for everyone joining the College Day. Please contact the Master of Media Relations if you have any further questions and we look forward to talking to you next quarter. Happy Halloween!

Speaker Change #102: Ladies and gentlemen, this does conclude today's conference call, thank you for your participation and you may now disconnect.