Transcript: United Airlines Holdings (UAL) Q3 2026 Earnings Call 

We know that eventually, high speed, low earth orbit WiFi will be industry standard for everyone.

For 2027 and really 2028, we are well on our way to being the only global US airline with Starlink at scale. So a lot of new customers are going to try us. It’s a huge head start. And we’re going to press our advantage wherever we can. And while others are just ramping up on their LEO WiFi installations, we’ll be on to our next wave of product and technology to sustain our lead and further deepen the competitive moats around our business.

Our mission will be to show new customers the very best of United, and then earn their long term loyalty by demonstrating that we’re the number one airline in everything else as well.

With both fuel and industry capacity expected to be elevated next year, will that share shift happen fast enough to get us to double digit pretax margins? While I do expect a meaningful RASM tailwind from Starlink in 2027, to be honest, it probably isn’t enough on its own. To get there in 2027, we probably also need at least one of the three following things to happen. Lower fuel, lower industry capacity, or a continued willingness for the industry to trade load factor for yield.

Regardless of what happens on how big the RASM benefits are in 2027, however, our series of big customer investments, including Starlink and some big new ideas we haven’t even announced yet, but are coming in the not too distant future. Have emerged as a new tailwind to a plan that was already working at United. And we expect to exit 2027 with more brand loyal customers than we otherwise would have had and expect that to lead to higher RASM in 2027 and beyond. And with that, I’ll pass it over to Brett.

Operational Update

Brett Hart, President – United Airlines Holdings Inc: Thank you, Scott, and good morning. First, I want to thank all of our United employees for their tremendous work throughout the quarter. Our team demonstrated exceptional resilience and adaptability, working together to restore operation and get our customers to their destinations.

United ranked second in on time departures for the third quarter, with United being first among the top seven U.S. carriers in July. We also delivered our second best quarter best third quarter post pandemic seat cancellation rate in United history, ranking first amongst the three largest U.S. carriers for the quarter. Ultimately, the strength of our operation is reflected in our customer satisfaction results.

In the third quarter, we saw our highest quarterly NPS score since 2022 amidst record passenger growth. Our people remain at the center of everything we do. And in August, we completed the first phase of our expanded pilot training center in Denver, increasing our capacity to train up to 860 pilots per day with 86 flight simulation training devices, 52 of which are full motion simulators. This investment supports both our existing workforce and our ability to develop the talent needed for United’s future.

Transportation Secretary Duffy and FAA Administrator Bedford announced that they are seeking an additional $30 billion in improvements for our nation’s air traffic control system. A safer and more resilient ATC system will benefit United’s customers and operations, and we’re actively engaged with the administration in both sides of the aisle in Congress to advocate for this much needed funding.

And it’s especially exciting to be here in Houston today as we celebrate a major milestone in the transformation of Terminal B at George Bush Intercontinental Airport. This project represents a significant investment in one of our most important hubs, and we believe it will fundamentally improve the experience for millions of customers traveling through Houston.

We’re making significant investments across our hub network, including at Washington Dulles, where we’re also advancing a major airport transformation and expect to open a new concourse with 14 additional gates next month. Together, these investments reflect our continued execution of our strategy to build a stronger airline positioned for long term profitable growth.

With that, I’ll turn it over to Andrew.

Commercial and Revenue Update

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: Thanks, Brett. United’s top line Q3 revenues increased by 17.4% year over year to a record $17.9 billion. TRASM increased by 15.9% with yields up 17%. Passenger load factor fell modestly. Consumers and businesses have been accepting price increases, which we believe is a result of fares lag and the rest of inflation, along with other aspects of travel costs for many years.

Looking at revenues by cabin, in Q3, premium revenue, including economy plus, increased 17% on a 2.5% increase in capacity. Premium PRASM increased 14.1%. Non premium revenue increased 18.4% on a half point increase in capacity with RASM up 17.8%.

Against the backdrop of strong premium cabin revenue growth, it was nice to see standard economy cabin RASMs up. Recall that in Q1 of ’26 was the first time in twelve quarters that economy cabin RASMs were positive. In other words, yields still have a long way to go to catch up with inflation, whether measured before or after the pandemic. We expect economy RASM to outpace premium once again in Q4.

Looking at revenues by travel purpose, business revenue increased by 22% in the quarter, with yields up 15%. Contracted business revenues increased by 26%. Premium business continues to be strong, with load factors in the premium cabins up a little over 0.5 point year over year and up 3.6 points since 2019.

Business load factor in the quarter increased by almost one point. While Starlink is important to all of our customers, it is critical for our business customers, which we believe will be a key driver of revenue and share growth in 2027.

Leisure revenues were up 16%, with stronger year over year yield gains than business traffic. Leisure load factor fell modestly by 1.3 points, which we view as a small amount of elasticity given higher ticket prices, a trade we would make every day.

Cargo revenues increased by 23% year over year, with most of the increase occurring in yields as our global long haul capacity growth was minimal in the quarter.

Loyalty revenue had another strong quarter, up 17%. Remuneration from Chase was up 15%, and portfolio spend on our co brand cards was up 13%. We remain on pace to generate 1 million new accounts in 2026, a material increase from 2025, thanks to changes to MileagePlus along with strong marketing from both United and Chase.

I’ve talked about United’s efforts in the past to deseasonalize our business by improving the relative RASM performance of Q3. We made substantial progress in Q3 of 2026 on this goal. Fuel costs may make our progress hard to see, but we believe these recent results are another milestone towards our goal of reaching double digit pretax margins as we move forward into a more normalized fuel environment.

My goal in absolute RASM is Q1, Q2 and Q4 to be similar each year, but a slight reduction in Q3 given less business traffic that travels during the summer. We can tailor our network and capacity to achieve this goal over time.

We expect RASM and yields increase sequentially from Q3 to Q4. Selling yields have been up in the very high teens in recent weeks, including some weeks north of 20%. However, we know we need to achieve more to recapture fuel costs as we see them today.

For a little more color on RASM strength in Q3, Central America, the Caribbean, Florida, Newark, and London were strong RASM tailwinds in the quarter. In fact, Florida RASMs were up 26% in the quarter alone. Hawaii, the South Pacific, and Chicago were RASM relative laggards in the quarter. Hawaii will have a better Q4, but will still underperform.

A quick note on Chicago. Starting in the second quarter of 2027, we expect minimal domestic industry capacity growth at O’Hare due to the FAA capacity constraints where the growth in total flights is capped. United is capped at 600 daily flights, and we think maybe that may be the likely outcome well into 2028 at this point.

United’s revenue share in Chicago continues to climb as we win more brand loyal customers. United hit the key milestone in Q2 of 2026, capturing 50% of Chicago based passengers revenue for the first time. Congratulations to the entire United team for delivering this amazing achievement.

Beyond Chicago, we also saw share gains in all remaining United hub cities with the latest data released by the DOT. We believe these share gains will increase further in 2027 as Starlink becomes commonplace across all United flights.

As we think about what changes from today to the end of 2027 for United, I wanted to give you a few highlights. We’ll continue the efforts to deseasonalize our RASM production. We’re excited to reestablish JFK as the destination in 2027. We will largely complete our United NEXT connectivity goals in our MidCon hubs by the summer of ’27. We’ll turn more of our attention towards our coastal gateways and international expansion in 2027 and beyond.

We’ll open amazing new terminal facilities in Houston tomorrow and in Dallas in just a few weeks. We’ll also open numerous United Clubs. Our newest club right here in Houston, Texas opens tomorrow, which will not only be United’s largest club, but the largest in the Americas.

By the end of ’27, we expect to finish installing Starlink on all our jets, both Mainline and Express. We’ll finish installation of our interior signature cabins, including seatback entertainment for all, large overhead bins, and new lighting by the end of ’27.

We’ll also grow premium capacity faster than main cabin capacity as we introduce the A321 Coastliner and XLR at scale we believe no other airline is contemplating. We’ll launch Relax Row, an economy plus open middle seat, extending premium products to all cabins as we elevate the experience in all cabins for all passengers.

We’ll continue to refine our product segmentation and retailing with the introduction of tiered fares across our network and various product types. Again, we’ll add more than 1 million new co brand accounts as we enter the sunset years of our existing Chase agreement, and we aim to recapture 100% of the price of oil in 2027.

At United, we will continue to stay focused on our consistent strategy and path, recognizing that our relative results show our plan is working. Our goal is double digit pretax margins, and we remain steadfast in our commitment to deliver them. And with that, I will pass it over to Mike. Mike?

Financial Results and Fourth Quarter Outlook

Mike Leskinen, Executive Vice President and Chief Financial Officer – United Airlines Holdings Inc: Thanks, Andrew, and thank you to the entire United team for the tremendous effort as we manage through a high fuel cost environment, an environment in which most of the industry will lose money.

Our third quarter results reinforce why United is on the right path and demonstrate how much progress we’ve made earning brand loyal customers, which are critical to delivering resilient and durable earnings. In the third quarter, we were deliberate about where we deployed capacity and continued to thoughtfully invest in the business. We remain determined achieve double digit pretax margins and an investment grade credit rating.

Our ability to pass on higher fuel costs through higher ticket prices was stronger than ever before and demonstrates how much United and the industry has transformed. In the third quarter, we delivered earnings per share of $2.54 and a pretax margin of 6.2%. Earnings per share were within our guidance range.

Fuel prices accelerated in the quarter and drove a $1.8 billion increase in expense year over year. We recaptured 72% of the increase in fuel expense as much of the increase versus our guidance occurred in the period, and most of our revenue was already on the books. We’re highly confident in our ability to recapture 100% of increases in our fuel cost, but with a lag.

Our CASM Ex was up 7.8%, and that higher rate now captures the full run rate of expense from our flight attendant deal. We also incurred the impact of close in capacity reductions. We expect Q3 to be the high watermark for CASM Ex, and expense growth will step down in the fourth quarter and then step materially lower in 2027.

Outside of the impact from close in capacity reductions, our CASM Ex trajectory has remained consistent with our expectations at the start of the year. I want to thank our team for their diligent work to keep us on track in such an inflationary environment.

Looking ahead, we expect fourth quarter earnings per share to be between $0.50 and $1.50 assuming an all in fuel price per gallon of approximately $4.80 based on last Friday’s forward curve. Underlying this guidance is a CASM Ex that will decelerate and a TRASM that is accelerating compared to the third quarter. This is a good setup as we exit the year.

We are forecasting that our fuel recapture in the fourth quarter will be similar to the third quarter given the continued increase in fuel prices. This is lower than the 100% we were anticipating due to the rapid spike in jet fuel prices late in the third quarter.

Turning to the balance sheet, we ended the quarter with $17.7 billion of liquidity, including our undrawn revolver, and paid down approximately $1 billion of debt. We raised $900 million of new debt that was priced at a fixed rate equivalent in the low 5% range.

Additionally, we upsized our revolving credit facility last week from $3 billion of unfunded liquidity to $5 billion and we extended the maturity two more years to 2031. We intend to reduce gross debt by the same amount as we target $18 billion of liquidity at year end. We expect this shift to unfunded liquidity to save approximately $70 million of annual interest and fees. This is currently the largest airline revolving credit facility in history and yet another proof point of the strength of our business and our balance sheet.

Rising oil prices have impacted our near term metrics, with our net leverage at 2.4 turns. However, we remain determined to achieve investment grade metrics and hopefully also ratings next year. We continue to target net leverage of less than two turns.

Our financial performance continues to demonstrate the strength of United’s business model and our ability to execute through industry shock events. We can’t control oil prices or geopolitics, but we can control how we run our airline. And in an environment like this, the gap between airlines that have invested for the long term and those that haven’t has become even more apparent.

While our relative margin has been industry leading, we remain focused on achieving absolute double digit pretax margins as our top financial goal. We will continue making investments that further our competitive advantage, and it will lead to those double digit pretax margins.

I’ll now turn it to Kristina to kick off the Q and A.

Question and Answer Session

Kristina Edwards, Managing Director of Investor Relations – United Airlines Holdings Inc: Thank you, Mike. We will now take questions from the analyst community. Please limit yourself to one question and, if needed, one related follow-up question. Regina, please describe the procedure to ask a question.

OPERATOR: Thank you. The question and answer session will be conducted electronically. If you’d like to ask a question, please press Our first question will come from the line of Mike Linenberg with Deutsche Bank. Please go ahead.

Liquidity and Revolving Credit Facility

Mike Linenberg, Analyst – Deutsche Bank: Yes. Hey, good morning, everyone. I’m staring at $5 jet fuel and hard to believe that you’re still on track to do $3 billion of pretax profit or more this year. So obviously, United has clearly cracked the code here.

But a question directly to Mike. Look, as best as I can tell, among publicly traded airlines, I think you had the highest liquidity position of anyone and yet you upsized it by another $2 billion. And so if my math serves me right, I presume your liquidity is right around $20 billion unless you paid down debt recently since quarter end.

Why the step up? And is it because you already had a lot, is it just being poised for opportunity? I mean, know that things break at $5 jet fuel. Talk about the philosophy behind having so much cash. Thanks for taking my question.

Mike Leskinen, Executive Vice President and Chief Financial Officer – United Airlines Holdings Inc: Yes. Thanks, Mike. It’s a great question. And it does create optionality. But we are cost conscious.

And so if you think about when we’ve raised our debt and where we’re investing the liquidity, the cost of carry is relatively low right now, number one. Number two, the upsizing the revolver is going allow us to carry that liquidity in a more efficient way.

So I said in my prepared remarks, but let me repeat, we intend to bring that liquidity to $18 billion at year end, $20 billion is too much. And so we’ll bring that down. That’s going to save us over $70 million in interest and fees.

And as we earn in an investment grade credit metric, we’ll reevaluate the level of liquidity. But we’re comfortable with this. We’re an industry that asteroids hit. We’re well prepared for lots of events. And it is a relatively low cost of insurance to carry the extra liquidity.

Scott Kirby, Chief Executive Officer – United Airlines Holdings Inc: And Mike, I’ll just quickly add, if people think we did that for optionality to do M and A activity, that is absolutely 100% not the rationale. It’s save $70 million to get to the same liquidity targets we had anyway. It’s simple.

Mike Linenberg, Analyst – Deutsche Bank: Great. Thanks, everyone.

Loyalty Revenue and Tiered Fares

OPERATOR: Our next question will come from the line of Tom Fitzgerald with TD Cowen. Please go ahead.

Tom Fitzgerald, Analyst – TD Cowen: Hi, everyone. Thanks very much for the time. It’s curious for Andrew, you’ve mentioned a lot of momentum on the loyalty side of the business.

And I’m just kind of it’s been kind of running the low double digit rate the last couple of years, but 1 million new co brand accounts annualizing next year and then some of the other benefits with Starlink. You made a lot of leadership changes on loyalty. Connected as well. I guess long winded way of saying, could we see that other revenue line item accelerate maybe into the low teens potentially next year?

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: I think we hope so. You pointed out, the milestone of 1 million new accounts, if those accounts mature and spend more next year and the year after, that’s how that calculation works, as I think we’re all aware of.

And so we’ll do a million accounts this year. We’ll get those accounts spend in. We’ll get them upgraded to higher credit cards, the club card in particular. And then we’ll do another million accounts next year. And that’s a big investment in making that number in terms of total loyalty revenue increase hopefully in the mid teens, at least 14% or 15% consistently for the next few years or maybe even higher.

Tom Fitzgerald, Analyst – TD Cowen: Thanks. That’s really helpful. And then just if I could squeeze in a quick follow-up on some of the tiered fare categories. Just curious early learnings with that and maybe how you could think about that tailwind into next year, specifically around buy up to basic business? Thanks again for the time.

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: Yes, I will say that we are really pleased by the launch of the tier products and we continue to expand them and are doing a bit more in the next few weeks. I think it’s been great for our customers. It provides more options for them and great for the airline as well. We’ve redesigned united.com specifically to sell them effectively.

And we’ll continue to refine our approach on that, that I think has even more upside. The buy up rates are incredibly high. Consumers know what they’re buying and we disclose it very carefully. This has worked for years. It started with basic economy a little more than ten years ago.

We’ve learned a lot of lessons on how to do this. And I just think it’s been really monumental for us, more so than people realize. And we’re glad to pave the way on this. It was a very good idea and we look forward to refining it. And if you recall, the early days of basic economy took a lot of refinements. And I think we’re just at the early days of this phenomena in the other cabins as well.

Fleet Plans and MAX 10 Deliveries

OPERATOR: Our next question will come from the line of Sheila Kahyaoglu with Jefferies. Please go ahead.

Sheila Kahyaoglu, Analyst – Jefferies: Thank you, and good morning, everyone. I wanted to ask about the fleet, maybe just based on deliveries slipping out of ’26 in your view for higher for longer fuel and accelerating capacity. How are you thinking about 2027 deliveries and retirements? And maybe as a follow-up to that, your specific plans on MAX deliveries across the nine and ten models in ’27s.

Mike Leskinen, Executive Vice President and Chief Financial Officer – United Airlines Holdings Inc: Hi, Sheila. Look, we’re really excited and want to congratulate Boeing for the certification of the MAX 10. The MAX 10 is a big part of our upgauging strategy. It’s going to be a very competitive aircraft for our network. So very excited about taking delivery of that.

As we look into 2027, I think we’re going to take about two wide body aircraft a month, and we’ll take over 100 narrow body aircraft. So we have some pent up demand in our fleet with older aircraft that are maintenance inefficient, fuel inefficient.

And so regardless of where we end up, the amount of capacity we end up flying, there is an opportunity for us to modernize the fleet and to up gauge the fleet that has really strong economics. So we’re excited to accelerate that rate of delivery on both narrow and wide.

Industry Structure and 2027 Cost Outlook

OPERATOR: Our next question will come from the line of Conor Cunningham with Melius Research.

Conor Cunningham, Analyst – Melius Research: Maybe I’ll push back a little bit on that opening statement from you, Scott. Just the bear thesis that’s out there is that you already had low fuel. You had structural change in the industry that brought industry supply super low for a long period of time.

And now you obviously have a fuel spike. Industry supply is ramping into that. You’re still seeing competitors discount close in. I’m trying to feel comfortable about the long term double digit pretax margin. It just feels like tweaks in supply don’t get you there anymore. So if you could just paint the picture a little bit better, I think that would be helpful. Thanks.

Scott Kirby, Chief Executive Officer – United Airlines Holdings Inc: I’ll do my best. So I’ll disaggregate it into unique to United, and industry. Unique to United, we’ve been winning share kind of everywhere we fly at all of our hubs for a while now. And I have pretty good anecdotes already. I mean, it’s mostly anecdotal now, but that Starlink is causing customers to move.

What I hear from those people as they get on, the number one thing I hear is they pick the United flight, there’s some other hub, somewhere else or a frequent flyer somewhere else. They pick a United flight and they say, oh my god, the app is amazing. Why doesn’t any other airline have that? And then the people are nice and they wind up switching.

So I don’t think that’s going to happen fast enough personally in 2027 to get us to double digits without some other structural macro changes. As I said in my opening comments, but it’s a big tailwind. And so that’s sort of unique to United.

On the structural level, boy, I happen to think that jet fuel prices are going to be high all the way through next year. There’ve been an awful lot of airlines say, managing their businesses if it weren’t for fuel, which in the short term is a way to absolve yourself of responsibility and accountability. But I just don’t think that’s going to last.

So I really what I think is good. I don’t know the timing. I think this is more a question of when than if. But if oil prices stay high, like I think they will through next year, I find it low probability that every airline runs out what their current capacity plans are for the full year. I know they’re all going to get on calls and say it, but once again, an activist investor coming in or something else like that happens, changes your mind in a hurry.

And I just the losses will be… So six to 10 U.S. airlines are going to lose money this year. And if it was higher next year, it’s just the stress is building. So I think there are going to be supply changes.

Actually being successful as an airline is really simple. One golden rule, don’t fly places that lose money. Well, that’s simple, very few people follow it, but there’s going to be less loss making flying.

I think by the end of next year, I don’t know when it’s going to happen, but I think at some point next year, these calls are going to be transitioned to 2028 is going to be a really good year because structural, more structural changes happen. And structural change has happened this year. The fact that Spirit went away was a reprieve from some airlines for making hard decisions, became a reprieve. But there’s other airlines that are next up on the firing line. And I think changes are coming.

Conor Cunningham, Analyst – Melius Research: Okay. Thank you. Maybe kicking over to Mike. It’s been difficult to model costs. I know it’s not just the United thing. It’s more of an industry problem or an industry headwind.

I know you’re talking about decelerating growth into next year, but if you could just give any color around ’27 and how you view cost. I think just people are trying to get comfortable with that side of the equation as we determine where fares go in general. Thank you.

Mike Leskinen, Executive Vice President and Chief Financial Officer – United Airlines Holdings Inc: Yeah. Thanks, Scott. And I think it’s a reasonable question to ask. This team has done an incredible job of managing the inflationary pressures we faced in 2026. And so I will repeat what I said in my script. Were it not for the voluntary reductions in capacity, our 2026 CASM Ex is tracking exactly where we expected it to at the beginning of the year. So given the inflationary pressures, given what we’ve seen from peers, I think that’s an incredible result.

As we look to 2027, we are going to continue to target 2% to 3% CASM Ex. We are definitely facing inflationary pressures. One of the biggest pressures we’re facing is from increasing distribution costs. Because as fares go up, the distribution cost as a percentage of fares. We’re facing airport costs that since the pandemic have gone up by 60%.

So there’s lots of work to do to run a more efficient airline to offset those inflationary pressures. At United, we’re going to have a unique tailwind in increasing gauge growth in 2027. So we’re going to work hard to live within that 2% to 3% CASM Ex in 2027 and beyond. But we do have our work cut out for us.

The last thing I will say is, in environments like this where fuel prices spike, we’re going to have no hesitation to cut capacity of flights that are losing money because we’re not managing the CASM Ex, we’re managing the margin. So we’re doing a great job relative to CASM Ex. We’re not changing the goals. The goals are going to remain aggressive. But make no mistake, we’re managing the margin, not CASM Ex.

Industry Capacity and Loyalty Program Valuation

OPERATOR: Our next question will come from the line of Andrew Didora with Bank of America. Please go ahead.

Andrew Didora, Analyst – Bank of America: Hey, good morning, everyone. Thanks for taking the questions. I guess my first one for Andrew or Scott. I guess, you talk about this higher for longer fuel environment in 2027. I guess, where do you think industry capacity should shake out next year? And how does United’s growth fit into that overall industry backdrop?

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: I think Scott gave the macro answer to that question largely, so I don’t think I want to repeat it. For United, we’re very conscious of our capacity. I think about it every day and look at every flight in every market. And we are nimble, and we’ll make the right decision. And we’ll make the right decision for 2027 as well as we usually do. I think we have a very good track record on this.

Andrew Didora, Analyst – Bank of America: Okay, thanks. And I guess a second one just quickly for Mike. Obviously, there was a loyalty transaction out in the market a couple of months ago with Air Canada that I think shed a little bit more light on the value of that business.

I know you don’t need to do that type of deal, but I think in the past, you’ve sometimes put the idea of providing a little bit more disclosure just to give investors a little bit more color on that business. Have you any new thoughts post that transaction? Thank you.

Mike Leskinen, Executive Vice President and Chief Financial Officer – United Airlines Holdings Inc: Thanks, Andrew. I love the question. And, look, we are the first airline to use our loyalty program as collateral in the pandemic. So I want to compliment the Air Canada team on an incredible transaction. I think it highlights the value of these loyalty programs, the tremendous value that, frankly, we’re not seeing in our share prices.

That said, here at United, as Andrew has shared, we are getting close to the sunset of our existing contract with our partner, number one. Number two, given that it’s about the sunset and given that it’s a historic contract that it doesn’t have modern economics, it makes much more sense for us to wait and get the new contract and then provide the additional disclosure.

So for now, holding pattern, Air Canada did an amazing job of highlighting the value that exists in these programs and particularly here at United.

Consolidation and Chicago Hub Economics

OPERATOR: Our next question will come from the line of Jamie Baker with JPMorgan. Please go ahead.

Jamie Baker, Analyst – JPMorgan: Hey, good morning, everybody. So Scott, since you brought up the C word, you’ve been vocal about this… Consolidation. What do think? Oh. You’ve been vocal about not engaging in M and A.

You’ve spoken about JetBlue specifically, given the, among other things, 10% to 15% margin gap between yourselves and them, and a preference to quote, unquote, go big. I believe that was your term when it comes to consolidation.

There’s been no movement at American Ford in terms of regime change, but we’ve seen JetBlue’s market cap get decimated here. We’ve got $2 billion of loyalty bonds trading at whatever, half of par. Obviously, it’s such a subject, but why shouldn’t United be a potential solution for JetBlue as they ponder a restructuring?

Scott Kirby, Chief Executive Officer – United Airlines Holdings Inc: Well, I’ve done enough talking this year, I think, about the C word, as you say, and I’ve done enough talking to be newsworthy in the last 48 hours. Actually, I did an interview six or seven weeks ago to be newsworthy. So I’m not going to create any new news. I just have nothing new to add on that.

We’re focused on… Yeah. You can hear from our call, you can hear from our tone. We feel great about what we’re doing here at United. I wish oil prices were lower in the short term, but I’m really proud of the team. The fact that we’re able to be doing this well in this environment, I think it is a matter of when, not if we get to double digit margins on a standalone basis.

We just have… And I think by the way, Starlink is it is the second schedule is number one. It is the clear number two in choice when people are choosing an airline to me. It is a significant advantage we’re going to have for the next couple of years.

And so we’re really focused on my message to the team is, we’re going to have new customers trying us from other airlines and our mission, I’m going to do it with a bunch of employees here in an hour is make sure they know that United is the best airline in the country for them to fly and get them to be long term customers.

I would say by the way, for those on the call that are listening, some point fly other airlines at some point in the next twelve months when you find yourself on the second or third United flight because of Starlink and you find yourself taking the application from the flight attendant for the credit card, and you realize that you’ve switched airlines, you will get a twofer. You will have upgraded your airline and your stock investment idea.

Jamie Baker, Analyst – JPMorgan: Hey. Fair enough. And then, Andrew, just quickly, can you expand on your earlier Chicago comments? I know you don’t want to give specific in terms of hub profitability. But on a fuel neutral basis, can you help us think about the shape of how margins have evolved there and what you expect to occur after the April date that you identified a few minutes ago? Not talking absolute. I’m just looking at how the change ex fuel, if you will, in Chicago profitability has looked.

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: Look, I’ll start off with looking backwards at our RASM results in Q3, I don’t think you saw any speed bumps. And looking forward to our outlook for Q4, I think our numbers also show there are no speed bumps. But that being said, there is a bit more capacity in Chicago than normal year over year. That headwind, I think, turns into a tailwind as of April given the way the FAA is managing capacity at the airport.

Overall, I’m not going to put a lot of fuel on this fire, but I would tell you that the RASM premium we have to Brand X is about 14 points and our CASM is better by three to four points. So I’ll leave you to do all the economics and math that that results in, but that’s the latest data that we see. We watch it daily.

But overall, I think that the macro point is it’s a minor thing in our Q3, Q4 numbers. And as we enter the bulk of next year, I think Chicago becomes a tailwind as of April and beyond.

Deseasonalization Efforts

OPERATOR: Our next question will come from the line of Ravi Shanker with Morgan Stanley. Please go ahead.

Ravi Shanker, Analyst – Morgan Stanley: Great. Thanks, morning everyone. In the prepared remarks, you spoke about deseasonalization efforts in 3Q bearing fruit and potentially that extending to other quarters as well. Can you just remind us what that means for how we think about the 4Q to 1Q walk on maybe key KPIs probably leading with capacity?

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: Yes. So first of all, going back to Q3, I’ve been disappointed over a period of years that Q3’s relative financial results have been disappointing versus Q2, which has gotten incredibly strong. June, in particular, is an amazing month now, more than it had been in the past. And August is the opposite of that, I think as kids go back to school earlier. And so we’ve been working really hard to make sure that we can get to a path where our Q3 earnings are at par with the other quarters.

For Q4 and Q1, we had a lot of work on Q1 coming out of the pandemic, particularly as business traffic evolved. And I think that’s come a long, long way, particularly with our Atlantic RASMs and relative profitability.

But as I said earlier in the opening, we would like for the RASM performance in all the quarters to be the same other than Q3, where given there’s just less premium business traffic in Q3, we think that should be a little bit lower. Again, that number was masked by fuel, I think, in Q3 of this year. But that’s our goal.

Deseasonalizing the business creates a lot more ability to fly and even schedule almost year round, which creates other cost efficiencies, which we think is the right way to go. And that’s what we’re evolving to as quickly as we can.

Ravi Shanker, Analyst – Morgan Stanley: Very good. Thank you.

Load Factor, Yields and Competitive Capacity

OPERATOR: Our next question will come from the line of Brandon Oglenski with Barclays. Please go ahead.

Brandon Oglenski, Analyst – Barclays: Hi, good morning and thanks for taking the question. So Scott or Andrew, think you both mentioned potentially trading load factor for yields or maybe dialing that in and revenue management systems. Is that something that United is maybe considering even more looking into ’27?

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: Look, I think it’s obvious where the price of fuel is. It’s obvious where our total CASM is. And it’s also therefore mathematically obvious what yields need to do. Do I expect there’d be some impacts on load factor? There was a tiny bit in Q3. There’ll probably be a little bit more in Q4.

But we know where yields need to be for United and we’re taking all the appropriate actions to get them there so we can recover 100% of fuel. And I do expect that that means slightly lower load factors.

And I’ll just reiterate, we don’t manage to a fixed load factor target. That’s not how it works. It’s not how it should work. We manage to maximize our RASM and our long term margin goal. And if load factors fall, they are incredibly high, by the way, relative to all of the past and my experience in this business, that’s perfectly okay.

Brandon Oglenski, Analyst – Barclays: Appreciate that, Andrew. And I guess what people are a little bit worried about here is obviously if you look at fourth quarter domestic capacity, both United and your large competitor American are up about 8% to 9% domestically and obviously into a higher jet fuel environment.

I mean, you just talk to us about the classic prisoner’s dilemma between this? And I think, Andrew, you highlighted the relative performance in Chicago. But I guess, how does this ultimately resolve? And can this be a more sustainable long term outlook competitively?

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: Well, I’m not going to talk about the other guy in that level of detail. I can tell you that we’re winning share. We’re winning share in all our hubs, not just Chicago, by the way. And we have an amazing competitive tool out there with Starlink to help us monetize that more even for their next year.

And I’ll also point out why Starlink is so, so important to us in this unique advantage is that our hubs are contested much more than the average legacy airline and therefore there are a lot more splitters that split their business between airlines. And in fact, there are a few people in our hubs, I don’t know exactly why, that give a higher share of wallet to the other airlines. And we’re going to reverse that next year and gain more share. So we feel really good about the unique aspects for where we’re going.

For Chicago, whether I like it or not, the FAA has imposed caps and those are a reality and that’s going to change the game a bit. And we like our advantage in Chicago. It’s a good advantage to have and we will work it and continue to push it. So I like our position quite frankly in Chicago for the short run and the long run.

But I do think the competitive heat, as maybe you would describe it, is going to be different for them a vast majority of 2027 just because of the conditions placed upon us by the FAA and also because of our gains of share because of Starlink.

Airline Turnarounds and the Premium Model

OPERATOR: Our next question will come from the line of John Godyn with Citigroup. Please go ahead.

John Godyn, Analyst – Citigroup: Hey, guys. Thanks for taking my question. Scott, I just wanted to ask another one about the industry structure and really just kind of get your perspective. You talk about a structure where there’s a small cluster of airlines that are succeeding, executing, winning, etcetera, and a separate group that are struggling with.

When we look at that group that’s struggling, generally, oversimplifying their turnaround plans are usually something like we’re going to add some premium seats. We’re going to change some fees and fares. We’re going to add a couple bells and whistles for the passengers, and we’re going to double or triple our earnings in two or three years, which, of course, is way faster than United did when it was doing its turnaround.

You’re somebody who’s actually quarterbacked a lot of these turnaround successfully. I’m just curious what your reaction is when you see other airlines that have never done it, simplifying it in that way.

Scott Kirby, Chief Executive Officer – United Airlines Holdings Inc: Well, thanks. You described it kindly. I’ll describe it, I think, more accurately. I’m not meaning to be mean. I look at those strategies as hope is our strategy, and it’s not going to work.

The reason it doesn’t work is because it’s not bells and whistles. You use the term bells and whistles. You can’t put a couple of bells and whistles on it and have these… You can’t just put a first class in. You can’t just put in a seat that has a door or whatever. You just can’t match selectively some of the things that have been done. It’s the whole package.

And we have the best product, I think, in the Western world now on our aircraft, and there’s some recognition of that from others. That’s the easiest part to match for another airline to match the product. It’s really important, but it’s the easiest part to match. The rest of the stuff is harder.

We are the best. We’re the most reliable airline in each one of our hubs. Newark is now the most reliable of the three New York airports. We’ve invested an incredible amount in technology to do that, and that’s why we operate in the hardest places in the country. That’s why we’re number one. That’s hard to replicate.

Technology, incredibly hard to replicate. I don’t think people appreciate how big the technology advantage is at United. If you fly United, you can see it in the app, but the app is the tip of the iceberg. We started six years ago, a program, hundreds of millions of dollars that we spent to get our technology moved off of legacy platforms and systems and into modern programs. Well, not just moving it to the cloud, but moving it to modern platform.

And so we can move fast and do things that others simply can’t do because we did that. At the time, there was no ROI on that because we didn’t know what we’d do with it, but it enables us to do incredible. So our technology lead is massive versus I don’t know who the second best airline in the world, but it is massive versus all of them.

And then finally service. When you create an airline that your employees are proud of, and that’s my job is to get our employees inspired to believe in United, and they do, and they are delivering for customers.

And so you put that whole package together, that’s what being premium. It’s all of the above. The analogy that I use, you can’t just take a Four Seasons room, copy the room, put it in a Motel 6, and expect it to be a Four Seasons. You need everything else that goes with it to be successful.

And there are only two airlines in the country that have been doing it. And we’ve been doing it for ten years. You just don’t snap your fingers and say, oh, I’m going to match this one element, and it works. So I’m not worried about it as a competitor. They’re doing it. It might be better for their own airlines, may be able to upsell with their own airlines and stuff, but brand loyal customers are not going to switch because of that.

John Godyn, Analyst – Citigroup: There was a lot there. One thing you didn’t emphasize was international networks and the importance of international networks in all of this. We do see some of these domestic carriers kind of suggesting or exploring or trying to execute on international build outs. Any perspective there?

Scott Kirby, Chief Executive Officer – United Airlines Holdings Inc: No. The reason I didn’t say that is because the commodity part of business is the route network. Almost everyone in the business, with the exception of people that sit in the conference rooms at United and Delta, thinks of air travel as a commodity.

The route network is incredibly important. Patrick is sitting in this room. He is the best in the world at cool destinations on the map like Nuuk, Greenland or Ulaanbaatar or flying to Sapporo now. And that is a nice to have for the frequent flyer program, but that is the commodity part of the business. The service product technology and reliability are what sets a brand airline, a brand loyal airline apart.

And by the way, for international, United was born on third base. I wish we had a huge domestic hub like Atlanta or Dallas. We don’t. That’s a weakness for us compared to the other guys. But on international, Newark, Dallas, and San Francisco are really the three best hubs in the country for international, particularly premium, but all international service. And we happen to have hubs in those places. It’s just a natural advantage for us.

Pricing Power and 2027 Fuel Recapture

OPERATOR: Our next question will come from the line of Scott Group with Wolfe Research. Please go ahead.

Scott Group, Analyst – Wolfe Research: Hey, thanks. Good morning. Scott, I think there’s an assumption that whenever fuel eventually goes lower, we’re going to give some chunk of this pricing back. And I’ll practice. Maybe this is just a really dumb question, but you’re all demonstrating so much more pricing power than I think any of us thought a few quarters ago.

It’s why can’t price or RASM or whatever continue to go up whenever fuel eventually goes lower? I guess, can pricing ever decouple from capacity, or is that just way too naive of a thought or hope?

Scott Kirby, Chief Executive Officer – United Airlines Holdings Inc: It’s an insightful question, and I will try to answer it. I’ll answer too many questions today, but I’ll answer this too because I think it’s really important.

First, I think it’s important to note that while pricing has gone up a lot this year, it is still down in real terms compared to 2019. So we are bouncing still off of a COVID low, and air travel remains a great value.

The more important point for will it stay and will it hold is, I think we’re demonstrating this year that it’s different this time. It’s different this time because costs have escalated so much across the industry. It’s not just fuel price. Our airport fees at our hub airports are 60% higher now than they were pre COVID. And those are the kinds of those that escalate, maintenance fees, engines, all that stuff has just gone through the roof.

And those apply to every airline. In the past, the cost leaders were the high margin, low cost airlines. They are now the low margin, no longer low cost airlines because costs have been harmonized. And every airline, six to 10 US airlines are going to lose money this year. It’s expensive to fly airplanes.

And you can’t continue to exist unless you can get to profitability. And so I think that tide has to rise for everyone or those airlines simply won’t exist, which would of course adjust pricing as well. They won’t exist if they can’t get pricing up.

And that is what’s happened this year. People by and large have been willing to accept lower load factors. I think it’s an important point. I said it in my opening script, maybe we’ll continue to trade that maybe a way we get there next year anyway. It doesn’t happen 100%. There’s still temptation from people to run fare sales and things, but mostly people have been willing to trade yield for load factor because they look at it and say, I have to charge what my cost is. It cost me x to fly an airplane. My yield has to be higher than x.

And that sort of fundamental math applies to every airline. And it’s actually why I’m pretty confident that we’re not going to take steps backwards in pricing because everyone’s looking at, got to get their yield at least above their cost. And a number of airlines aren’t there yet.

So I feel confident, I’ve been around the industry a long time like you. And it’s certainly easier, by the way, if there was less capacity, it’s more straightforward. Because the temptation to run a sale and boost your load factor is lower if you’re already booked high. So it’s certainly be easier, but I think there’s a good chance. I certainly think pricing is going to stay. But I think that there’s a good chance that the industry surprises to the upside on yield next year even in a higher capacity environment.

Scott Group, Analyst – Wolfe Research: And then, Mike, just real quick. When you talk about 100% fuel recapture next year, realistically, what’s the fuel price we need to get back to to actually get there?

Mike Leskinen, Executive Vice President and Chief Financial Officer – United Airlines Holdings Inc: Look, we’re trying not to be a hedge fund or fuel trader. So what we do is we look at current crack spreads and we look at the forward curve for Brent. And if you look at that, fuel price in 2027 would be over $4 for the full year. And it’d be about $4.50 for Q1 and $4.20 for Q2, drifting to $3.70 by 4Q ’27.

So we think about that as the base case. I’m sure that’s wrong, but we don’t try to prognosticate on any different view versus the forward curve. So that’s what we would need to pass through.

Fourth Quarter Yields and Cargo Strength

OPERATOR: Our next question comes from the line of Duane Pfennigwerth with Evercore ISI. Please go ahead.

Duane Pfennigwerth, Analyst – Evercore ISI: Hey, thanks. Good morning. A couple of quick ones. Andrew, where are you seeing the most sequential improvement in yields into 4Q either by geography or customer segment? And really hoping I know broad based is a popular term right now, but really hoping we can get more than that. Thank you.

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: Sure. The simple answer, as I said earlier, is leisure yields are higher than business, but business is still strong. But the momentum is a bit stronger in international. As you saw in Q3, Latin had a great quarter. I expect that to happen yet again in Q4. We’re not going to lose any momentum there.

But I also expect the Atlantic and the Pacific to gain momentum. And that’s why we gave the guide, and that’s how we’re talking about our acceleration into Q4. So hopefully that helps.

Duane Pfennigwerth, Analyst – Evercore ISI: That does help. And then just very quickly, cargo, can you speak I mean, you mentioned that it’s mostly yield, but is this macro, is this geography? Is this go to market? What is driving the continued strength in cargo? Thank you.

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: Asia is definitely very strong. As you know from our numbers, we didn’t grow our global long haul a lot last year, and in particular in high cargo tracks we didn’t. So we’ve been focused on yield in the bellies because the bellies are relatively full to begin with. And so we did a great job on that track, and we’ll see where it goes next year.

But the environment for cargo I think, does remain strong. It is more of a commodity based product than our passenger seats at this point. We’re aware of that. We’re doing our best to even decommoditize cargo. That’s a whole another subject. But cargo is an amazing part of United Airlines. We lead the way in the United States and expect to continue to do so for a long time to come.

Corporate Travel Recovery and 2027 Capacity

OPERATOR: Our next question will come from the line of Catherine O’Brien with Goldman Sachs. Please go ahead.

Catherine O’Brien, Analyst – Goldman Sachs: Hey, good morning, everyone. Thanks for having me. Just one on corporate for Andrew. So corporate continues to be a bright spot. I understand that leisure yields are having a bit of recovery here, but still really strong corporate yields. With corporate load factors up one point in 3Q, that’s better than the, I think, up half a point in 2Q. Do you expect that to continue to improve based on current 4Q trends?

And then I guess maybe just higher level, if we see a larger step up in corporate volume recoveries, which I think are still a decent amount lower than 2019, what could this mean for premium cabin pricing over the medium term?

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: Corporate is still, I would say, four to five load factor points behind 2019 as a contribution to United Airlines. So as that continues to move in this direction, obviously we’re really excited. This is another place that we were born on third place for all the obvious reasons or third base, not third place for all the obvious reasons.

And so I think that’s a meaningful tailwind to the premium global business carriers, in which there’s primarily two in the country. And so that’s, I think, a big tailwind for us.

The trends for Q4 look identical in this space to Q3 for me in terms of the yield production and the volumes of revenue. So we’re going into, I think, a particularly strong Q4 where business traffic just shines in the United network. And I think you’ll see that when we are talking about this in January of next year.

Catherine O’Brien, Analyst – Goldman Sachs: Maybe just one on ’27 capacity. I mean, as we’ve talked about, United’s one of the only carriers making money this year, capacity to accelerate into next year. I think there’s quite a few other carriers who should probably be looking at their ’27 capacity plans with a lot more scrutiny than United. But does overall industry capacity growth figure into your plans on growth, just given the impact that could have on the pricing environment?

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: Scott talked about this, I think, in a great amount of detail on that. I don’t think anybody’s capacity plans for 2027 are firm. And even when they are, they probably won’t be realized for numerous different reasons. So I’ll kind of leave it at that. I think we have a very good track record of making great capacity decisions, and I expect we will do the same in 2027.

Media Questions

OPERATOR: We will now switch to the media portion of the call. Our first question will come from the line of Leslie Josephs with CNBC. Please go ahead.

Leslie Josephs, Reporter – CNBC: Hi. Good morning, everyone. Andrew, you had mentioned the load factors going down a little bit and how maybe going forward, the pricing is so strong, it doesn’t really matter. Do you worry at all about customers getting priced out of air travel, period, and if airfare stays this high?

And then I also wanted to ask you, Scott, Ed Bastian’s getting honored at Wings later this week, and I was wondering if you have any words for him, and how you see your competition with Delta currently? Thank you.

Scott Kirby, Chief Executive Officer – United Airlines Holdings Inc: Well, I’ll start then. I have a huge respect for Ed, and I’ve been public in saying, I took inspiration from what Delta did. Now, I think we’ve passed them and we’re the innovator now. But I took a lot of inspiration for what Ed did.

I’m going miss it because we host a big charity event in Dallas this weekend. But I texted Ed as soon as he got it. It’s well deserved, maybe a decade late, that you should have gotten a long time ago. But I think Delta and Ed have done a great job. It is well deserved. He should have gotten it earlier, but I’m sorry I’m going to miss it because we’ve got a conflict.

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: Leslie, I’ll take the first part of the question, I guess. Look, our perspective is we need to charge prices that recover the total cost of what it costs to fly an airline and we have to do that.

But that being said, as we create our products, we’re aiming to elevate for all in all cabins for all passengers and create value for all in the process of doing so. And the latest example is Wi-Fi that works. It works at scale. And it’s going to be a reason, I think, customers increasingly choose United Airlines in 2027 and beyond.

OPERATOR: Our final question will come from the line of John Pletz with Crain’s Chicago Business. Please go ahead.

John Pletz, Reporter – Crain’s Chicago Business: Good morning. You mentioned that you think capacity at O’Hare will be lower for longer. Why is that? And why is it going to be good for United?

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: Well, this is a really complicated assessment, but there is an enormous amount of construction occurring at O’Hare. It goes through the early 2030s and that is the timeline. We wish it was faster, by the way. We were always supportive of redeveloping the field and getting modern facilities when maybe others were not. And we look forward to those facilities being built.

But in the meantime, it is a construction zone, and we need to reflect that reality. And I think the taxiways and other aspects of the airfield, which do not have immediate changes planned for them, are just going to take years to resolve.

It’s disappointing as we invest all this money in the field. I think United Airlines would like to grow. But at the same time, it’s important that it be a reliable airfield for all travelers on all airlines. We’ve had numerous conversations with the FAA about this, and that’s where I think it’s coming out at.

And so my guess is that this restriction lasts for a longer than we still expect, but that’s simply my guess based on what I see in terms of construction at the airport and the timelines for completion.

John Pletz, Reporter – Crain’s Chicago Business: You cut out there a bit. You said my guess is what?

Andrew Nocella, Executive Vice President and Chief Commercial Officer – United Airlines Holdings Inc: That this is a restriction that lasts until the construction at the airport is done and the taxiway situation has been resolved.

John Pletz, Reporter – Crain’s Chicago Business: All right. Thanks.

Closing Remarks

OPERATOR: And I will now turn the call back over to Kristina Edwards for closing remarks.

Kristina Edwards, Managing Director of Investor Relations – United Airlines Holdings Inc: Thanks everyone for joining the call today. Please contact Investor Media Relations if you have any further questions and we look forward to talking to you next quarter. Bye everyone.

OPERATOR: Thank you. Ladies and gentlemen, this concludes today’s conference. You may now disconnect.

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