United Airlines Q1 2026 Earnings Call - Navigating Fuel Volatility Through Aggressive Yield Recovery

Regina, Conference Call Operator: This call is being recorded and is copyrighted. Please note that no portion of the call may be recorded, transcribed, or rebroadcast without the company’s permission. Your participation implies your consent to our recording of 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.

Kristina Edwards, Managing Director of Investor Relations, United Airlines: Thanks, Regina. Good morning, everyone. Welcome to United’s first quarter 2026 earnings conference call. Yesterday, we issued our earnings release, which is available on our website at ir.united.com. Information in yesterday’s release and the remarks made during this conference call may contain forward-looking statements which represent the company’s current expectations and are based upon information currently available to the company. A number of factors could cause actual results to differ materially from our current expectations. Please refer to our earnings release, Form 10-K and 10-Q and other reports filed with the SEC by United Airlines Holdings and United Airlines for a more thorough description of these factors. Unless otherwise noted, we will be discussing our financial metrics on a non-GAAP basis on this call, and historical operational metrics will exclude pandemic years.

Please refer to the related definitions and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures at the end of our earnings release. Joining us today to discuss our results and outlook are Chief Executive Officer Scott Kirby, President Brett Hart, Executive Vice President and Chief Commercial Officer Andrew Nocella, and Executive Vice President and Chief Financial Officer Mike Leskinen. We also have other members of the executive team on the line available for Q&A. Now I’d like to flip the call over to Scott.

Brandon Oglenski, Analyst, Barclays0: Thanks, Christina, and good morning, everyone. I’d like to congratulate the United team on a strong first quarter. We’re building the number one brand loyal airline in the world, and our financial results are indicative of the structural, permanent, and irreversible changes that have happened at United and across the industry. Our first quarter results are just the latest proof point in our strategy to build a decommoditized brand loyal airline that’s setting a new standard for what is possible for customers in air travel. We’ve proven that the winning strategy is to make travel easier and better for all customers. While all of us at United are deservedly proud of the brand we’ve built, we aspire to go farther and we want to set a new higher standard by revolutionizing air travel for our customers.

More immediately, of course, we’re managing through the impact of jet fuel prices that have doubled. Industry stress events seem to happen every 5-6 years. While we didn’t know exactly what or when it would be, we knew something would happen, and the best thing we could do was to prepare United in advance. To that end, we have 1, tripled our cash balance, 2, moved to the top of the industry in profit margins, and 3, strengthened our balance sheet. In fact, we ended 2025 with our highest credit rating in almost 3 decades. Advanced preparation allows us to stay focused on the long term while making near-term tactical adjustments to account for elevated fuel prices.

At the moment, our goal is to do whatever it takes to recover 100% of the increase in jet fuel prices as quickly as possible and to achieve double-digit pre-tax margins next year. Oil is incredibly volatile right now, but because we think we’re moving towards 100% pass-through, it allows us to have confidence in both our near and medium-term earnings trajectory, enough so that we can still provide guidance. For United, here’s how we’re thinking about our goals to get to 100% pass-through and achieve double-digit margins in 2027. One, to recover 100% of fuel costs, yields need to increase by about 15%-20% and we are assuming that fuel may remain higher for longer. Two, as yields increase, there will be an elasticity effect on demand we’re estimating will lead to less overall demand.

While we haven’t actually seen that decline yet, Econ 101 makes us believe it’s coming. Three, less demand means that we should be supplying fewer seats to the market. For United, that means we’re targeting capacity to be flat to up 2% for 3Q and 4Q on a year-over-year basis. It simply doesn’t make sense to fly marginal flights that will lose cash in a higher fuel price environment. Mike will provide more details behind our 2026 outlook, but our view for 2027 is that we’re targeting a pre-tax margin of at least 10%. We obviously have some time to see what happens, but if jet fuel remains elevated compared to our pre-war levels as we think it might, we’d once again expect to require less capacity growth in 2027 than we were planning just two months ago.

Realistically, there probably isn’t enough time to make up 100% of the fuel price increase this year, but I feel very good about 100% recovery and getting to double-digit margins in 2027. Because we’ve positioned United for success, we can make tactical adjustments to manage what we need to in the short term while also staying focused on our long-term plan. I’m also more convinced than ever that our decade-long strategy to build a great brand loyal airline that is obsessively focused on making travel easier and better for all customers is the winning strategy. Finally, there’s been a lot of press coverage regarding consolidation rumors. We’ve not commented specifically on those reports and aren’t going to start today. You can ask me about it if you’d like, but you won’t be getting anything new from me on it today. With that, I’ll hand it over to Brett.

Brett Hart, President, United Airlines: Thank you, Scott, and good morning. During the first quarter of 2026, United carried a record number of passengers while also navigating a challenging operating environment. The quarter experienced elevated weather events and geopolitical disruptions, but our teams remain laser-focused on recovering from these events swiftly and delivering top-tier reliability for our customers. In the first quarter, we continued our streak of ranking first in on-time departures among the eight largest U.S. carriers. During the quarter, United’s per seat cancellation rate averaged 44% lower than the next two largest U.S. carriers. Solid operational performance is the backbone of the airline and helped drive our highest first quarter on-time Net Promoter Score since the pandemic. During the quarter, customers increasingly engaged with our self-service tools, allowing us to drive more personalization throughout their journey.

Day-of-app usage reached a record 86%, supported by continued mobile enhancements such as improved bag tracking and live TSA wait times. Additionally, I would also like to take a moment to thank the TSA employees who showed up to keep us safe during the government shutdown. We have also improved our disruption communications by embedding live maps directly within customer messages. These tools and redesign help us recover faster and make it easier for customers to navigate disruptions, another reason United remains differentiated and why we continue to build brand loyalty. Late last week, the FAA issued an order regarding the summer 2026 schedule at Chicago O’Hare. We are currently reviewing the FAA order, and will share additional information, including any next steps, as soon as our review is complete.

We are pleased to reach a tentative agreement during the quarter with our flight attendants, represented by the Association of Flight Attendants. This agreement includes well-deserved industry-leading wages and other meaningful improvements for our flight attendants, who play an essential role in caring for our customers and representing United every day. Voting concludes on May 12th. On April 6th, United celebrated its 100th birthday, a meaningful milestone for our airline, the generations of employees who have built it, and our loyal customers who continue to choose to fly the friendly skies on United. I want to thank all of our employees for the care and commitment they bring each day to our customers and to one another. As we recognize this milestone, we remain firmly focused on the future and on building an even better airline through continued investment in our product, our people, our network, and our operation.

With that, I will hand it over to Andrew to discuss the revenue environment and our other industry-leading commercial initiatives.

Andrew Nocella, Executive Vice President and Chief Commercial Officer, United Airlines: Thanks, Brett. Consolidated total operating revenue in Q1 increased 10.6% year-over-year to a record first quarter of $14.6 billion. PRASM increased by 6.9% year-over-year. All regions had positive PRASM in the quarter. I described the start of the year as strong for all customer types in all regions. For January and February, prior to any impact from the war, we saw ticketing for business revenues up approximately 12%, while leisure was up a healthy 6%. Looking back at Q4, business ticketed revenues were up 6% and leisure was up only 2% year-over-year, creating a nice sequential increase in the first two-thirds of the quarter. Premium demand remains strong with Q1 premium revenues up 13.6% on 4.4% increase in capacity. Premium PRASMs were up 8.9% year-over-year, leading main cabin by four points. It is clear that consumers continue to seek elevated experiences.

Business demand was strong in Q1 with revenues up 14% year-over-year, with strength across all verticals. Headlines about TSA wait times did suppress demand between March 23rd and April 1st, but they have fully recovered since. Our loyalty business continued to outperform and total loyalty revenue was up 13% in the quarter. Acquisitions and spend were both very healthy and supported by updates we made to the MileagePlus program. Late in the first quarter, we implemented five broadly successful price increases, along with an increase in baggage fees that began to offset the increase in the price of jet fuel. Price increases in response to the increase in jet fuel have been significant and across the board. However, global long-haul increases have been a bit stronger than domestic. In January and February, United’s sell-in ticket yields were up 4% year-over-year.

In the first half of March, that increased to 12% and further increased to 18% for the second half of March. So far in April, this trend has continued, and in the last week, sell-in yields for all future travel are now up 20% year-over-year. As you would expect, we sold 23% of our Q2 and 8% of our Q3 capacity at lower price points prior to the rise in jet fuel costs. We remain confident in our ability to fully recapture the fuel cost increases over time, and in 2Q, we expect to recover between 40% and 50% of the current increase. In response to higher fuel cost environment, we’ve begun to adjust capacity downward by approximately 5 points throughout the rest of the year. We now expect Q3 and Q4 capacity to be flat to up approximately 2%.

Our adjustments removed marginal capacity on off-peak days and flight times such as red-eyes, which we believe will fuel our recovery from fuel price increases in the second half of 2026. Our current sell-in schedule is up just over 4% in the summer, but those capacity adjustments will be loaded in the next week or so to get the capacity out there selling appropriately. On our January call, I hinted about new commercial initiatives that we believe will drive brand loyalty, choice, and increase revenue for United over the medium and long term. We have now formally announced these initiatives, and I will summarize them today for you. To be clear, these changes have been in the works for years and they are made across all aircraft, all cabins, and many different areas of the commercial business.

First, and maybe of greatest importance, we’ve made the largest change in a decade to how we display and sell products on united.com and in our app. Internally, we describe this change as nested sell-in. Best-in-sell took years to research, program, and test, and is now active in our digital channels. We can now properly merchandise our growing product lineup. We have already seen large increases in upselling because of these website changes. We simply were unable to show all of the products we had for sale easily on the old website display. Second, as part of the website evolution, we’ve introduced base fares in our premium cabins. Base fares come with less checked luggage, no early seat assignments, and different club access features.

To be clear, everyone on a base fare will be able to secure a seat assignment at any point via an ancillary purchase or for free during the check-in window. These base fares allow consumers more control over their experience by choosing what services they want to include on their journey, and were a tremendous success in the economy cabin with Basic Economy. Third, we announced that 50 A321 Coastliners are planned to join our fleet. With the Coastliner, we can extend our award-winning Polaris brand for the first time on all United flights from New York to Los Angeles and San Francisco. Fourth, we unveiled United’s new Airbus A321XLR onboard products. These products on each XLR are consistent with the Coastliner.

However, we’ve modified certain aspects of each XLR for the unique needs of an eight-hour Atlantic crossing versus a transcontinental flight, including the larger snack bar, more lavatories, more galley space, and less main cabin seating density. Combined between the Coastliner and the XLR, we expect to have a fleet of 100 A321s equipped with 20 lie-flat beds and 12 Premium Plus seats. A commitment to this unique narrow-body platform unmatched by others. Premium Plus seats will be, for the first time, deployed on domestic routes at scale. Fifth, to be a premium brand, we needed to have a consistent product no matter what plane you fly on or where you’re going. United redefined service to smaller communities a few years back with the CRJ-550, and we’ve now extended that idea into what we’re calling the CRJ-450.

Sixth, we announced Relax Row, our latest product innovation for young families on global routes a few weeks ago. Relax Row is a main cabin product that transforms three seats into a flat surface and includes bedding and pillows. Seventh, we said we would change MileagePlus to accelerate United’s earnings, and we have. Members will now be awarded more miles when they fly if they hold our co-branded credit card versus members who do not hold the card. We also announced discounts for redemption only available to credit card holders. All these actions will increase the value of being a MileagePlus member and holding our credit card. While we continue to work under a long-term co-brand contract with our partners from Chase, we’re making changes to what we can control today.

In due course, we expect to have a new contract optimized for all stakeholders due to the current market dynamics. Turning to our fleet, we have taken delivery of four high-premium Boeing 787-9s, with up to 16 more expected to be added in 2026, and a total of 33 planned over the next two years. The interior of our new 787-9 has something for everyone, and we believe further strengthens our premium brand. All of our commercial initiatives announced over the last few weeks have been years in the making, tested with countless customers and employee focus groups, and are ready for prime time. Our launch plan is bold, quick, and designed to increase customer choice, revenues, and brand loyal customers. These new initiatives, plus previous initiatives like Signature Interiors and Starlink, are additions expected to be largely rolled out in two years. The future is now.

United is now on final approach towards our product and premium vision, with a completely transformed United versus pre-pandemic for all customers. I could not be more proud of the United team that has spent countless years and hours planning these product changes. These are the type of changes and product improvements across all cabins and for all customers that we believe genuinely differentiate United. We will continue to watch the demand and pricing environment very carefully in the coming weeks and quarter to refine as necessary our approach to this rapidly changing environment. With that, I’ll hand it over to Mike to discuss our results and our outlook. Mike?

Mike Leskinen, Executive Vice President and Chief Financial Officer, United Airlines: Thanks, Andrew. The first quarter has been a reminder that successfully managing an airline for the long term requires being prepared for short-term shocks. We’ve accomplished that at United by earning brand loyal customers. That strategy has led to margins at the top end of our industry and the best balance sheet we’ve had in almost 30 years. The financial strength it’s created reinforces our ability to make the right long-term decisions. The latest challenge in our industry is the massive run-up in fuel prices created by the conflict in Iran. Fuel prices remain volatile, and we’re monitoring the situation closely. We delivered resilient results with first quarter earnings per share of $1.19 within our initial guidance range of $1-$1.50, and up 31% year-over-year, even with a $340 million higher fuel bill in the quarter.

Our pre-tax margin was 3.4%, a 40 basis points expansion versus the first quarter of last year. Demand for the United product was already robust going into this heightened fuel environment. We believe we have the ability to pass on the increase in fuel due in large part to our brand loyal customers, continued demand strength, and preference to fly United even at higher fares. In this elevated fuel environment, we began to swiftly adjust capacity, in addition to pulling our Tel Aviv and Dubai flights, which together were 1.5 points of our capacity.

These close-in cancellations from low-CASM markets, along with significant storm-related capacity reductions throughout the quarter, pressured our unit costs, and as a result, our CASM-ex for the first quarter was up 5.9% year-over-year. As discussed, we are also proactively removing about five points of capacity for the rest of the year that we don’t believe can cover the elevated cost of fuel. We expect capacity in the back half of the year to be flat to up 2%, several points lower than our original plan. That will continue to pressure our CASM-ex, but we expect it will improve profitability and cash flow for the remainder of the year. This is precisely why we don’t manage to CASM-ex, but to long-term profits and cash flow. Looking ahead, we expect second quarter EPS to be between $1-$2, anchored by an all-in fuel average price of approximately $4.30 per gallon.

For the full year, we are providing an updated and widened guidance range to encompass multiple scenarios. As we’ve experienced over the last two months, the world can change quickly, but in both higher and lower fuel price scenarios, we expect to recapture 40%-50% of the increased fuel cost in the second quarter, 70%-80% in the third quarter, and 85%-100% by the fourth quarter. We expect to deliver a full year 2026 EPS in the $7-$11 range. The demand environment to date remains strong, and we expect will support a double-digit increase in RASM in the second quarter and for the full year. If fuel prices remain on a downward trend, we expect to be in the upper half of the guidance ranges, and if fuel re-escalates, we’d expect to be in the lower half of the guidance ranges.

With that said, United remains in a strong financial position. Our resilience in a high fuel price environment, as well as our relative position in the industry, provides further confidence in our long-term target of achieving double-digit pre-tax margins as soon as next year. Our proactive approach to managing the network in this environment is helping us achieve this outcome. Turning to the balance sheet, we continue to march towards our goal of being investment grade. In the quarter, we took actions to make further progress towards this goal and pay down more than $3.1 billion in debt, unencumbering more assets by accelerating our repayment of $2 billion of our notes that were secured by our slots, gates, and routes, while also prepaying $400 million of near-term maturity or higher cost aircraft debt.

Additionally, the first quarter marked United’s return to the unsecured market as we raised $2 billion across two unsecured bonds, our first unsecured issuance since 2019. The 5-year bonds priced at 5 3/8, while the 3-year bonds came in under 5% at 4 7/8. We successfully reset the credit curve for United, compressing the gap in our credit spreads with investment grade peers to historically low levels. This was the first high-yield bond issued with a coupon below 5% since Ford did it 4 years ago. Our execution exceeded our initial expectations as the market responded with incredible demand. This is the strongest evidence yet that the buy side appreciates that we’re knocking on the door of investment grade.

In the first quarter, we generated $2.9 billion in free cash flow, and while our free cash conversion in the near term will be pressured as fuel prices remain elevated, we remain committed to generating durable and growing free cash flow. To wrap up, our first quarter performance remained resilient. We are managing the business with the expectation that jet fuel remains elevated in the medium term. We’re nimbly adjusting the network and cutting capacity that doesn’t cover fuel costs, all while continuing to invest in our people and our hard product. As we look to the future, United is positioned to deliver stable double-digit pre-tax margins, strong free cash conversion, and strong EPS growth on the other side of it. I’ll now turn it to Christina to kick off the Q&A.

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

Regina, Conference Call Operator: Thank you. The question and answer session will be conducted electronically. If you would like to ask a question, please press star, then the number one on your telephone keypad. Please hold for a moment while we assemble our queue. Our first question will come from the line of Jamie Baker with JP Morgan. Please go ahead.

Jamie Baker, Analyst, JP Morgan: Oh, hey. Good morning, everybody. Scott, the CNBC interview where you articulated the idea of a larger brand that would capture passenger flows that are currently flowing to foreign competitors. It sounds like this is an idea that’s still under development at United, but I’m curious, could you envision a world where United might operate its own hub in Europe the way that Pan Am once did? Second, do your existing partnerships with Star Alliance members, do those relationships factor in at all to your thinking in this regard? I think the idea of capturing foreign flows is fascinating. I’m just trying to think through how you might get there, and maybe consolidation is the only way.

Mike Leskinen, Executive Vice President and Chief Financial Officer, United Airlines: Well, thanks, Jamie. I thought you were going to get through that without saying the C word. You almost made it. First, I think it’s extremely unlikely that we’ll open a foreign hub anywhere in the world. Our Star Alliance partnerships are great. They enable global reach and breadth. They enable us to give our customers the ability to fly to lots of cities around the globe that are never going to be big enough for United Airlines on our own to fly to, and you frequent flyer miles to go to those kinds of places. Those are all great. Really, everything that I’ve said today or said on CNBC and Bloomberg this morning are all things that I’ve said in the past. I know people are now viewing it in a different light because of the rumors that came out last week.

everything that I said are things that I have said in the past. Really, it comes from

Brandon Oglenski, Analyst, Barclays0: We’ve had this vision to build a great brand loyal airline, and it’s just worked incredibly well. Like you look at our first quarter results, like with this kind of increase in fuel prices to deliver those kind of results, to be able to look through to the full year with fuel prices doubling and still have reasonable confidence in $7-$11 of earnings and stay focused on the long term. It is dramatically different here at United than it was in the past. In the past, this would’ve been furloughing and deferring aircraft orders, cost-cutting exercises, and just all kinds of stuff to try to manage through the near-term noise. It’s dramatically different. We’ve won by winning customers in all classes of service, by the way. We invest nose to tail. Like most of our investments apply to all customers.

Starlink, seatback entertainment in every seat, Wi-Fi, the best app in the world. They apply to every single customer on the airplane. Because that strategy has worked, I thought it would work, but it’s worked even better than I thought. You can see it in our financial results. You can see it in the market share data. In all of our hubs where we had big competitors, same thing’s happened everywhere. It’s not unique to competing with any one airline. It’s happened everywhere. You can see it in the data. It’s worked even better than I thought. Which because it’s worked even better than I thought it would, it allows us to raise the bar on ourselves, and aspire to something even bigger. I think there is this big global trade deficit in the U.S.

Andrew Nocella, Executive Vice President and Chief Commercial Officer, United Airlines: Mm-hmm.

Brandon Oglenski, Analyst, Barclays0: We compete with some really good airlines in the Middle East and Asia, and they have some advantages that we don’t have. Look, I actually haven’t said what it takes to do it, and I don’t even know the answer. Anything that might be an answer comes with complications, and there’s no certainty that any of them get there on their own. It’s an aspiration that we have at United. I’ve sort of talked about it and hinted at it at least, in the past. It is an aspiration that I think United uniquely is in a position to take a run at. Dream big. That’s the only way you accomplish big things.

Jamie Baker, Analyst, JP Morgan: Okay. For my quasi-related follow-up, it’s on the tape that the administration is readying a $500 million rescue package for Spirit. I’ve been with you for the last couple of years in terms of permanent and irreversible structural change, but how does the industry continue to evolve if the government chooses to prop up failing businesses whose failures have nothing to do with fuel?

Brandon Oglenski, Analyst, Barclays0: Yeah. Well, first, I don’t know what’s going to happen there. I think that we’re proving right now that well-run airlines like United Airlines can even be profitable, and certainly don’t need bailouts in a time like this. To your point, Spirit was. I feel bad for the people of Spirit, but it’s been pretty obvious that Spirit’s business model was fundamentally flawed, and the airline was not going to be able to make it or ever cover their cash operating costs. I hope that doesn’t happen. If it does, we’re going to keep focused on winning brand loyal airlines like-

Jamie Baker, Analyst, JP Morgan: Okay.

Brandon Oglenski, Analyst, Barclays0: Brand loyal customers. For us, I don’t think that this is nearly as big a deal as for others that are in the more commoditized space. If I was working at one of the airlines that depended on more commoditized travel, I’d be irate probably about this. For us, I think we’ve so distanced ourselves from the rest of the industry, that I don’t speak about policy, but I don’t think it’s going to have, whether Spirit fails or keeps flying, I don’t think it has much effect on United one way or another, to be honest.

Jamie Baker, Analyst, JP Morgan: That’s great, Scott. Thanks for the color.

Brandon Oglenski, Analyst, Barclays0: Yep.

Regina, Conference Call Operator: Our next question will come from the line of Conor Cunningham with Melius Research. Please go ahead.

Conor Cunningham, Analyst, Melius Research: Hi, everyone. Thank you. Man, I’m pretty happy that I don’t need to ask the Spirit question. In a world where fuel remains elevated for a long period of time, just curious on how that changes your management style of a hub, or just like your general view on profitability to the overall system. I assume you’re refreshing that analysis for yourself all the time. Are you doing that for your competitors as well as you look for opportunities more broadly? Thank you.

Andrew Nocella, Executive Vice President and Chief Commercial Officer, United Airlines: Yeah, I think the answer is affirmative on all the above. We look at this daily, weekly, quarterly, monthly, you name it. As fuel prices go higher, the question is how will demand react? At this point, we can tell you that the price increases are going well and demand is hanging in there really strong. What we’ve done is proactively canceled flights, particularly on off-peak days and off-peak times, expecting that there could be some demand weakness in those channels. We’ll see. We think we’re ahead of the curve here, and we’ll continue to watch it and monitor it, but so far so good, and demand is hanging in.

Conor Cunningham, Analyst, Melius Research: Perfect. Maybe just on the demand destruction commentary a little bit. I’m trying to unpack it a little bit because in the past, you’ve talked about demand being somewhat inelastic to price, and I realize you’re not seeing it fall off now, but there’s a lot of speculation that may happen. As you run your scenarios, can you just talk a little bit about how you expect premium, maybe the business traveler to change? Or I assume that the demand destruction really comes from the leisure side of the equation. If you could just talk about how the scenarios play out within your 2026 guidance. Thank you.

Andrew Nocella, Executive Vice President and Chief Commercial Officer, United Airlines: I think we’re a bit in uncharted territory. I think we can tell you right now that all types of customers remain particularly strong. Like just in the last week or so, our yields are now up 20% year-over-year. Even more importantly, the business part of our business traffic is over the last two weeks up 25%, business revenue up 25%. That’s accelerated from up 16% in quarter one and 9% late last year. These price points are being absorbed and passed through, and volumes are increasing. For United, you’ll recall we had the unique headwind last year related to Newark.

which we’re going to lap in about 10 days, I believe. It’ll create easier comps for at least United and maybe harder comps for others, but the numbers look really fantastic over the last few weeks. Now we’ll have to keep watching it, particularly as summer ends and like in order to maintain these type of yields at United, I felt like we needed less capacity on Tuesdays, Wednesdays, and Saturdays, and off-peak times, and we’ve done that. Look, business traffic is strong. Leisure traffic is bouncing in the mid-single digits right now, which I think I’m happy with. We’ll continue to watch it. It is uncharted territory, given the massive amount of changes we’ve done. We’ve had 5 broadly successful price increases, and right now we are passing on yields that are up 20% year-over-year.

Mike Leskinen, Executive Vice President and Chief Financial Officer, United Airlines: Hey, Conor, this is Mike. I just want to pile on because you asked about the guidance policy. We’ve long had a guidance policy of building in an act of God into the guidance, and so what you’re hearing from Andrew, what you’re hearing from Scott, there’s nothing in our bookings that suggests there’s demand destruction. I believe it’s prudent to be prepared for that. We are not seeing it. We’re hopeful that we won’t see it. The economy seems robust. The stock market is indicating the economy is robust, and it may be that that is an act of God we did not need to be prepared for. That is our policy, and we need to be prepared for lots of scenarios.

Conor Cunningham, Analyst, Melius Research: Great. Thank you guys.

Regina, Conference Call 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. Just on fuel, the debate appears to be moving from fuel inflation to fuel availability. Just trying to get a sense of what kind of visibility you guys might have, especially out in Asia or Europe, regarding potential fuel shortages and what the plan B might be in that case.

Mike Leskinen, Executive Vice President and Chief Financial Officer, United Airlines: Hi, Ravi. It’s a great question. We’ve got really good visibility for four or five weeks, and you are right to say that this issue is centered on Europe and Asia. It’s much less of an issue in the U.S. We don’t see a lack of availability being an issue at all in the U.S. It’s a price issue. However, even in Europe and Asia, as we sit here today, we think it is a price issue, not an availability issue. We think that as prices rise, and you’re seeing the price of jet rise much more than the price of Brent as crack spreads widen out. We think that price is going to be a rationing function. That means there will not be spot outages, but we’re watching it closely.

The longer the strait remains closed, the more that is of risk, and it is of risk in the regions you noted, Asia and Europe, not so much the U.S.

Ravi Shanker, Analyst, Morgan Stanley: Great. That’s very helpful color, Mike. Maybe as a quick follow-up, Scott, your first response, you said that you compete with some really good airlines in the Middle East. Obviously, they’re having a little bit of an issue right now. Do you see any structural share gain opportunities in transatlantic or even longer haul from some of those challenges, or vice versa? Do you expect them to be aggressive when the situation settles down?

Brandon Oglenski, Analyst, Barclays0: I view this as temporary. I think you look at what Dubai, not just Emirates, but Dubai, the city-state of Dubai have accomplished is remarkable and impressive. If I had to make a bet, I’d bet on Dubai. I think it’s going to come back fully. Won’t come back immediately. It’s temporary, but will come back fully.

Ravi Shanker, Analyst, Morgan Stanley: Very helpful. Thank you.

Regina, Conference Call Operator: Our next question comes from the line of Scott Group with Wolfe Research. Please go ahead.

Scott Group, Analyst, Wolfe Research: Hey, thanks. Good morning. Scott, maybe this is a naive question, but why does the industry need a crisis to start pushing through such higher yields? Why can’t we do it more sustainably? Maybe just afterwards I’ll lump it all into one question. When I take your 10% pre-tax margin for next year, it sort of gets you to roughly $18 of earnings. I know you don’t want to get into specifics, but just at a high level, as fuel hopefully starts to normalize lower, do you assume you hold on to this higher yield, or do we have to give some of that back?

Brandon Oglenski, Analyst, Barclays0: I actually will answer that first question, and maybe I’ll even try on the second one. I’ve watched this for at least 25 years now, and I’ve come to the conclusion that I guess I’ll start with the conclusion. Every airline CEO should have to have spent 2 years at a reasonably senior position in revenue management to understand it. At its core, most of them haven’t. That’s the reason it’s harder to get fares up. I think what happens at airlines is the math geeks that are really smart that run revenue management, I’m looking at one of them in the room. Sorry to call you a geek, Dave, but he’s awesome. I’m one of them too, know that air travel demand is inelastic and that there’s room to price more appropriately for our cost to capital and to return our cost to capital.

The people in marketing and government affairs are better at telling the CEO, "Oh, that’s a bad message," and da, da. They’re much better communicators to CEOs, and so the pressure internally in the organization is really hard to raise fares. I mean, it seems crazy right now that you have a couple of airlines that are raising fares like crazy, and then they run a fare sale every week. Like the marketing team disconnected from the revenue management team, and the marketing team are better marketers, and so they tend to win is really what happens. You see it in a crisis, and by the way, another almost sure bet is in late October or November every year, there’s going to be fare increases.

I eventually figured this out 20, 25 years ago, that in October. The teams finished the budget, and they rolled it up to the CEO and the CFO, who pounded the table and said, "That’s an unacceptable result." They said, "Go raise fares," which they did. That’s not exactly a crisis, but it takes something like that, and it’s goofy to me that that’s the way it happens. It’s nonsensical, but I actually think that’s the reason that it happens, and I’ve thought that for a long time. A crisis causes it to go up more. Now as to the question of, does this hold next year? I think, actually, that a situation like this at least has the potential to be different and for pricing to hold more.

First, as I said earlier, I think, or I said somewhere today, I forget where I’ve talked, that airfares in real terms are down 27% in 2025 versus pre-pandemic. That had put a bunch of airlines either losing a lot of money or sort of break-even-ish, really only a couple of airlines returning their cost of capital. Everyone has to eventually return your cost of capital. I think it is more likely than not this time, and certainly the longer this lasts, the higher the probability goes that the pricing increases hold. It probably won’t hold 100% if it all normalizes. I told the team earlier today, and it’s just my guess, that if things went back to mid-February normal, I think we’d keep 20% of the price increase next year.

I think that’s going to move towards 80%, and every day, it’s ticking up the longer this goes on. We’re not going to give guidance for next year, but I do think that we’ll be double-digit margins next year, and your analysis is not unreasonable.

Regina, Conference Call Operator: Our next question will come from the line of Brandon Oglenski with Barclays. Please go ahead.

Brandon Oglenski, Analyst, Barclays: Hey, good morning, and thanks for taking the question. Scott, I’m wondering if you could elaborate on winning brand loyal share, and specifically as it equates to your Chicago O’Hare hub, especially now that there’s a proposed FAA summer cap on operations there. I guess A, how are you faring versus your competitor? And then B, how do you anticipate complying with that? Thank you.

Brandon Oglenski, Analyst, Barclays0: I’m answering more questions today than I like, but I’ll do it. In Chicago, we’re still reviewing the order, but it does appear that we’re not going to get to grow as much as we and our customers would like. The real point is one you make. We’ve won brand loyal share here in Chicago, and it’s never been about the number of flights or the number of gates. The number of gates and flights were the output of what was happening with brand loyal customers. We have by far the best technology. We have by far the best service, the best reliability, by far the best product, and customers have overwhelmingly voted. This isn’t unique to Chicago, by the way. This has happened in all of our hubs.

Customers in all of our hubs have voted overwhelmingly for United, and we got three big hubs where we have three different big competitors, each of which we’ve won about 20 points of market share. Here in Chicago, we’ve actually won 38 points of market share with business travelers. Customers care about quality. Quality really matters. We give great value to all customers, and so the brand loyal customers have switched, and absolutely nothing about that changes here in Chicago. It does look like the FAA is going to not let us grow as much as we and our customers would have liked. I wish we could grow more, but we can’t. We got other places we can grow and look forward to someday being able to grow more here.

Nothing changes about the sort of structure here in Chicago and the decade that we’ve spent winning brand loyal customers by creating a great airline for them.

Regina, Conference Call Operator: Our next question.