The paragraph is an introduction to United Airlines Holdings' Third Quarter 2024 Earnings Conference Call. The operator, Krista, begins by explaining the call's structure and the recording consent. Kristina Edwards, the Managing Director of Investor Relations, then welcomes participants and provides key information about the earnings release, available on their website. She notes that the call may include forward-looking statements based on current expectations, and advises caution as actual results may vary due to different factors. She also mentions that financial metrics will be discussed on a non-GAAP basis, with reconciliations available in the earnings release.

In the paragraph, Scott Kirby, the CEO, begins the call by acknowledging the recent devastation caused by hurricanes in the Southeast and describes United's efforts in providing relief. He then discusses the company's quarterly results, highlighting an improvement in domestic market yields due to the exit of unprofitable capacity. Kirby credits the United team for achieving strong results and improving the customer experience by fostering a positive culture focused on safety. He emphasizes that these results align with long-term expectations for both United and the broader industry, attributing success to the company's dedicated workforce.

Over several years, United has made significant product and technology investments, including upgrading aircraft, enhancing customer amenities like seatback screens and fast WiFi, and improving their app. Their $10 billion investment in their workforce has been especially crucial, leading to industry-leading contracts with most major work groups. Despite challenges post-COVID, United's proactive strategies have positioned them as leaders operationally and financially. They are committed to providing benefits to stakeholders, including stable careers and improved customer experiences, and can now return value to shareholders, as evidenced by their $1.5 billion share repurchase program approval.

The paragraph discusses United's success in operations, highlighting a record-breaking third quarter in terms of passenger numbers despite challenging weather conditions. The company achieved top rankings for on-time departures and arrivals among major U.S. airlines. United attributes this success to strategic investments in operations, resources, technology, and safety measures, including enhanced pilot training and new safety technology, to improve resilience and recovery during challenging conditions. These efforts demonstrate United's commitment to creating value and preparing for future growth.

The paragraph highlights the importance of running a reliable operation and investing in customer experience as key factors in the airline's success. It credits Linda Jojo, the retiring Executive Vice President and Chief Customer Officer, for her leadership and contributions to industry-leading customer innovations and cultural impact, notably her mentorship. Under her leadership, the airline saw significant improvements in its Net Promoter Score (NPS). Linda emphasizes the investments of over $14 billion in technology to enhance efficiency and service, contributing to United's strong reputation and customer choice.

The paragraph highlights United's strategic investments in technology to enhance its competitive advantage and foster a culture of innovation. By equipping flight attendants with iPhones, United improved personalized service and customer connections, contributing to higher NPS scores. The airline also transitioned to paperless flight decks, issued iPads to technicians, and upgraded operational tools, boosting efficiency and communication. United launched unique features like Connection Saver, benefiting millions of customers. Their app, used by 90% of travelers, offers time-saving features and automatic rebooking, doubling self-service success rates and freeing employees to assist customers in need.

The paragraph highlights United Airlines' recent innovations and revenue performance. United introduced various technological advancements, including their patented Agent on Demand service and improvements to in-flight WiFi through a deal with Starlink. Additionally, they've implemented customer-centric features like automatic seat upgrades and flight filters for wheelchair accessibility. Andrew Nocella discusses the airline's strong financial results, noting a 2.5% increase in revenue to $14.8 billion despite a slight decrease in consolidated TRASM. United's strategic decisions on product offerings and capacity deployment have maintained strong margins relative to competitors.

The paragraph discusses United Airlines' strategic adjustments in capacity management and growth across various regions in response to evolving industry conditions. In 2024, United anticipated the reduction of unprofitable domestic capacity by the industry, timing its slower expansion until conditions improved, resulting in better pricing and yield domestically and in near Latin America. Their growth strategy in Europe from 2022 to 2023 aligned well with post-pandemic demand recovery, yielding strong RASM growth across the Atlantic. In contrast, Asia faced challenges due to economic headwinds, despite a significant capacity increase. United is reallocating underperforming capacity in Guam to enhance opportunities in Tokyo, planning moderated growth in the Pacific as it aims to stabilize its post-pandemic network.

United Airlines is experiencing strong year-over-year performance, with improvements expected across both the Atlantic and Pacific regions in the fourth quarter. The airline is optimistic about long-term growth, seeing a structural shift in profitability within its international entities. United's network has remained profitable across all hubs and regions. Corporate demand increased significantly in September and is projected to continue growing, providing a strong boost to revenues. Key highlights include an increase in contracted corporate revenues, improvements in premium cabin revenue, and growth in basic economy volumes. Additionally, the MileagePlus program and Connected Media business are contributing to new high-margin revenue streams.

The paragraph discusses United Airlines' financial performance and future outlook. Active membership in the MileagePlus program increased by 13% year-over-year, and credit card spend set a new record, indicating growing customer engagement. Although there were challenges in Q3 with weak yields for domestic leisure travel, United expects stronger yields in Q1 2025 due to schedule and business model changes by low-margin airlines. The environment is improving, with corporate traffic revenue growing as return-to-office policies take effect. Asia's unit revenues improved in Q4. United reported a pretax margin of 9.7% and earnings per share of $3.33 in Q3, surpassing expectations despite challenges like the CrowdStrike outage and suspension of flights to Tel Aviv and Aman. Revenue trends improved across most regions, aided by a drop in fuel prices, and customers continued to prefer United as the airline invested in its products, people, and operations.

The paragraph discusses the financial and operational performance of an airline, noting a 6.5% increase in CASM ex due to lower capacity growth and other factors. Despite challenges like delivery delays from Airbus and Boeing, the airline expects cost improvements as labor issues moderate and capacity grows in the fourth quarter, projecting earnings per share between $2.50 and $3. The airline received 20 aircraft in the quarter and plans for further deliveries, estimating adjusted capital expenditures to remain under $6.5 billion for the year. The airline's United Next plan aims to strengthen its market position, offering diverse products for different customer needs, which has improved profitability even if the stock price hasn't reflected these gains.

The paragraph discusses United Airlines' decision to initiate a $1.5 billion share repurchase program funded by free cash flow, highlighting a commitment to balancing business investment, shareholder value return, and debt reduction. The company reports repurchasing approximately $82 million in shares to offset dilution from exercised warrants, with average repurchase prices at $39.99 per share. United Airlines expresses confidence in achieving financial goals, including EPS guidance, and is optimistic about future prospects. The paragraph concludes with Kristina Edwards opening the Q&A session for analysts.

In the discussion, Conor Cunningham inquires about United's strategy for capitalizing on industry changes in 2025, particularly as competitors make significant network and product changes. Scott Kirby responds by emphasizing United's focus on enhancing connectivity in Mid-Con hubs, investing in customer experience to gain market share, and the expected acceleration of corporate traffic, especially in Q1. This aligns with their United Next plan for sustained growth. Kirby also notes their aim to maintain high-yield market share and continue developing their global network. Cunningham then asks about updates on United Next, originally laid out in 2021, and the strategy to achieve a forecasted double-digit pretax margin by 2026, acknowledging United's success in adjusting and improving margins.

In the paragraph, Scott Kirby discusses the airline industry's anticipated evolution toward higher margins. He highlights past trends from 2011-2014, when major airlines saw significant margin expansion despite the growth of ultra-low-cost carriers (ULCCs). Currently, Southwest and another major airline have even lower margins than in 2011, prompting Southwest to make a long-term capacity commitment. Kirby asserts that the industry's predicted improvement is now underway, with expected significant margin expansion over the next three years, similar to the 2012-2014 period. The question is how much margins will expand. The paragraph ends with a transition to a question about international expansion strategies from David Vernon.

In the paragraph, Scott Kirby discusses United Airlines' strategic approach to expanding its routes, emphasizing the potential of flying to new and profitable destinations beyond their partner hubs. He highlights Greenland as a small but impactful addition that can enhance United's brand and customer engagement. With the United Next plan, the airline aims to leverage its global hubs in key cities to unlock growth opportunities carefully and profitably. Despite the small scale of certain routes, like the new service to Greenland, there is significant potential for expansion. David Vernon then briefly mentions Boeing's delay in the delivery of the 777X aircraft.

The paragraph discusses the impact of production delays for the next generation of widebody aircraft, like the 777X and 787, on supply and demand in the aviation industry over the next few years. Scott Kirby mentions that the grounded widebody aircraft, such as the A380, and a slowdown in production lines could benefit the global long haul network. Mike Leskinen adds that the company is specifically concerned about the delays with the 787 and suggests that Boeing's potential decision to raise equity could help stabilize their business. Andrew Dedorio from Bank of America asks about the implications of a Boeing strike and whether capital expenditure (CapEx) might be at the lower end of the projected $7 billion to $9 billion range due to these production issues. Kirby responds by indicating he will provide a general answer before Mike addresses the CapEx details.

The speaker emphasizes a focus on Boeing's long-term success, highlighting the importance of returning to the company's foundational strengths of quality, engineering, and safety, rather than short-term profits. They express optimism about changes under Kelly Ortberg's leadership, including a reported willingness to prioritize long-term decisions over immediate stock market reactions. Despite challenges like a strike, seen as a result of past cultural issues, the speaker is confident that Boeing employees and management will unite in making the company great again. While acknowledging short-term setbacks, they stress the importance of building a sustainable and thriving company for the future. Mike Leskinen is briefly mentioned but not elaborated on.

The paragraph discusses the situation of an airline company that is experiencing delays in receiving aircraft from Boeing and Airbus, which affects their capital expenditure projections. They expect these delays to persist, suggesting a downward bias in CapEx. In the context of a Q&A session, James Baker from JPMorgan notes the increased capacity by competitors during peak seasons, aiming for profitability despite yield pressures. He questions whether this trend might become the new normal. Andrew Nocella acknowledges the struggles and rapid changes in competitors' business models but emphasizes their challenges in making quick adjustments.

The paragraph discusses the challenges faced by an airline dealing with unproductive aircraft utilization and a financial model that may be unsustainable. The speaker highlights a shift in the U.S. marketplace with rapid reductions in unprofitable capacity since mid-August and expresses optimism about continued improvements, especially in international and business travel. The conversation shifts to basic economy volumes, with an observed 21% rise. James Baker questions United's inventory compared to Delta and American and asks if United aims to become the largest supplier of discount capacity domestically. Andrew Nocella responds that United's primary goal is to expand margins while offering a full product range to customers, adjusting capacity to achieve this.

The paragraph discusses United's strategy of offering a basic product which has proven beneficial and profitable, and how it intends to continue this approach to benefit its bottom line. United's domestic passenger volume through this strategy is currently around 15% to 16% and could increase as costs decrease. It mentions the success of the basic offering over the past several years. The conversation then shifts to a question about the impact of MileagePlus and Kinective Media on margin expansion in 2025. Andrew Nocella indicates that while specific details are not available at the moment, MileagePlus is a valuable asset and recent technological investments will enhance personalized service. These developments, including the integration of Starlink, are expected to be significant, starting to impact the business next year. Scott Kirby adds that 2025 will be an investment phase.

The paragraph discusses the financial outlook and performance of an airline's business. It mentions that while the airline is expected to start making a small profit in 2025, significant growth is anticipated in 2026 and beyond. The core business has substantial momentum, but revenue from MileagePlus is not expected to significantly impact 2025. The airline is committed to providing more information for better financial modeling. The premier membership program is performing well, with a 9% revenue increase, driven mostly by premier members who actively use credit cards. There has been no significant customer reaction to the Kinective platform so far. In addressing a question from analyst Scott Group, Andrew Nocella mentions that CASM (Cost per Available Seat Mile) is up, and RASM (Revenue per Available Seat Mile) is down in the third quarter, with no expected reversal in this trend for the fourth quarter.

The paragraph discusses United Airlines' financial expectations and strategies. Mike Leskinen expresses confidence that by 2025, the company's revenue per available seat mile (RASM) will surpass its cost per available seat mile (CASM), marking an inflection point. He does not provide quarterly guidance but expects CASM, excluding specific expenses, to peak in Q3 2023 and then decline in Q4 and further into 2025. The company focuses on profitability by cutting efficient costs and investing in customer experience. Scott Group asks about RASM expectations for Q4, to which Andrew Nocella responds with insights about the current yield environment, mentioning January's positive outlook compared to previous months.

The paragraph discusses the recovery outlook for Q1, highlighting that the pricing environment is improving and business travel is rebounding. Scott Kirby notes that coastal hubs are experiencing stronger corporate traffic growth compared to interior hubs, with professional, financial, and tech services leading. Energy sector growth is slower. Duane Pfennigwerth inquires about growth and CapEx expectations for 2025, considering past constraints from OEMs. Mike Leskinen responds that the company has outlined CapEx expectations between $7 billion and $9 billion, suggesting a more confident growth outlook than in previous years.

The paragraph discusses the impact of the Boeing strike and other delays on United's capital expenditures forecast for 2025, suggesting a downward bias. While no specific guidance for capacity in 2025 is given, United assures it aims to maximize profitability. Sheila Kahyaoglu from Jefferies questions about the domestic Revenue per Available Seat Mile (RASM) decline in Q3. Andrew Nocella responds, noting that RASM was lowest in July but improved significantly by September, with a notable increase in business traffic. He expresses optimism for better earnings in Q4 and beyond, while Sheila seeks further clarification on strong Q1 bookings.

The paragraph discusses United Airlines' strong financial performance and strategic investments. Andrew Nocella attributes this strength to improved pricing for leisure travel, adjustments in capacity, better business bookings, and changes in low-margin airline business models, which are expected to create a strong environment in 2025. Brandon Oglenski congratulates the team on their Q3 performance and inquiries about elevated capital expenditures (CapEx) as part of the United Next strategy. Mike Leskinen explains that the CapEx is crucial for fleet refreshment and growth, allowing United to offer competitive services like basic economy, which are reshaping the industry.

The paragraph discusses Mike Leskinen's focus on achieving a free cash flow conversion target of 50% in the near term and 70-75% in the longer term. It mentions that the capital expenditure (CapEx) target for the next few years is $7 billion to $9 billion, potentially lowering next year. Additionally, Mike Linenberg from Deutsche Bank inquires about the impact of flight cancellations on United and its partners due to CrowdStrike, suggesting that United's booking tools may have minimized the revenue impact, as it was not prominently reported. Mike Leskinen emphasizes that healthy businesses don't make excuses for such issues.

The paragraph discusses a business strategy that involves setting guidance with the expectation of experiencing negative impacts from "acts of God" each quarter. If these impacts are less severe, the company can surpass expectations. Scott Kirby expands on this by emphasizing a cultural philosophy of having a "no excuses" mindset, learned from his time at the United States Air Force Academy. This approach encourages innovation and continuous improvement, rather than blaming external events. He claims that this mindset has positioned the company as the leader in innovation within the airline industry, driving them to find creative solutions to counter challenges without dwelling on uncontrollable factors.

In the paragraph, United Airlines discusses its response to challenges in serving smaller markets, particularly during COVID-19 when they withdrew from 30 to 40 markets due to pilot shortages. COO Andrew Nocella mentions that the regional jet (RJ) network has rebounded more quickly than expected and is back to its new operational rate. United has added 11 CRJ-550 aircraft with SkyWest, which have performed well, allowing for better service to smaller communities. However, United doesn’t plan large-scale changes and intends to focus on less frequent schedules with larger aircraft that offer lower unit costs, aligning with their United Next strategy to improve profitability and competitiveness.

The paragraph discusses the company's strategy for maintaining a smaller regional jet (RJ) fleet while keeping costs low in smaller communities. Steve Trent from Citi questions the company about its trajectory of reduced leverage and potential for achieving an investment-grade rating. Mike Leskinen responds by highlighting improved margins and decreased leverage, expressing confidence in earning the trust of credit rating agencies to achieve investment-grade status. Additionally, when asked about growth, Leskinen emphasizes the importance of strategic partnerships, such as those with Copa and Star Alliance members, while maintaining a balanced approach to growth that includes both partner and non-partner hubs.

The paragraph discusses United Airlines' plans to expand into new international regions supported by their hubs in New York, Washington D.C., and San Francisco. The airline sees international flights, including new destinations like Marrakesh and Greenland, as crucial to its strategy and aims to maintain its position as the largest U.S. carrier flying overseas. Despite a temporary decline in travel demand around the presidential election, United anticipates continued strong performance in Europe. The airline encourages travelers to take advantage of low fares to Europe, which remains appealing, especially in Southern regions during winter.

The paragraph contains a conversation between Mary Schlangenstein from Bloomberg and Scott Kirby regarding United Airlines' operations in China. Scott Kirby explains that United's current operations in China are significantly different from pre-pandemic levels. Previously, United had about 10 daily flights to China, but now only operates three. The demand environment has changed, and he doesn't anticipate increasing flights much beyond this in the near future. The Revenue per Available Seat Mile (RASM) has normalized compared to pandemic levels, negatively impacting year-over-year RASM results across the Pacific, a trend expected to end in Q4 and Q1. When asked about the load factor on China flights, Kirby doesn't provide specifics but indicates it's not high enough. The operator then moves to a question from Rajesh Singh about Boeing's pricing affecting United's schedule.

In the paragraph, Emirates President Tim Clark suggests that Boeing might face Chapter 11 bankruptcy, but Scott Kirby from United Airlines does not anticipate this outcome. He emphasizes the immediate impact of any delays in aircraft deliveries due to strikes but remains optimistic about Boeing's long-term recovery. Kirby appreciates Boeing's focus on future resilience, despite current setbacks. The call concludes with Kristina Edwards inviting further questions through Investor Media Relations and wishing participants a happy Halloween.

This summary was generated with AI and may contain some inaccuracies.