United Airlines Holdings, Inc. (NASDAQ:UAL) Q1 2024 Earnings Call Transcript

Helane Becker: And then just for my follow-up question, maybe Mike, as we think about the earnings guidance for the second quarter. How should we think about like the percentage corporate, leisure, domestic, international, are you starting to skew more corporate international in the next six months than you have in the past, or how should we think about that breakdown?

Mike Leskinen: I would just say that all of the above, domestic leisure has been really strong. And despite that historically being an area where we were less than — we had less of a exposure than some of our peers, we’ve done an incredible job. Now business demand is clearly continuing to come back and that’s wind in our sales from a relative perspective. So I think as we’ve said, it’s been the theme of the call, the current results at United are very strong but the future is even brighter. So feel great about business continuing to drive our relative results.

Andrew Nocella: I’ll add one incremental fact, Helane. The growth in Polaris load factors has been pretty significant year-over-year. And the growth in premium load factors across the board at United Airlines, our paid premium load factor was up 9 points year-over-year in the quarter, which is amazing. But as we revenue manage all of that, we kept all of the premium leisure passengers in their seats as we added more corporate into their seats. So we were able to do both. And that is one of the reasons for the great execution in the quarter is that we see corporate rebound in, but we see the desire for premium products by leisure customers continue to be strong.

Helane Becker: So is the answer then you’re putting more premium seats, because if you have corporate demand for the same seats, you’re pricing up to lose some, right? Don’t you have to price that to lose some of that demand?

Andrew Nocella: What happened in this [indiscernible] case is during the pandemic, we had very high free load factors in some of these premium cabins, and that number is coming down more towards…

Operator: Your next question comes from the line of Brandon Oglenski from Barclays.

Brandon Oglenski: Mike, can you give us some insight on how you’re planning for the cost structure in ’25 through ’27 just given the variability that you gave us on CapEx. And I know it’s aspirational to get 100 deliveries every year, and Scott spoke to it as well, maybe you filter in some buffer here on spare aircraft. But how do you think about hiring, especially given that some of these training events might be an 18 month decision?

Mike Leskinen: I think by level loading, our aircraft delivery schedule and making skyline stable, we’re going to be able to better match our flight attendant, we’re going to be better match our pilot hiring. So that the inefficiencies that we’re discussing right now around, again, the 40 less aircraft we have for this year, those inefficiencies will work themselves out. And so that’s what’s critical to this. But in addition to our overall cost structure, when we think about the inflationary world that we’ve been in, that pressure is going to — the industry is going to continue to face that. But at United, we have the gauge benefit and that gauge benefit will be metered in a smooth way. So I feel very excited about that.

Brandon Oglenski: And maybe just a quick one for you, Mike. I know you guys had wanted to do an analyst meeting soon here, and that’s going to get pushed back. But any strategic teasers you want to give us on MileagePlus, because I know it’s been a focus of yours and the team?

Mike Leskinen: I will repeat what I’ve said in the past. MileagePlus, it’s a crown jewel in the assets we have here at United Airlines. It was a critical source of collateral during the pandemic. But the dream is that it is recognized the value of that asset, the value of that business, especially as we grow it, is recognized in our equity market cap. It’s not there today. You’re going to see us continue to give more and more disclosure, more and more transparency to that business. You’re going to see us share more and more details on the growth plans we have for the data in that business. And eventually, if we get no value in our market cap, we’ll take more aggressive actions. I’ve been a consistent message on that and you’ll hear even more at our Investor Day.

Operator: Thank you. We will now switch to the media portion of the call [Operator Instructions]. Our first question comes from the line of Mary Schlangenstein from Bloomberg.

Mary Schlangenstein: So I wanted to see if you could give a little bit more detail on the aircraft that were delayed from second quarter to third quarter as part of the FAA review, whether you can tell us what — how many aircraft, what types of aircraft and specifically how the FAA resulted in the delays?

Scott Kirby: I’ll try. I don’t think we know for sure yet. I think we’ve got three airplanes that are coming in the next few months. They’re MAX aircraft MAX-9s, three aircraft that are coming in the next few months, and we’ll continue to work with the FAA on — I’m going to change that. What we’re mostly focused on, though, that’s not what we are focused on. We are focused on figuring out everything I said in this call, how to use this — embracing this process as an opportunity to get a new higher standard for safety. And as we go through that process, there will be some point along the way where we’ll start taking aircraft deliveries again, but that is absolutely not our focus nor should it be our focus.

Mary Schlangenstein: They haven’t — the FAA hasn’t prohibited any aircraft deliveries. Is that right? It’s just the start of the use of some of those planes or is it actually the deliveries themselves?

Scott Kirby: It’s putting — it’s not the delivery, it’s putting them on the certificate.

Mary Schlangenstein: And you said it’s just three for right now. And my second question was you all talked a lot about the corporate rebound and how that’s playing out. But is there anything different that you expect to see in summer travel this season? Like it sounds like there might have been some geographic shifts for some areas that were strong last summer won’t be as strong this summer? And do you expect the domestic market to be particularly strong this summer?