United Airlines Holdings, Inc. (NASDAQ:UAL) Q2 2023 Earnings Call Transcript

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Simply, we start with a strong foundation to support our growth and neither must we shrink a hub to profitability or seek to grow a hub with sub-power margins, and I think that’s a really important setup for us. As Scott said, constraints to growth continue. Cost convergence is now well documented. The other thing I’ll add, United is far less reliant today on contracted corporate business, and that business has clearly been slow to return, but that doesn’t mean it won’t. If it does, the legacy business model will benefit the most. Further, NDC is changing distribution in the space as passengers with more flexibility — want more flexibility in when they travel and how they travel and are increasingly preferring to work directly with United on our industry-leading app.

More and more often, individual corporate customers pick the airlines they want to fly on versus the purchasing manager at their business recommendation. This change in consumer behavior is locked in during the pandemic and now seems irreversible to me. Of course, we’re focused on our high ground and our last advantage, of course, is our great team innovation.

Scott Kirby: All right, well David, that was a lot, but you can tell we feel confident.

Operator: Our next question comes from Conor Cunningham from Melius Research.

Conor Cunningham : On the — LCCs right now are ramping back capacity [Indiscernible] fare sales. That seems to be out there. So that seems to be having like a little impact on you right now. I’m just curious on what’s actually — what changes the mindset around your unwillingness to match these fares? Or is it premium, coastal? Just any thoughts there would be helpful.

Andrew Nocella : Well, that’s largely a domestic question. And I think our domestic environment has done well. As you know, in Q2, we really just hit it right on the head in terms of our guidance for the domestic entity. And in Q3, our performance looks to be very, very similar. So we’re pretty pleased by how Q3 is setting up. I just think with where we are with our brand, our network, our upgauge, we’re carefully from an RM point of view, determined in our policy. And as we started Q2, we decided to hold out and book later in the curve. I think that proves right. And as we go into Q3, I think this guidance would tell you that we don’t see a change. So I’m sure there are other things happening in the environment that are both positive or negative. But we don’t see a change in the Q3 environment of down a little bit for domestic PRASM is entirely consistent with the Q2. And so we don’t see a change, and we see steady and strong demand.

Conor Cunningham : And then just on the international landscape, you obviously are taking a huge advantage there. Just curious on what’s next for the Atlantic. Are you comfortable with that network? And then just on the Pacific build-out, there seems to be a lot of upside there. I’m just curious on your expectations for that fall launch.

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