United Airlines Holdings, Inc. (NASDAQ:UAL) Q4 2022 Earnings Call Transcript

Page 9 of 15

Helane Becker: So, just one question here. When we look at air fares and we compare, say, premium economy to where business class was pre-pandemic, it seems like the price points moved to that level, right? So, you have some economy fare. Then, you have a premium fare in economy that seems to be equal to what business was, and you seem to have business that is significantly higher. So, A, is that observation correct; and B, what’s your expected load factor in the front of the cabin?

Andrew Nocella: All right. There’s a lot of numbers you put out there, Helane. What I’ll try to say is that paid first-class load factors, particularly here domestically are up a lot. They’re up 6 points. And so, our RASM growth in the first-class cabin versus the main cabin domestically is 15 points higher. So, it’s doing incredibly well, which we’re excited to see, obviously, because of our move towards more dual-class aircraft and monetizing the premium cabins. On our global long-haul fleet, I think it’s a little bit different than maybe what you said. The public price points may be exactly what you said, I don’t know. But the performance, I would say, is that Polaris is not back to where we’d like it to be just yet. But the middle cabin, the Premium Plus cabin is and better and the coach cabin is and better.

And so, the RASM performance onboard the aircraft is a little bit more tilted towards the back of the aircraft or the middle of the aircraft on the global long-haul fleet than it is the front. And why I’m also particularly excited about this recovery in large corporate traffic is that is how we tend to fill the front of the aircraft. And so, the trends we see in January look just really good. And that also is a positive TRASM tailwind to the global network as we do a much better job of filling up Polaris with higher quality yield than we did in 2022. And I’m confident when we end 2023, we’ll be able to report that the Polaris paid load factors and paid yield are much closer to their 2019 baseline than they were in 2022.

Helane Becker: Okay. That makes perfect sense. And then just for my follow-up question. I’m not sure whether you said that or Scott said this, but if €˜22 — if nobody flew their capacity original plans in €˜22, which they didn’t, and they don’t in €˜23 and the infrastructure issues — and I don’t see the government rushing to invest in air traffic control. In fact, I see it getting worse. I don’t see the FAA investing. As you think about this, doesn’t €˜23 get worse than €˜22 and €˜24 get worse than €˜23? And doesn’t that accelerate to the point where you can’t — the industry just have more because you run out of space?

Scott Kirby: Pretty close to yes is the answer. We’re near the limit on capacity — on flights in the system. There are places that are at the limits, and we’re near. And you can see it, like it works fine, and you can add more on good weather days when absolutely nothing goes wrong. Something goes wrong every week. I mean, there’s weather, there’s systems issues that happen at the FAA, they happen at individual airlines, there’s pipelines that get cut for fuel at airports, there’s vendors that fuel airplanes at airports that are short staffed or have higher sick calls, just the stuff that happens every day. And we’re near the capacity limit in terms of total number of flights.

Page 9 of 15