Operator: All right. We’ll go to the next caller in queue. Jamie Baker from J.P. Morgan.
Jamie Baker: First one for Andrew. So you said the 20% revenue increase for Basic Economy, what can you tell us about the composition of that growth? Is some percentage MileagePlus members trading down? Is some percentage stimulation of brand new demand from scratch, is some percentage of share shift from LMAs? I guess the simpler question is who’s driving the growth?
Andrew Nocella: I think it’s largely a share shift, Jamie. We developed Basic Economy numerous years ago now and have been refining how we sell it, how we distribute it, and that product. And it’s an important product in our lineup. We do focus a lot on premium. But we know we need to be competitive across the whole range of needs that our customers have in our hubs and that required a competitive basic economy product that we could do profitably. And as we look at the data, we think the biggest change here is as we’ve increased our gauge, we’ve been able to attract more and more market share across the board, but in particular, we’ve been able to attract more of it from some of the low cost carriers out there. So we’re really pleased with this development. And it’s given us every indication that we should continue to push forward as our gauge increases and we’ll be able to more effectively take on that traffic and grow our share base even more.
Jamie Baker: And then for Mike, it was a couple of years ago, in fact, it might have been, like, almost two years to the day that there were press reports that United was looking at monetizing a portion of MileagePlus and then things subsequently went pretty quiet on that front. So a couple of questions. First is, is loyalty as important to United as it is to Delta? Delta’s leading so hard into this topic on its calls. And second, any thoughts on how United or the broader industry might get investors to value this cash flow at a higher multiple? And if the answer is no, I’m happy to cede the floor.
Mike Leskinen: I appreciate the question. This is something I’m very passionate about. MileagePlus is a crown jewel in the businesses we have here at United Airlines. We’ve made some significant progress towards growing that business. We have a new leader in Richard Nunn. We have significant projects underway around data and how we can create a better customer experience and monetize that data, simultaneous. And you can expect a very fulsome update on the May 1st Investor Day. We do have ideas on how to bring the market attention to the value and the higher premium multiple that those earnings should trade at. And we have several options, and we’ll share more when we’re ready to share more. But we’ve discussed some of those, some of those have been written about in the analyst reports. And if the value is not recognized in our fares, we will take action to highlight that value in the near future.
Operator: We’ll go to the next caller in queue, Michael Linenberg from Deutsche Bank.
Michael Linenberg: Just getting back to, I guess, Scott, on the issue with the MAX 10, at least, fortunately, in the case of United, you do have a choice. You’re a very large operator of the Airbus product as well as the Boeing narrow-body product. As we think about the issues with supply chain and constraints across the OEM space, is there at some point where you’re thinking that given the size of United that it would be prudent to consider a wide-body from another OEM? Right now, it looks like the 787 is the future for United from a wide-body perspective, but you still have that A350 order out there. Has your thinking on that changed?
Mike Leskinen: The A350 is a incredible aircraft. We have a significant order book for 787s right now and we have a mix of 777 aircraft, some are relatively older and a sub fleet is quite young. As we look into the 2030’s, the A350 is an aircraft that we are looking at. We don’t have any new news to share with you today but the timing will be that early part of the next decade.
Michael Linenberg: And then just a quick follow-up back to what Jamie brought up on Basic Economy, the 20% increase is obviously pretty significant. But last quarter, you were up 50%. And the question is, is that just a function of a more difficult comp or did you actively pull back on inventory of Basic Economy just given the surge that we’ve seen on the cost side, and back to your point about sort of trying to maintain that gap between CASM and RASM?
Andrew Nocella: No, we didn’t pull back on it for that reason. And remember, these are year-over-year comps but you have to consider the math of what we did last year. We’re very bullish about Basic. We’re also very bullish about the premium. And the point is, we have a really great diversified revenue stream across all of our cabins as we try to de-commoditize our product. We are really hopeful that we’ll continue to drive increasing volumes in basic. It seems to be having the appropriate P&L effect at United and competitive effect across the industry. So it’s something we want to do more of, not less of. And so you should expect that.
Operator: Conor Cunningham from Melius Research.
Conor Cunningham: I’m a little confused on the comment between — on the link between CASM and RASM. I would have thought that would have been the case before. So I’m just trying to understand what’s changed. Is it that you’re being — like just better at predicting outcomes or is it really more of an industry comment that you’re trying to drive home here?
Scott Kirby: It’s really an industry comment. In the past, if United had — if an airline, including United, had CASM going up, while others had CASM going down, the price is the lowest common denominator. So it’s an industry comment. As industry — just like fuel. Anything that affects the whole industry is a pass through. If it affects one airline, it’s not, but if it affects all airlines, it’s a pass through, that was — we were sitting in this room a year ago, and maybe we didn’t do it articulately, but that was the point we were trying to make, and that is exactly what happened. And it is what’s going to happen going forward.
Conor Cunningham: And then it was a little unclear in the prepared remarks. I’m just trying — does your outlook for costs include accruals for open labor contracts, and just what are the risks that you see for the cost plan in 2024?
Andrew Nocella: We include our expectations for all labor agreements in our base.
Operator: Catherine O’Brien from Goldman Sachs.
Catherine O’Brien: I might stick with the cost side, just following on Conor’s quickly here, versus your low single-digit ex-MAX impact CASM-ex guide for the first quarter. How do we think about the puts and takes through year-end versus that level of CASM-ex inflation? Before today, I was originally assuming growth would decelerate over the year, but CASM-ex comp fees, so each quarter in my model ended up looking pretty similar on a year-over-year basis, ex-MAX impacting the 1Q. Is that a fair way to think about it or is there more lumpiness than that, that I’m missing? And then I guess, just to put a finer point on one question, does 1Q and full year EPS include any flight and tenant accrual?
