Mike Leskinen: So Catie, let me take the last question first. We include our expectations for labor agreements in our guidance. Regarding CASM trends in Q2 and Q3 and Q4, you would expect the MAX headwind to go away. We do think we’re getting closer to seeing that aircraft fly again. You would see some United-specific tailwinds with some gauge increase. Although, with slowing deliveries, that gauge increase in ’24 will be less than we would have expected. You will see continued pressure from labor of about 3 to 4 points, that’s an industry headwind for CASM-ex, not unique to United. We expect it will lead to higher TRASM to offset. But you should continue to see that we will lap the majority of that as we enter into the fourth quarter.
And then maintenance headwind of about 1 point, that’s going to be lumpy quarter-to-quarter. As I sit here today, I think it’s about 1 point in each of the quarters. this year. At some point, the supply chain will fix itself in aerospace, but we don’t see that today and I think it probably takes well beyond 2024. So you should think about — to summarize, you should think about the labor and maintenance headwinds as being persistent.
Catherine O’Brien: And maybe just sticking with you, Mike, the $9 billion CapEx figure that’s tied to your contractual commitments, unless I’ve got that wrong. Even as of your last 10-Q before the MAX grounding, you were expecting 17% less aircraft than the contractual amount. I guess there’s probably more downside reset today, given what’s going on with the MAX. But in order of magnitude, does that delta between expected and contractual deliveries largely flipped how we should think about downside risk on a dollar basis versus that $9 billion?
Andrew Nocella: The delta in between contractual and expected is growing. And we don’t know exactly where it settled yet, that’s what we’re working through now. And we are working on an alternate strategy to mitigate some of the loss in growth. But yes, as you’re thinking about CapEx coming below $9 billion this year and the trajectory for maybe lower than what you would expect CapEx in ’25 and beyond, that’s how you should think about it.
Operator: Scott Group from Wolfe Research.
Scott Group: So Mike, I totally get your message that the plan is fluid and flexible. But as it stands today, I’m just wondering, do you think RASM is going to be positive this year? And then maybe just, can you help us just think about shaping the year a little bit? So if I look at last year, had a pretty massive second quarter and then moderation in the second half of the year. Are you thinking a similar shape or maybe more back half weighted? Any color there would be helpful.
Mike Leskinen: Scott, I’ll kick it off and say, yes, we think TRASM for the year will be positive, but the details will come from Andrew.
Andrew Nocella: Well, we’re not giving exact guidance here other than, yes, we’re very bullish on the year. I think I laid out a business case where domestic is starting the year incredibly strong. I think we’ve laid out a business case for where we’re going to do with trans-Atlantic capacity. And I do expect Asia capacity to step down materially as we head into Q2 and then Q3, which is obviously going to bolster those numbers, too. So I remain bullish on the year.
Scott Group: Mike, I don’t know if you had any thoughts on shaping the year for us, if you have any color. And then maybe just my other follow-up just for Andrew. Just on the point about domestic and international margins converging a little bit this year. Maybe I just want to make sure I’m understanding it. Is this domestic getting better in international a little less good or is it they’re both improving, but domestic is improving more? Just any additional color there would be great.
Andrew Nocella: Look, I think we’re seeing — I hate to say the word exceptional, but we’re seeing really good strength in domestic right now, and I expect that’s going to narrow the gap. International margins are well ahead of domestic margins in 2023, and they’ll continue to be well ahead of domestic margins in 2024. But I do think that gap will narrow a bit based on the RASM outlook that I’m looking at, again, which is pretty darn good for domestic. Maybe I’ll take the seasonal shape in as well. We’re working very diligently to make Q1 a more profitable quarter for United. I think we are well on our way prior to the MAX grounding. And obviously, if you take that out, you can use that to update the estimates as to where we would have been in Q1.
We made a lot of changes to how we fly in Q1, and we didn’t talk about all those details. But when I look at our RASM trends, particularly in domestic, I am now confident that all those changes had the desired effect. As we continue to build and make sure that in the future, Q1 can — well, it won’t ever be our best quarter to be blunt that it will be a much better relative quarter. But our global network, I have to say in Q2 and Q3 really stands out, and we expect it to be stellar again over those six months in 2024.
Mike Leskinen: Scott, just specifically asked about the shape of our quarterly earnings through the year. It’s going to look like a normal seasonal pattern, albeit with a slightly bigger loss in the first quarter due to MAX 9 grounding.
Operator: Helane Becker of Cowen.
Helane Becker: So here’s my two questions. The first question is, as you think about 2026 margins and maybe you’ll update us on May 1st, how do we bridge from the roughly 8% at year end ’23 to say 12% to 14% in 2026?
Andrew Nocella: We will update our longer term margin targets at Investor Day. But the tailwinds that we expect from the United Next strategy from engage, from the connectivity, from the preference to fly United, we have proven, it used to be — it was a strategy on a piece of paper. We have proven that it’s working. And so as we think about ’24, deliveries being a little less than ’25 and ’26, of reaccelerating into that United Next strategy, we see just continued momentum. And so as for the specific level of 12% to 14% pacing, we’re going to have to update you on May 1st. But the strategy is working and we’re very confident in an upward trajectory to both earnings and margin.
