00:00Yesterday, after the bell, United Airlines reported earnings.
00:03This follows Delta reporting earnings.
00:05United beat expectations across the board.
00:07Joining us now to discuss is the chief executive officer, Scott Kirby,
00:11right before that earnings call with investors.
00:14Scott, thank you so much for being with us.
00:16I want to start on the transformation in the airline industry,
00:19just this incredible focus on revenues coming from premium and loyalty.
00:23Really, they doubled relative to the pace that you're seeing in the main cabin.
00:27Can you give us some more color about why that is?
00:30Well, you know, we've spent a decade at United trying to build what we call a brand-loyal airline
00:35to get customers, but really all customers, to choose to fly United,
00:39to get out of the commodity cycle of the business.
00:41And 2025 is a great year for that.
00:43Despite all the headwinds, United Airlines was the only airline to grow EPS last year.
00:47We've started with a really strong booking environment in 2025.
00:50It really is the culmination of this brand-loyal strategy.
00:54And yes, that's over-indexes to the premium.
00:56Those are the customers that fly the most and have the most loyalty.
01:00And that part of the business has done the best.
01:02But, you know, we've seen pretty significant strength in the back of the airplane as well.
01:07We had 7% growth in basic economy last year.
01:09And we've been investing there.
01:11You know, I think one of the cool things we recently announced is we're the only airline in the country
01:14that has ovens in coach.
01:16And so we're going to be serving hot meals in coach for customers that pre-order,
01:20give the customers the ability to pre-order hot meals.
01:22And that applies, obviously, to the entire cabin and is not just focused on premium.
01:27Premium has over-indexed, but really we're seeing strength across the board.
01:32That strength across the board, and this is what I was trying to get into,
01:35and I'd love your color on this.
01:37How much are the main cabin customers increasingly cost-conscious,
01:41even as the more premium and loyalty customers seem willing to pay for quality,
01:49for the perks that come along with some of your new offerings?
01:52Well, while we index higher-end kind of across the board, even in main cabin,
01:56so we're not a perfect indicator of the economy,
01:59you know, one of the things I would say is customers are across the board willing to pay
02:03for better product service, better technology, better experience across the board.
02:07But also, I'd add, like, airline traffic, you know, in 2025,
02:12airfares were 2% lower than they were in 2019.
02:16So we've been deflationary, inflation's about up about 23% over that period.
02:20We've been deflationary, and our costs in many cases have grown even more.
02:24You know, 50% increase in airport costs is sort of the norm across the industry.
02:28So airfare remains a pretty good value, pretty good travel for customers.
02:33There's a lot of, that's put a lot of pressure on the low end of the airline industry.
02:37As you can see, but air travel remains a good value.
02:41And we are increasingly finding that really across the board,
02:44customers are willing to pay for a little, at least a little bit for a better experience.
02:49You know, that deflation that you were talking about,
02:51how much do you need to see consolidation at the lower end of the offerings
02:55in order to actually bring supply into balance?
02:59Well, I think the low end, whether it happens through consolidation
03:01or airline shrinking or airlines just going out of business,
03:04I think the low end of the market is in the, it's a painful process,
03:08but in the process of shrinking back to the niche that works for the low end.
03:13And that really is flying in big leisure markets,
03:15mostly flying to Orlando and Vegas, and really shrinking back to that niche.
03:20And they're going through that process.
03:21I don't know if it'll be consolidation or liquidation or just shrinking dramatically,
03:25but they really outgrew the niche and they're in the painful process of shrinking back to that niche.
03:31Do you expect, and you're talking about a particular niche,
03:34it makes me think you're talking about JetBlue as position for that.
03:38Are you expanding the partnership that United has with JetBlue?
03:41Well, I wasn't talking about them, but JetBlue is a great partner for us.
03:45We love their focus on customers.
03:47Really, it's more cultural than anything is the reason we wanted to partner with JetBlue,
03:51because we both believe in doing the right thing for customers that the industry is not a commodity.
03:56And the partnership is great so far.
03:59If there are opportunities to expand in the future, we'd certainly look at that.
04:02You know, JetBlue is, you know, trying to turn the corner.
04:05They've had, they, like much of the industry's, you know, had challenges,
04:08but they have the right strategy, the right vision.
04:11And we have a lot of hope for them in the future.
04:14And we appreciate the partnership with them.
04:17The first two weeks of January have been tremendous.
04:19They broke records when it comes to revenues and ticketing,
04:22both in consumers and also business travel.
04:26What does that say for the setup for the remainder of 2026?
04:29Do you expect this to be an incredibly active year?
04:33You know, we have come in pretty, pretty hot to start the year.
04:38I think that's indicative of an underlying economy
04:40that has more underlying strength, I think, than most appreciate.
04:44We saw that all through the last year, see it continuing into this year
04:48and people getting back to travel.
04:50I'm sure that applies in other industries as well.
04:54We're not sure if it'll last for the whole year.
04:56You know, I think our base case probably is that will.
04:58We haven't built that into our guidance.
05:00We've been more conservative that in our guidance.
05:02But if it continues like this, it's going to be a really good year for United Airlines.
05:07Where specifically is it good?
05:08Is it on domestic?
05:09Is it international?
05:10We saw international really strong,
05:12although inbound traffic to the United States fell off from a couple of different countries.
05:17We saw that with Canada.
05:18We saw that with China.
05:19I mean, where do you see the growth really coming from?
05:22You know, the rising tide is lifting all of those boats.
05:27So everything is better across the board.
05:29But the best remains international, remains premium, remains business travel.
05:34And, you know, speaking to international,
05:37about 80 percent of the customers on United Airlines international flights are U.S. citizens.
05:42And we really never saw much slowdown there, even though we did see some, you know,
05:47some slowdown from some parts of the geography.
05:50Those mostly bottomed out and have started to recover.
05:53But really, we see the most strength in international and premium.
05:57But everything is getting better across the board,
06:00at least in the first few weeks of January as we come into the new year.
06:04We're here in Davos, and there's a lot of discussion about geopolitical tensions.
06:08There's a lot of discussion about the dispute over Greenland and tariffs and treaties.
06:14And it feels as though some people are saying that the world order is changing.
06:18We heard that from Mark Carney of Canada.
06:20I just wonder how you plan for the year ahead with some of these geopolitical tensions.
06:25Do you feel it when you are transporting people between places
06:28and seeing some of the barriers maybe get a little bit higher?
06:33So we've spent a decade with a strategy to build a brand-loyal airline
06:38that would have resilience in the face of all the kind of issues that affect aviation
06:43that happen all the time.
06:44And last year had more than its fair share of surprises that impacted demand
06:50and that impacted travel.
06:51And yet, you know, we had a no-excuses culture here at United,
06:54and we just overcame obstacles and were the only airline in the country
06:57that grew EPS last year.
06:59And it's really that brand-loyal strategy gives us a resilience
07:03in the face of what there are going to always be geopolitical issues.
07:06We're the largest global airline from the U.S.
07:09We're exposed to all levels of the – or all around the globe.
07:11And so we deal with stuff all the time.
07:14And, you know, while it has short-term impact,
07:17staying focused on the long-term and that brand strategy
07:20has been really successful for us, I think it will be this year.
07:23You know, we entered this year with a strong booking environment,
07:26feeling like a pretty good economy,
07:27really more U.S.-focused on our customer base.
07:30And, you know, as we've said in this interview,
07:33like our bookings are just – we're setting one record after another
07:36as we come into the year.
07:37So we feel pretty good that our guidance is solid.
07:40And as long as things stay like they are,
07:42we're going to wind up being conservative as we get through the full year.
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