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00:00Scott, great to see you after a quarter where you did beat expectations but cut guidance.
00:04We'll get into all the numbers.
00:05I want to start with the big news over the past couple of weeks.
00:09Are you going to buy American Airlines?
00:11Well, thanks for being here in person, Lisa.
00:15And first, I'm not going to comment on that.
00:16But I will tell you a little bit about, repeat some of the things that I've said in the past.
00:21And first, it was a great quarter.
00:23Even though fuel prices doubled, you know, the team at United did an incredible job.
00:27And really, you look at full guidance, giving guidance for the full year, being able to be solidly profitable, even
00:32in this escalating fuel price environment, I think is really the entree to where we want to go for the
00:36future, which is we've built a brand-loyal airline by attracting customers, by giving them quality, by giving them value,
00:43an airline that customers love.
00:44And that, you know, gives us resilience in tough times.
00:48But it also lets us think about what's the next phase for United Airlines.
00:52And we've spent, you know, the last couple of years thinking about, you know, proving that this strategy to win
00:56a brand-loyal customer works.
00:58But how do we become a truly globally competitive airline?
01:01And I don't have the answers yet.
01:02I'm not seeing anything specific about what they are.
01:04But today, there's a big trade deficit in the United States with foreign-flagged airlines.
01:09And they fly 65% of the long-haul seats into the U.S., even though only 40% of
01:13the customers are foreigners.
01:14And that trade deficit is bad for United Airlines.
01:16It is bad for U.S. aviation.
01:19It's bad for U.S. workers because we actually create some of the really best jobs with the best benefits
01:24in the country, not just jobs but careers.
01:26And it's bad for the United States of America.
01:28And so I would like to solve that and create a truly global, great airline that all U.S. citizens
01:34can be proud of.
01:34So it's important, in other words, for the United States to fortify its airline industry with the competitor in mind,
01:40not necessarily of the big three in the U.S. of American, United, and Delta, but internationally with some of
01:46the long-haul carriers that you see as really the main competition for the United States.
01:49Is that correct?
01:50You know, I feel like what we at United have done here in the United States by building a brand
01:54-loyal airline, you know, we really have attracted all the brand-loyal, certainly in our hubs, we've attracted the brand
02:00-loyal customers.
02:01And we've won huge market share kind of everywhere that we fly by being better, by being high quality.
02:07And that's what's caused us to win.
02:09And I think the next phase for us is can we take that around the globe?
02:12Can we do that everywhere that we fly?
02:15And, look, there's some really good airlines in the Middle East.
02:17There's some really good airlines in Asia.
02:19They do some things better than us.
02:20But can we create a U.S. airline?
02:23And I don't have the answer.
02:24I'm not 100% sure we can do it and not proposing any specifics today.
02:27Of course.
02:27But it's an aspirational vision that I think United is in a unique position to go after because of the
02:33success we've had, because our people are great, because of the investments we've made in product and technology to get
02:38there.
02:39And because we have the willingness to try to do big things, that we are in a unique position to
02:45try to achieve that and do something big for United but also for the country.
02:48You've been really vocal about how it's an opportunity when there is a crisis or when there's serious pressures in
02:54the industry right now as high oil prices to potentially pick up other assets that could be distressed, others that
02:59are weaker, that are falling out of favor.
03:01Are there characteristics of airlines that you would consider taking over, assets that you would potentially acquire in this type
03:09of period?
03:10Yeah.
03:10You know, one, the best way to prepare for a crisis is to be prepared before it starts.
03:15We knew something would happen.
03:16I didn't know when.
03:16We knew something would happen.
03:17So we're carrying triple the cash we had pre-COVID.
03:20We've moved to the top of the industry in profit margins.
03:22We have the best credit rating that we've had in over 30 years.
03:26And we're committed to getting to an investment-grade balance sheet.
03:30That gives us the ability to look through the problems, the spike in oil prices, to the other side and
03:36not have to make short-term, you know, strategic, bad strategic decisions.
03:41And as I look at assets, like maybe they will, maybe they won't become available.
03:45We've actually even had some discussions with one airline about buying some.
03:49But the kinds of things we're most focused on are, again, back to this, how do we create a great
03:55airline for, a decommoditized great airline for customers that can really be stronger internationally.
04:00So things that support growing an international network are more interesting to us because that's where our focus and I
04:08think that's where our big future growth potential is.
04:10President Trump gave a nod to you in a conversation yesterday talking about how he likes what you're doing.
04:16He said that he didn't really want to see a tie-up between America and United.
04:19I know you're not saying anybody.
04:21Do you think that this is a more amenable period for tie-ups than it has been in the past?
04:25This is sort of a window that airlines can capitalize on to execute mergers that have been hard-fought in
04:32the past?
04:32Well, I'm not sure.
04:33But that's certainly the market consensus.
04:35That's what people think.
04:37And what I think it is, more than anything, is an opportunity to maybe, instead of looking at everything through
04:44the traditional lens, which is mostly a domestic lens, to maybe think about what does quality mean?
04:49What do customers want?
04:50What do customers really want?
04:52And I think we have proven at United, customers want great technology.
04:56People love our app.
04:57It's so much better than any other airline in the world.
04:59They like the information that we can give them.
05:01People want great service.
05:02People want high reliability.
05:04Customers want a great product.
05:06You know, customers want value.
05:09And value is much bigger than just the price.
05:12And customers want quality.
05:14They want value.
05:15And I think, you know, whether it's this administration or not, I think thinking about what do customers really want.
05:21And look, we have proof points.
05:22Like here in three of our hubs where we had big competitors, three different hubs, we've won about 20 points
05:29of market share with the local community over the last year.
05:31Those are massive moves at an airline against three different competitors that were big in those markets.
05:36And it's all because we built a quality airline that takes care of customers and puts customers first.
05:41You've talked about how you are going to raise prices.
05:43All the airlines are raising prices.
05:44And we've seen this.
05:45Are you surprised by how little customers have stopped flying?
05:50How much demand destruction actually has been?
05:51So, you know, airfares have gone, as oil goes up, we need about 15 to 20 percent increase in airfares
05:57to recover, ultimately to recover 100 percent of that fuel price.
06:01And so fares have gone up.
06:03But in real terms, you know, airfares in 2025 were 27 percent below where they were 2019 pre-COVID.
06:08So we're just, like, starting to catch up.
06:11We haven't even caught up to inflation, even with the increase in fuel prices.
06:15I did expect a bigger price elasticity effect from customers.
06:18We've seen, actually, remarkably strong demand continuing even in the face of what are necessarily higher prices.
06:26But we are anticipating somewhere down the road that elasticity is real, become 101.
06:32We all took it.
06:33And that that's going to happen and that there will be less demand.
06:37That's partly why our, you know, we're going to trim some flying out of the third.
06:41Nothing, not getting rid of airplanes or changing anything strategically, but we're just going to trim some of the marginal,
06:46the Tuesday, Wednesday, Saturdays, the red-eye flying out of the second half of the year.
06:50Because I think both oil has a possibility of being higher for longer, but also in the face of higher
06:56fuel prices, there will be less demand.
06:57And so we need to supply less to the market.
06:59Is there any scenario where you could see cutting capacity more than that?
07:02I mean, there's been discussion around flights to Europe getting canceled as a result of just simply a lack of
07:08physical jet fuel available to fly back.
07:10Well, first on the physical jet fuel, we have not seen problems yet.
07:15Prices are higher, but we haven't actually seen shortages.
07:18But we're closely watching everywhere on the globe.
07:21But in particular, Asia and Europe are the two sort of hot spots that we're most focused on.
07:26And it's not impossible that something like that would happen.
07:29I think we'll manage through with – it'll be higher priced, but that we'll manage through without getting to shortages.
07:35I hope so, even though it could happen.
07:37But even if there starts to be shortage, I think what you'll see – you've already seen it in Asia.
07:40You've seen it a little bit already starting to happen in Europe – is it's more likely to take short
07:45-haul services out of the system than the long-haul global flights.
07:48You know, there's options for short-haul.
07:50You can drive, you can take a train.
07:52And the global long-haul, to keep the world connected, I think will probably be the last in the tail
07:58of where flying would have to stop.
08:00So we're probably going to be able to manage through it.
08:02In the meantime, we've seen other airlines really struggling internationally.
08:05LaFranza, for example, cutting flights.
08:07We've seen the Asian carriers really struggle as a result of just a physical lack of jet fuel.
08:12Does this give you an opening in some ways on the international scale, given the fact that they're facing some
08:17real constraints?
08:18You know, we talked earlier about there may be opportunity in this.
08:22I doubt that it's anything because of what's happening on international carriers.
08:25That'll be a temporary phenomenon.
08:27They're not going to give up slots.
08:29You know, I'd like to get more slots in other places.
08:31But people aren't going to give up slots, I don't think, over something like this.
08:35So I think the opportunity is more how do we really create a great U.S. airline that's focused on
08:40U.S. citizens primarily and getting them around the globe.
08:43How do we eliminate that, you know, 65-40 trade deficit?
08:45Do you think it's appropriate for the government to get a stake in Spirit Airlines as we struggle to fortify
08:51the U.S. airlines?
08:53You know, on that point, like, first, I think you can see this even in this fuel crisis little spike,
09:00that well-run airlines like United Airlines can remain solidly profitable.
09:04And I don't think that this is anywhere close to the U.S. airline industry needing a bailout, the kinds
09:09of things that have happened in the past.
09:11And the problems at Spirit predate the run-up in fuel.
09:16It was a fundamentally flawed business model.
09:18And I feel bad that, you know, like, as much as we're competitive with them, like, I don't want to
09:22see people lose their jobs.
09:23By the way, a lot of them are coming to United.
09:26I talked to all of our new hire pilot class, and every time there's a whole bunch of hands that
09:29came from Spirit.
09:29So, but I don't want to see anyone lose their jobs.
09:32But this was a fundamentally flawed business model that I've been going back into the last administration saying it's going
09:38to fail because the business model doesn't work.
09:40And so I think the spike in fuel prices just moves forward by a couple of months.
09:44I just want to finish up.
09:45You are the economist who has the most front-row view to the American economy, more so than anyone else.
09:51Do you think right now the economy is better or worse than people think it is?
09:55You know, certainly if I read the headlines, it's better than what the people in the headlines said.
09:59Although the stock market, you know, is acting like it's pretty good.
10:02So people that vote with their money, that aren't just experts on TV, seem to be voting that the economy
10:07is pretty good.
10:07And that's what we see.
10:08I think the risks are higher in the economy right now.
10:12You know, like what's happening with oil, it's such an inelastic demand for oil.
10:16And if you get to the point where we have to have demand destruction to overcome oil shortages, I think
10:23that could impact the economy, but we just don't see it yet.
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